Richemont forecast sale profits of up to 40%
LUXURY GOODS maker Richemont said strong sales growth would boost its half-year profit by up to 40 per cent, much more than analysts had expected, helped by demand from emerging markets and sales to Asian shoppers visiting Europe.
The Swiss-listed maker of IWC watches and Cartier jewellery said that operating and net profit were likely to increase by between 20 and 40 per cent in the six months to the end of September 2012.
Analysts polled by Starmine expected growth to come in at an average of 28 per cent for the first half of fiscal year 2013. Shares in Richemont rose 5.5 per cent to 59.15 Swiss francs in early trading yesterday, outperforming a 0.3 per cent rise in the Stoxx 600 personal and household goods index.
“At the start of the year the company was saying the margin could go lower this year given investments – now it looks like it will go higher,” said John Cox, head of Swiss research at brokerage Kepler Capital Markets.
“I put this down to the pricing power of its superb brand portfolio as well as higher capacity utilisation amid the sales rise, and it also benefits from the franc peg, given its Swiss franc cost base.”
The firm burnished its outlook after sales for the four months ending July 2012 rose 24 per cent on a reported basis and 13 per cent in constant currencies from a year earlier.
Strong growth in emerging markets, in particular China, plus a tendency among Asian shoppers to buy luxury goods while on holiday in Europe, have buoyed sales at Richemont and bigger rival LVMH, helping offset the impact of reduced spending in Europe, as government austerity measures bite.
Although concerns have begun to emerge for the luxury sector after figures showed China’s red-hot growth is starting to cool, the Asia-Pacific region is still the fastest-growing luxury market in the world.
Richemont beat expectations with a 43 per cent rise in profit for last year, thanks to strong Asian demand, and said at the time it expected further growth.
The firm, controlled by South Africa’s Rupert family, said various factors, including movements in the exchange rate, could still impact five-month sales, due to be reported on September 5th. – (Reuters)