Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — H1 FY2020 Earnings Presentation

51 slides from Compagnie Financiere Richemont Sa's earnings presentation, November 2019

  1. Slide 1: FY20 Interim Results

    FY20 INTERIM RESULTS 30 SEPTEMBER 2019

  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: Agenda

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

  4. Slide 4: H1-20 Key Figures

    H1-20 KEY FIGURES › Sales up by 9% at actual exchange rates and by Sales 6% at constant rates In € million Sept 19 7 397  Excluding Online Distributors, +5% at actual Sept 18 6 808 exchange rates; +2% at constant exchange rates  Growth in all regions, distribution channels and Operating profit In

  5. Slide 5: Operations

    Operations “THERE IS A BEAUTY THAT REMAINS WITH US , . | ONE OF AFTER WE HAVE STOPPED LOOKING.” 20N C0) VERSEAS VACHERON CONSTANTIN | Not many. GENEVE RICHEMONT

  6. Slide 6: Sales in Europe

    H1-20 SALES IN EUROPE › Sales increased by 7%; stable excluding Online Distributors  Mixed performance by market  Strong online retail growth; good momentum in retail sales  Growth led by Online Distributors and Jewellery Maisons +7% +7% 9% 6% Europe 18% 30% Asia Pacific Americas Japan Middle Eas

  7. Slide 7: Sales in Asia Pacific

    H1-20 SALES IN ASIA PACIFIC › Sales increased by 5%; up by 4% excluding Online Distributors  Double digit growth in China and Korea  Growth across all channels  Strong performance of Jewellery Maisons and Online Distributors +1% +5% 9% 6% +4% 18% Europe Asia Pacific 30% Americas Japan Middle East

  8. Slide 8: Sales in Americas

    H1-20 SALES IN AMERICAS › Sales increased by 6%; stable excluding Online Distributors  Double digit increase at Online Distributors and high single digit growth at the Fashion & Accessories Maisons  Retail sales in line with the prior year period; strong growth in online retail +6% +6% 9% 6% 18% E

  9. Slide 9: Sales in Japan

    H1-20 SALES IN JAPAN › Sales growth of 13%  Benefited from purchases ahead of October VAT increase  Double digit increases across all channels and most business areas +13% 0% +13% 9% 6% 18% Europe Asia Pacific 30% Americas Japan Middle East and Africa 37% w/o Impact of Total Online Online Group Di

  10. Slide 10: Sales in the Middle East and Africa

    H1-20 SALES IN THE MIDDLE EAST AND AFRICA › Sales down by 1%, excluding Online Distributors by 5%  Strong growth at Online Distributors; declines in other business areas  Wholesale sales impacted by continued network optimisation +4% 9% 6% -1% Europe 18% Asia Pacific 30% Americas Japan Middle East

  11. Slide 11: Sales by Distribution Channel

    H1-20 SALES BY DISTRIBUTION CHANNEL › Retail up by 4%, with almost all regions and business Sept 17 areas posting growth 17% › Online retail up by 28% 52%  Full period effect 31%  Particularly strong increase in Europe and Americas › Wholesale down by 1% Retail Online retail  Increased sales in J

  12. Slide 12: Sales by Product Line

    H1-20 SALES BY PRODUCT LINE › Growth across almost all product lines 3% 4% 36% Watches 10% › Single digit growth in watches and jewellery Jewellery Clothing › Positive impact of Online Distributors on 11% Leather goods clothing and leather goods Writing instruments Other 36% Excluding Online Distrib

  13. Slide 13: Performance – Jewellery Maisons

    H1-20 PERFORMANCE – JEWELLERY MAISONS › Sales increased by 8%  Growth across all regions, led by Asia Pacific and Japan  Growth across all channels › Operating margin decreased to 32.6%  Stable gross margin  Increased investments in store renovations and communication 6 months €m Sept 19 Sept 18

  14. Slide 14: Jewellery Maisons

    H1-20 JEWELLERY MAISONS › Jewellery and watches showed progress  Successful launch of Clash; positive development of existing collections (e.g. Love at Cartier and Alhambra at Van Cleef & Arpels)  Good performance from new product launches › Retail strength, with four net new store openings and on

