Richemont shrugged off a tough global luxury goods market and delivered a strong performance in the first half of its financial year, thanks to a sharp jump in second quarter sales.
Investors cheered the result, with the share price rising 4.52% to R3,658.33 and the company’s market capitalisation rising to R33bn shy of R2-trillion.
The owner of brands such as Cartier and Van Cleef & Arpels reported a 10% rise in sales, at constant exchange rates, for the six months to end-September, and by 5% in actual rates to €10.6bn.
The momentum came later in the second quarter, with sales shooting up 14% as demand rose across all regions, the company said.
Europe, the US and the Middle East were the biggest drivers, all posting double-digit growth as local shoppers continued spending. In Asia, conditions were mixed, but China, Hong Kong and Macau returned to growth in the second quarter after a slow start to the year, it said.
As usual, Richemont’s jewellery division did most of the heavy lifting. Brands including Cartier and Van Cleef & Arpels continued to attract strong demand, helping jewellery sales grow 17% in the second quarter.
The group said watches, which have had a tougher time globally, showed early signs of stabilising, with sales in that division starting to improve in the second quarter.
Fashion and accessories brands such as Alaïa and Peter Millar also performed better, though the wider division still posted a small loss.
Richemont said it kept costs tightly controlled, helping lift operating profit by 7% to €2.4bn. Profit for the period was up 4% at €1.8bn, partly because last year’s results were dragged down by a large one-off write-down linked to its former online retail business.
Basic headline earnings per share (HEPS) rose to €3.009 compared with €2.862 a year ago.
Richemont paid a dividend of Sf3 per share in September, following shareholder approval at its AGM.
The group ended the half-year with a €6.5bn cash pile.
Richemont said it expected the challenging environment to continue, especially with uneven recovery in China and rising costs, but its strong second-quarter performance showed its core brands were still in high demand.
Friday’s share price gain saw Richemont move ahead of AB InBev to become the fourth-largest company on the JSE by market capitalisation, behind Prosus, BHP and British American Tobacco.
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