The Swiss luxury group reported Friday net income in the six months through September increased 53 percent to 1.09 billion euros. The average estimate of nine analysts surveyed by Bloomberg was 1.02 billion euros. However, sales loweredduring the first half of the year, leading to executives changes within the group.
Thus, Cartier chief Bernard Fornas and deputy chief executive Richard Lepeu will become joint CEOs in April after current Chief Executive Officer Johann Rupert, 62, steps down, Richemont advanced in a statement released Friday.
The announcement came as the Geneva-based group - which owns brands including Cartier and Montblanc - reported a slowdown in sales growth to 7 percent at constant exchange rates in October from 12 percent in the first half. "For the second half of the year, the comparatives are likely to be impacted by less favourable exchange rates," the group said.
Despite the weaker than expected sales, the high-end watches maker outperformed its August forecast that first-half profit would rise as much as 40 percent as European sales rose 19 percent in local currencies, twice as fast as the pace in the Asia Pacific (APB) region, reported Bloomberg TV. The weaker euro helped drive profit growth as it boosted sales in Europe to the detriment of China, Richemont said. Consequently, the company’s operating margin widened 1.5 percentage points to 27 percent.
Upside was brought by sales growth between April and September which helped net profit at the Swiss group soar 52 percent to 1.08 billion euros, beating a 1.04 billion forecast in a Reuters’ poll.
“The margin was better than expected, driven by pricing power in watches and jewelry, while Asian tourists in Europe remain the growth driver,” said commenting the news Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich. "I think the slowdown is temporary and we certainly aren't seeing a repeat of 2007-8. Post elections in the U.S. and China, I suspect sentiment will improve," he added.
In the same vein, Richemont said in a presentation overall growth in the Asia-Pacific region, which accounted for 41 percent of group sales in the first half, was "normalizing" after two exceptional years. Growth in the region decreased to 9 percent in the first half from 60 percent in the year-ago period.