Compagnie Financiere Richemont SA · SIX:CFR
Compagnie Financiere Richemont SA — Richemont — FY2010 Earnings Presentation
78 slides from Compagnie Financiere Richemont SA's earnings presentation, May 2010
Slide 1: Annual Results FY10
Annual Results FY10 May 2010 Please ensure that your mobile phones and PDAs are switched off
Slide 2: Forward-looking statements
This document contains forward-looking statements as that term is defined in the United States Private Securities Litigation Reform Act of 1995. Words such as 'may', 'should', 'estimate', 'project', 'plan', 'believe', 'expect', 'anticipate', 'intend', 'potential', 'goal', 'strategy', 'target', 'will
Slide 3: Economic Highlights: improving trends but imbalances & volatility remain
Economic Highlights: improving trends but imbalances & volatility remain Worst recession since the 1940s Very difficult H1, followed by initial signs of recovery Yet, persistent uncertainty… Budget deficits / Sovereign debt: a major open issue Uncertainty & volatility still prevail Source: IMF Volat
Slide 4: Strategic Highlights: directions maintained, challenges met
Strategic Highlights: directions maintained, challenges met Group well prepared Strategic direction maintained through these challenging times Maisons’ equity protected Production slowed, integration level increased and resources protected Continued investments in systems alignments Wholesale distri
Slide 5: FY10 Financial Highlights
FY10 Financial Highlights Limited decline in sales 5 176m - 4% Contained decrease in operating profit 830m -14% & margin 16% - 190bps Relative resilience of net profit 603m - 18% from continuing operations Cash-flow from operations nearly doubled 1 464m + 80% Record net cash position 1 896m + 1 074m
Slide 6: Review of results
Review of results
Slide 7: FY10: a Year of Contrast
FY10: a Year of Contrast Reported sales (% change)
Slide 8: FY10 Sales in Europe
FY10 Sales in Europe Back to FY07 level Difficult H1 Improved H2, but no clear signs of recovery yet Prior years restated at constant rates
Slide 9: FY10 Sales in Asia Pacific
FY10 Sales in Asia Pacific Fifth consecutive year of double digit growth Barely affected by worldwide recession Momentum accelerating since August 09 Leading positions for most Maisons Prior years restated at constant rates
Slide 10: FY10 Sales in Americas
FY10 Sales in Americas Significant decline started in Nov 08, entirely due to the USA Sharp rebound in H2, but how much is due to “easy comps”? “Never underestimate” the USA Benefits from economic recovery & streamlined distribution network expected to materialise gradually Prior years restated at c
Slide 11: FY10 Sales in Japan
FY10 Sales in Japan Down -17% 12% of Group sales Soft landing in sight? Prior years restated at constant rates
Slide 12: FY10 Sales by Network
FY10 Sales by Network Resilience of retail, up 2% and now 46% of Group sales Volatility of wholesale Impacted by strong de-stocking and reduction in the number of external POS Stronger take off expected – driven by restocking Potential production shortages to be closely monitored Retail Wholesale Pr
Slide 13: Group results
Group results * * -5% at constant rates
Slide 14: Gross Profit
3074 3415 3417 3191 FY07 FY08 FY09 FY10 + 90 bps 63.7% Asa% of sales - 150 bps 63.1% FY07 / 61.6% FY08 FY09 FY10 RICHEMONT
Slide 15: Operating Expenses
Operating Expenses -4% +3% -21% + 1%
Slide 16: Operating Discipline Maintained
Operating Discipline Maintained Cost discipline maintained Selective increase in capex, e.g. store renovation Production increased; inventories closely monitored
Slide 17: FY10 Performance - Jewellery Maisons
FY10 Performance - Jewellery Maisons Limited decline in sales Contribution margin maintained at 28% Excellent performance of Cartier
Slide 18: FY10 Performance - Specialist Watchmakers
