Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — Richemont — H1 FY2019 Earnings Presentation

50 slides from Compagnie Financiere Richemont Sa's earnings presentation, Nov 9, 2018

  1. Slide 1: FY19 Interim Results as at 30 September 2018

    FY19 INTERIM RESULTS AS AT 30 SEPTEMBER 2018

  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: H1-19 Results

    H1-19 RESULTS › Highlights › Review of Operations › Financial Review › Conclusion › Q&A Session

  4. Slide 4: H1-19 Key Figures

    H1-19 KEY FIGURES › Sales up 24% at constant rates; 21% at actual rates Sales* In € million › Online retail, now 14% of Group sales Sept 18 6 808 Sept 17 5 620 › Sales up 8% at constant rates and 6% at actual rates excluding Online Distributors Operating profit  Growth in most regions and all busin

  5. Slide 5: Review of Operations

    JAEGER-LECOULTRFs Review of Operations RICHEMONT

  6. Slide 6: Sales in Europe

    H1-19 SALES IN EUROPE › Sales increased by 28% overall › Increase of 1% excluding Online Distributors  Impact of disposal of Lancel  Varied performances by country  High single digit retail growth offsetting lower wholesale  Continued outperformance of jewellery +27% +28% 8% 7% Europe 18% 30% As

  7. Slide 7: Sales in Asia Pacific

    H1-19 SALES IN ASIA PACIFIC › Sales increased by 20% overall › Increase of 14% excluding Online Distributors  High single digit growth in mainland China; double digit increases in other main markets  Double digit increases in retail and wholesale  Strong growth in jewellery and watches +6% +20% 8

  8. Slide 8: Sales in Americas

    H1-19 SALES IN AMERICAS › Sales increased by 42% overall › Increase of 13% excluding Online Distributors  Higher sales in both retail and wholesale, with particular strength in retail  Broad based growth across all product lines and business areas +29% +42% 8% 7% Europe 18% Asia Pacific Americas 3

  9. Slide 9: Sales in Japan

    H1-19 SALES IN JAPAN › Sales increased by 14% › Increase of 8% excluding Online Distributors  Higher domestic and tourist spending  High single digit growth in retail and jewellery  Double digit growth in watches +6% +14% 8% 7% Europe +8% 18% Asia Pacific Americas 30% Japan Middle East and Africa

  10. Slide 10: Sales in the Middle East and Africa

    H1-19 SALES IN THE MIDDLE EAST AND AFRICA › Sales increased by 4% overall › Sales declined 4% excluding Online Distributors  Unsupportive local currencies and geopolitical uncertainties  Strong growth in writing instruments and clothing  Watches impacted by a reduction in wholesale points of sale

  11. Slide 11: Sales by Distribution Channel

    H1-19 SALES BY DISTRIBUTION CHANNEL › Retail up 13% Sept 17  Led by Asia Pacific, the Americas and Middle East 14% and Africa 52%  Strong increase in jewellery, watches and writing instruments 34% › Online retail Retail  YNAP, online sales of Watchfinder and Group Maisons Online retail Wholesale

  12. Slide 12: Sales by Product Line (incl. Online Distributors)

    H1-19 SALES BY PRODUCT LINE (INCL. ONLINE DISTRIBUTORS) › High-single digit growth in watches driven by 3% 4% strong end client demand 5% 37% Watches Jewellery › Double digit growth in jewellery 15% Clothing Leather goods › Strong increase in clothing, now the Group’s Writing instruments third large

  13. Slide 13: Performance – Jewellery Maisons

    H1-19 PERFORMANCE – JEWELLERY MAISONS › Sales increased by 9%  Broad-based growth across regions with double digit increases in Asia Pacific and the Americas  Strong growth in retail › Operating margin improved 280bps to 33.8%  Manufacturing efficiency gains  Continued investment in communicatio

  14. Slide 14: Jewellery Maisons

    H1-19 JEWELLERY MAISONS › Main product lines performed well at Cartier and Van Cleef & Arpels  Double digit growth in jewellery  High single digit increase in watches › Retail’s strong performance included the benefit of 8 net store openings › Wholesale sales impacted by continued optimisation of

