Richemont’s third-quar­ter rev­enue up 7%

Pretoria News - - BUSINESS REPORT - Sandile Mchunu

SWISS lux­ury group Richemont yes­ter­day re­ported that its rev­enue in­creased 7 per­cent, ex­clud­ing cur­rency shifts, in the quar­ter to the end of De­cem­ber, beat­ing mar­ket ex­pec­ta­tions of growth of 5.9 per­cent.

Richemont owns in­ter­na­tional lux­ury brands such as A Lange & Söhne, Baume & Mercier, Cartier, Chloé, Dun­hill, IWC Schaffhausen and Van Cleef & Ar­pels.

How­ever, the group re­ported lower whole­sale rev­enue, as it be­came more se­lec­tive with its re­tail points, a sign that the lux­ury-brands house is clean­ing up its dis­tri­bu­tion net­work af­ter be­ing forced to buy back un­sold watches. Whole­sale rev­enue was down 3 per­cent to €1.14 bil­lion (R16.92bn), but this was offset by a 13 per­cent in­crease in re­tail rev­enue, to €1.98bn, in the quar­ter.

“Whole­sale sales de­creased 3 per­cent, re­flect­ing qual­i­ta­tive up­grades to our ex­ter­nal dis­tri­bu­tion net­work and the mon­i­tor­ing of in­ven­tory at our multi­brand re­tail part­ners. Growth in Asia-Pa­cific in the whole­sale chan­nel was offset by de­clines in other re­gions,” the group said.

Richemont said Asia-Pa­cific and the Mid­dle East and Africa were its two best-per­form­ing re­gions, re­port­ing sales growth of 11 per­cent dur­ing the quar­ter.

The group said the growth in these re­gions ben­e­fited from favourable cur­ren­cies, the in­ter­nal­i­sa­tion of ex­ter­nal points of sales and the an­tic­i­pated in­tro­duc­tion of value-added tax in the United Arab Emi­rates.

How­ever, in ac­tual rates, the re­gions achieved sales growth of only 5 per­cent and 3 per­cent re­spec­tively.

The Amer­i­cas recorded sales growth of 8 per­cent at con­stant ex­change rates. The group at­trib­uted this to a good per­for­mance from the Jew­ellery Maisons. In Ja­pan, it recorded sales growth of 5 p er­cent, sup­ported by strong growth from spe­cial­ist watch­mak­ers and a favourable cur­rency environment, the group stated. Sales in Europe were dis­ap­point­ing be­cause of the strength of the euro, and chal­leng­ing com­par­a­tives in the UK weighed on sales, which de­clined 1 per­cent.

Richemont said its other busi­nesses posted sta­ble sales, with growth no­tably from Mont­blanc, Chloé and Lan­cel.

“Ex­clud­ing the im­pact of the sale of Shang­hai Tang, the other busi­nesses would have recorded mod­er­ate growth,” the group said. The group’s net cash po­si­tion at the end of De­cem­ber 2017 was €5.1bn, down from €5.2bn at the end of 2016.

It achieved sales growth of 10 per­cent at con­stant ex­change rates, boosted by the con­tin­u­a­tion of the pos­i­tive trend seen in the first six months of the fi­nan­cial year. At ac­tual rates, the group said it achieved sales growth of 7 per­cent.

In its an­nual re­sults to the end of March 2017, the group re­ported sales of €10.65bn, op­er­at­ing profit of €1.76bn and profit of €1.21bn.

Richemont’s shares closed 0.04 per­cent lower at R114.55 on the JSE yes­ter­day.

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