Compagnie Financiere Richemont Sa · SIX:CFR
Compagnie Financiere Richemont Sa — FY2018 Earnings Presentation
51 slides from Compagnie Financiere Richemont Sa's earnings presentation, May 2018
Slide 1: FY18 Annual Results
FY18 ANNUAL RESULTS AS AT 31 MARCH 2018
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
Slide 3: FY18 Results
FY18 RESULTS › Highlights › Review of Operations › Financial Review › Conclusion › Q&A Session
Slide 4: FY18 Key Figures
FY18 KEY FIGURES › Sales of €11bn: +8% at constant; +3% at actual rates Sales Increase of 7% at constant rates, excluding inventory in € million buy-backs in FY18 and FY17 FY18 10 979 FY17 10 647 Strong retail performance Operating profit › Operating profit of €1 844m, up 5% in € million FY18 16
Slide 5: Review of Operations
MAKES THE WORLD AND YOUR WRIST A BETTER PLACE. Review of Operations o Da Vinci Chronograph Edition Laureus Sport for Good Foundation». Wl Re RICHEMONT SCHAFFHAUSEN
Slide 6: Sales in Europe
FY18 SALES IN EUROPE › Slight decline in sales versus prior year Adverse impact from the strength of the euro Continued growth in the United Kingdom All product lines broadly in line or positive, with the exception of watches Subdued retail sales growth; decline in wholesale sales driven pri
Slide 7: Sales in Asia Pacific
FY18 SALES IN ASIA PACIFIC › Strong broad-based double digit growth across Main markets, notably China, Hong Kong, Korea and Macau Most product lines, notably jewellery and watches All distribution channels 9% 8% Europe Hong Kong 16% FY18 4 352 China 27% Rest of Asia FY17 3 903 Americas in €m
Slide 8: Sales in Americas
FY18 SALES IN AMERICAS › Sales growth of 8% Strong retail performance, driven by ›Jewellery and clothing ›Full-year impact of the reopened Cartier NY flagship store ›Strong online sales Inventory management initiatives weighed on wholesale performance 9% 8% Europe 16% Asia Pacific FY18 1 805 Ame
Slide 9: Sales in Japan
FY18 SALES IN JAPAN › Sales increased by 6% Softer comparative figures and favourable currency environment Good growth in jewellery, watches and retail more than offsetting decline in wholesale sales Full year contribution from the reopened Cartier and new Piaget and Van Cleef & Arpels flagshi
Slide 10: Sales in the Middle East and Africa
FY18 SALES IN THE MIDDLE EAST AND AFRICA › Sales up 2% Impacted by inventory buy-backs and geopolitical uncertainties Supported by higher tourist spending and internalisation of external points of sale Moderate growth in jewellery, watches and writing instruments 9% 8% Europe 16% Asia Pacific
Slide 11: Sales by Distribution Channel
FY18 SALES BY DISTRIBUTION CHANNEL › Retail, up 14% Double digit growth driven by strong performance in jewellery, watches and all regions, except Europe Six net store openings include internalisation of external points of sales › Wholesale, down 1% Impacted by watch inventory management initi
Slide 12: Sales by Product Line
FY18 SALES BY PRODUCT LINE › Broad based growth across product lines at constant rates 4% 4% 4% 41% Jewellery Double digit growth in jewellery in most 7% Watches regions; now the Group’s largest product line Leather goods Clothing Mid single digit increase in watch sales; strong Writing instrume
Slide 13: Segment Highlights
FY18 SEGMENT HIGHLIGHTS › Jewellery Maisons’ profitability strengthened, with operating margin increasing by 150bps to close to 30% › Specialist Watchmakers improved operating margin by 190bps while taking inventory management initiatives › Profitability in Other businesses impacted by a number of o
