Richemont H1 Profit Hits On Weak China Demand; Stock Dips

(RTTNews) - Shares of Compagnie Financiere Richemont AG were losing around 4 percent in the morning trading in Switzerland after the Swiss luxury goods group reported Friday sharply lower profit in its first half with wider loss from discontinued operations as well as slightly lower sales. Weak demand in Asia Pacific, mainly China, offset improved performance in all other regions.

Chairman Johann Rupert said, "Looking ahead, whilst I remain cautious in this uncertain context, I am therefore confident in our ability to navigate the current as well as future cycles and to deliver sustained value over the long term... "

In its first half, profit attributable to owners of the parent company dropped to 458 million euros from 1.51 billion euros last year. Earnings per 'A' share were 0.779 euro compared to 2.601 euros in the previous year.

The latest results were mainly hurt by 1.27 billion euros loss from discontinued operations mainly due to the non-cash write-down of YOOX NET-A-PORTER or YNAP, while prior year's loss was 655 million euros.

On a continuing operations basis, profit declined 20 percent to 1.73 billion euros from 2.16 billion euros a year ago.

Operating profit decreased 17 percent to 2.21 billion euros from 2.66 billion euros in the previous year, resulting in 21.9 percent operating margin, down 410 basis points from prior year's 26 percent.

The weak results largely reflected the impact of the decline in sales at Specialist Watchmakers, a slight gross margin erosion and ongoing investments for Maisons' long-term growth.

Revenues for the period declined 1 percent to 10.08 billion euros from 10.22 billion euros in the prior year.

However, sales from continuing operations were stable at constant exchange rates, benefitting from the company's balanced geographic mix and continued strength at Jewellery Maisons.

Richemont said it recorded very solid sales progress in most regions, led by the Americas and Japan in value, which grew 10 percent and 32 percent, respectively. Europe and Middle East & Africa also posted robust growth in sales. Meanwhile, these were offset by the 19 percent decrease in Asia Pacific sales, led by China.

In Switzerland, Richemont shares were trading at 122.50 francs, down 4.1 percent.

For more earnings news, earnings calendar, and earnings for stocks, visit rttnews.com.