Richemont has sought to quash speculation about takeover approaches after jewelery sales and a recovery in China led the Swiss luxury group to record earnings.
Revenue for the owner of Cartier and Van Cleef & Arpels rose 14 per cent at constant exchange rates to an all-time high of nearly €20bn for the year ended March 31. Operating profit rose by a third to a record €5bn over the past 12 months and ahead of expectations, while net cash rose €1.3bn to €6.5bn.
After a Swiss news outlet reported that France’s LVMH had set its sights on acquiring it, Johann Rupert, chairman of Richemont, which controls the Swiss group, reiterated that the company was not for sale. Richemont also rejected a deal with Kering proposed by bankers two years ago, Rupert said.
“We are in constant dialogue and we respect each other’s independence,” he said of LVMH.
The Swiss company joins other groups in the luxury sector, such as LVMH and Hermès, in reporting buoyant earnings on the back of a sales boom in Asia, particularly China. Gucci owner Kering, however, has been left behind.
Ignoring geopolitical obstacles and rising inflation, the global luxury sector has boomed in recent years, with the strength of its recovery after a pandemic contraction in 2020 surprising industry experts with double-digit growth in 2021 and again last year.
Fourth-quarter sales rose “significantly” as the Asia-Pacific region recovered after China lifted Covid-19 travel restrictions, Richemont said.
But Rupert warned: “Economic instability and political uncertainty are set to remain features of the business environment. The Group will therefore strive to maintain the necessary agility to manage fluctuating levels of demand.”
While Chinese tourism was picking up again, large groups have not yet returned because flights are expensive. Most analysts expect international Chinese tourism, a key driver of global luxury sales, to pick up more significantly from the second half of this year.
Demand in the US has been slowing since November, reflecting analyst expectations for a slowdown there and trends reported by other luxury companies in the sector’s biggest market, Rupert also noted.
Richemont reported a loss of €3.6bn from discontinued operations due to a €3.4bn non-cash writedown on ecommerce platform Yox Net-A-Porter. The company is in the process of separating the ecommerce business from its core operations after announcing plans to sell a majority stake in the unprofitable platform to Emirati investor and online rival Farfetch last year. The deal is currently being investigated by regulators.
“The polarization between prestige pieces and weak brands continued unabated and was accelerated by high inflation in recent months,” wrote Jean-Philippe Bertsky at Vontobel. “Richemont ranks very well with Cartier, Van Cleef & Arpels or Vacheron Constantin.”
The Swiss group will offer a special dividend of SFr1 on top of an increased ordinary payout of SFr2.50. It also plans to buy back up to 10 million of its A shares, or 1.7 percent of its equity.
Shares rose more than 5 percent on Friday after the earnings release. This year it has increased by 31 percent.