Slide 14: Performance – Jewellery Maisons
FY18 PERFORMANCE – JEWELLERY MAISONS › High single digit sales growth Strength in Asia Pacific, Americas and retail Strong growth in jewellery and watches (non-recurrence of FY17 buy-backs) › €244m increase in operating result Non-recurrence of €151m one–time charges in prior year Robust sal
Slide 15: Jewellery Maisons
FY18 JEWELLERY MAISONS › Solid, broad-based, jewellery sales › Growth in watch sales across price points and materials › Double digit increase in retail benefiting from internalisations and store openings at Cartier and Van Cleef & Arpels › Measured growth in wholesale reflecting a strengthened appr
Slide 16: Performance – Specialist Watchmakers
FY18 PERFORMANCE – SPECIALIST WATCHMAKERS › Decline in sales reflects €203m inventory buy-backs Double digit decrease in wholesale; Europe, the Americas and Middle East and Africa particularly impacted Partly offset by double digit increase in retail and growth in Asia Pacific › Improvement in o
Slide 17: Specialist Watchmakers
FY18 SPECIALIST WATCHMAKERS › Wholesale impacted by inventory management initiatives across almost all Maisons Inventory buy-backs Sell-in management Wholesale network optimisation › Strong retail across most Maisons driven by New aesthetics and broadened offer Strength of Piaget jewellery
Slide 18: Performance – Other
FY18 PERFORMANCE – OTHER › Sales broadly in line with prior year Growth in Europe and Asia Pacific Notable performance from Peter Millar Shanghai Tang out of scope from 1 July 2017 › Operating loss of €65m Excluding one-time items in both years (FY18: €37m net charge; FY17: €114m net gain),
Slide 19: Other
FY18 OTHER › Sales benefited from Montblanc’s solid growth in leather, new tech products and special editions in writing instruments Good growth of clothing at Dunhill and Peter Millar; first time collections under new creative directors at Dunhill and Chloé › Wholesale growth across most Maison
Slide 20: Financial Review
Van Cleef & Arpels Financial Review RICHEMONT
Slide 21: Gross Profit
FY18 GROSS PROFIT › Gross profit increased by 5%; gross margin at 65.1%, up 120bps Lower watch inventory buy-backs compared to prior year Favourable manufacturing capacity utilisation impact Larger share of retail 40bps negative currency impact FY18 7 150 FY18 65.1% +5% +120bps FY17 6 799 FY
Slide 22: Operating Expenses
FY18 OPERATING EXPENSES › Tight control of operating expenses +3% Selling and distribution 20% 5% increase on a reported basis Communications Administrative 58% Excluding the €178m real estate gain in -1% 21% +2% Other FY17, +2% reported and +6% at constant exchange rates › 48% of sales, broadly
Slide 23: Operating Profit
FY18 OPERATING PROFIT › Improved operating leverage with +5% in operating profit versus +3% in sales Gross margin leverage on sales, tight cost control Excluding one-time items in both years, operating profit up +10% 12 months €m FY18 FY17 Change Sales 10 979 10 647 +3% Gross profit 7 150 6 799
Slide 24: Net Finance Income and Costs
FY18 NET FINANCE INCOME AND COSTS › Broadly in line with prior year Gain on monetary items Reduced losses from the Group currency hedging programme Negative impact from fair value adjustments 12 months €m FY18 FY17 Change Financial income, net 4 10 -6 Net foreign exchange gains/(losses) on mon
Slide 25: Profit for the Year
