Compagnie Financiere Richemont SA · SIX:CFR

Compagnie Financiere Richemont SA — H1 FY2011 Earnings Presentation

59 slides from Compagnie Financiere Richemont SA's earnings presentation, November 2010

  1. Slide 1: Interim Results FY11

    Interim Results FY11 September 2010 Gary Saage, Chief Financial Officer Sophie Cagnard, Head of Investor Relations

  2. 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

  3. Slide 3: FY11 Interim Results agenda

    1. FY 11 Interim Results Highlights 2. Financial & Operating Review 3. Conclusion

  4. Slide 4: H1-11 Financial Highlights

    H1-11 Financial Highlights „ Strong recovery of sales in all segments and +37% to € 3’259m regions including 10 pct points of FX & 5 pct points of NET-A-PORTER.COM „ Retail growth ahead of wholesale +47% vs +29% „ Operating profit increase reflects comparatives +95% to € 760m but also pricing power

  5. Slide 5: H1-11 Economic Highlights

    H1-11 Economic Highlights: improved environment or easier comps? „ Uncertainties remain but financial crisis contained & continued development of growth markets „ Supportive currency environment overall „ Strong commodity prices CFR Quarterly Reported Sales H1 + 11 % H2 + 9 % H1 + 10 % H2 -5% H1 - 1

  6. Slide 6: NET-A-PORTER.COM

    H1-11 NET-A-PORTER.COM „ Outstanding sales growth „ Sales of € 120m „ Profitable (pre-acquisition impact) „ Significant growth prospects ahead „ Weekly magazine for the iPad launched in September „ MR PORTER.COM to be launched

  7. Slide 7: Financial & Operating Review

    Financial & Operating Review

  8. Slide 8: Sales in Europe

    H1-11 Sales in Europe „ Strong growth even excluding NET-A-PORTER.COM „ Driven by locals and clientele from growth markets „ ME and Russia renewing with growth, albeit at a slower rate Japan Russia Middle East 11% 1% 5% Americas H1-11 Sales = € 1’260m 15% Western Europe ² 31% + 23% + 18% + 14% Asia-

  9. Slide 9: Sales in Asia Pacific

    H1-11 Sales in Asia Pacific „ Superior double digit growth across the region „ Hong Kong, largest single market worldwide „ Leading positions consolidated Americas Japan 15% 11% H1-11 Sales = € 1’157m + 36% + 30% + 30% Europe Asia-Pacific 38% 36% Sept 07 Sept 08 Sept 09 Sept 10 - 2% % differential a

  10. Slide 10: Sales in Americas

    H1-11 Sales in Americas „ Nearly back to Sept 08 level „ Retail close to peak „ Wholesale < peak, partly reflecting network streamlining „ Strong growth on a sound base Europe 38% Japan H1-11 Sales = € 489m 11% + 37% + 13% Americas + 9% Asia-Pacific 15% 36% Sept 07 Sept 08 Sept 09 Sept 09 Sept 10 -

  11. Slide 11: Sales in Japan

    H1-11 Sales in Japan „ Up 4% - market share gains „ Positive market response to new launches Europe Asia-Pacific H1-11 Sales = € 353m 38% 36% + 7% + 4% Japan Americas 11% 15% Sept 07 Sept 08 Sept 09 Sept Sept 10 - 7% - 25% % differential at constant rates

  12. Slide 12: Sales by Network

    H1-11 Sales by Network „ Retail growing twice as fast as wholesale despite more challenging comps „ Successful store openings „ Integration of NET-A-PORTER.COM „ Wholesale > Sept 08 levels reflects good sell-out and effective streamlining Retail €1’522m (47% of Group Sales) Wholesale € 1’737m (53% o

  13. Slide 13: Maisons Highlights

    H1-11 Maisons Highlights „ Jewellery Maisons and Specialist Watchmakers’ profitability healthy „ Writing instrument Maison‘s contribution rebounding „ Fashion & Accessories, profitable as a group and improving „ Reduced losses in non branded manufacturers