  15. Slide 15: Performance – Specialist Watchmakers

    H1-19 PERFORMANCE – SPECIALIST WATCHMAKERS › Sales increase of 2%  Strong growth in Asia Pacific; varied in other regions  Double digit increase in retail more than offset lower wholesale sales › Lower operating margin of 18.5%  Impact of stock provisions for physical inventory returns  Partly m

  16. Slide 16: Specialist Watchmakers

    H1-19 SPECIALIST WATCHMAKERS › Performance varied across Maisons, regions and channels  Vacheron Constantin, Roger Dubuis, Jaeger LeCoultre, Lange & Söhne and Piaget outperformed  Good reception of the IWC 150 anniversary collection  Retail growth across all regions offset decline in wholesale in

  17. Slide 17: Performance – Online Distributors

    H1-19 PERFORMANCE – ONLINE DISTRIBUTORS › 5 months of YNAP, 4 months of Watchfinder  13% of Group sales  Includes sales of Richemont Maisons through YNAP › Loss resulted from  Amortisation of intangible assets recognised on acquisition  Investment in communication and enterprise platform 6 month

  18. Slide 18: Online Distributors

    H1-19 ONLINE DISTRIBUTORS › YNAP  Launch of online flagship stores (OFS) for Balmain and Azzedine Alaïa  Continued omni-channel roll-out for OFS  New The Vanguard offer to promote emerging fashion designers on NET-A-PORTER  New kidswear offer on NET-A-PORTER  NET-A-PORTER launched the Fine Jewe

  19. Slide 19: Performance – Other

    H1-19 PERFORMANCE – OTHER › Muted sales increase of 1% overall  Up mid-single digit excluding disposals of Lancel and Shanghai Tang  Growth in almost all regions, led by the Americas and Europe › Operating loss of €46m  One-time items of €58m related to Lancel disposal  Varied performances acros

  20. Slide 20: Other

    H1-19 OTHER › Sales increase at almost all Maisons  Healthy increases at Montblanc and Peter Millar, with Montblanc growth driven by leather goods and writing instruments  Chloé and Azzedine Alaïa strong growth partly supported by store openings › Retail sales growth impacted by  Divestments  Re

  21. Slide 21: Financial Review

    Financial Review RICHEMONT

  22. Slide 22: Gross Profit

    H1-19 GROSS PROFIT › Gross profit increased by 16% overall 4 256 3 955  Manufacturing efficiency gains  Larger share of retail  Supportive currencies €m 301 Excluding Online Group Online Distributors total Distributors › Gross margin impacted by acquisitions  Down 300bps to 62.5% 66.6% 62.5%  U

  23. Slide 23: Operating Expenses

    H1-19 OPERATING EXPENSES 5% › Operating expenses up 24% +34% Selling and Distribution 22% Communications  Excluding online distributors, increase of 8% 52% Fulfillment 3% Administrative  One-time items of €77m, mainly related to 18% Other +10% Lancel disposal +17%  Amortisation of intangible asse

  24. Slide 24: Operating Profit

    H1-19 OPERATING PROFIT › 3% decrease in operating profit  €159m of acquisition and disposal-related charges  Excluding Online Distributors, operating margin increased to 21.1% 6 months €m Sept 18 Sept 17* Change Sales 6 808 5 620 +21% Gross profit 4 256 3 680 +16% Net operating expenses -3 126 -2

  25. Slide 25: Net Finance Income and Costs

    H1-19 NET FINANCE INCOME AND COSTS › Net finance costs due to movement in period-end exchange rates  Loss on monetary items compared with gain in prior year period  Increase in interest expense, primarily due to €4bn corporate bond 6 months €m Sept 18 Sept 17 Change Financial (expense)/income, net

  26. Slide 26: Profit for the Period

    H1-19 PROFIT FOR THE PERIOD › Significant increase reflects post-tax non-cash accounting gain on existing YNAP shares › Excluding gain, a 10% decline following lower operating profit and reversal of net finance result 6 months €m Sept 18 Sept 17 Change Operating profit 1 130 1 166 -3% Net finance (c