FY18 PROFIT FOR THE YEAR › In line with prior year Increase in operating profit Higher effective tax rate 12 months €m FY18 FY17 Change Operating profit 1 844 1 764 +5% Net finance costs -150 -160 Share of post-tax results of equity-accounted -41 -34 investments Profit before taxation 1 653 1 57
Slide 26: Cash Flow from Operations
FY18 CASH FLOW FROM OPERATIONS › Strong improvement of cash flow from operations includes positive impacts from Higher operating profit Favourable working capital movement, particularly in inventory and creditors Non-recurrence of prior year’s €268m UK pension plan contribution 12 months €m FY
Slide 27: Capital Expenditure
FY18 CAPITAL EXPENDITURE › Capex spend at €487m, now 4.4% of Group sales › Focus on store refurbishments and relocations €487m €599m Cartier – Tokyo, Roppongi Distribution 53% 50% 5.6% 4.4% Manufacturing 18% 21% Van Cleef & Arpels - Munich Other 29% 28% FY18 FY17 FY18 FY17 as a % of sales as a % of
Slide 28: Free Cash Flow
FY18 FREE CASH FLOW › Increase in free cash flow resulting from Strong cash flow from operations Acquisition of Dufry stake and investment properties 12 months €m FY18 FY17 Change Cash flow from operations 2 723 1 896 +827 Net change in tangible assets -436 -521 +85 Net change in intangible asse
Slide 29: Balance Sheet Strength
BALANCE SHEET STRENGTH €25.6bn €25.6bn Fixed assets 13% Other non-current assets 11% 57% Total equity Inventory 19% Other current assets 4% Investments in money market and externally 20% managed funds 18% Non-current liabilities Cash 33% 25% Current liabilities Assets Equity and liabilities
Slide 30: Dividends
DIVIDENDS › FY18 dividend of CHF1.90 per 1 A share/10 B shares › Increase of 6% in CHF terms
Slide 31: Strategic Direction & Conclusion
Strategic g Direction & Conclusion
Slide 32: FY 2018 in Summary
FY 2018 IN SUMMARY › Double digit growth in retail and in Asia Pacific, led by all main markets China, Hong Kong, Macau and Korea › Solid sales of jewellery, now the Group’s largest product line › Resilient watch sales, with strong retail sales and significant wholesale inventory control measures ›
Slide 33: Conclusion
CONCLUSION › Long-standing commitment to doing business responsibly › Well-positioned and unique portfolio of Maisons › Ability to seize long-term growth opportunities thanks to strong balance sheet › Sharpened focus on clients, talents and stakeholders
Slide 34: Q&A Session
Q&A Session
Slide 35: Appendix
Appendix RICHEMONT
Slide 36: Financial Highlights
FINANCIAL HIGHLIGHTS Sales Profit for the year Dividends € million € million CHF 1 A share/10 B shares CR HR ¨ ¨% FY18 +8% +3% FY18 11.1% 1 221 +1% FY18 1.90 +6% 10 979 FY17 -4% -4% -4% FY17 11.4% 1 210 -46% FY17 1.80 +6% 10 647 FY16 FY16 20.1% 2 227 +67% FY16 1.70 11 076 -1% +6% +6% FY15 FY15 12.8%
Slide 37: Sales Highlights (Region)
SALES HIGHLIGHTS (REGION) Europe Asia Pacific Americas € million € million CR CR € million CR FY18 -3% 2 986 -2% FY18 +12% 4 352 +17% FY18 +1% 1 805 +8% FY17 -9% 3 068 -8% FY17 -1% 3 903 0% FY17 +2% 1 781 +2% FY16 +10% 3 388 +10% FY16 -4% 3 937 -13% FY16 +10% 1 745 -1% FY15 FY15 +13% 1 588 +8% +6% 3
Slide 38: Sales Highlights (Product Line and Segment)
SALES HIGHLIGHTS (PRODUCT LINE AND SEGMENT) Watches Jewellery Leather goods € million € million € million CR CR CR FY18 +1% 4 368 +5% FY18 +9% 4 537 +15% FY18 +0% 780 +4% FY17 -15% 4 340 -15% FY17 +7% 4 160 +7% FY17 +12% 779 +11% FY16 -1% 5 098 -8% FY16 +17% 3 881 +8% FY16 -1% 698 +9% FY15 +1% 5 168
Slide 39: Product Line Highlights
PRODUCT LINE HIGHLIGHTS % sales growth vs FY17 Actual rates 14 12 10 Jewellery 8 6 4 2 Watches 0 Writing instruments -2 Leather goods -4 Clothing -6 -8 -10 Other -12
