Compagnie Financiere Richemont Sa · SIX:CFR
Compagnie Financiere Richemont Sa — FY2015 Earnings Presentation
63 slides from Compagnie Financiere Richemont Sa's earnings presentation, May 22, 2015
Slide 1: FY15 Annual Results
FY15 Annual Results As at March 31, 2015
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: FY15 Results
FY15 Results Highlights Review of Operations Financial Review Strategic Directions & Conclusion Q&A Session Piaget Rose Passion
Slide 4: FY15 highlights
Sales, € m FY15 highlights 10 410 10 023 Volatile and contrasted forex impacts FY14 FY15 Operating profit, € m Modest sales growth of 4% on a reported basis (+1% cc) 2 670 25.6% Solid in the Western Hemisphere, Middle-East 2 427 24.2% Difficult in most Asian markets FY14 FY15 Operating pro
Slide 5: Review of Operations
Review of Operations Excluding Net-a-Porter Extremely Piaget necklace
Slide 6: FY15 sales in Europe
FY15 sales in Europe Rebound in H2 benefiting from Increased tourism driven by weak euro Continued resilience of domestic clientele Good performance of the Jewellery Maisons, Specialist Watchmakers and Montblanc + 7% 3 067 2 886 % change at constant rates
Slide 7: FY15 sales in the Middle East and Africa
FY15 sales in the Middle East and Africa Double digit growth softening Lower tourism in Dubai Resilient domestic clientele Driven by the Jewellery Maisons, the Specialist Watchmakers and Chloé + 13% % change at constant rates
Slide 8: FY15 sales in Asia Pacific
FY15 sales in Asia Pacific Affected by HK and Macau China slowdown moderating, Taiwan and Australia growing double digit Main performers: Van Cleef & Arpels, IWC and Chloé % change at constant rates
Slide 9: FY15 sales in Americas
FY15 sales in Americas Sales growth softening to + 8% Predominance of domestic clientele partly compensating for lower tourism Solid performance of Van Cleef & Arpels, Jaeger-LeCoultre, Chloé and Peter Millar + 8% 1 588 1 405 % change at constant rates
Slide 10: FY15 sales in Japan
FY15 sales in Japan Sales down by 6% Decline limited by increased tourism from China Positive momentum at the Specialist Watchmakers and Montblanc - 6% % change at constant rates
Slide 11: FY15 sales by network
FY15 sales by network Excluding Net-a-Porter, Retail accounts for 52% of Group sales Stable Retail reflects temporary flagships closures, and weight of Japan, HK and Macau 42 net new stores and 35 internalisations +1% +1%
Slide 12: FY15 sales by product line
FY15 sales by product line Continued strength of Jewellery Clothing up, thanks to Chloé and Peter Millar Watches and leather under pressure Writing instruments back to growth 12 months €m FY15 FY14 Constant rates Actual rates Watches 5 168 5 125 - 2% + 1% Jewellery 3 325 3 025 + 7% + 10% Clo
Slide 13: FY15 Maisons highlights
FY15 Maisons highlights Mid-single digit reported sales growth and broadly stable operating margin at the Jewellery Maisons Mid-single digit reported sales growth and lower operating margin at the Specialist Watchmakers 2% reported sales growth at the Group’s other businesses, including Montbl
Slide 14: FY15 performance – Jewellery Maisons
FY15 performance – Jewellery Maisons Continued steady performance of jewellery compensates for mid-single digit decline at Cartier watches In this context, good operating contribution, up 4% Operating contribution margin maintained at a high level of 35% thanks to Cartier and further improveme
Slide 15: FY15 performance – Specialist Watchmakers
FY15 performance – Specialist Watchmakers Most Maisons showed robust growth 6% decrease in operating contribution reflects a challenging Asia Pacific and a strong Swiss franc Operating contribution margin maintained above 20%, at 23% of sales 12 months €m FY15 FY14 Actual rates Sales 3 123 2 9
Slide 16: FY15 performance – Other
FY15 performance – Other Significant underperformance of Alfred Dunhill and Lancel Operating losses of € 64m Reduced losses at the Group’s watch component manufacturing facilities 12 months €m FY15 FY14 Actual rates Sales 1 630 1 599 + 2% Operating contribution - 64 - 29 n/a Contribution margi
Slide 17: Financial Review
Financial Review Cartier “Pur absolu” diamond
Slide 18: FY15 operating profit
