After steadying the helm in 2003, the Richemont group surged forward last year, with profits rising strongly.
It should be recalled that 2002 had not been a positive year for Richemont, with turnover down by 5% and operating and net results dropping respectively by 46 and 22%. This was a reflection of the economic and political uncertainties following September 11, 2001, and the ensuing contraction of tourism coupled with the atypical pneumonia epidemic. However, the Geneva luxury products group faced all its problems squarely and improved its profit situation in 2003 – +14 and +3% respectively – despite the continuing drop in sales (-8%).
The improvement continued during the 2004 – 2005 financial year, which closed at the end of last March. Sales again began to rise (+10%, to 3,717 million euro), while profits exploded: +71%, to 505 million, for the operating result and +33%, to 881 million, for the net result. The latter includes 468 million from Richemont’s holding in the BAT (British American Tobacco) group, which rose by 11%, and 413 million (+74%) from the activities of the group’s subsidiaries.
With regard to operating results, we should highlight the performance of the group’s jewellers – above all Cartier, but also Van Cleef & Arpels – with a profit of 460 million euro (+25%), while the profits of the watchmaking firms – Baume & Mercier, IWC, Jaeger-LeCoultre, A. Lange & Söhne, Panerai, Piaget and Vacheron Constantin – grew by 56%, to 148 million. As for the makers of writing instruments – Montblanc and Montegrappa – their operating results grew by 7%, to 59 million. The only cloud on the horizon is the situation affecting the companies – Dunhill and Lancel – active in leather goods and household accessories, which hardly improved at all, with a loss of 40 million, against 42 million in 2003 – 2004. Starting from 31st March next, Christopher Colfer will be replacing Simon Critchell as Chief Executive Officer (CEO) of Dunhill, following the latter’s resignation. He will have a difficult task before him, as will his colleague at Lancel to whom the Chairman, Johann Rupert, and the General Manager of the Norbert Platt group have entrusted the mission of making Lancel a world-class brand.
The group is nonetheless optimistic for the current financial year. The months of April and May, with a progress in sales of 15%, were a continuation of the first quarter of 2005. In particular, the watchmaking businesses continued to make great progress. At the level of markets, the Asia-Pacific region and the American continent remain the driving forces of growth, but Europe is not very far behind, with a two-digit increase in sales during the same months. In other words, if no unforeseen negative external event occurs, the 2005 – 2006 financial year should once again be largely positive for the world’s number two in luxury products.