Slide 40: Voluntary Tender Offer for YNAP
VOLUNTARY TENDER OFFER FOR YNAP › Strategic rationale Strengthen YNAP’s leading position in online luxury retailing Accelerate Richemont’s move into digital and e-commerce › Current status Exceeded minimum acceptance level, with 94.999% of ordinary shares on 9 May 2018 Settlement of tender o
Slide 41: 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
Slide 42: Sales by Region and Segment
FY18 SALES BY REGION AND SEGMENT Constant Actual % of 12 months €m FY18 FY17 rates* rates total Europe 2 986 3 068 -2% -3% 27% Asia Pacific 4 352 3 903 +17% +12% 40% Americas 1 805 1 781 +8% +1% 16% Japan 980 1 010 +6% -3% 9% Middle East and Africa 856 885 +2% -3% 8% Total sales 10 979 10 647 +8% +3
Slide 43: Operating Result by Segment
FY18 OPERATING RESULT BY SEGMENT 12 months €m FY18 FY17 Change Jewellery Maisons 1 926 1 682 +15% Specialist Watchmakers 262 226 +16% Other -65 110 NR Operating result 2 123 2 018 +5% Corporate costs -279 -254 +10% Central support services -233 -234 -0% Other operating expense -46 -20 NR Operating r
Slide 44: Group Results
FY18 GROUP RESULTS 12 months €m FY18 FY17 Change Sales 10 979 10 647 +3% Cost of sales -3 829 -3 848 -0% Gross profit 7 150 6 799 +5% Net operating expenses -5 306 -5 035 +5% Operating profit 1 844 1 764 +5% Net finance costs -150 -160 Share of post-tax results of equity-accounted investments -41 -3
Slide 45: Summary Balance Sheet and Inventory
SUMMARY BALANCE SHEET AND INVENTORY at 31 March €m 2018 2017 Non-current assets 5 974 5 727 Current assets 19 584 14 433 Non-current liabilities 4 605 731 Current liabilities 6 315 3 900 Equity attributable to owners of the parent company 14 631 15 529 Non-controlling interests 7 0 Equity 14 638 15
Slide 46: Retail Network
RETAIL NETWORK 31 March 31 March Net change 2018 Internal Franchise 2017 Internal Franchise Total Montblanc 589 273 316 573 +1 +15 +16 Cartier 272 200 72 283 -2 -9 -11 Chloé 193 112 81 167 +15 +11 +26 Van Cleef & Arpels 129 87 42 124 +4 +1 +5 Alfred Dunhill 92 87 5 99 -3 -4 -7 Piaget 92 68 24 95 0 -
Slide 47: Main Product Launches
FY18 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery Résonance – High Jewellery Le Secret - High Jewellery Etincelle Frivole Cluster Pluie d’été Perlée pearls of gold, new references Cactus de Cartier, new references Lucky Animals Juste un Clou, new references › Watches Ecrou de Ca
Slide 48: Main Product Launches
FY18 MAIN PRODUCT LAUNCHES › Watches › Métiers d’Art Copernicus Celestial Spheres Limelight Gala 26mm › Traditionnelle minute repeater tourbillon Altiplano 60th anniversary › Traditionnelle and Historiques, new references Piaget Polo S on leather strap › Patrimony moon phase & retrograde › Jew
Slide 49: Main Product Launches
FY18 MAIN PRODUCT LAUNCHES › Rendez Vous Moon, steel & pink gold › Da Vinci collection relaunch › Reverso One, steel › Ingenieur collection relaunch › Master Limited › Pilot’s Watch collection, new references › Luminor Submersible 1950 3 Days Automatic Oro › Classima, new references Rosso - 42mm › C
Slide 50: Main Product Launches
FY18 MAIN PRODUCT LAUNCHES › W Writing iti Instruments I t › Leather Meisterstück Unicef Faye Day Writers Edition Antoine de Saint-Exupéry Pixie Muses Edition Marylin Monroe Drew Bijou Great Character The Beatles Roy y › Watches Montblanc Summit smartwatch TimeWalker › Hard Produ
Slide 51: Richemont
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Compagnie Financière Richemont — FY2018 Earnings Presentation on 6ix