FY15 operating profit Reported operating profit up by 10%; underlying stable Operating expenses contained 12 months €m FY15 FY14 Annual change Sales 10 410 10 023 + 4% Gross profit 6 876 6 491 + 6% Net operating expenses - 4 206 - 4 064 + 3% Selling and distribution expenses - 2 554 - 2 309 + 11
Slide 19: FY15 gross profit
FY15 gross profit 6% gross profit increase outpaces sales growth Positive pricing power Higher share of Retail Negative forex € million as a % of sales 6 876 + 6% 6 491 66.1% + 130bps 64.8%
Slide 20: FY15 operating expenses
FY15 operating expenses Sharp CHF appreciation in Q4 Investments in distribution and organisation Higher fixed rental costs
Slide 21: FY15 net finance income and costs
FY15 net finance income and costs Non cash losses on euro-denominated cash investments of € 652m Hedging losses of € 217m 12 months €m FY15 FY14 Annual change Financial (expense)/income, net - 28 - 30 + 2 Net foreign exchange losses on monetary items in holding entities - 652 - 42 - 610 Net fore
Slide 22: FY15 profit from continuing operations
FY15 profit from continuing operations Profit from continuing operations down by 36% Tax charge declined by 11% 12 months €m FY15 FY14 Annual change Operating profit 2 670 2 427 - Net finance costs - 953 72 Profit before taxation 1 717 2 499 - 31% Taxation - 369 - 415 - 11% Share of post-tax res
Slide 23: FY15 cash flow from operations
FY15 cash flow from operations* Increase in inventories Cash settlement of hedging programme 12 months €m FY15 FY14 Annual change Operating profit * 2 671 2 419 252 Depreciation and amortisation 502 431 + 71 Other items - 208 59 - 267 Movement in working capital - 578 - 34 - 544 Cash flow from o
Slide 24: FY15 capital expenditure
FY15 capital expenditure* Stable as a % of Group sales Includes Net-a-Porter Group in both years Jaeger-LeCoultre - New York, Madison Av. + 5% Van Cleef & Arpels - Milan, Via Montenapoleone * including discontinued operations Cartier - Miami Design District
Slide 25: FY15 capital expenditure
FY15 capital expenditure* Increased weight of store renovations, relocations and openings Cartier – Chengdu, China * including discontinued operations
Slide 26: FY15 free cash flow
FY15 free cash flow* Lower cash flow from operations Real estate disposal Higher taxation paid 12 months €m FY15 FY14 Annual change Cash flow from operations 2 387 2 875 - 488 Net change in tangible assets - 585 - 542 - 43 Net change in intangible assets - 104 - 98 - 6 Disposal of investment p
Slide 27: Balance sheet strength
Balance sheet strength € 20.4bn € 20.4bn Fixed assets 16% Other non-current assets 5% Asset held for sale 4% Inventory 71% Total equity 27% Other current assets 6% ST investments 14% 4% Non-current liabilities 1% Liabilities held for sale Cash 28% 24% Current liabilities Assets Liabilities
Slide 28: Dividends
Dividends FY15 dividend of CHF 1.60/share Increase of 14% in CHF terms Objective to grow dividends steadily, over the long term
Slide 29: April 2015 sales
April 2015 sales + 9% reported; - 8% at constant currencies To be compared to + 1% reported; + 6% at constant currencies in April 2014 Retail + 4%, Wholesale - 17% at constant currencies Good momentum for Jewellery, Europe and Japan Continued slowdown in Asia Pacific
Slide 30: Strategic directions & conclusion
22 May 2015 Strategic directions & conclusion
Slide 31: Operating in Switzerland
Operating in Switzerland Adapting our organisation and product offering to CHF appreciation Pricing CHF denominated opex CHF denominated capex Product development A business friendly country -26%
Slide 32: Managing operations in a slow growth and fast moving environment
Managing operations in a slow growth and fast moving environment Sales drivers Product innovation, authenticity and quality Production control, reactivity, flexibility and agility Fair and transparent worldwide pricing policy
Slide 33: Managing operations in a slow growth and fast moving environment
Managing operations in a slow growth and fast moving environment Innovative distribution initiatives New locations and news concepts with key watch trade partners Inventory monitoring E-tailing
Slide 34: Capital allocation: recent transactions
