Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — H1 FY2023 Earnings Presentation

45 slides from Compagnie Financiere Richemont Sa's earnings presentation, Sep 30, 2022

  1. Slide 1: FY23 Interim Results

    FY23 INTERIM RESULTS 30 SEPTEMBER 2022 At Richemont, We Craft the Future

  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: Definitions

    DEFINITIONS › yoy means year-on-year change vs six-month period ended 30 September 2021 › Movements at constant exchange rates are calculated by translating underlying sales in local currencies into euros in both the current period and the comparative periods at the average exchange rates applicable

  4. Slide 4: Agenda

    › Highlights › Sales › Business areas › Financials › Conclusion › Q&A › Appendix At Richemont, We Craft the Future

  5. Slide 5: Highlights

    Highlights At Richemont, We Craft the Future

  6. Slide 6: H1-23 Key Figures (Continuing Operations)

    H1-23 KEY FIGURES (CONTINUING OPERATIONS) Sales* › Double-digit increase in sales: +16% at constant In € million exchange rates; +24% at actual exchange rates Sept 22 9 676 Sept 21 7 787 › Operating profit up 26% to €2.7bn translating into a Operating profit* 28.1% operating margin, up 30bps In € mi

  7. Slide 7: H1-23 Highlights

    H1-23 HIGHLIGHTS › Strong broad-based sales growth  Double-digit sales increases across all business areas, channels and regions (excluding Asia Pacific up 3%) at actual rates  The Americas, Europe and Japan outperforming  Growth led by retail  All business areas performing well › Strong operati

  8. Slide 8: Sales

    Sales At Richemont, We Craft the Future

  9. Slide 9: H1-23 Sales by Region

    H1-23 SALES BY REGION % of sales, % change at actual rates, % change at constant rates 22% +45% +45% Europe › Strong double-digit growth in 8% Japan almost all regions 23% +66% +76% +40% 8% 39% +22% +25% +3% › Largest contribution to sales Americas Middle +12% -5% Asia Pacific increase from the Amer

  10. Slide 10: H1-23 Sales by Distribution Channel

    H1-23 SALES BY DISTRIBUTION CHANNEL › Retail: strongest channel performance, with double-digit increases across all business areas; largest contributor to Group sales › Online retail: growth across all business areas, led by superior growth at the Specialist Watchmakers › Wholesale: higher sales dri

  11. Slide 11: H1-23 Direct-to-Client (DTC) Sales

    H1-23 DIRECT-TO-CLIENT (DTC) SALES Retail Online retail 70% 7% 65% 6% 5% 60% 4% 55% 3% 50% 2% › Majority of Group sales 45% 1% directly with end-clients 40% 0% Sept 21 Sept 22 Sept 21 Sept 22 › DTC rate up +240bps over prior-year period DTC H1-23 DTC rate by business area* › Highest penetration rate

  12. Slide 12: Business areas

    Business areas At Richemont, We Craft the Future

  13. Slide 13: H1-23 Performance – Jewellery Maisons

    H1-23 PERFORMANCE – JEWELLERY MAISONS › Sales higher by 24%  Double-digit growth in almost all 21% regions, led by Europe and Japan +55% Europe  Strong direct-to-client sales 10% 22% +76% Japan +34% › Operating result up 22% to €2.35bn Americas 9% +20% 38%, +3%  Strong achievement given Middle Ea

  14. Slide 14: H1-23 Jewellery Maisons

    H1-23 JEWELLERY MAISONS › Excellent performance of iconic collections  Jewellery: Trinity and Clash (Cartier); Alhambra and Fauna (Van Cleef & Arpels); Opera Tulle and Macri (Buccellati)  Watches: Tank and Santos (Cartier); Poetic Complications (Van Cleef & Arpels) › Further retail development wit

  15. Slide 15: H1-23 Performance – Specialist Watchmakers

    H1-23 PERFORMANCE – SPECIALIST WATCHMAKERS › Sales up by 22%  Double-digit growth across almost all 21% regions +46% Europe  Major progression in direct-to-client 15% 6% +63% Japan sales to 54% +57% Americas 6% 52%, +4% › Operating margin of 24.8%, up 240bps Middle +35% Asia Pacific East &  Solid

  16. Slide 16: H1-23 Specialist Watchmakers

    H1-23 SPECIALIST WATCHMAKERS › Ongoing strong performance of iconic collections including Vacheron Constantin Overseas, Panerai Submersible, A. Lange & Söhne Lange1, Baume & Mercier Riviera › Direct-to-client sales share increased to 54% with further retail network development and e-commerce activat

  17. Slide 17: H1-23 Performance – Other

    H1-23 PERFORMANCE – OTHER › Sales growth of 27%  Growth in all regions, led by the Americas and Middle East & Africa 33% +20%  Notable recognition from wholesale Europe 6% +17% Japan buyers 36% +50% 20% 5% › Operating result of €56m +8% Americas +55% Asia Middle Pacific  Good cost control % of sa

