Compagnie Financiere Richemont Sa · SIX:CFR
Compagnie Financiere Richemont Sa — FY2017 Earnings Presentation
52 slides from Compagnie Financiere Richemont Sa's earnings presentation, 2017
Slide 1: FY17 Annual Results
FY17 ANNUAL RESULTS AS AT 31 MARCH 2017
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: FY17 Results
FY17 RESULTS › Highlights › Review of Operations › Financial Review › Conclusion › Q&A Session
Slide 4: FY17 Key Figures
FY17 KEY FIGURES › Sales decline limited to 4% at constant and actual exchange rates Sales in € million Sales decline of 2% excluding buy-backs FY17 10 647 FY16 11 076 › Operating profit down to €1 764m Operating profit €109m net one-time charges in FY17 in € million FY17 16.6% 1 764 Operating
Slide 5: Review of Operations
Review of Operations RICHEMONT
Slide 6: Sales in Europe
FY17 SALES IN EUROPE › Decline reduced to 8% Demanding comparatives Positive trading in the UK 3 388 3 068 -8% 9% 8% Europe 17% Asia Pacific Americas 29% Japan Middle East/Africa FY FY 16 17 in €m 37% -8% change in at€m constant rates % change at constant rates
Slide 7: Sales in Asia Pacific
FY17 SALES IN ASIA PACIFIC › In line with last year Strong sales in China, Korea and Macau Hong Kong impacted by buy-backs Watches positive in retail 3 937 3 903 0% 9% 8% Europe Hong Kong 17% China 29% Rest of Asia Americas FY FY Japan 16 17 15% Middle East/Africa in €m 0% changeinat €m consta
Slide 8: Sales in Americas
FY17 SALES IN AMERICAS › Sales up 2% Good growth in jewellery, leather goods and clothing Retail growth supported by Cartier NY flagship store reopening 1 745 1 781 +2% 9% 8% Europe 17% Asia Pacific Americas 29% Japan Middle East/Africa FY FY 16 17 in €m +2% changeinat€m constant rates 37% % cha
Slide 9: Sales in Japan
FY17 SALES IN JAPAN › Sales down 12% Demanding comparatives Impact of volatile yen on tourist spending Mitigated by the reopening of Cartier Ginza flagship store 1 031 1 010 -12% 9% 8% Europe 17% Asia Pacific Americas 29% Japan Middle East/Africa FY FY 16 17 in €m 37% -12% changeinat€mconstant
Slide 10: Sales in the Middle East and Africa
FY17 SALES IN THE MIDDLE EAST AND AFRICA › 10% decline in sales partly attributable to Buy-backs and negative currency movements Reduced tourist spending 975 885 -10% 9% 8% Europe Asia Pacific 17% Americas 29% Japan Middle East/Africa FY FY 16 17 in €m 37% in €m -10% change % change at at consta
Slide 11: Sales by Network
FY17 SALES BY NETWORK › Retail now 60% of Group sales 4% growth Double digit increases in mainland China, UK, Korea and Macau Positive contribution from jewellery, leather goods and writing instruments › Wholesale sales impacted by buy-backs Double digit growth in the UK, Korea and Macau 6 3
Slide 12: Sales by Product Line
FY17 SALES BY PRODUCT LINE › Continued good momentum in jewellery, now 39% of Group sales 4% 5% 4% 41% Watches › Watches’ continued weakness, also 7% Jewellery impacted by buy-backs Leather goods Clothing › Good growth in leather goods and writing Writing instruments instruments 39% Other › Clothing
Slide 13: Segment Highlights
FY17 SEGMENT HIGHLIGHTS › Jewellery Maisons segment’s profitability remains strong even when including one-time items › A difficult year for the Specialist watchmakers segment › Mixed performance within the Other segment with substantial one-time items
Slide 14: Performance – Jewellery Maisons
FY17 PERFORMANCE – JEWELLERY MAISONS › Good growth in jewellery partly compensated for weakness in watches › Excluding exceptional buybacks, overall sales increased slightly › One-time charges of €151m 12 months €m FY17 FY16 Actual rates Sales 5 927 6 048 -2% Operating result 1 682 1 892 -11% Operat
