Richemont saw strong sales growth across all segments and geographic regions for the year ended March 31, with the specialist watchmakers posting record sales and profits despite the stronger Swiss franc. The group reported record cash flow from operations of €1.696 billion. Operating profit increased by 63%, double the rate of growth of sales, to €1.355 billion.
Cash flow generated from operations for the year was a record €1.696 billion. Compared to the prior year, the additional €232 million generated from operations reflected the 3.7% increase in operating profit to 19.7%. Richemont reported that its balance sheet is stronger than ever.
For April, sales were 35% above the comparative period at constant exchange rates.
Looking at sales by region, Asia-Pacific lead the way with an increase of 48% at actual exchange rates. The Americas showed an increase of 40%. Regarding the Americas, Richemont said:
“The strong recovery of sales in the Americas region reflects both weak comparative sales in local currency terms, the integration of Net-A-Porter.com and positive exchange rate effects. Nevertheless, growth in the region stems from a strong retail performance and higher levels of productivity in the wholesale network. The reported growth has occurred despite the reduction in the number of points of sale in the region. The Americas region represented 14% of Group sales.”
Retail sales were up 45%, compared with 23% for wholesale operations.
Sales at the Specialty Watchmaking maisons, as Richemont calls them, were up 31% while operating results were up 64%, and the operating margin increased 4.3% to 17.1%. Richemont said:
“All of the Group’s specialist watchmakers performed well, excluding, as expected, Baume & Mercier which is being restructured. The reorganization of Baume & Mercier’s product offer during the second half of the financial year negatively impacted both sales and operating results. The specialist watchmakers’ results in the comparative year included a one-off charge amounting to €13 million.” (Montblanc results are reported separately – see below).
“The specialist watchmakers posted record sales and profits. Overall, the operating margin increased to 21.4% of sales, in spite of higher costs of sales due to the appreciation of the Swiss franc and higher precious material prices.”
Montblanc saw sales increase 22% and operating results increase 38%. Richemont said: “Montblanc’s sales growth reflected good demand for its range of writing instruments, watches and accessories. Operating results improved due to a better utilisation of manufacturing capacity and a more efficient retail network.”