  18. Slide 18: H1-23 Other – Fashion & Accessories

    H1-23 OTHER – FASHION & ACCESSORIES › Strong contribution from:  New collections: Alaïa Summer/Fall 22, Chloé Fall 22, Montblanc Extreme leather  Clothing: G/Fore (Peter Millar); Leather goods: Nama (Chloé), Lingot Small (Delvaux); Writing instruments: Meisterstück (Montblanc) › Retail network upg

  19. Slide 19: Financials

    Financials At Richemont, We Craft the Future

  20. Slide 20: H1-23 Gross Profit

    H1-23 GROSS PROFIT › Gross profit up 27% › Gross margin up 140bps to 68.9%  Favourable currency movements, geographical and channel mix  Higher input costs partly offset by price increases +1.4ppt 68.9% 67.5% H1-22* Fx Impact Country/ Capacity utilisation H1-23 Channel/ Product and Other Mix & Pri

  21. Slide 21: H1-23 Operating Expenses

    H1-23 OPERATING EXPENSES › Operating expenses, 28% higher  Higher retail sales and larger retail +28% operations impacting S&D expenses +1 3 944 +29 +152  Strategic communication +201 investments to support sales +469  Increase in administrative expenses 3 092 aligned with sales OPEX › Representi

  22. Slide 22: H1-23 Operating Profit

    H1-23 OPERATING PROFIT › Operating profit increased 26%  Higher sales and gross profit  Controlled operating expenses  Operating margin up 30bps to 28.1% Constant 6 months €m Sept 22 % of sales Sept 21* % of sales Change rates Sales 9 676 7 787 +24% +16% Gross profit 6 667 68.9% 5 260 67.5% +27%

  23. Slide 23: H1-23 Net Finance Costs

    H1-23 NET FINANCE COSTS › Improved net finance costs  €150m reversal in net foreign exchange gain on monetary items  €88m reduction in non-cash fair value losses on financial instruments  Partly offset by €60m increased net losses on hedging activities 6 months €m Sept 22 Sept 21* Change Financia

  24. Slide 24: Discontinued Operations

    DISCONTINUED OPERATIONS › YNAP now presented under ‘discontinued operations’  24 August 2022 announcement of agreement with Farfetch and Alabbar  Balance sheet items moved to ‘assets held for sale’ and ‘liabilities held for sale’  Income statement items moved to ‘discontinued operations’ › €2.9bn

  25. Slide 25: H1-23 Profit/Loss

    H1-23 PROFIT/LOSS › Profit for the period from continuing operations rose 40% reflecting a higher operating profit › Profit margin from continuing operations up 250bps to 21.8% › Loss for the period due to €2.9bn loss from discontinued operations 6 months €m Sept 22 Sept 21* Change Operating profit

  26. Slide 26: H1-23 Cash Flow from Operating Activities

    H1-23 CASH FLOW FROM OPERATING ACTIVITIES › Cash flow from operating activities lower by €241m  Higher operating profit  Partly offset by additional investments in working capital and higher level of receivables due to strong sales 6 months €m Sept 22 Sept 21* Change Operating profit from continui

  27. Slide 27: H1-23 Capital Expenditure

    H1-23 CAPITAL EXPENDITURE › Capex of €377m, 3.5% of sales  Investments in store network and technology  Manufacturing spend at the Jewellery Maisons €377m Cartier – Fifth Avenue, New York Retail 47% €272m 48% 3.5% Manufacturing 19% 3.1% 13% Other 34% 39% Sept 22 Sept 21 Sept 2222 Sept Sept 21 21 S

  28. Slide 28: H1-23 Free Cash Flow

    H1-23 FREE CASH FLOW › Free cash flow of €808m  Lower cash flow from operating activities  Increase in capex  Partly offset by lower acquisitions of other non-current assets (prior-year period included Farfetch China investment) 6 months €m Sept 22 Sept 21 Change Cash flow from operating activiti

  29. Slide 29: Balance Sheet Strength

    BALANCE SHEET STRENGTH €39.6bn €39.6bn Fixed assets 19% Other non-current assets 6% 46% Total equity Inventory 18% Other current assets 5% Investments in money market and externally 17% 24% Non-current liabilities managed funds Assets held for sale 10% 26% Current liabilities Cash 25% 4% Liabilities

  30. Slide 30: Conclusion

    Conclusion At Richemont, We Craft the Future

  31. Slide 31: Advancing Our ESG Goals

    ADVANCING OUR ESG GOALS › Environment  On track to source 100% renewable electricity before the end of 2025  10% energy reduction plan implemented in offices and boutiques across Europe  Biodiversity strategy upgrade to be finalised in 2023 › Social  Improved supplier code of conduct and standar