Slide 15: Performance – Specialist Watchmakers
FY17 PERFORMANCE – SPECIALIST WATCHMAKERS › Growth in retail sales driven by new stores › Wholesale impacted by buy-backs › Operating margin of 10% excluding one-time charges of €72m 12 months €m FY17 FY16 Actual rates Sales 2 879 3 225 -11% Operating result 226 520 -57% Operating margin 7.8% 16.1%
Slide 16: Performance – Other
FY17 PERFORMANCE – OTHER › 2% sales increase Good growth at Montblanc, Chloé and Peter Millar Negatively affected by store closure programme › Net one-time gain of €114m 12 months €m FY17 FY16 Actual rates Sales 1 841 1 803 +2% Operating result 110 -94 NR Operating margin 6.0% -5.2% NR
Slide 17: Financial Review
Financial Review
Slide 18: Gross Profit
FY17 GROSS PROFIT › 4% decrease in gross profit Margin of 64.6% without effects of buy-backs and manufacturing capacity adjustments Favourable currencies and higher share of retail 7 118 64.3% 6 799 63.9% -4% -40bps FY FY FY FY 16 17 16 17 in €m as a % of sales in €m as a % of sales
Slide 19: Operating Expenses
FY17 OPERATING EXPENSES › In line with prior year -0.4% › Excluding real estate gain of €178m, +3% increase of 3% -9 5 213 +24 One-time charges of €34m +32 Continued investment in retail network +109 -178 5 057 5 057 5 035 5 035 OPEX +2 ppts +1 ppt -4 ppts +3% FY16 New Comm. Other Fx Subtotal Re
Slide 20: Operating Profit
FY17 OPERATING PROFIT › 14% decrease in operating profit Annual 12 months €m FY17 FY16 change Sales 10 647 11 076 -4% Gross profit 6 799 7 118 -4% Net operating expenses -5 035 -5 057 0% Selling and distribution expenses -3 044 -2 950 +3% Communication expenses -1 119 -1 093 +2% Administration expen
Slide 21: Net Finance Income and Costs
FY17 NET FINANCE INCOME AND COSTS › Effect of the Group’s currency hedging programme Annual 12 months €m FY17 FY16 change Financial income/(expense), net 10 -7 +17 Net foreign exchange (losses)/gains on monetary items -17 114 -131 Net losses on hedging activities -125 -45 -80 Fair value adjustments
Slide 22: Profit for the Year
FY17 PROFIT FOR THE YEAR › Non-recurrence of €539m profit from discontinued operations in FY16 Annual 12 months €m FY17 FY16 change Operating profit 1 764 2 061 -14% Net finance (costs)/income -160 2 Share of post-tax results of equity-accounted -34 -5 investments Profit before taxation 1 570 2 058
Slide 23: Cash Flow from Operations
FY17 CASH FLOW FROM OPERATIONS › Inventory decrease of €123m › Annuity contract purchase of €268m for the transfer of FY17 1 896 risks related to a defined benefit pension plan in the UK FY16 2 419 in € million Annual 12 months €m FY17 FY16 change Operating profit 1 764 2 061 -297 Operating loss fro
Slide 24: Capital Expenditure
FY17 CAPITAL EXPENDITURE › 16% lower capex, now 5.6% of Group sales › Focused on store refurbishments and relocations €710m €599m Van Cleef & Arpels – Castlereagh Street, Sydney Distribution 44% 50% 6.1% 5.6% Manufacturing 26% 21% Officine Panerai – Lotte Avenue, Seoul Other 30% 29% FY FY FY FY 16 1
Slide 25: Free Cash Flow
FY17 FREE CASH FLOW › UK pension plan contribution of €268m › Lower capex Annual 12 months €m FY17 FY16 change Cash flow from operations 1 896 2 419 -523 Net change in tangible assets -521 -613 +92 Net change in intangible assets -49 -79 +30 Net change in non-current assets -22 -27 +5 Taxation paid
Slide 26: Balance Sheet Strength
BALANCE SHEET STRENGTH €20.2bn €20.2bn Fixed assets 16% 12% Other non-current assets Inventory 26% 77% Total equity Other current assets 7% Investments in money market and externally 17% managed funds Non-current liabilities 4% Cash 22% 19% Current liabilities Assets Equity and liabilities
