Richemont interim profit down 21% on sluggish China demand

Compagnie Financière Richemont SA reported a sharp decline in annual profit on Friday, impacted by weak demand in China and modest price increases.

Richemont interim profit down 21% on sluggish China demand

For the first half of the fiscal year ending September 30, the Swiss luxury goods company posted a pretax profit of €2.09 billion, down 21% from €2.63 billion in the same period last year. Revenue for the six months decreased by 1.5% to €10.07 billion, compared to €10.22 billion previously, primarily due to a significant drop in Asia Pacific sales. Sales in the Asia Pacific region fell by 19% to €3.44 billion, down from €4.26 billion, with China leading the decline. However, Richemont noted that its diversified regional portfolio, driven by multiple growth engines, helped mitigate the downturn in Asia Pacific. The company highlighted strong performance in other regions. Sales in the Americas were "very solid" despite an 11% drop to €2.34 billion from €2.11 billion. Japan saw a remarkable 32% increase in sales, reaching €1.08 billion from €824 million. Both Europe and the Middle East & Africa also recorded robust growth. The Jewellery Maisons division, including Buccellati, Cartier, and Van Cleef & Arpels, continued to perform well and gain market share. However, Richemont acknowledged that limited price hikes in recent months were insufficient to fully counter rising raw material costs, particularly for gold.

Further results details

The global watch market is experiencing a slowdown, with China seeing the most significant impact, affecting watch brands across the industry. Earnings per share plunged to €0.782 from €2.643, while headline EPS dropped 20% to €2.862 from €3.577. Chairman Johann Rupert stated, "Richemont showed sustained resilience amid challenging macroeconomic and geopolitical conditions, bolstered by ongoing investments in our distribution and manufacturing capabilities." Looking forward, Rupert expressed confidence in the company's ability to navigate current uncertainties and adapt to future economic cycles.