FY10 Performance - Specialist Watchmakers Very good overall performance Coherent portfolio of strong Maisons; great individual potential Excluding 2 loss makers, strong contribution margin > 20%
Slide 19: FY10 Performance - Writing Instrument Maison
FY10 Performance - Writing Instrument Maison Limited sales decline – Montblanc, a resilient “gift destination” Profit & profitability improved Prime positioning in China
Slide 20: FY10 Performance - Other
FY10 Performance - Other Contrasted performance Fashion & Accessories profitable and improving Production for third parties heavily impacted – loss making Chloé, good resilience A. Dunhill & Lancel, close to breakeven
Slide 21: Profit for the year
Profit for the year rn) 3 12 months Operating profit Net finance income! (costs) Profit before taxation Taxation Share of post taxation results of associates Profit from continuing operations Discontinued operations (net of tax) Profit for the year of which minority interest Taxation 15.7% 13.7% FY0
Slide 22: Cash-flow From Operations
Cash-flow From Operations Substantial increase in cash-flow from operations Significant decline in working capital
Slide 23: Fixed Assets Investments
Fixed Assets Investments Piaget – Hai Huai Road, Shanghai Montblanc – Heritage 1881, HK
Slide 24: Fixed Assets by Category
Fixed Assets by Category Cartier – AIA Plaza, Hong Kong IWC – Ion Orchard Turn, Singapore
Slide 25: Free Cash-flow
Free Cash-flow 12 months €m Cash-flow from operations Net change in fixed assets Net change in intangible assets Net change in subsidiaries and non-current assets Taxation paid Net interest (expense)lincome Free cash-flow from subsidiaries Dividends received from associated undertakings Total free c
Slide 26: Strong Balance Sheet
€7.7bn ykVA Total Equity Inventories Other Current Assets ST Investments 6% Non-Current Liablilities Current Liablilities Cash Assets Liabilities RICHEMONT
Slide 27: Dividends
Dividends FY10 dividend of CHF 0.35/share Up 17% from CHF 0.30/share in FY09 Policy of steady dividend growth in value, profit allowing
Slide 28: Strategy Overview & Conclusion
Strategy Overview & Conclusion
Slide 29: Positive Sales Momentum in April 2010
Positive Sales Momentum in April 2010 Easy comps’ Third party watch retailers starting to restock Asia-Pacific accelerating: +42%cc, +45% in Constant exchange rates Actual exchange rates
Slide 30: NET-A-PORTER: a strategic move into new distribution channels
NET-A-PORTER: a strategic move into new distribution channels Superior & unique business model created by Natalie Massenet: premier online luxury fashion retailer with unrivalled customer service We exercised our pre-emptive rights given third party interest A very well managed, profitable, customer
Slide 31: Our Long Term Values
Our Long Term Values Focusing on Maisons’ development Autonomy Creativity, authenticity Quality, craftsmanship & service Efficiency of the business model (shared services & platforms), allowing leverage & control Increasing control over distribution More retail More partnership, fewer partners Pione
Slide 32: Q&A Session
Q&A Session
Slide 33: Appendix: Financials
Appendix: Financials RICHEMONT
Slide 34: Financial Highlights
FY09 FY10 Gross Margin, € m 3074 63.1% Operating profit, € m 1118 21.1% FYO7 FY08 16.7% FY07 Taxation rates 16.9% 0 15.71% 13.7% FY08 Fyo09 FY10 789 16.3% FYO7 Net profit Luxury, € m 971 AY 134 18.4% 599 FY08 FY09 FY10 Net Cash, €m FY08 FY09 FY10 Free Cash flow, € m FY08 FY09 Return on operating ass
Slide 35: Hedging Policy
Hedging Policy Consistent application of hedging policy since April 2004 70% of our forecasted net foreign currency cash flow exposure arising in USD block, HKD, JPY is hedged versus the CHF and Euro In the case of the USD, the net exposure takes into account purchases of precious metals and diamond