  14. Slide 14: Performance – Jewellery Maisons

    H1-11 Performance – Jewellery Maisons „ Very strong, broad based, sales growth „ Increased Cartier and Van Cleef & Arpels’ leadership in prestige jewellery & watches „ Strong rebound in profitability following slight contraction in FY10 6 months €m Sept 10 Sept 09 Actual Rates Sales 1 619 1 222 + 32

  15. Slide 15: Jewellery Maisons

    H1-11 Jewellery Maisons „ Broad-based double-digit growth in sales: „ Double-digit growth in sales geography, product lines, price points „ Europe and Americas particularly and network outstanding „ Successful development in established „ Creative jewellery, bijoux and watches & growth markets „ Bri

  16. Slide 16: Performance – Specialist Watchmakers

    H1-11 Performance – Specialist Watchmakers „ Substantial growth in sales „ Marked rebound in profitability in spite of a strong Swiss franc „ All Specialist Watchmakers improving results 6 months €m Sept 10 Sept 09 Actual Rates Sales 901 655 + 38% Operating contribution 259 133 + 95% Contribution ma

  17. Slide 17: Specialists Watchmakers

    H1-11 Specialists Watchmakers „ Outstanding growth driven by „ Robust growth driven by Asia Pacific and „ Retail demand for Lange 1 and Lange Zeitwerk „ Asia Pacific „ Renewing with creativity, many striking „ Polo 45 chrono, Magic Hour, Altiplano launches, including watches, Possession bijoux „ The

  18. Slide 18: Specialists Watchmakers

    H1-11 Specialists Watchmakers „ Solid growth: „ Improvement despite „ Retail „ Low exposure to growth markets „ Americas and Asia Pacific „ 100% wholesale exposure „ Highly competitive segment „ Continued success of models featuring in-house movements „ A transition year „ Luminor Marina 1950 3 Days

  19. Slide 19: Specialists Watchmakers

    H1-11 Specialists Watchmakers „ Significant growth in nearly all markets „ Strong performance overall „ Marked success of the Patrimony line, „ Rich collection of Classic & Complications high-complications and Atelier Cabinotiers pieces driving sales special order timepieces „ Reverso (e.g. Duetto)

  20. Slide 20: Specialists Watchmakers

    H1-11 Specialists Watchmakers „ Substantial upturn, especially in Asia „ Renewed confidence in its masterpieces Pacific & ME : & operational know-how led to significant „ Iconic Portuguese and Pilot’s lines increase in retail & sell-out across all geographies „ Successful launches (e.g. Portuguese Y

  21. Slide 21: Performance – Writing Instrument Maison

    H1-11 Performance – Writing Instrument Maison „ Robust sales „ Nearly all regions & networks up double digit „ Margin contribution up by 66% 6 months €m Sept 10 Sept 09 Actual Rates Sales 303 238 + 28% Operating contribution 48 29 + 66% Contribution margin 16% 12% + 366 bps

  22. Slide 22: Montblanc Maison

    H1-11 Montblanc Maison Star Nicolas Rieussec „ Positive developments in all categories with watches Open Date and writing instruments performing strongest „ Sustained demand for Nicolas Rieussec Chronograph (in-house movement) „ Metamorphosis and Exo-Tourbillon watches highly acclaimed „ Successful

  23. Slide 23: Performance – Other

    H1-11 Performance – Other „ Fashion & Accessories profitable and improving „ A profitable Alfred Dunhill and closer to breakeven Lancel „ Chloé: profitability improving thanks to higher sales, positive gross margin development and good cost control „ Reduced losses at non branded manufacturers 6 mon

  24. Slide 24: Other: Fashion & Accessories

    H1-11 Other: Fashion & Accessories „ Sales improvement driven by „ Strong double digit growth in all channels „ Leather „ Successful launch of a 3rd iconic bag: B.B. „ Asia Pacific (c.65% of sales) „ First inroads into Japan, Russia, HK & China exceeding expectations „ Further upgrading of distribut