Slide 27: Dividends
DIVIDENDS › FY17 dividend of CHF1.80 per share › Increase of 6% in CHF terms
Slide 28: Conclusion
Conclusion RICHEMONT
Slide 29: Conclusion
CONCLUSION › A challenging, but productive year Significant measures taken which weighed on short term performance › Resilience of retail and jewellery › Long term commitment to value creation › Focus on internal growth and sustainable cash flow › Transition of senior management
Slide 30: Q&A Session
Q&A Session RICHEMONT
Slide 31: Appendix
Appendix RICHEMONT
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS Sales € million Gross profit € million Operating profit € million FY17 FY17 FY17 -4% 10 647 64% 6 799 17% 1 764 FY16 11 076 FY16 64% 7 118 FY16 19% 2 061 +6% FY15 +4% 10 410 FY15 66% 6 876 FY15 26% 2 670 FY14 -1% 10 023 FY14 65% FY14 24% 2 427 6 491 Net profit € million Net cash
Slide 33: Strategic Objectives
STRATEGIC OBJECTIVES Value creation over the long term and sustainable dividend growth Generating long term organic growth and steady cash flow Further developing competitive advantages through ›Entrepreneurship, learning culture, creativity and innovation ›Customer focus ›Craftsmanship ›Control
Slide 34: Hedging
HEDGING › 70% of our forecasted net foreign currency cash flow exposure arising primarily in USD block, HKD, JPY, CNY is hedged versus CHF › In the case of USD, the net exposure takes into account purchases of precious metals and precious stones › Different types of currency derivatives can be used
Slide 35: Sales by Region and Segment
FY17 SALES BY REGION AND SEGMENT Constant Actual % 12 months €m FY17 FY16 rates* rates of total Europe 3 068 3 388 -8% -9% 29% Middle East/Africa 885 975 -10% -9% 8% Asia Pacific 3 903 3 937 +0% -1% 37% Americas 1 781 1 745 +2% +2% 17% Japan 1 010 1 031 -12% -2% 9% Total sales 10 647 11 076 -4% -4%
Slide 36: Operating Result by Segment
FY17 OPERATING RESULT BY SEGMENT Annual 12 months €m FY17 FY16 change Jewellery Maisons 1 682 1 892 -11% Specialist Watchmakers 226 520 -57% Other 110 -94 NR Operating contribution 2 018 2 318 -13% Corporate costs -254 -257 -1% Central support serv ices -234 -239 -2% Other operating expense -20 -18
Slide 37: Group Results
FY17 GROUP RESULTS Annual 12 months €m FY17 FY16 change Sales 10 647 11 076 -4% Cost of sales -3 848 -3 958 -3% Gross profit 6 799 7 118 -4% Net operating expenses -5 035 -5 057 -0% Operating profit 1 764 2 061 -14% Net finance(costs)/income -160 2 Share of post-tax results of equity-accounted inves
Slide 38: Summary Balance Sheet and Inventory
SUMMARY BALANCE SHEET AND INVENTORY €m FY17 FY16 Non-current assets 5 727 5 767 Current assets 14 433 14 358 Non-current liabilities 731 882 Current liabilities 3 900 4 196 Equity 15 529 15 047 including Net cash 5 791 5 339 €m FY17 FY16 Annual change Finished goods 3 426 3 432 -6 -0% Raw materials
Slide 39: Retail Network
RETAIL NETWORK Annual change FY17 Internal External FY16 Internal External Total Montblanc 573 272 301 573 0 0 0 Cartier 283 202 81 279 +5 -1 +4 Chloé 167 97 70 170 0 -3 -3 Van Cleef & Arpels 124 83 41 116 +5 +3 +8 Alfred Dunhill 99 90 9 192 -54 -39 -93 Piaget 95 68 27 97 0 -2 -2 Jaeger-LeCoultre 92
Slide 40: Jewellery Maisons
FY17 JEWELLERY MAISONS › Good performance of jewellery across all lines did not fully mitigate weakness in watches Watches grew in retail driven by the Drive and Clé in steel Watches in wholesale were impacted by significant buy-backs and a difficult environment Notable success of the Love and
Slide 41: Jewellery Maisons
