Profit rises at luxury goods firm Richemont but chief to resign

Net income grows by more than 50 per cent on Cartier jewellery sales to Asian tourists

PUBLISHED : Saturday, 10 November, 2012, 12:00am
UPDATED : Saturday, 10 November, 2012, 5:04am

Financiere Richemont, the world's second-biggest luxury-goods company, says Johann Rupert will resign from his post as chief executive next year.

Bernard Fornas and Richard Lepeu will become joint chief executives in April after Rupert steps down, Richemont said.

Rupert, the company's controlling shareholder and chairman, became chief in 2010 after Norbert Platt, who had held the job since 2004, stepped down.

Richemont named Lepeu as deputy chief executive and Gary Saage as chief financial officer last year.

Fornas has led Cartier for a decade and Richemont said he would leave his position of chief executive of that brand at the end of this year.

The announcement came as the retailer reported first-half profit that beat analysts' estimates on sales of Cartier jewellery to Asian tourists.

Net income in the six months to end-September increased 53 per cent to €1.09 billion (HK$10.78 billion) the Geneva-based company said yesterday in a statement.

The average estimate of nine analysts in a survey was €1.02 billion.

The maker of Jaeger-LeCoultre watches outperformed its August forecast that first-half profit would rise as much as 40 per cent as European sales rose 19 per cent in local currencies, twice as fast as the pace in the Asia-Pacific region.

The weaker euro helped drive profit growth as it boosted sales in Europe to the detriment of China, Richemont said.

Operating margin widened 1.5 percentage points to 27 per cent.

"The margin was better than expected, driven by pricing power in watches and jewellery, while Asian tourists in Europe remain the growth driver," said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich.

The US dollar was on average 13 per cent higher against the euro during the period.

The Swiss company said it expects the foreign currency impact to become "less favourable" during the second half of the financial year.

Sales last month increased 7 per cent in local currencies after first-half revenue rose 21 per cent to €5.11 billion, or 12 per cent, excluding currency shifts.

The growth in October "looks reasonable", Cox said. Still, "it appears Asia and America's local currency sales declined in October, which some might highlight as a negative".

Revenue from the company's watch division climbed 25 per cent to €1.46 billion, beating the €1.45 billion average estimate of 15 analysts in a survey.

The maker of Vacheron Constantin timepieces got more than a quarter of its sales in the six months to September from specialist watchmakers.

Sales from Richemont's jewellery unit increased 20 per cent to €2.61 billion, trailing analyst estimates of €2.63 billion. The division generates about half the company's sales.