  27. Slide 27: Cash Flow from Operations

    H1-19 CASH FLOW FROM OPERATIONS › Cash flow from operations of €733m, impacted by higher working capital requirements  Increase in inventories at the Maisons and YNAP  Reduction in creditors linked to March 2018 inventory buy-back programme 6 months €m Sept 18 Sept 17 Change Operating profit 1 130

  28. Slide 28: Capital Expenditure

    H1-19 CAPITAL EXPENDITURE › €118m increase in capex spend explained by  YNAP impact  Store renovations and relocations  Group logistics centre and IT infrastructure €279m €161m Cartier - Hong Kong, Peking Road Retail 39% 49% Manufacturing 7% 4.1% 14% 2.9% Van Cleef & Arpels - Xi’an, Shin Kong Pla

  29. Slide 29: Free Cash Flow

    H1-19 FREE CASH FLOW › Free cash flow increased by €134m › Lower cash from operations more than offset by lower net acquisitions 6 months €m Sept 18 Sept 17 Change Cash flow from operations 733 1 108 -375 Net acquisition of tangible assets -201 -136 -65 Net acquisition of intangible assets -63 -21 -

  30. Slide 30: Balance Sheet Strength

    BALANCE SHEET STRENGTH €28.8bn €28.8bn Fixed assets 31% 56% Total equity Other non-current assets 6% Inventory 21% Other current assets 5% 18% Non-current liabilities Investments in money 14% market and externally managed funds 26% Current liabilities Cash 23% Assets Equity and liabilities

  31. Slide 31: Conclusion

    Conclusion RICHEMONT

  32. Slide 32: Conclusion

    CONCLUSION › Strength of our Jewellery Maisons and online/offline stores › Resources allocated towards supporting our digital transformation › Strength of balance sheet › Confidence in long term prospects

  33. Slide 33: Q&A Session

    Q&A Session RICHEMONT

  34. Slide 34: Appendix

    IX Append sy Z 0 2 . i U iu

  35. Slide 35: Financial Highlights

    FINANCIAL HIGHLIGHTS Sales* Profit for the period* Dividends € million € million CHF/share CR HR ∆% ∆% Sept 18 6 808 +24% +21% Sept 18 2 253 NR Sept 18 n/a n/a 33.1% 0.00 Sept 17 5 620 +12% +10% Sept 17 17.3% 974 +17% Sept 17 n/a 0.00 n/a FY18 10 979 +8% +3% FY18 1 221 +1% FY18 +6% 11.1% 1.90 +6% FY

  36. Slide 36: Sales Highlights (Region)

    SALES HIGHLIGHTS (REGION) Europe* Asia Pacific* Americas* € million CR € million CR CR € million Sept 18 2 071 +28% Sept 18 2 548 +20% Sept 18 1 213 +42% Sept 17 1 637 +3% Sept 17 2 175 +25% Sept 17 891 +10% FY18 2 986 -2% FY18 4 352 +17% FY18 1 805 +8% FY17 3 068 -8% FY17 3 903 - FY17 1 781 +2% Jap

  37. Slide 37: Sales Highlights (Channel)

    SALES HIGHLIGHTS (CHANNEL) Retail* € million CR Sept 18 3 557 +13% Sept 17 3 229 +9% FY18 6 914 +14% FY17 6 389 +4% Sept 17 Online retail 14% € million CR Sept 18 959 NR 52% Retail Sept 17 64 Online retail 34% Wholesale FY18 0 FY17 0 Wholesale* € million CR Sept 18 2 292 +1% Sept 17 2 327 +11% FY18

  38. Slide 38: Sales Highlights (Product Line)

    SALES HIGHLIGHTS (PRODUCT LINE) Watches* Jewellery* € million CR € million CR 3% 4% Sept 18 2 491 +7% Sept 18 2 445 +15% 5% 37% Watches Jewellery Sept 17 2 387 +4% Sept 17 2 189 +14% 15% Clothing FY18 4 368 +5% FY18 4 537 +15% Leather goods Writing instruments FY17 4 340 -15% FY17 4 160 +7% Other Cl

