Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — Richemont — FY2020 Earnings Presentation

62 slides from Compagnie Financiere Richemont Sa's earnings presentation, May 15, 2020

1. Slide 1: FY20 Annual Results

   FY20 ANNUAL RESULTS 31 MARCH 2020

2. Slide 2: Forward-looking statements

   Certain of the matters discussed in this document about our and our subsidiaries’ future performance, including, without limitation, store openings and closings, product introductions, sales, sales growth, sales trends, store traffic, Richemont's strategy and initiatives and the pace of execution th

3. Slide 3: Hong Kong, Macau and Taiwan references

   Any long form references to Hong Kong, Macau and Taiwan within this presentation are Hong Kong SAR, China; Macau SAR, China; Taiwan, China respectively.

4. Slide 4: Agenda

   › Covid-19 › Highlights › Operations › Financials › Conclusion › Q&A

5. Slide 5: Covid-19

   Covid-19 RICHEMONT

6. Slide 6: Covid-19 Response

   COVID-19 RESPONSE from January from February from February from March BUSINESS HEALTH & SAFETY REMEDIATION RESTART CONTINUITY MEASURES MEASURES MEASURES MEASURES

7. Slide 7: Covid-19 Response – Health & Safety Measures

   COVID-19 RESPONSE – HEALTH & SAFETY MEASURES › Health, safety and wellbeing of colleagues, clients, partners and communities remain our top priority  Strict precautions from the outset  Widespread temporary closures  24/7 help line and additional wellbeing support available to employees › c. 100

8. Slide 8: Covid-19 Response – Business Continuity Measures

   COVID-19 RESPONSE – BUSINESS CONTINUITY MEASURES › Minimal services across facilities  Essential production activities and operations maintained  Several distribution centres moved to shift arrangements  Always following governmental and public health guidelines › Working remotely, whenever appro

9. Slide 9: Covid-19 – Estimated Impact on FY20

   COVID-19 – ESTIMATED IMPACT ON FY20 › Sales c. €(800)m › EBIT c. €(450)m › Cash c. €(350)m

10. Slide 10: Covid-19 Response – Remediation Measures

    COVID-19 RESPONSE – REMEDIATION MEASURES › Swift remediation measures taken to preserve cash  Adapting inventories, supply chain and production to changing environment  Operational expenses restricted to business critical spend only while maintaining a focus on new retail  Capital expenditure lim

11. Slide 11: Covid-19 Response – Restart Measures

    COVID-19 RESPONSE – RESTART MEASURES › Gradually reopening of facilities  Maintaining stringent protocols  A number of stores reopened across Asia Pacific in March › Digital more important than ever › Focusing investments on USA and Asia, notably China

12. Slide 12: Highlights

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13. Slide 13: FY20 Key Figures

    FY20 KEY FIGURES › Sales 2% higher at actual rates, in line at constant rates Sales  Excluding Online Distributors, -1% and -3% at actual in € million and constant rates, respectively FY20 14 238 FY19 13 989  Impact of Covid-19: Q4 sales -18% and -19% at actual and constant rates Operating profit

14. Slide 14: Operations

    Operations “BEAUTY LIES IN THE DETAILS OF THEGRANDEST | 9810 *k ONE OF URES, AND THE FINEST.” VACHERON CONSTANTIN TAOVTIONNELLE VACHERON CONSTANTIN | not many. GENEVE RICHEMONT

15. Slide 15: Sales – Europe

    FY20 SALES - EUROPE › Sales increased by 4%  Covid-19 impact in Q4  Good performance at Jewellery Maisons and slight decline at Specialist Watchmakers; double digit growth at Online Distributors  Double digit increase in online retail; mid-single digit increase in retail  Varied performance acro

16. Slide 16: Sales – Asia Pacific

    FY20 SALES - ASIA PACIFIC › Sales decreased by 6%  Severe impact of Covid-19 in Q4  Lower sales in all business areas, except for Online Distributors  Marked increase in online retail; decreases in retail and wholesale  Significant decline in Hong Kong; double digit growth in China and Korea +4%