Slide 36: Foreign Currency Hedging Contracts Average Rates against the CHF
Foreign Currency Hedging Contracts Average Rates against the CHF
Slide 37: Sales by Region
Russia 2% Japan Middle East 6% Americas 14% Western Europe 31% Asia-Pacific Other Europe 34% 1% 12 months Mar 10 Pe Constant rates - 20% -17% “5% RICHEMONT
Slide 38: Sales by product line
Sales by product line ~ constant & actual rates
Slide 39: Sales & Operating Result by Business Area
Sales & Operating Result by Business Area
Slide 40: Profit & Loss Account
Profit & Loss Account G) 3 12 months Cost of sales Net operating expenses Operating profit Net financial (costslincome) Share of post-tax results of associates Profit before taxation Taxation Profit from continuing operations Discontinued operations, net of tax Profit for the year Analysed as follow
Slide 41: Summary Balance Sheet
Summary Balance Sheet €m Fixed assets Other long term assets Net current assets Long term liabilities excluding borrowings Net operating assets Investment in associates Net assets Equity Shareholders’ equity Minority interests 4835 4835 RICHEMONT
Slide 42: Inventory
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Slide 43: Appendix: Maisons
Appendix: Maisons
Slide 44: Jewellery Maisons in FY10
Jewellery Maisons in FY10 High Jewellery Financial highlights Secrets & Merveilles Marginal decrease in sales & profitability following record sales & profitability in FY09 Broad-based double-digit growth in Asia-Pacific Operational highlights Cartier more than ever the reference in timeless and tru
Slide 45: Jewellery Maisons in FY10
Jewellery Maisons in FY10 Secrets et Merveilles Collection Constant upgrading of distribution 21 net boutique openings mostly in Asia-Pacific (o.w. 7 in China) led to a network of 286 stores Increased selectivity in wholesale network, notably in the US Key PR events Major exhibitions of the Cartier
Slide 46: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Fine Watchmaking Collection Apr 09 Jeddah UAE New Baignoire Jun 09 Mar 09 Santos 100 Carbon Jun 09 HK Heritage 1881 Hong Kong Miss Pasha Nov 09 Jun 09 Tank Solo Steel - Collection les Must Nov 09 Orchard Ion,
Slide 47: Jewellery Maisons in FY10
Jewellery Maisons in FY10 Pacific Grove necklace, Financial highlights California Rêverie Lower sales, after record revenue & profitability in FY09 Good performance of Asia-Pacific and the Middle East; Europe and the US confronted with challenging environment Europe particularly affected by very tou
Slide 48: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 High Jewellery Openings Eternal Pearls Apr 09 Shanghai China Le Quattro Stagioni Jun 09 May 09 California Rêverie Oct 09 HK Heritage 1881 - Kowloon Hong Kong Papillons Oct 09 Jun 09 744 Fifth Avenue Dec 09 Milan Italy Jun 09
Slide 49: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Altiplano 43 mm Financial highlights Excellent performance: higher sales and profit Robust growth in retail and in Asia-Pacific – now over 60% of sales – mitigated by declines elsewhere Effective take-over of agent in China/Korea and retail strategy Success of the Polo
Slide 50: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Twice Nov 09 HK Heritage 1881 + Piaget Time Gallery Hong Kong Jun 09 Piaget Emperador Coussin Regulator Nov 09 Hyunday Coex Seoul Piaget Emperador Coussin Big Moon Nov 09 Nov 09 Piaget Emperador Big Moon Dec
Slide 51: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial highlights Very satisfactory performance after excellent FY10 Higher sales thanks to strong growth in Asia-Pacific (leadership in China) Very good profitability level, in line with FY09 Operational highlights Numerous product line successes The iconic Patrimo
