Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — Richemont — H1 FY2021 Earnings Presentation

46 slides from Compagnie Financiere Richemont Sa's earnings presentation, Sep 30, 2020

  1. Slide 1: FY21 Interim Results

    FY21 INTERIM RESULTS 30 SEPTEMBER 2020

  2. 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

  3. Slide 3: Highlights, Operations, Financials, Conclusion, Q&A

    › Highlights › Operations › Financials › Conclusion › Q&A

  4. Slide 4: Highlights

    Highlights RICHEMONT ®(@ NATURELLE’ Van Cleef & Arpels rie! das GRANDE GALERIE Pewee VOL TION PRECIEUS&ES Jardin des Plantes exposition Paris 5° 16 septembre 2020 — #ExpoPierresPrécieuses 14 juin 2021

  5. Slide 5: H1-21 Key Figures

    H1-21 KEY FIGURES › Sales decreased by 26% at actual exchange rates Sales and by 25% at constant rates In € million Sept 20 5 478  All regions, channels and business areas down; Sept 19 7 397 sales in China increased substantially  Q2 sales lower by 5% and 2% at actual and Operating profit In € mi

  6. Slide 6: Highlights

    HIGHLIGHTS › Resilient business model with notable performances from  Jewellery Maisons  China: +78% reported, +83% at constant exchange rates due to strong domestic demand  Maison online sales: up triple digits, now representing 7% of overall Maison sales  Stable cash flow from operating activi

  7. Slide 7: Operations

    Operations RICHEMONT

  8. Slide 8: Overview of Revenue by Region

    H1-21 OVERVIEW OF REVENUE BY REGION Change vs PY: - 1 919 M€ -26% 7 397 -987 -173 -447 5 478 -282 -30 › Europe and the Americas most H1-20 Europe Asia Pacific Americas Japan Middle East H1-21 severely impacted, improvement in Q2 Japan Middle East and Africa 7%, €365m 8%, €423m › Relative resilience

  9. Slide 9: Sales in Europe

    H1-21 SALES IN EUROPE › Sales declined by 44%  Strong impact from store and fulfilment centre closures in Q1, lack of international tourism and muted local demand  Resilience at Online Distributors  Robust performance from our Maisons in online retail +7% Japan Middle East and Africa 7% 8% Americ

  10. Slide 10: Sales in Asia Pacific

    H1-21 SALES IN ASIA PACIFIC › Sales down by 4%, with pronounced double digit growth in Q2  Strong growth in China across channels, declines elsewhere  Good performance at Jewellery Maisons Japan Middle East and Africa +22% 7% 8% Americas +5% 16% Europe 22% -4% -29% Asia Pacific Q1-21 Q2-21 H1-21 H

  11. Slide 11: Sales in Americas

    H1-21 SALES IN AMERICAS › Sales contracted by 31%, resuming growth in September  Declines in all business areas and channels; Jewellery Maisons less affected  Resilience in online retail - triple digit increase for our Maisons Japan Middle East and Africa +6% 7% 0% 8% Americas 16%, €900m Europe 22

  12. Slide 12: Sales in Japan

    H1-21 SALES IN JAPAN › Sales lower by 44%  Impacted by reduced international tourism and challenging comparatives  Growth in online retail +13% Japan Middle East and Africa 7%, €365m 8% Americas 16% Europe -26% 22% -44% -64% Asia Pacific Q1-21 Q2-21 H1-21 H1-20 47% % of sales

  13. Slide 13: Sales in the Middle East and Africa

    H1-21 SALES IN THE MIDDLE EAST AND AFRICA › Sales decreased by 5%  Strong increase in Jewellery Maisons; stable performance at Online Distributors  Retail sales growth aided by internalisation of stores at Jewellery Maisons  Double digit growth in online retail Japan Middle East and Africa +36% 7

  14. Slide 14: Sales by Distribution Channel

    H1-21 SALES BY DISTRIBUTION CHANNEL › Retail sales decreased by 22%  High single digit increase in Asia Pacific, double digit increase in Middle East and Africa; declines in all business areas with Jewellery Maisons most resilient › Online retail sales contracted by 3%  Varied regional performance

  15. Slide 15: Sales by Product Line

    H1-21 SALES BY PRODUCT LINE › Jewellery the largest and most resilient 2% 3% 9% product category 41% Jewellery Watches › Watch sales impacted by exposure to 13% Clothing wholesale, declines in all regions Leather goods and accessories Writing instruments › Clothing and leather goods helped by 32% Ot

  16. Slide 16: Performance – Jewellery Maisons

    H1-21 PERFORMANCE – JEWELLERY MAISONS › Sales decreased by 18% overall in H1, but increased by 4% in Q2  Higher sales in Asia Pacific and Middle East and Africa; very strong growth in China  Triple digit increase in online retail; lower sales in both retail and wholesale › Resilient operational pe

  17. Slide 17: Jewellery Maisons

    H1-21 JEWELLERY MAISONS › Innovative digital initiatives adapted to new environment  Virtual events for high jewellery and watchmaking (Watchmaking Encounters)  Distance sales › Selective developments in store network  Renovated store re-openings in Shanghai for Cartier and in Paris for Van Cleef

