On May 12, 2017, Richemont, the Swiss luxury goods group, announced its audited consolidated results and proposed dividend for the year ended March 31, 2017.
· Regardless of the actual exchange rate or constant exchange rate, sales fell by 4% year-on-year to 10.647 billion euros; calculated at constant exchange rate, excluding the previously announced special inventory repurchase effect, sales fell by 2% year-on-year.
· Sales of jewellery, leather goods and writing instruments increased significantly.
· Strong growth in China, South Korea, and the United Kingdom; growth resumed in the United States.
· Operating profit fell 14% year-on-year.
Net cash position increased by EUR 452 million to EUR 5.791 billion.
· Proposed dividend of 1.80 Swiss francs per share, a year-on-year increase of 6%.
Financial report overview
The past year has challenged Richemont. The change in demand has particularly affected Richemont’s watch business and changed the consumption model. The Group responded to this. By taking major measures, Richemont solved these challenges. Although these measures had a short-term adverse impact on financial performance, they paved the way for the Group’s long-term development. Looking back over the past year, Richemont Group’s sales have fallen slightly, and the growth at the retail side has offset the decline at the wholesale side.
The overall situation improved markedly in the second half of the fiscal year. The United States, Richemont’s largest market, has resumed growth. Mainland China, Richemont’s second largest market, has shown strong growth with South Korea, the United Kingdom and Macau, China. Excluding the special measures to improve the Group’s multi-brand retail partner inventory and optimize certain wholesale and retail outlets, the year-on-year decline in sales calculated at a constant exchange rate was controlled within 2%.
The weakness in wholesale sales was mainly affected by the above-mentioned measures, and the increase in sales of jewelry, leather products and writing instruments alleviated this negative effect to some extent. Professional watchmaking brands and Cartier watches (belonging to the jewellery sector) were affected by special repurchases and capacity adjustment measures. Montblanc, Chloé and Peter Millar sales have maintained good growth momentum. The Group’s brands continue to adjust fixed costs and production structures in accordance with sustainable levels of demand. Therefore, taking into account a large number of one-time expenses, Lifeng’s operating profit fell by 14% year-on-year.
This fiscal year’s net profit is much lower than last fiscal year’s level. Excluding one-time gains from the merger of Net-a-Porter and Yoox Group, net profit for the fiscal year fell 24% year-on-year.
Good working capital management limits the reduction in operating cash flow, while cost control and the sale of investment real estate have increased the net cash position to 5.791 billion euros (March 31, 2017).
Based on the increase in cash flow and pure cash, the Board of Directors intends to increase the dividend from 1.70 Swiss francs per share to 1.80 Swiss francs per share in the previous fiscal year.
The volatility and uncertainty of the geopolitical and trading environment may rise. Richemont is committed to transforming itself to operate in a more sustainable growth environment. The Group will adjust product supply, tilt communications and distribution towards new consumption models, and prioritize resources for R & D innovation, digital marketing, online sales platforms and training for all its brands.
Richemont’s strong cash flow and strong balance sheet allow the group to focus on creating value for shareholders over a longer period of time. Richemont believes that luxury is still a unique business with good long-term prospects, and the Group’s brands with important assets and heritage can better plan and develop in this environment.