Slide 52: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings HK Heritage 1881 - Kowloon Hong Kong Patrimony Traditionelle 38mm (new caliber 4400) Apr 09 Sep 09 Historiques American 1921 Apr 09 Shenzhen China Mar 10 Overseas self-winding & Chronograph May 09 Métiers d‘A
Slide 53: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial & Operational highlights Achievements in spite of challenging FY10 (sales/profit) Europe (>40% of sales), higher sales since November Asia- Pacific, up double digit versus FY09 The Richard Lange “Pour le Mérite”, a watch with a fusée-and-chain transmission, a
Slide 54: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings / Renovations Richard Lange Pour le Mérite pink gold / platinum July 09 None Lange Zeitwerk in gold / platinum Sept 09 Saxonia Annual Calendar Apr 10 1815 Chronograph Apr 10 Lange Double Split in pink gold Ap
Slide 55: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial highlights Positive impact on sales of recent redeployment following the acquisition of Asian distribution rights in April 2009 Still significant losses partly attributable to post acquisition restructuring Operational highlights Product offer being revisited
Slide 56: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Excalibur Double Tourbillon Skeleton Sept 09 Shanghai China Sep 09 Kingsquare Chronograph Oct 09 EasyDiver – hours, minutes & small seconds Apr 10 Hong Kong China Oct 09 Excalibur Double Tourbillon Skeleton (
Slide 57: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial highlights Decline in sales & profit contained thanks to strong growth in retail and resilience of Asia-Pacific Europe (>50% of sales) affected by lower wholesale sales Operational highlights Product lines update Good sales performance of Iconic lines (Revers
Slide 58: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Master Grande Ultra Thin Apr 09 Cannes France May 09 Grande Reverso Jun 09 Master Compressor Diving GMT lady céramique Aug 09 Buenos Aires Argentina Oct 09 AMVOX 3 Tourbillon GMT Aug 09 Hong Kong HC HK Compre
Slide 59: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial highlights Satisfactory performance after record sales in FY09 Portuguese Strong sales in Asia-Pacific, limited decline in the US Chronograph Good level of profitability driven by: Resilience of iconic Pilot and Portuguese lines Great offer in the steel segme
Slide 60: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Ingenieur Mission Earth Jun 09 HK Heritage 1881 - Kowloon Hong Kong Jun 09 Da Vinci Perpetual Calendar Digital Jun 09 Ion Orchard Road, Singapore Singapore Aquatimer Automatic / Chrono July 09 July 09 Nobless
Slide 61: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial highlights Sales decline resulting from: Termination of the Ferrari licence Europe (>40% of sales) down - but rather resilient Contained sales decline and effective cost control led to a high profit margin Operational highlights Continued success of the Manif
Slide 62: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Luminor Marina 1950 3 Days Automatic, 44mm Apr 09 Doha Qatar Luminor Chrono Daylight Titanium, 44mm Sep 09 Nov 09 Luminor 1950 Chrono Monopulsante 8 Days Ceramic, 44mm Sep 09 Geneva Switzerland Dec 09 Radiomi
Slide 63: Specialist Watchmakers in FY10
Specialist Watchmakers in FY10 Financial highlights A tough year High exposure to Europe & US customers 100% wholesale exposure Highly competitive segment Significant loss, partly due to restructuring charges Strategic directions Marketing & distribution strategy revisited under the new CEO Hampton
Slide 64: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Renovations New Hampton Geneva Switzerland Oct 09 - XL Automatic open balance Apr 09 - Small and XL Quartz Apr 09 Riviera Flyback automatic 45mm Jun 09 William Baume - Tourbillon 43mm Sept 09 - XL Manual Ultra-thin si
Slide 65: Montblanc Maison in FY10