17. Slide 17: Sales – Americas

    FY20 SALES - AMERICAS › Sales increased by 6%  Growth at Jewellery and Fashion & Accessories Maisons as well as Online Distributors  Decline in wholesale; progression in retail and online retail 8% 7% Europe +6% 6% +6% ----- +4% 20% Asia Pacific Americas 30% Japan ----- +2% Middle East and Africa

18. Slide 18: Sales – Japan

    FY20 SALES - JAPAN › Sales slightly down  Covid-19 impact in Q4  Good growth at the Specialist Watchmakers  Increases in wholesale and online retail channels +5% 0% ----- 8% 7% -1% -1% Europe 20% Asia Pacific Americas 30% Japan Middle East and Africa -21% 35% Q3 YTD Q4 FY20 Impact of Group Online

19. Slide 19: Sales – Middle East and Africa

    FY20 SALES - MIDDLE EAST AND AFRICA › Sales declined by 3%  Covid-19 impact in Q4  Strong increase at Online Distributors  Stable retail, strong growth in online retail; more than offset by lower wholesale sales 0% 8% 7% -3% ----- Europe ----- 20% Asia Pacific +3% -6% Americas 30% Japan Middle Ea

20. Slide 20: Sales by Distribution Channel

    FY20 SALES BY DISTRIBUTION CHANNEL › Retail decreased by 2% 19%  Jewellery Maisons broadly in line; decline at Specialist Watchmakers and Fashion & 51% Accessories Maisons 30%  Growth in Europe and the Americas, decline in 0% Asia Pacific  Stores closures during Q4 Retail Online retail Wholesale*

21. Slide 21: Sales by Product Line

    FY20 SALES BY PRODUCT LINE › Jewellery sales stable 3% 4% 36% › Lower watch sales – compounded impact of 10% Jewellery Watches unrest in Hong Kong and Covid-19 13% Clothing › Slight decline in leather goods Leather goods Writing instruments › Double digit growth in clothing Other 34% Group total Exc

22. Slide 22: Performance – Jewellery Maisons

    FY20 PERFORMANCE – JEWELLERY MAISONS › Sales rose by 2%  Covid-19 impact  Regional growth led by Europe, the Americas and Japan  Higher retail sales; strong growth in online retail › Operating margin declined by 270bps  Lower sales in Q4, higher gold prices, Buccellati  Investments in retail re

23. Slide 23: Highlights – Jewellery Maisons

    FY20 HIGHLIGHTS - JEWELLERY MAISONS › Moderate growth in jewellery  Notable performance from jewellery icons: Juste un Clou at Cartier and Alhambra at Van Cleef & Arpels; successful launch of Clash de Cartier  Good contribution from Buccellati since acquisition  In watches, strong performance of

24. Slide 24: Performance – Specialist Watchmakers

    FY20 PERFORMANCE – SPECIALIST WATCHMAKERS › Sales lower by 4%  Covid-19 impact  Growth in Japan and the Americas  Decline in retail and wholesale; increase in online retail › Operating margin adversely impacted by  Lower sales  Higher gold prices, strong Swiss franc 12 months €m FY20 FY19* Chan

25. Slide 25: Highlights – Specialist Watchmakers

    FY20 HIGHLIGHTS - SPECIALIST WATCHMAKERS › Decline across most Maisons  Notable growth at A. Lange & Söhne and Panerai  Good response to launch of Odysseus and Lange 1 anniversary editions at A. Lange & Söhne, and Submersible Carbotech at Panerai › Markedly lower retail sales in Asia Pacific, nota

26. Slide 26: Performance – Online Distributors

    FY20 PERFORMANCE – ONLINE DISTRIBUTORS › Sales growth of 15%  Prior year includes 11 months for YOOX NET-A-PORTER GROUP and 10 months for Watchfinder & Co.  Strong growth across most regions › Operating margin impacted by  Competitive pricing environment  Increased communications spending; conti

27. Slide 27: Highlights – Online Distributors

    FY20 HIGHLIGHTS - ONLINE DISTRIBUTORS › YOOX NET-A-PORTER GROUP  600 brands and 300 exclusive capsules launched  Replatforming of MR PORTER completed  NET-A-PORTER Tmall Luxury Pavilion now features more than 165 brands  Digital initiatives utilising AI to enhance client experience  New sustain

