RICHEMONT’S share price plunged 11.87 percent on the JSE on Friday morning even after it reported strong financial results year to March 31 that saw it declare a special on top of the annual payout.
Directors of the group, which owns luxury brands such as Cartier, Piaget, Van Cleef & Arpels, Dunhill and Montblanc, on Friday recommended a dividend of CHF 2.25 (R37.66) per ‘A’ share, and a special dividend of CHF 1 per ‘A’ share.
Reuters reported the share price slumped because the company had struck a cautious note over growth in China, and after its full-year profit had disappointed. There was also no meaningful progress in long-running talks about its Luxury New Retail.
Chairman Johann Rupert said in the results they looked forward to concluding matters with their Luxury New Retail partners “in the near future”.
Richemont is in negotiations with luxury digital groups Farfetch and Alibaba Group about a global strategic partnership to boost luxury brand sales in China, and build e-commerce in the global luxury industry.
The group’s R151.47 share price at one point on Friday represented a more than 37 percent decline since the start of the year, but was much the same level it was trading at 12 months ago.
The group said there had been a “significant step change in group sales and operating profit,” which reached €19.18 billion (R321bn) and €3.39bn respectively in the past year.
An increased focus on sustainability saw the appointment of a chief sustainability officer.
The suspension of commercial activities in Russia resulted in a €168 million negative impact on the results. Group profit rose 61 percent to €2.08bn. There was a 55 percent increase in net cash position to €5.25bn.
“Even if the worst of Covid is hopefully behind us, we face a global environment that is the most unsettled we have experienced for a number of years. We can, however, take comfort from the strength and enduring appeal of our maisons and their relatively balanced geographic spread,” said Rupert.
He said Richemont’s €5.3bn net cash position at the end of March 2022 was a source of strength through volatile times ahead.
Sales increased 46 percent at actual exchange rates and by 44 percent at constant exchange rates in the past year, with double-digit increases across all business areas, regions and channels - growth momentum was led by retail and the Americas.
Operating profit more than doubled to €3.39bn. An improved operating margin of 17.7 percent was driven by Jewellery Maisons, which reported a 49 percent increase in sales growth at actual exchange rates and a 34.3 percent operating margin.
Specialist Watchmakers grew sales by 53 percent at actual exchange rates and the operating margin was 17.3 percent.
Online Distributors grew turnover by 27 percent, with earnings before interest tax depreciation and amortisation at breakeven.
Other business areas, mainly the fashion and accessories maisons, reported 53 percent growth at actual exchange rates, and significantly reduced operating loss.
BUSINESS REPORT ONLINE