  25. Slide 25: Other: Fashion & Accessories

    H1-11 Other: Fashion & Accessories „ Double digit sales increase „ Strong retail performance, particularly in China and Europe „ Chloé Winter collection showing encouraging sell-through „ Excellent performance of leather thanks to Marcie, Paraty and Ethel bags „ New management Love, Chloé, advertisi

  26. Slide 26: Group results

    H1-11 Group results 6 months €m Sept 10 Sept 09 Sales 3 259 2 379 + 37% Gross profit 2 113 1 464 + 44% Net operating expenses -1 353 -1 074 + 26% Selling and distribution expenses - 761 - 598 + 27% Communication expenses - 264 - 204 + 29% Administration expenses - 314 - 259 + 21% Other income / (exp

  27. Slide 27: Gross Profit

    H1-11 Gross Profit € million As a % of sales + 44 % - 100 bps + 330 bps +8% - 18 % - 250 bps 2 113 1 655 1 788 65.0% 64.8% 1 464 64.0% 61.5% Sept 07 Sept 08 Sept 09 Sept 10 Sept 07 Sept 08 Sept 09 Sept 10

  28. Slide 28: Operating Expenses

    H1-11 Operating Expenses 8% 26% 3% 8% 7% ! + 19 % excl. NET-A-PORTER.COM 1 074 1 353 + 26% Sept 09 FX NET-A- Commu- Other Sept 10 1 353 PORTER nication + 27% 1 074 + 29% + 21% 761 598 264 259 314 204 13 14 Sept 09 Sept 10 Sept 09 Sept 10 Sept 09 Sept 10 Sept 09 Sept 10 Sept 09 Sept 10 Net operating

  29. Slide 29: Profit

    H1-11 Profit 6 months €m Sept 10 Sept 09 Operating profit 760 390 + 95% Net finance (costs) / income - 120 24 Profit before taxation 640 414 + 55% Taxation - 98 - 71 + 39% Share of post taxation results of associates 102 2 Profit from continuing operations 644 345 + 87% Discontinued operations (net

  30. Slide 30: Cash flow From Operations

    H1-11 Cash flow From Operations Sept 10 598 „ Significant increase in cash flow from operations Sept 09 321 „ Limited swing in working capital Sept 08 224 6 months €m Sept 10 Sept 09 Operating profit 760 389 371 Depreciation 139 112 27 Other items 47 48 -1 Movement in working capital - 348 - 228 - 1

  31. Slide 31: Fixed Assets Investments

    H1-11 Fixed Assets Investments + 50% Gross € 75m MB – Marina Bay Sands, Singapore (Disposals) 1m Gross € 50m (Disposals) 2m € 50m Net 74 m As % of Sales 2.3% IWC – Beirut, Lebanon Net 48 m 2.1% Sept 09 Sept 10 Sept 09 Sept 10 Lancel – St Tropez, France

  32. Slide 32: Fixed Assets by Category

    H1-11 Fixed Assets by Category € 75m € 50m 59% Retail Vacheron Constantin – Beijing, China Retail 52% 30% Manufacturing Manufacturing 42% 11% Other Other 6% Sept 09 Sept 10 Cartier – HK Plaza Shanghai, China

  33. Slide 33: Free Cash flow

    H1-11 Free Cash flow 6 months €m Sept 10 Sept 09 Cash flow from operations 598 321 Net change in fixed assets - 74 - 48 Net change in intangible assets - 21 - 11 Net change in subsidiaries and non-current assets - 237 35 Net movement in short-term bond funds -2 118 Taxation paid - 112 - 59 Net inter

  34. Slide 34: Strong Balance Sheet

    Strong Balance Sheet € 9.1bn € 9.1bn Fixed Assets 21% Other LT Assets 7% 70% Total Equity Inventories 28% Other Current Assets 11% 5% Non-Current Liablilities ST Investments 15% 25% Current Liablilities Cash 18% Assets Liabilities