28. Slide 28: Performance – Other

    FY20 PERFORMANCE – OTHER › Sales reduction of 5%  Covid-19 impact  Growth in the Americas more than offset by declines in other regions  Lower retail and wholesale sales, growth in online retail › Operating results down by €46m reflected  Lower sales  €45m impairment charge 12 months €m FY20 FY

29. Slide 29: Highlights – Fashion & Accessories

    FY20 HIGHLIGHTS - FASHION & ACCESSORIES › Contrasting results across Maisons  Continued outperformance at Peter Millar  Growth in the Americas at Montblanc; declines in all other regions  Good response to tech products and new categories at Montblanc › Retail sales down; good resilience at Montbl

30. Slide 30: Financials

    se Z 0 2 a U 4 Financials

31. Slide 31: Gross Profit

    FY20 GROSS PROFIT › Gross profit in line with prior year › Gross margin at 60.5%, 130 bps down 7 827 8 611  Lower manufacturing capacity utilisation €m 805  Higher gold prices, adverse FX effect Group Maisons Online Distributors Total Group  Lower gross margin at Online Distributors › Strong marg

32. Slide 32: Operating Expenses

    FY20 OPERATING EXPENSES › Operating expenses increased by 6% 3% Selling and Distribution +10% 22% Communication  Low growth of Selling and Distribution 5% 50% Fulfilment Administrative  Communication expenses include Watches 20% Other & Wonders non refundable charges +6% +2%  Administrative expen

33. Slide 33: Operating Profit

    FY20 OPERATING PROFIT › Operating profit down by 22%  Significantly impacted by Covid-19  Operating margin at 10.7% 12 months €m FY20 FY19 Change Sales 14 238 13 989 +2% Gross profit 8 611 8 645 0% Net operating expenses -7 093 -6 702 +6% Selling and distribution expenses -3 512 -3 433 +2% Communi

34. Slide 34: Net Finance Income and Costs

    FY20 NET FINANCE INCOME AND COSTS › Increase in net finance costs due to  €233m higher net foreign exchange loss on monetary items  First-time adoption of IFRS 16  Partly offset by gains on hedging activities 12 months €m FY20 FY19 Change Net foreign exchange losses on monetary items -245 -12 -23

35. Slide 35: Profit for the Year

    FY20 PROFIT FOR THE YEAR › Decrease reflects  Lower operating profit  Higher net finance costs  Non-recurrence of €1 378m post-tax non-cash accounting gain on revaluation of YOOX NET-A-PORTER shares held prior to buy-out 12 months €m FY20 FY19 Change Operating profit 1 518 1 943 -22% Net finance

36. Slide 36: Cash Flow from Operations

    FY20 CASH FLOW FROM OPERATIONS › Increase in cash flow from operations  Higher depreciation, including right of use assets depreciation  Lower working capital requirements 12 months €m FY20 FY19 Change Operating profit 1 518 1 943 -425 Depreciation, amortisation and impairment 1 537 813 +724 Other

37. Slide 37: Capital Expenditure

    FY20 CAPITAL EXPENDITURE › Capex at €735m  11% lower than prior year  Store openings and renovations  IT spending, mainly at YOOX NET-A- PORTER GROUP €735m €826m Cartier – Chinaworld, Beijing Distribution 44% 40% 9% Manufacturing 13% 5.9% 5.2% 51% Other 43% FY20 FY20 FY19 FY19 FY20 FY19 FY19 FY18

38. Slide 38: Free Cash Flow

    FY20 FREE CASH FLOW › Free cash flow lower by €122m  Inclusion of IFRS 16 lease payments  Higher taxes 12 months €m FY20 FY19 Change Cash flow from operations 2 797 2 331 +466 Net change in tangible assets -568 -633 +65 Net change in intangible assets -165 -165 - Payments capitalised as right of u

39. Slide 39: Balance Sheet Strength

    BALANCE SHEET STRENGTH €30.4bn €30.4bn Fixed assets 40% 57% Total equity Other non-current assets 5% Inventory 22% Other current assets 4% 24% Non-current liabilities Investments in money market and externally 14% managed funds 19% Current liabilities Cash 15% Assets Equity and liabilities