Capital allocation: recent transactions St Regis Retail location in New York “Operating hedge” to Cartier Mansion in New York Pre-tax cash gain of € 234m Return close to double in 2 years Yoox Net-a-Porter Significant value increase over 5 years
Slide 35: Conclusion
Conclusion Achieve long term sustainable organic growth Increase Maisons equity, create goodwill Creativity, inventiveness, product attractiveness and differentiation Preserve and develop skilled craftsmanship Maintain long standing commitment to doing business responsibly Generate Ste
Slide 36: The Making of Art
THE MAKING OF ART PRESENTED BY CARTIER COLLECTION & SICHUAN MUSEUM CGRRL +> PHABRERE 2015.04.18 — 2015.07.28 ONG we Mee Mee51S NO. 251 HUANHUA SOUTH ROAD. WUHOU DISTRICT 12 & INSUTUT. PR CHNAE, Beeson ens Noses ie Sane sees 10 Ce
Slide 37: Q&A Session
Q&A Session Jaeger-LeCoultre Master grande tradition tourbillon céleste
Slide 38: Appendix
Appendix Cartier Sound bracelet
Slide 39: Financial highlights
Financial highlights * FY14 & FY15 exclude the Net-a-Porter Group
Slide 40: Strategic objectives
Strategic objectives Achieve long term organic growth building goodwill, rather than acquiring goodwill By further developing competitive advantages through Attraction and retention of entrepreneurial & creative management as well as skilled craftsmen Control over production & product develo
Slide 41: Hedging policy
Hedging policy 70% of our forecasted net foreign currency cash flow exposure arising primarily in USD block, HKD, JPY, CNY is hedged versus CHF and Euro In the case of USD, the net exposure takes into account purchases of precious metals and precious stones Different types of currency derivati
Slide 42: 12 months average rates against the CHF
12 months average rates against the CHF 12 months average rates to 31 March Actual average rates Hedge rates versus CHF 2015 2014 2016 2015 US $ 0.93 0.92 0.94 0.92 HK $ 8.35 8.46 8.48 8.51 CNY 6.67 6.67 6.91 6.80 YEN 118 109 119 111
Slide 43: FY15 sales by region
FY15 sales by region 12 months €m FY15 FY14 Constant rates Actual rates Europe 3 067 2 886 + 7% + 6% Middle East/Africa 841 705 + 13% + 19% Asia Pacific 4 100 4 139 - 6% - 1% Americas 1 588 1 405 + 8% + 13% Japan 814 888 - 6% - 8% Total sales 10 410 10 023 + 1% + 4%
Slide 44: FY15 sales by business area
FY15 sales by business area 12 months €m FY15 FY14 Constant rates Actual rates Jewellery Maisons 5 657 5 438 + 1% + 4% Specialist Watchmakers 3 123 2 986 + 2% + 5% Other 1 630 1 599 - 0% + 2% Total sales 10 410 10 023 + 1% + 4%
Slide 45: FY15 reported operating result by business area
FY15 reported operating result by business area 12 months €m FY15 FY14 Annual change Jewellery Maisons 1 975 1 890 + 4% Specialist Watchmakers 730 778 - 6% Other - 64 - 29 - 121% Gain from investment property 234 - n/a Operating contribution 2 875 2 639 + 9% Corporate costs - 205 - 212 - 3% Central
Slide 46: FY15 Group results
FY15 Group results 12 months €m FY15 FY14 Annual change Sales 10 410 10 023 + 4% Cost of sales - 3 534 - 3 532 + 0% Gross profit 6 876 6 491 + 6% Net operating expenses - 4 206 - 4 064 + 3% Operating profit 2 670 2 427 + 10% Net finance costs - 953 72 Share of post-tax results of equity-accounted in
Slide 47: Summary balance sheet
Summary balance sheet €m FY15 FY14 Non-current assets 4 522 4 092 Current assets 15 928 11 826 Non-current liabilities - 942 - 847 Current liabilities - 5 088 - 3 113 Equity attributable to owners of the parent company 14 421 11 964 Non-controlling interests - 1 - 6 Equity 14 420 11 958 including Ne
Slide 48: Inventory
Inventory €m FY15 FY14 Annual change Finished goods 3 459 2 727 + 732 + 27% Raw materials and work in progress 1 979 1 728 + 251 + 15% Total 5 438 4 455 + 983 + 22% Rotation FY15 FY14 Number of months of COGS 23.0 16.9
Slide 49: Retail network
Retail network March 2015 Internal External vs PY Internal vs PY External March 2014 Montblanc 537 271 266 + 37 + 23 477 Cartier 286 201 85 + 6 - 10 290 Alfred Dunhill 214 146 68 - 1 - 19 234 Chloé 171 99 72 + 7 + 2 162 Lancel 102 69 33 - 4 - 6 112 Van Cleef & Arpels 105 73 32 + 3 - 2 104 Piaget 94
Slide 50: FY15 Jewellery Maisons