  35. Slide 35: Conclusion

    Conclusion

  36. Slide 36: Latest Trends

    Latest Trends „ October trends „ +36% in € : retail + 50%, wholesale + 26% „ +27% at cc: retail + 39%, wholesale + 19% „ Consistent geographic trends

  37. Slide 37: Strong Maisons and Cash Position Allow to Maintain Strategic Directions

    Strong Maisons and Cash Position Allow to Maintain Strategic Directions „ Increase leadership position in prestige jewellery & watches „ Continue focus on organic growth „ Expand retail, increase control over external distribution „ Continue regional focus on growth markets „ Further enhance our bus

  38. Slide 38: Conclusion: Core Strengths

    Conclusion: Core Strengths „ Unique portfolio of prestigious Maisons „ Leadership in prestige jewellery & watches „ Great potential given universal appeal of European luxury goods „ High exposure to clientele from growth markets while remaining a reference for local clientele from established market

  39. Slide 39: Q&A Session

    Q&A Session

  40. Slide 40: Appendix

    Appendix v as)

  41. Slide 41: Financial Highlights

    Financial Highlights Sales, € m Gross Margin, € m Operating profit, € m 3 415 2 113 760 5 418 1 118 23.3% 5 290 5 176 64.8% 64.6% 3 417 21.1% 968 63.1% 3 191 1 464 830 390 17.9% 3 259 16.4% 61.6% 61.5% 16.0% 2 379 FY08 FY09 FY10 Sept09 Sept10 FY08 FY09 FY10 Sept09 Sept10 FY08 FY09 FY10 Sept09 Sept10

  42. Slide 42: 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 d

  43. Slide 43: Foreign Currency Hedging Contracts

    Foreign Currency Hedging Contracts 6 months 12 months average average Hedge rate to Actual rate to Hedge rate to Versus the CHF Sept 10 Sept 10 March 11 YEN 88 83 87 US $ 1.04 1.07 1.05 HK $ 7.46 7.28 7.50 Average Rates against the CHF 6 months to 30 Sept 10 6 months to 30 Sept 09 YEN 83 88 US $ 1.0

  44. Slide 44: Sales by Region

    H1-11 Sales by Region Japan Russia Middle East 11% 1% 5% Americas 15% Western Europe ² 31% Asia-Pacific Other Europe 36% 1% 6 months €m Sept 10 Sept 09 Constant rates Actual rates Europe 1 260 995 + 23% + 27% Asia-Pacific 1 157 771 + 36% + 50% Americas 489 325 + 37% + 51% Japan 353 288 + 4% + 23% To

  45. Slide 45: Sales by Product line

    H1-11 Sales by Product line Jewellery Leather Goods 23% 8% Writing Instruments 5% Watches 51% Clothing & Other 13% 6 months €m Sept 10 Sept 09 Constant rates Actual rates Watches 1 649 1 190 + 28% + 39% Jewellery 745 581 + 17% + 28% Leather Goods 271 211 + 20% + 28% Writing Instruments 166 125 + 23%

  46. Slide 46: Sales by Business Area

    H1-11 Sales by Business Area Specialist Watchmakers Writing 28% Instrument Maison 9% Jewellery Other Maisons 13% 50% 6 months €m Sept 10 Sept 09 Constant rates Actual rates Jewellery Maisons 1 619 1 222 + 22% + 32% Specialists watchmakers 901 655 + 28% + 38% Writing instrument Maison 303 238 + 19% +

  47. Slide 47: Reported Operating Result by Business Area

    H1-11 Reported Operating Result by Business Area 6 months €m Sept 10 Sept 09 % Chge Operating contribution Jewellery maisons 541 349 + 55% 65% Specialists watchmakers 259 133 + 95% 31% Writing instrument maison 48 29 + 66% 6% Other - 19 - 28 + 32% - 2% Subtotal 829 483 + 72% 100% Corporate costs - 6

  48. Slide 48: Profit

    H1-11 Profit 6 months €m Sept 10 Sept 09 Sales 3 259 2 379 + 37% Cost of sales -1 146 - 915 Gross margin 2 113 1 464 + 44% Net operating expenses -1 353 -1 074 Operating profit 760 390 + 95% Net financial (costs) / income - 120 24 Share of post-tax results of associates 102 2 Profit before taxation