  15. Slide 15: Performance – Specialist Watchmakers

    H1-20 PERFORMANCE – SPECIALIST WATCHMAKERS › Sales rose by 1%  Growth in Asia Pacific and Japan  Mid-single digit increase in retail sales; lower wholesale sales › Operating margin at 18.1%  Negative impact of wholesale initiatives and Hong Kong SAR, China  Partly offset by improved gross margin

  16. Slide 16: Specialist Watchmakers

    H1-20 SPECIALIST WATCHMAKERS › Growth across most Maisons  Best performing Maisons include A. Lange & Söhne, Panerai and Vacheron Constantin  New references well received (e.g. Pilot’s Watch at IWC, Submersible at Panerai, Overseas at Vacheron Constantin) › Retail sales increased in almost all reg

  17. Slide 17: Performance – Online Distributors

    H1-20 PERFORMANCE – ONLINE DISTRIBUTORS › Sales higher by 32%  Prior year period includes five months for YOOX NET-A-PORTER GROUP and four months for Watchfinder & Co.  Low double digits on a full period base  Broad-based growth across regions › Operating margin decreased to -16.5%  Full six mon

  18. Slide 18: Online Distributors

    H1-20 ONLINE DISTRIBUTORS › YOOX NET-A-PORTER GROUP  Over 200 new brands introduced since April and 90 exclusive capsules launched  Personal shopping offer strengthened  NET SUSTAIN created for innovative sustainable fashion  NET-A-PORTER flagship store launched on Tmall Luxury Pavilion through

  19. Slide 19: Performance – Other

    H1-20 PERFORMANCE – OTHER › Sales up by 1%  Double digit increase in the Americas; moderate growth in Japan  Growth in offline and online retail › Positive operating results 6 months €m Sept 19 Sept 18 Change Sales 941 935 +1% Operating results 3 -46 NR Operating margin 0.3% -4.9% +520bps

  20. Slide 20: Other – Fashion & Accessories

    H1-20 OTHER – FASHION & ACCESSORIES › Mixed performance across Maisons  Notable growth at Peter Millar  Good performance of leather goods at Montblanc › Increase in retail sales supported by Montblanc and dunhill › Solid growth in online retail › Wholesale sales declined overall, mitigated by stro

  21. Slide 21: Financials

    Financials RICHEMONT

  22. Slide 22: Gross Profit

    H1-20 GROSS PROFIT › Gross profit increased by 8% 4 610 4 221 › Relatively stable gross margin at 62.3%  Broadly neutral currency effect 389  Dilutive impact of Online Distributors €m w/o Online Online Total Group  Increase of 100bps to 67.6% excluding Distributors Distributors Online Distributor

  23. Slide 23: Operating Expenses

    H1-20 OPERATING EXPENSES 3% › Operating expenses up by 10% +15% Selling and Distribution 22% Communication  6% increase excluding Online Distributors 50% Fulfilment 5% Administrative  Amortisation of intangible assets up by 20% Other +6% €13m to €95m +20% › 46.6% of sales vs. 45.9% in the prior ye

  24. Slide 24: Operating Profit

    H1-20 OPERATING PROFIT › 3% increase in operating profit › Operating margin down by 90bps; up by 70bps excluding Online Distributors 6 months €m Sept 19 Sept 18 Change Sales 7 397 6 808 +9% Gross profit 4 610 4 256 +8% Net operating expenses -3 445 -3 126 +10% Selling and distribution expenses -1 72

  25. Slide 25: Net Finance Income and Costs

    H1-20 NET FINANCE INCOME AND COSTS › Increase in net finance costs compared with prior year period  First time adoption of IFRS 16  Higher net loss on monetary items 6 months €m Sept 19 Sept 18 Change Financial income/(costs), net +10 -20 +30 Lease liability interest expense -36 - -36 Net foreign

  26. Slide 26: Profit for the Period

    H1-20 PROFIT FOR THE PERIOD › Decrease reflects non-recurrence of €1 378m post-tax non-cash accounting gain on revaluation of YOOX NET-A-PORTER shares held prior to buy-out › Excluding this non-recurring item, broadly in line with prior year period 6 months €m Sept 19 Sept 18 Change Operating profit