  18. Slide 18: Performance – Specialist Watchmakers

    H1-21 PERFORMANCE – SPECIALIST WATCHMAKERS › Sales for the period down by 38%; Q2 sales down by 18%  Declines in all regions, with relative resilience in Asia Pacific  Triple digit increase in online retail more than offset by strong declines in other channels › Small operating loss of €8m  Lower

  19. Slide 19: Specialist Watchmakers

    H1-21 SPECIALIST WATCHMAKERS › New digital initiatives enhancing reach and customer experience  Watches & Wonders on the Cloud  Virtual boutique experience at IWC and Piaget  Distance sales › Targeted store openings  IWC Zurich, with immersive experience  5 new Tmall Luxury Pavilion flagship st

  20. Slide 20: Performance – Online Distributors

    H1-21 PERFORMANCE – ONLINE DISTRIBUTORS › Sales decrease overall at 21%; 2% increase in Q2 sales  Steady improvement in all regions since reopening of fulfilment centres  Relative outperformance in Europe, Middle East and Africa and Japan  Highly competitive pricing environment for YOOX NET-A-POR

  21. Slide 21: Online Distributors

    H1-21 ONLINE DISTRIBUTORS › YOOX NET-A-PORTER GROUP  20th anniversary  NET-A-PORTER replatforming on track  165 exclusive brand capsules introduced  Partnership with Watches & Wonders  202 luxury brands now available on NET-A- PORTER Tmall Luxury Pavilion  Management of Montblanc online flagsh

  22. Slide 22: Performance – Other

    H1-21 PERFORMANCE – OTHER › H1 sales declined by 42%; Q2 sales decreased by 24%  Impacted by closure of fulfilment centres and stores and drop in travel retail  Broad based declines across regions; strong performance in China  Double digit increase in online retail › Operating loss of €108m  Low

  23. Slide 23: Other – Fashion & Accessories

    H1-21 OTHER – FASHION & ACCESSORIES › Accelerated digital transformation  Fully digitalised showrooms for Spring buying  Deployment of distance sales tools and live streaming events  3 new Tmall Luxury Pavilion flagship stores (Chloé, dunhill and Montblanc) › Montblanc online store now hosted by

  24. Slide 24: Financials

    Financials << <a th RICHEMONT

  25. Slide 25: Gross Profit

    H1-21 GROSS PROFIT › Gross profit decreased by 31% 4 610 -31% › Gross margin at 57.8%, 450 bps down 3 165  Lower manufacturing capacity utilisation  Adverse currency movements Sept Sept 20 19  Higher gold prices in €m  Highly competitive pricing environment in 62,3% online fashion -450bps 57,8%

  26. Slide 26: Operating Expenses

    H1-21 OPERATING EXPENSES › Operating expenses down by 21% 3% Selling and Distribution -11% Communication 25%  Decline in selling and distribution reflects Fulfilment strong cost compression measures 6% 53% Administrative -4% Other  Event cancellations and careful monitoring -50% 13% -17% led to lo

  27. Slide 27: Operating Profit

    H1-21 OPERATING PROFIT › 61% decrease in operating profit  Significant impact from Covid-19  Operating margin halved to 8.3% 6 months €m Sept 20 Sept 19 Change Sales 5 478 7 397 -26% Gross profit 3 165 4 610 -31% Net operating expenses -2 713 -3 445 -21% Selling and distribution expenses -1 429 -1

  28. Slide 28: Net Finance Costs

    H1-21 NET FINANCE COSTS › Slight increase in net finance costs due to  €43m swing in financial expense line  €41m higher net loss on monetary items  Partly offset by €68m higher gains on hedging activities 6 months €m Sept 20 Sept 19 Change Financial (expense)/income, net -33 10 -43 Lease liabili

  29. Slide 29: Profit for the Period

    H1-21 PROFIT FOR THE PERIOD › Decrease in profit reflects  Lower operating profit  Slightly higher net finance costs 6 months €m Sept 20 Sept 19 Change Operating profit 452 1 165 -61% Net finance costs -117 -110 +6% Share of equity-accounted investments' results 9 12 -25% Profit before taxation 34

  30. Slide 30: Cash Flow from Operating Activities

    H1-21 CASH FLOW FROM OPERATING ACTIVITIES › Cash flow from operating activities broadly in line with prior year period  Lower operating profit  Significant improvement in working capital (primarily strong inventory discipline) and lower taxes paid 6 months €m Sept 20 Sept 19 Change Operating profi

  31. Slide 31: Capital Expenditure

    H1-21 CAPITAL EXPENDITURE › Capex 33% lower than prior year period  Targeted investments in store network and manufacturing facilities  Continued investments in IT, mostly at YOOX NET-A-PORTER €280m Cartier, Shanghai IFC 44% €188m 3.8% Retail 45% 12% 3.4% Manufacturing 10% 44% Other 45% Sept 20 Se

