The good times continued to roll for luxury goods makers Friday, Nov. 10, with Swiss watches and jewelry maker Richemont SA (CFRUY) posting a 10% increase in sales over the six months to the end of September, and a 46% hike in operating profit.
Richemont, owner of the high-end accessories brand Montblanc, Piaget watches and jeweler Cartier, posted an operating profit of €1.17 billion ($1.36 billion), up from €955 million a year earlier, on sales of €5.6 billion, up from €5.09 billion, with the gains largely driven by rebounding Chinese demand.
The results were largely in line with analyst expectations, which had been raised by strong quarterly results from other European luxury goods houses, including Hermes International SA (HESAY) and Kering SE (PPRUF) , both of which posted double digit profit growth in the third quarter.
Richemont shares traded down half a percentage point early in the European trading day at €89.65 after the company warned that the year-on-year growth was exceptional due to the company's weak performance over the same period in 2016.
"While we cannot predict the environment for the full year, it is clear that the full year results on a comparative basis will not see the exceptional level of growth reported in the period under review," noted Chairman Johann Rupert.
Richemont, like its luxury goods rivals, has benefited from a rebound in sales in China, where a government crackdown on graft and spending by government officials led to a sharp fall in early 2016 sales of everything from watches to high-end liquor.
Richemont's six-month sales in the Asia Pacific region, which accounts for almost 40% of turnover, rose 25% year-on-year at constant exchange rates, more than twice the growth of its next best performing market, the Americas, which gained 10% over the period. Revenues in Europe, which represents 29% of sale, gained 3%.
At the product category level Richemont's jewelry brands, which include Van Cleef & Arples, was the top performer, with 15% growth in revenues and a 30% improvement in operating results to €981 million. Watch sales climbed 6% to deliver operating results of €294 million, up 57%.
Richemont also announced a management shakeup, with Jérôme Lambert, currently head of operations, promoted to the newly created role of COO, where he will oversee all brands except Cartier and Van Cleef & Arpels.
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