  32. Slide 32: Farfetch / Alabbar Partnership: Milestone in Our LNR Journey

    FARFETCH / ALABBAR PARTNERSHIP: MILESTONE IN OUR LNR JOURNEY › Rationale  Accelerate our Maisons’ ‘Luxury New Retail’ ambition  Turn YNAP into a neutral industry platform, highly attractive to clients and brands › Features  Most Richemont Maisons to power their e-commerce operations and “connect”

  33. Slide 33: Significant Transformation Since 2008

    SIGNIFICANT TRANSFORMATION SINCE 2008 › Step change in sales and profit 80% DTC › Increased direct-to-client sales to 73% with online reaching 6% of sales 60% 40% › Growing strength of jewellery, renewed strength of watches 20% › Enlarged offering in terms of price points and 0% 2008 H1-23 appeal to

  34. Slide 34: Well Positioned for Long-Term and Responsible Growth

    WELL POSITIONED FOR LONG-TERM AND RESPONSIBLE GROWTH › Strong operational and financial performance  Double-digit sales growth across all business areas and channels led to sales approaching the €10bn mark  Double-digit increase in operating profit to €2.7bn translated into an improved operating m

  35. Slide 35: Q&A

    Q&A At Richemont, We Craft the Future

  36. Slide 36: Appendix

    Appendix At Richemont, We Craft the Future

  37. Slide 37: H1-23 Financial Highlights

    H1-23 FINANCIAL HIGHLIGHTS Sales* Profit from continuing operations* Ordinary Dividends € million CR HR € million ∆% CHF 1 A share/10 B shares ∆% Sept 22 9 676 +16% +24% Sept 22 21.8% 2 105 +40% FY22 2.25 1.00 +13% Sept 21 7 787 +70% +68% Sept 21 19.3% 1 503 +295% FY21 2.00 +100% Sept 20 4 622 -25%

  38. Slide 38: Prior-Year Financials Represented

    PRIOR-YEAR FINANCIALS REPRESENTED › Unaudited data › Audited numbers for FY22 will be disclosed on 20 May 2023 €m H1-22* FY22* Sales 7 787 16 748 Gross profit 5 260 11 176 Gross margin 67.5% 66.7% Operating profit 2 168 3 753 Operating margin 27.8% 22.4% Profit for the period from continuing operati

  39. Slide 39: Strong Group ESG Leadership

    STRONG GROUP ESG LEADERSHIP ENVIRONMENT SOCIAL GOVERNANCE Sustainalytics 42M 10.7 in top 2% Community Investment spend (+17% vs. 2021) First Chief Sustainability First Product Social Impact Officer in 2022 Assessment for small scale gold mining Governance & Sustainability Board 3rd consecutive year

  40. Slide 40: H1-23 Sales by Product Line

    H1-23 SALES BY PRODUCT LINE Constant Actual 6 months €m Sept 22 Sept 21* rates rates Jewellery 4 661 3 777 15% 23% Watches 3 589 2 921 15% 23% Clothing 403 274 32% 47% Leather goods and accessories 467 362 23% 29% Writing instruments 233 191 14% 22% Other 323 262 16% 23% Total sales 9 676 7 787 16%

  41. Slide 41: H1-23 Operating Results by Business Area

    H1-23 OPERATING RESULTS BY BUSINESS AREA 6 months €m Sept 22 Sept 21* Change Jewellery Maisons 2 354 1 930 +22% Specialist Watchmakers 506 376 +35% Other 56 42 +33% Operating result 2 916 2 348 +24% Valuation adjustments on acquisitions -12 -15 -20% Corporate costs -181 -165 +10% Central support ser

  42. Slide 42: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY at 30 September €m 2022 2021 Non-current assets 10 349 14 291 Current assets 29 283 22 450 Non-current liabilities 9 553 9 435 Current liabilities 11 806 8 962 Equity attributable to owners of the parent company 18 219 18 271 Non-controlling interests 54 73 Equity

  43. Slide 43: H1-23 Retail Network

    H1-23 RETAIL NETWORK Net change Sept 22 Internal Franchise March 22 Internal Franchise Total Internal Franchise Jewellery Maisons 453 353 100 444 339 105 +9 +14 -5 Cartier 269 203 66 267 199 68 +2 +4 -2 Van Cleef & Arpels 142 114 28 139 108 31 +3 +6 -3 Buccellati 42 36 6 38 32 6 +4 +4 0 Specialist W

  44. Slide 44: 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 c

  45. Slide 45: 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 • Alaïa • AZ Factory • Chloé • Delvaux • dunhill • Montblanc • Peter Millar • Purdey • Serapian • Watchfin

Compagnie Financière Richemont — H1 FY2023 Earnings Presentation on 6ix