May 20, 2019

Richemont's Sales Revenue Grows 27% Y-o-Y to Touch
€ 13,989 Mn for FY 2019; Jewellery Performs Strongly

Luxury conglomerate Compagnie Financière Richemont SA (Richemont) announcing its audited consolidated results for the year ended March 31, 2019, reported that group sales increased to €13,989 million. 

The Company noted that the results of Yoox Net-a-Porter Group (YNAP) and Watchfinder & Co. (Watchfinder) have been included in the Group’s financial statements with effect from   May 1 and 1 June 2018, respectively.

“They are grouped under the business area Online Distributors,” the Company pointed out. “The acquisition and first-time consolidation of Online Distributors has had a material impact on sales, operating profit, cash flow and net cash.” Further, Richemont said, online retail regroups the sales of YNAP as well as the online sales portion of both Watchfinder and the Group’s Maisons; while retail now only incorporates sales from the Group’s directly operated boutiques.

“In a relatively supportive environment, sales increased by 27% at actual and constant  exchange rates, reflecting growth across all business areas and distribution channels,” commented Richemont Chairman, Johann Rupert. “Excluding YNAP and Watchfinder - collectively referred to as our ‘Online Distributors’ - sales for the period grew by 8% at both actual and constant exchange rates. Jewellery Maisons and the retail channel posted the strongest performance. Most of our markets were in positive territory, led by double digit increases in the US and in all the main markets of Asia Pacific.” The only exceptions regionwise, were the Middle East and Africa.

The jewellery maisons  had a stellar year. “At actual exchange rates, the 10% sales progression at Cartier and Van Cleef & Arpels was underpinned by double digit growth in jewellery and watches,” Richemont said. 

It added: “Operating results increased by 16% compared to the prior year. The € 303 million improvement primarily reflected higher sales, continued manufacturing efficiency gains and good cost control. The Jewellery Maisons accelerated investments in both store renovations and communication initiatives.”

The Group’s gross profit grew by 20% to € 8,645 million; while its  operating profit rose by 5% to € 1,943 million. However, the Company noted that “Excluding onetime net charges of respectively € 118 million in the year under review and € 208 million in the prior year, as well as this year’s first time consolidation of Online Distributors, operating profit for the year would have increased by 13%.”

Net operating expenses increased by 26% on a reported basis. “Excluding Online Distributors and the above mentioned charges, operating expense growth was limited to 7%,” the Company noted.

Richemont declared   € 2,787 million as profit for the year, a growth by a whopping 128%. This unusual figure was also due to the consolidation taking place. “This increase reflected a € 1,378 million post-tax non-cash accounting gain on the revaluation of the YNAP shares held prior to the tender offer,” Richemont explained. “Excluding this amount, profit for the period grew by 15%, primarily driven by a higher operating profit.”

“Earnings per share (1 A share/10 B shares) increased by 128% to € 4.927 on a diluted basis,” Richemont stated. “To comply with the South African JSE Limited Listings Requirements of providing headline earnings per share (‘HEPS’) data, the relevant figure for headline earnings for the year ended 31 March 2019 was € 1,467 million (2018: € 1 339 million).” Basic HEPS for the year was € 2.600 (2018: € 2.373), diluted HEPS for the year stood at € 2.596 (2018: € 2.367).  

Cash flow generated from operating activities decreased by € 392 million to € 2 331 million.  The reduction reflected a € 764 million increase in working capital requirements, the Company said, on account of various factors.

Following the acquisition of Online Distributors, inventories increased by € 1,243 million to € 6,186 million (2018: € 4,943 million) as at   March 31, 2019.  

At   March 31, 2019, the Group’s net cash position amounted to € 2,528 million (2018: € 5,269 million).  

The  Board has proposed a dividend of CHF 2.00 per share, up from CHF 1.90 per share last year.