Sep 8, 2010
Richemont sales beat forecast, Asian demand soars
Sep 8, 2010
ZURICH, Sept 8 (Reuters) - Swiss luxury goods group Richemont's (CFR.VX) five-month sales jumped 37 percent, beating forecasts and confirming a rebound in the sector as wealthy Asians splash out again on top-end watches and jewellery.
Photo : AFP
Richemont, normally cautious in its outlooks, said on Wednesday net profit for its first half to September should be significantly higher than last year.
However, the strong Swiss franc would lead to a higher cost of sales in the second half for the maker of Cartier watches, Montblanc pens and Chloe handbags.
"The improved trading environment is certainly welcomed. However, it is far too soon to draw any conclusions about the sustainability of the economic recovery," chairman and chief executive Johann Rupert said.
Peers like Swatch (UHR.VX) and LVMH (LVMH.PA) have also reported double-digit growth in watch and jewellery sales in the first half and Swiss watch exports rose almost 20 percent between January and July, after the worst slump in decades.
Weak U.S. economic data have raised concerns the world's largest economy may slip back into recession and weigh on the global economic recovery.
Richemont shares were down 1.6 percent to 41.18 Swiss francs at 0815 GMT, underperforming a flat European personal and household goods index.
Investors were taking profits after recent strong gains, a Zurich-based trader said. Richemont shares have risen almost 7 percent this month, hitting a two-month high earlier this week.
"Provided the macroeconomic outlook does not deteriorate ahead of the key Christmas period, in particular in Asia, we believe the company could deliver a stronger than expected margin recovery in the next couple of years," Citi analyst Thomas Chauvet said in a note to clients.
While revenue in Asia-Pacific and the Middle-East continued to grow, sales in other regions remained below prior record levels, reflecting the ongoing difficulties in western economies, the world's second largest luxury goods group said.
"Richemont is clearly ahead of expectations and especially Europe with an organic growth of 15 percent was a surprise. It is a very strong set of sales figures and it is obvious that the first-half result will be very strong," Vontobel analyst Rene Weber said, reiterating his "Buy" rating on the share.
Richemont stock, which has gained more than 20 percent this year, trades at 16.7 times estimated March 2012 earnings, a premium to Swatch Group at 15.4 times estimated 2011 earnings but at a discount to LVMH at 17.3.
Sales rose 37 percent at actual exchange rates from April to August, ahead of a forecast of 26 percent in a Reuters poll. The company provided no overall sales figure.
Excluding the acquisition of Net-a-porter.com and in constant currencies, sales were up 22 percent, also above the 16 percent rise forecast.
(Editing by David Cowell and Dan Lalor)
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