40. Slide 40: Dividend

    DIVIDEND › Due to the ongoing Covid-19 pandemic and related lack of visibility, the Board believes it is prudent to reduce its dividend proposal to CHF1.00 per 1 A share/10 B shares › Potential equity-based shareholder loyalty scheme being considered

41. Slide 41: Conclusion

    Conclusion RICHEMONT

42. Slide 42: Digital Updates

    DIGITAL UPDATES Acceleration of the digital agenda of our Maisons  At YNAP, NET-A-PORTER re-platforming underway, MR PORTER successfully completed  In our Maisons, looking to have an e-commerce solution for all Maisons, expand into new markets and offer new services › Increased collaboration with

43. Slide 43: Conclusion

    CONCLUSION › Sales, operations and demand strongly impacted by Covid-19  Resilience of jewellery and clothing  Increased online penetration rate at our Maisons › Committed to safeguarding our people, brand equity, assets and partners › Restart measures  Gradual reopening of operations  Focusing

44. Slide 44: Richemont

    RICHEMONT

45. Slide 45: Appendix

    RICHEMONT

46. Slide 46: Financial Highlights

    FINANCIAL HIGHLIGHTS Sales Profit for the year Dividends € million € million CHF 1 A share/10 B shares CR HR ∆% ∆% FY20 14 238 0% +2% FY20 6.5% 931 -67% FY20 1.00 -50% FY19 +27% +27% FY19 FY19 13 989 19.9% 2 787 +128% 2.00 +5% FY18 11 013 +8% +3% FY18 FY18 11.1% 1 221 +1% 1.90 +6% FY17 10 647 -4% -4

47. Slide 47: Sales Highlights (Region)

    SALES HIGHLIGHTS (REGION) Europe Asia Pacific Americas € million CR € million CR € million CR FY20 4 298 +4% FY20 4 992 -6% FY20 2 806 +6% FY19 4 118 +37% FY19 5 243 +20% FY19 2 551 +40% FY18 3 019 -2% FY18 4 352 +17% FY18 1 806 +8% FY17 3 068 -8% FY17 3 903 0% FY17 1 781 +2% Japan Middle East and A

48. Slide 48: Sales Highlights (Channel)

    SALES HIGHLIGHTS (CHANNEL) Retail € million CR FY20 7 338 -2% FY19 7 320 +8% FY18 6 758 +14% FY17 6 389 +4% 19% Online retail € million CR FY20 2 646 +14% 51% Retail FY19 2 262 NR FY18 156 30% FY17 NR 0% Wholesale* Retail € million CR Online retail FY20 4 254 -5% Wholesale* FY19 4 407 +7% FY18 4 099

49. Slide 49: Sales Highlights (Product Line)

    SALES HIGHLIGHTS (PRODUCT LINE) Jewellery Watches € million CR € million CR FY20 5 205 0% FY20 4 816 -4% FY19 5 061 +11% FY19 4 930 +13% 3% 4% FY18 4 537 +15% FY18 4 368 +5% 10% 36% FY17 4 160 +7% FY17 4 340 -15% 13% Clothing Leather goods € million CR € million CR FY20 1 792 +12% FY20 1 415 -1% 34%

50. Slide 50: Sales Highlights (Business Area)

    SALES HIGHLIGHTS (BUSINESS AREA) Jewellery Maisons Specialist Watchmakers € million € million CR CR Chart Title FY20 7 217 0% FY20 2 859 -6% 12% FY19 7 083 +10% FY19 2 980 +10% 51% 17% FY18 6 452 +14% FY18 2 714 -2% FY17 5 927 -2% FY17 2 879 -11% 20% Online Distributors Other € million € million CR

51. Slide 51: IFRS 16

    IFRS 16 › Net present value of committed lease payments capitalised as right of use asset and lease liability › Income statement  Right of use asset depreciated; lease interest expense in finance costs  Positive like-for-like impact of c. €100m on operating profit › Cash flow statement  No impact

52. Slide 52: Hedging

    HEDGING › 70% of our forecasted net foreign currency cash flow exposure arising primarily in AED, CNY, HKD, JPY, SGD and USD is hedged vs. CHF and EUR › In the case of USD, the net exposure takes into account purchases of precious metals and precious stones › Realised and unrealised gains/losses on