  32. Slide 32: Free Cash Flow

    H1-21 FREE CASH FLOW › Free cash flow up €104m vs. H1-20  Lower capital expenditures  Lower lease payments due to rent relief 6 months €m Sept 20 Sept 19 Change Cash flow from operating activities 926 928 -2 Net acquisition of tangible assets -120 -197 +77 Net acquisition of intangible assets -62

  33. Slide 33: Balance Sheet Strength

    BALANCE SHEET STRENGTH €32.8bn €32.8bn Fixed assets 36% 51% Total equity Other non-current assets 4% Inventory 19% Other current assets 5% 28% Non-current liabilities Investments in money market and externally 14% managed funds Cash 22% 21% Current liabilities Assets Equity and liabilities

  34. Slide 34: Conclusion

    Conclusion RICHEMONT QU, \ Ors I syns © sno \ NTlEME a DATE SAU

  35. Slide 35: In Summary

    H1-21 IN SUMMARY › The environment has been marked by  Strong acceleration in online luxury shopping  Increased direct engagement with clients  Slower recovery in wholesale, reshoring in China, exacerbated by a halt in international tourism  Increased weight of Millennials and Gen-Z among client

  36. Slide 36: In Summary

    H1-21 IN SUMMARY › Marked improvement in Q2, strong contribution from Jewellery Maisons, online retail sales and China, now the Group’s largest market › Higher free cash flow › Magnitude and duration of the pandemic still unknown  Safety of colleagues, clients and partners is paramount  Creativity

  37. Slide 37: H Z . i U

    H Z 0 2 . i U 4

  38. Slide 38: Appendix

    Appendix

  39. Slide 39: Financial Highlights

    FINANCIAL HIGHLIGHTS Sales Profit for the period Dividends CHF 1 A share/10 B shares ∆% € million CR HR € million ∆% Sept 20 Sept 20 n/a 0.00 5 478 -25% -26% Sept 20 2.9% 159 -82% Sept 19 Sept 19 n/a 0.00 7 397 +6% +9% Sept 19 11.7% 869 -61% FY20 FY20 FY20 1.00 14 238 0% +2% 6.5% 931 -67% -50% FY19

  40. Slide 40: Hedging

    HEDGING › 70% of our forecasted net foreign currency cash flow exposure arising primarily in AED, CNY, HKD, JPY, SGD and USD is hedged vs. CHF and EUR › In the case of USD, the net exposure takes into account purchases of precious metals and precious stones › Realised and unrealised gains/losses on

  41. Slide 41: Sales by Region and Business Area

    H1-21 SALES BY REGION AND BUSINESS AREA Constant Actual % of 6 months €m Sept 20 Sept 19 rates* rates total Europe 1 234 2 221 -44% -44% 22% Asia Pacific 2 556 2 729 -4% -6% 47% Americas 900 1 347 -31% -33% 16% Japan 365 647 -44% -44% 7% M iddle East and Africa 423 453 -5% -7% 8% Total sales 5 478 7

  42. Slide 42: Operating Results by Business Area

    H1-21 OPERATING RESULTS BY BUSINESS AREA 6 months €m Sept 20 Sept 19* Change Jewellery M aisons 922 1 219 -24% Specialist Watchmakers -8 285 -103% Online Distributors -138 -104 -33% Other -108 5 NR Elimination -1 -2 -50% Operating results 667 1 403 -52% Valuation adjustments on acquisitions -99 -93

  43. Slide 43: Group Results

    H1-21 GROUP RESULTS 6 months €m Sept 20 Sept 19 Change Sales 5 478 7 397 -26% Cost of sales -2 313 -2 787 -17% Gross profit 3 165 4 610 -31% Net operating expenses -2 713 -3 445 -21% Operating profit 452 1 165 -61% Net finance costs -117 -110 +6% Share of equity-accounted investments' results 9 12 -

  44. Slide 44: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY at 30 September €m 2020 2019 Non-current assets 13 308 14 014 Current assets 19 471 17 148 Non-current liabilities 9 392 7 285 Current liabilities 6 774 6 701 Equity attributable to owners of the parent company 16 491 17 061 Non-controlling interests 122 115 Equit

  45. Slide 45: Retail Network

    RETAIL NETWORK Net change Sept 20 Internal Franchise March 20 Internal Franchise Total Internal Franchise Jewellery Maisons 458 323 135 457 321 136 +1 +2 -1 Cartier 272 203 69 270 203 67 +2 - +2 Van Cleef & Arpels 139 101 38 140 99 41 -1 +2 -3 Buccellati 47 19 28 47 19 28 - - - Specialist Watchmaker

  46. Slide 46: At Richemont, we craft the future

    At Richemont, we craft the future Buccellati • Cartier • Van Cleef & Arpels • A.Lange & Söhne • Baume & Mercier • IWC • Jaeger-LeCoultre • Panerai • Piaget • Roger Dubuis • Vacheron Constantin • Watchfinder & Co. • YOOX NET-A-PORTER GROUP • Alaïa • Chloé • dunhill • Montblanc • Peter Millar • Purdey

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