FY17 JEWELLERY MAISONS › Sales growth reflected Strong growth in Asia Pacific and Europe Strong jewellery sales across price points › Many store renovations; few store openings included Australia – Sydney Castlereagh Street USA – Miami Design District Twist Emeraude Bracelet Frivole Between
Slide 42: Main Product Launches
FY17 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery Magicien – High Jewellery Emeraude en Majesté – High Jewellery Amulette de Cartier, new references L’Arche de Noé – High Jewellery Cactus de Cartier Bouton d’or Free Love Perlée, new references › Watches › Watches Clé de Cartier, n
Slide 43: Specialist Watchmakers
FY17 SPECIALIST WATCHMAKERS › Strong jewellery sales across most › All regions down except for the regions Middle East › Lower watch sales, partially › Good retail sales did not mitigate impacted by buy-backs weak wholesale sales, notably impacted by buy-backs › 4 new internal boutiques (Macau, Kore
Slide 44: Specialist Watchmakers
FY17 SPECIALIST WATCHMAKERS › Solid performance in the UK and › Resilient sales on strength in Asia China did not offset weakness and retail elsewhere › Retail growth supported by 3 new › Positive retail sales boutiques (China, Macau, Japan), new references within the Velvet › Good performance of Ri
Slide 45: Specialist Watchmakers
FY17 SPECIALIST WATCHMAKERS › Weakness in most markets › Positive retail sales and strong momentum in China, Korea, USA › China showed good performance and the UK limited overall decline driven notably by mid-complication pieces and Rendez-Vous › Highly successful relaunch of the Pilot’s collection
Slide 46: Specialist Watchmakers
FY17 SPECIALIST WATCHMAKERS › Overall sales decline cushioned by › Slight growth in Middle East offset positive momentum in China and by weakness in other regions Korea › Good support from Capeland › 1st Panerai celebrity endorsement Shelby Cobra and Classima with Chinese actor Wallace Huo collectio
Slide 47: Main Product Launches
FY17 MAIN PRODUCT LAUNCHES › Watches › Overseas, new design Limelight Gala Milanese › Patrimony, new references Piaget Polo S › Historiques, new references › Jewellery › Harmony complete calendar Possession and Rose, new references Sunny Side of Life Extremely Piaget › Saxonia, thin versio
Slide 48: Main Product Launches
FY17 MAIN PRODUCT LAUNCHES › Rendez Vous Moon (steel & pink gold) › Pilot’s collection relaunch › Reverso One (steel) › Master Limited › Luminor Due › Classima, new references › Luminor Marina 1950 3 Days Automatic, › Capeland Shelby Cobra new references › Petite Promesse › Radiomir 1940 Minute Repe
Slide 49: Other
FY17 OTHER › Good sales performance overall Strong growth in leather goods driven by Urban Spirit and Meisterstück collection Growth in writing Instruments supported by launch of Heritage Rouge & Noir 110th anniversary edition and the new Augmented Paper, a new digital device Urban Spirit Collec
Slide 50: Other
FY17 OTHER › Strong performance driven by › Optimisation of certain retail and shoes (now integrated from prior wholesale locations impacted the licensee) and leather goods year’s performance › Growth across most regions › H2 benefited from growth in its remaining stores in Asia Pacific › Menswear i
Slide 51: Main Product Launches
FY17 MAIN PRODUCT LAUNCHES › Writing Instruments › Leather Heritage Rouge & Noir Nile Meisterstück Ultra-Black Faye Backpack Montblanc Augmented Paper Faye Mini › Watches Montblanc 4810 collection Boheme Day & Night Tourbillon Cylindrique Pocket Watch 110 Years › Leather Urban Sp
Slide 52: Richemont
RI CHEMON T
Compagnie Financière Richemont — FY2017 Earnings Presentation on 6ix