Cie. Financiere Richemont SA (CFR), the second-biggest luxury goods company, reported full-year profit that beat analysts’ estimates as sales were boosted by buoyant demand for high-end goods in the Asia-Pacific region.
Net income climbed 43 percent to 1.54 billion euros ($1.96 billion) in the 12 months through March 31, the Geneva-based company said today in a statement. The average of 14 analyst estimates compiled by Bloomberg was 1.36 billion euros. Revenue gained 29 percent to 8.87 billion euros, including growth of 43 percent in Asia-Pacific.
Richemont rose the most in nine months in Zurich trading. The maker of Cartier jewelry gets about 42 percent of revenue in Asia-Pacific, where the luxury market will expand as much as 16 percent this year, according to Bain & Co. The forecast excludes China, which the researcher estimates will grow as much as 22 percent. Richemont said sales in April rose 29 percent on a reported basis and 20 percent excluding currency swings.
“Richemont continues to lead the pack in terms of organic growth rates,” HSBC analysts including Antoine Belge wrote today in a note. The current year “is off to a staggering start.” HSBC has a neutral recommendation on the stock.
The shares gained 8.1 percent, the steepest advance since Aug. 11, to 57.65 Swiss francs.
While mindful of unstable economic conditions, particularly in the euro zone, Richemont is convinced of the resilience and long-term prospects of its maisons, Chairman and Chief Executive Officer Johann Rupert said in the statement. “We therefore look forward to the future with cautious optimism,” he said.
Excluding currency swings, sales climbed 46 percent in the Asia-Pacific region, 20 percent in Europe, 30 percent in the Americas and 9 percent in Japan, the company said.
While growth has slowed in some Chinese coastal cities, the country is doing very well overall, Rupert said today on a call to reporters. Richemont hasn’t seen any sign of demand waning in Europe, the CEO also said, adding that he’s been surprised by the region’s resilience. Full-year sales growth in Europe was a “notch” slower than the prior year, the company said.
Revenue from Richemont’s watch division, which includes Jaeger-LeCoultre timepieces, climbed 31 percent to 2.32 billion euros, exceeding the 2.25 billion-euro average estimate of 13 analysts surveyed by Bloomberg. Asia imported more than half of Switzerland’s watches last year, according to the Federation of the Swiss Watch Industry.
Sales at the jewelry unit increased 32 percent to 4.59 billion euros. Richemont in March said Stanislas de Quercize, who heads the Van Cleef & Arpels brand, will succeed Bernard Fornas as chief executive of Cartier by the end of 2012.
Montblanc sales climbed 8 percent to 723 million euros, while other businesses, which include online fashion retailer Net-A-Porter and the company’s watch-component manufacturing activities, climbed 27 percent to 1.23 billion euros.
Richemont plans to open about 70 stores this year, while cash will be used for organic growth, Rupert said. There are no acquisitions on the immediate horizon, he said.
Richemont also said today it will buy back as many as 10 million A shares, or a 1.7 percent stake, through the market over the next two years. The stock will be held by the company to hedge awards to executives under a stock option plan.
The company also proposed a dividend of 55 centimes a share, up 22 percent on the prior year, to be paid on Sept. 13.
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