  39. Slide 39: Sales Highlights (Business Area)

    SALES HIGHLIGHTS (BUSINESS AREA) Jewellery Maisons* Specialist Watchmakers* € million € million CR CR Sept 18 3 454 +12% Sept 18 1 550 +4% 13% 51% Sept 17 3 164 +15% Sept 17 1 527 +6% Jewellery Maisons 13% FY18 6 447 +14% FY18 2 714 -2% Specialist Watchmakers Online Distributors FY17 5 927 -2% FY17

  40. Slide 40: Hedging

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

  41. Slide 41: Sales by Region and Business Area

    H1-19 SALES BY REGION AND BUSINESS AREA Constant Actual % of 6 months €m Sept 18 Sept 17* rates** rates total Europe 2 071 1 637 +28% +27% 30% Asia Pacific 2 548 2 175 +20% +17% 37% Americas 1 213 891 +42% +36% 18% Japan 534 479 +14% +11% 8% Middle East and Africa 442 438 +4% +1% 7% Total sales 6 80

  42. Slide 42: Operating Result by Business Area

    H1-19 OPERATING RESULT BY BUSINESS AREA 6 months €m Sept 18 Sept 17 Change Jewellery Maisons 1 167 981 +19% Specialist Watchmakers 286 294 -3% Online Distributors -115 - NR Other -46 6 NR Elimination -6 0 NR Operating result 1 286 1 281 +0% Corporate costs -156 -115 +36% Central support services -11

  43. Slide 43: Group Results

    H1-19 GROUP RESULTS 6 months €m Sept 18 Sept 17* Change Sales 6 808 5 620 +21% Cost of sales -2 552 -1 940 +32% Gross profit 4 256 3 680 +16% Net operating expenses -3 126 -2 514 +24% Operating profit 1 130 1 166 -3% Net finance (costs)/income -47 72 NR Share of post-tax results of equity-accounted

  44. Slide 44: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY at 30 September €m 2018 2017 Non-current assets 10 503 5 935 Current assets 18 281 13 330 Non-current liabilities 5 130 649 Current liabilities 7 437 3 938 Equity attributable to owners of the parent company 16 131 14 677 Non-controlling interests 86 1 Equity 16 2

  45. Slide 45: Retail Network

    RETAIL NETWORK Net change Sept 18 Internal Franchise March 18 Internal Franchise Internal Franchise Total Jewellery Maisons 409 292 117 401 287 114 +5 +3 +8 Cartier 275 202 73 272 200 72 +2 +1 +3 Van Cleef & Arpels 134 90 44 129 87 42 +3 +2 +5 Specialist Watchmakers 474 290 184 460 284 176 +6 +8 +14

  46. Slide 46: Main Product Launches

    H1-19 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery  Coloratura – High Jewellery  Quatre contes de Grimm collection – High Jewellery  Reflection set XS  Bouton d’or, new references  Cactus, new references  Alhambra celebration (50th anniversary)  Panthère Sweet Demoiselle  Juste Un Clou SM 

  47. Slide 47: Main Product Launches

    H1-19 MAIN PRODUCT LAUNCHES › Watches › Overseas, new references  Limelight Gala, new references › Traditionnelle Collection Excellence Platine –  Altiplano Ultimate, new references Limited Editions pieces  Possession Watch, new references › Fiftysix, new collection › Jewellery  Possession, new

  48. Slide 48: Main Product Launches

    H1-19 MAIN PRODUCT LAUNCHES › Polaris Geographic, new references › Jubilee Collection launch › Rendez-Vous Date Quartz Small and › Pilot’s Watch, new references Medium › Reverso Tribute Tourbillon Duoface › Submersible BMG-TECH™ – 47mm › Classima, new references › Luminor Due Steel / Red gold – 38mm

  49. Slide 49: Main Product Launches

    H1-19 MAIN PRODUCT LAUNCHES › Writing Instruments › Leather  Meisterstück Le Petit Prince  Duke collection  Great Character JF Kennedy  Footwear  Writers Edition Homer  Patron of Art Ludwig › Watches  Star Legacy  Montblanc 1858 › Leather › Bags  My Montblanc Nightflight  Roy Bucket  Faye

  50. Slide 50: Richemont

    RI CHEMON T

Richemont — H1 FY2019 Earnings Presentation on 6ix