53. Slide 53: Sales by Region and Business Area

    FY20 SALES BY REGION AND BUSINESS AREA Constant Actual % of 12 months €m FY20 FY19 rates* rates total Europe 4 298 4 118 +4% +4% 30% Asia Pacific 4 992 5 243 -6% -5% 35% Americas 2 806 2 551 +6% +10% 20% Japan 1 212 1 148 -1% +6% 8% Middle East and Africa 930 929 -3% 0% 7% Total sales 14 238 13 989

54. Slide 54: Operating Result by Business Area

    FY20 OPERATING RESULT BY BUSINESS AREA 12 months €m FY20 FY19* Change Jewellery Maisons 2 077 2 229 -7% Specialist Watchmakers 304 381 -20% Online Distributors -241 -99 -143% Other -141 -95 -48% Elimination -2 2 NR Operating results 1 997 2 418 -17% Valuation adjustments on acquisitions -196 -173 +1

55. Slide 55: Group Results

    FY20 GROUP RESULTS 12 months €m FY20 FY19 Change Sales 14 238 13 989 +2% Cost of sales -5 627 -5 344 +5% Gross profit 8 611 8 645 0% Net operating expenses -7 093 -6 702 +6% Operating profit 1 518 1 943 -22% Net finance costs -337 -183 +84% Share of equity-accounted investments' results 17 1 408 -99

56. Slide 56: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY at 31 March €m FY20 FY19 Non-current assets 13 660 10 761 Current assets 16 801 17 278 Non-current liabilities 7 327 4 697 Current liabilities 5 875 6 303 Equity attributable to owners of the parent company 17 136 16 951 Non-controlling interests 123 88 Equity 17

57. Slide 57: Retail Network

    RETAIL NETWORK 31 March 31 March Net change 2020 Internal Franchise 2019 Internal Franchise Total Internal Franchise Jewellery Maisons 457 321 136 399 288 111 +58 +33 +25 Cartier 270 203 67 266 198 68 +4 +5 -1 Van Cleef & Arpels 140 99 41 133 90 43 +7 +9 -2 Buccellati 47 19 28 0 0 0 +47 +19 +28 Spec

58. Slide 58: Main Product Launches

    FY20 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery  Clash  Romeo & Juliet – High Jewellery  La Panthère  Contes d’Hiver  Magnitude  Lucky Animals – new creations  Jasmin unique solitaire launch › Watches  Frivole and Perlée – new references  Santos Dumont and Santos Jewellery/Chrono  Alham

59. Slide 59: Main Product Launches

    FY20 MAIN PRODUCT LAUNCHES › Watches › Patrimony Perpetual Calendar PG blue dial  Possession paved › Overseas Tourbillon ST blue dial  Altiplano meteorite › Egérie Auto Moonphase PG silver dial  Gala precious › Jewellery  Possession bangles  Piaget sunlight  Piaget rose › Odysseus 24 › Zeitwer

60. Slide 60: Main Product Launches

    FY20 MAIN PRODUCT LAUNCHES › Master grande tradition Gyrotourbillon › Pilot's watches Spitfire, 7 references Westminster perpetuel › Pilot's watches TOP GUN, 4 references › Dazzling Rendez-Vous Moon › Portofino new models, 12 references › Reverso Tribute Small Seconds Burgundy › Submersible Bronzo 4

61. Slide 61: Main Product Launches

    FY20 MAIN PRODUCT LAUNCHES › Writing Instruments › Leather  Re-Launch StarWalker  Aby & Aby Lock  Meisterstück Le Petit Prince – The Aviator  Chloé C vanity bag  Patron of Art – Homage to Emperor Hadrian  Faye top handle bag & mini chain bag  High Artistry, A Celebration of the Taj Mahal  Da

62. Slide 62: At Richemont, we craft the future

    At Richemont, we craft the future Buccellati • Cartier • Van Cleef & Arpels • A.Lange & Söhne • Baume & Mercier • IWC • Jaeger-LeCoultre • Panerai • Piaget • Roger Dubuis • Vacheron Constantin • Watchfinder & Co. • YOOX NET-A-PORTER GROUP • Alaïa • Chloé • dunhill • Montblanc • Peter Millar • Purdey

Richemont — FY2020 Earnings Presentation on 6ix