  49. Slide 49: Summary Balance Sheet

    Summary Balance Sheet €m Sept 10 Sept 09 Fixed assets 1 950 1 458 Other long term assets 614 598 Net current assets 2 210 2 270 Long term liabilities excluding borrowings - 315 - 173 Net operating assets 4 459 4 153 Investment in associates 8 19 Net cash 1 882 902 Net assets 6 349 5 074 Equity Share

  50. Slide 50: Inventory

    Inventory €m Sept 10 Sept 09 €m Finished goods 1 617 1 594 23 + 1% Raw materials and work in progress 919 772 147 + 19% Total 2 536 2 366 170 + 7% Rotation Sept 10 Sept 09 Number of months of COGS 17.7 20.3

  51. Slide 51: Retail Network

    H1-11 Retail Network Sept 2010 External Internal vs PY Internal vs PY External March 2010 Montblanc 360 140 220 -1 +7 354 Cartier 293 114 179 +8 +2 283 Alfred Dunhill 212 77 135 +4 +2 206 Lancel 146 71 75 +2 +0 144 Chloé 108 38 70 +2 -5 111 Van Cleef & Arpels 85 32 53 +4 +2 79 Piaget 69 25 44 +3 -2

  52. Slide 52: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Watches High Jewellery Fine Watchmaking Collection Les Voyages Extraordinaires High Jewellery watches collection Calibre de Cartier Bijoux Perlée Jewellery Magic Alhambra set in white gold with diamond Trinity (Coeur, Panthère, Draperie) Oiseaux de Para

  53. Slide 53: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Watches Watches Piaget Polo FortyFive lady Métiers d‘Art “La Symbolique des laques”, year 1 Altiplano 43mm Magic Hour paved Openings Dalian - China Jewellery Marina Bay Sands - Singapore Possession Celebration Taiyuan - China Manchette & necklace Posses

  54. Slide 54: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Watches Watches Saxonia Annual Calendar EasyDiver automatic Grand Lange 1, ref. 115.028 Excalibur Double Tourbillon platinum Collection “Homage to F.A. Lange“ Lange 1 Daymatic Jewellery Lange Zeitwerk Luminous BeHeart, Tahiti pearls Jewellery Watches Li

  55. Slide 55: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Watches Watches Duomètre à Quantième lunaire Portuguese Yacht Club Chronograph AMVOX2 Grand Chronograph Portuguese Hand-Wound Atmos 566 by Marc Newson – blue version Portuguese Tourbillon Mystère Rétrograde Master Compressor Diving Automatic Navy Seals

  56. Slide 56: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Watches Watches Radiomir Regatta 1/8 Second Titanio Classima Luminor Marina 1950 3 Days Automatic - Extra-thin Quartz Radiomir Composite 8 Giorni - GMT Chrono - Magnum Openings Riviera magnum Chrono Hong Kong Kowloon – China Shanghai IFC – China Paris –

  57. Slide 57: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Watches Men Leather Goods Villeret Vintage ADV8 Brown LLG Rieussec Silicon Escapement Bladon LLG (Tan & Black) Writing Instruments Explorer Black LLG & SLG StarWalker Ruthenium Meisterstück Montblanc Diamond John Lennon Edition Openings Le Bon Marché Pa

  58. Slide 58: Main Product Launches & Store Openings

    H1-11 – Main Product Launches & Store Openings Ladies Handbags Leather Goods B.B. (Brigitte Bardot) Darla bag Plume Aurore bag Miss Adjani Margareth bag Miss Elsa Chloé & See by Chloé shoes, Fall/Winter 2010-11 Men Lines Au sphinx Openings A l‘incomparable None Openings St Tropez - France One Centra

  59. Slide 59: Richemont

    RI CHEMON T

Compagnie Financière Richemont — H1 FY2011 Earnings Presentation on 6ix