FY15 Jewellery Maisons Modest reported sales growth led by all regions except Asia, and by jewellery Jewellery sales driven by recent launches: Odyssée and Cartier Royal II HJ collections, Panther, Juste un clou and Amulette collections Watch sales supported by Calibre Diver, steel watches, di
Slide 51: FY15 Jewellery Maisons
FY15 Jewellery Maisons Outstanding sales driven by all regions except Japan All price points successful from Peau d’Âne new HJ collection to Heritage, Floral (Cosmos launch), Alhambra and Perlée Jewellery collections Remarkable performance of Poetic complications Timepieces Key recent launch
Slide 52: FY15 Main Product Launches
FY15 Main Product Launches Cartier Van Cleef & Arpels Jewellery Jewellery Cartier Royal HJ collection Peau d’Âne HJ collection Panthère de Cartier Cosmos hard stones Amulette de Cartier Two Butterfly diamonds Paris Nouvelle Vague Bridal “Your Poetic Setting” Perlée couleurs Watches
Slide 53: FY15 Specialist Watchmakers
FY15 Specialist Watchmakers Sales affected by the significant slowdown Moderate sales growth in HK and Macao, and by lower purchases Mixed regional performance: strong China, Korea, by mainland Chinese Japan, Middle East and Europe; weak HK and US Jewellery sales however almost on par with p
Slide 54: FY15 Specialist Watchmakers
FY15 Specialist Watchmakers Good growth in sales across regions, excluding Satisfactory performance led by Europe Asia Pacific (notably HK), and Russia/CIS and the Americas Success of the 1815 family thanks to new models, Positive impact of the Hommage launch; continued anniversary edition,
Slide 55: FY15 Specialist Watchmakers
FY15 Specialist Watchmakers Marked sales growth balanced among product Notable growth in sales across regions lines, geographies and channels and channels Commendable sales growth of feminine Successful relaunch of Aquatimer line, launch and complicated offer of the Portofino Midsize Key e
Slide 56: FY15 Specialist Watchmakers
FY15 Specialist Watchmakers Good momentum across regions Moderate sales growth supported by Upgraded product mix with sales of watches with Europe and the Middle East in-house movements exceeding 80% of total sales Clifton - introduced in 2013 – first pillar; 40% of sales Successful intr
Slide 57: FY15 Main Product Launches
FY15 Main Product Launches Piaget Vacheron Constantin Watches Watches Altiplano 900P Malte 82230 Altiplano dame Malte small model 81515 Mini tradition Malte tourbillon openworked 30135 Blooming Rose Traditionnelle 82172 Traditionnelle Day / Date-Power Reserve 85290 Jewellery Trad
Slide 58: FY15 Main Product Launches
FY15 Main Product Launches Jaeger-LeCoultre IWC Watches Watches Reverso Classic small & Classic small duetto Aquatimer Auto/Chrono Rendez-vous Moon Aquatimer Chrono Manufacture Rendez-vous Ivy Minute Repeater Portofino Midsize Master Grande Tradition Tourbillon grande complication Pi
Slide 59: FY15 Other
FY15 Other Good sales sustained by Europe, the Middle East and Americas and the South Korean operations Good momentum of Leather (double digit growth) and Writing Instruments benefiting from the Meisterstück 90 years celebration programme 37 new internal boutiques (net) John F. Kennedy Limit
Slide 60: FY15 Other
FY15 Other Difficult trading in Asia Pacific, in particular in HK Successful launch of the new best-seller Charlie and China; Japan broadly in line only partially compensating for weak French domestic market and Maison repositioning Negative trend in Menswear and Leather but new Completed ma
Slide 61: FY15 Other
FY15 Other Moderate sales growth with positive momentum Sales up by 30% at historic rates and 22% in all major regions but Japan at constant rates Strong growth in Ready-to-Wear EBIT of € 1m, cash flow of € 16m Gradual turnaround of leather thanks to the Merger with Yoox announced 30 Mar
Slide 62: FY15 Main Product Launches
FY15 Main Product Launches Montblanc Alfred Dunhill Writing Instruments Leather Meisterstück 90 years Traveller Navy & Burgundy LLG StarWalker Extreme Bourdon bi colours LLG John F Kennedy Boston LLG and SLG Chassis LLG and SLG Watches Guarsdman Meisterstück Heritage Perpetual Cale
Slide 63: Richemont
RICHEMONT
Compagnie Financière Richemont — FY2015 Earnings Presentation on 6ix