Montblanc Maison in FY10 Financial highlights Sales decline contained to 6% despite Relatively high exposure to the local European and North American clientele more sensitive to economic slowdowns Continued downsizing of wholesale network and closure of 18 DOS Higher profit & profitability, despite
Slide 66: Montblanc Maison in FY10
Montblanc Maison in FY10 Watch competence & appeal further strengthened Success of Star Nicholas Rieussec watch (in house movement) supported growth of watch category Increased interest generated by the Haute Horlogerie Collection Villeret 1858 Strong creativity & exclusive in house movements underl
Slide 67: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Watches Openings Rieussec Automatic Steel July 09 Red Sea Mall, Jeddah Saudia Arabia TimeWalker Gold Ceramic Sept 09 Apr 09 Star 4810 Chronograph Automatic Dec 09 HK Heritage 1881 - Kowloon Hong Kong July 09 Sport Black DLC D
Slide 68: Other: Fashion & Accessories in FY10
Other: Fashion & Accessories in FY10 Financial highlights Decline in sales contained thanks to the performance of leather & menswear and resilience of retail (up on prior year) Single digit growth in Asia-Pacific (c.60% of sales) mitigated by Japan (c.25% of sales) Breakeven maintained in core busin
Slide 69: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Men Leather Goods Openings Chassis (Small Leather Goods) Aug 09 HK Heritage 1881 - Kowloon Hong Kong Jun 09 Heist Traveller (Large Leather Goods) Aug 09 Micro D8 (Large & Small) Aug 09 Hangzhou Tower China Dec 09 Facet (Large
Slide 70: Other: Fashion & Accessories in FY10
Other: Fashion & Accessories in FY10 Financial highlights Strategic repositioning continues and is starting to bear fruit Strong reported sales reflect growth in retail (double digit) and w/s (single d) Solid performance in France (c.3/4 of total sales) and China Strong sales growth across all produ
Slide 71: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Ladies Handbags Openings Angelina by Lancel Jun 09 Tokyo Japan Jun 09 Roll‘n Rock Oct 09 Shanghai West Gate Mall China Jun 09 La Belle Dec 09 HK Heritage 1881 - Kowloon Hong Kong Nov 09 Dolcetta Feb 10 Paris Line Feb 10 Renov
Slide 72: Other: Fashion & Accessories in FY10
Other: Fashion & Accessories in FY10 Financial highlights Good resilience from Japan, Asia-Pacific and retail led to limited decline in sales Costs and capex controlled with no new internal store in FY10. 3 new franchised stores in Mainland China, and 1 in Beirut Profitability maintained, albeit at
Slide 73: Main Product Launches & Store Openings/Renovations
Main Product Launches & Store Openings/Renovations April 2009 – April 2010 Leather Goods Openings Marlow bag July 09 Beirut Lebanon Oct 09 Marcie bag Dec 09 Paris – Le Printemps France Dec 09 Chloé shoes, Fall/Winter 2009-10 Jun 09 See by Chloé shoes, Fall/Winter 2009-10 July 09 Renovations/Relocati
Slide 74: Retail Network
Retail Network March 2010 of which internal March 2009 | Otherss 18 4 ET 7 TOTAL 1399 817 +20 +9 1370 Internal 817 +20 797 External 582 +9 573 RICHEMONT
Slide 75: Retail Network China
Retail Network China As at 31 March 2010 Alfred Dunhill Montblanc Cartier Chloé Piaget Shanghai Tang IWC Lancel Vacheron Constantin Van Cleef & Arpels Jaeger-LeCoultre Panerai Roger Dubuis A. Lange & Sohne Baume & Mercier 13 10 ose Co OSB ON NO HEH EN @ eos se a Ny BNP BA Bh wO RN ON Boutiques Other
Slide 76: Retail Network Russia & CIS Countries
Retail Network Russia & CIS Countries
Slide 77: The Hallmark of Geneva – Le poinçon de Genève
The Hallmark of Geneva – Le poinçon de Genève 1. "The quality of all parts and components of the movement, including those used for auxiliary mechanisms, must comply with the standards prescribed by the Office for the optional inspection of Geneva watches. Steel parts must display polished angles an
Slide 78: Richemont
RI CHEMONT