  27. Slide 27: Cash Flow from Operations

    H1-20 CASH FLOW FROM OPERATIONS › €455m increase in cash flow from operations, reflecting  Higher operating profit  Higher depreciation, with new right of use assets under IFRS 16  Non-recurrence of prior years’ inventory buy-backs 6 months €m Sept 19 Sept 18 Change Operating profit 1 165 1 130 +

  28. Slide 28: Capital Expenditure

    H1-20 CAPITAL EXPENDITURE › Capex in line with prior year period  New and renovated stores  IT systems and logistics centre, primarily for YOOX NET-A-PORTER GROUP €280m €279m 39% Retail 44% Cartier – Beijing, China World 7% 4.1% Manufacturing 12% 3.8% 54% Other 44% Sept 19 Sept 18 Sept19 Sept 19 S

  29. Slide 29: Free Cash Flow

    H1-20 FREE CASH FLOW › Free cash flow increased by €33m  Higher cash flow from operations, net of lease payments  Partly offset by higher taxes 6 months €m Sept 19 Sept 18 Change Cash flow from operations 1 188 733 +455 Net acquisition of tangible assets -197 -201 +4 Net acquisition of intangible

  30. Slide 30: Balance Sheet Strength

    BALANCE SHEET STRENGTH €31.2bn €31.2bn Fixed assets 40% 55% Total equity Other non-current assets 5% Inventory 21% 23% Non-current liabilities Other current assets 6% Investments in money market and externally 13% managed funds 22% Current liabilities Cash 15% Assets Equity and liabilities

  31. Slide 31: Conclusion

    Conclusion RICHEMONT

  32. Slide 32: In Summary

    H1-20 IN SUMMARY › Growth and profit resilience amid heightened global uncertainty and ongoing investments in IT and communication › Continuing transformation of the business model  Progress on YOOX NET-A-PORTER’s replatforming  Preparation of NEW ERA omnichannel offer  Joint venture with Alibaba

  33. Slide 33: H Z . i U

    H Z 0 2 . i U 4

  34. Slide 34: Appendix

    . y > 3 RAI . TORO, ©) MEE ‘ AUTOMATIC 300m/1000ft RICHEMONT ‘ ; G A PIONEERING INNOVATION MADE FOR MODERN HEROES

  35. Slide 35: Financial Highlights

    FINANCIAL HIGHLIGHTS Sales Profit for the period Dividends € million € million CHF 1 A share/10 B shares CR HR ∆% ∆% Sept 19 7 397 +6% +9% Sept 19 11.7% 869 -61% Sept 19 n/a 0.00 Sept 18 6 808 +24% +21% Sept 18 33.1% 2 253 NR Sept 18 n/a 0.00 FY19 13 989 +27% +27% FY19 2 787 +128% FY19 +5% 19.9% 2.0

  36. Slide 36: Sales Highlights (Region)

    SALES HIGHLIGHTS (REGION) Europe Asia Pacific Americas € million € million € million CR CR CR Sept 19 2 221 +7% Sept 19 2 729 +5% Sept 19 1 347 +6% Sept 18 2 071 +28% Sept 18 2 548 +20% Sept 18 1 213 +42% FY19 4 118 +37% FY19 +20% FY19 2 551 +40% 5 243 +17% FY18 1 806 +8% FY18 3 019 -2% FY18 4 352 J

  37. Slide 37: Sales Highlights (Channel)

    SALES HIGHLIGHTS (CHANNEL) Retail € million CR Sept 19 3 808 +4% Sept 18 3 557 +13% FY19 7 320 +8% Sept 17 FY18 6 758 +14% 17% Online retail € million CR 52% Sept 19 1 260 +28% Sept 18 959 NR 31% FY19 2 262 NR FY18 156 NR Retail Wholesale Online retail € million CR Wholesale* Sept 19 2 329 -1% Sept

  38. Slide 38: Sales Highlights (Product Line)

    SALES HIGHLIGHTS (PRODUCT LINE) Watches Jewellery € million CR € million CR Sept 19 2 647 +4% Sept 19 2 649 +4% 3% 4% Sept 18 2 495 +7% Sept 18 2 467 +15% 36% 10% FY19 5 061 +11% FY19 4 930 +13% FY18 4 537 11% FY18 4 368 +5% +15% Clothing Leather goods € million CR € million CR Sept 19 853 +21% Sept

  39. Slide 39: Sales Highlights (Business Area)

    SALES HIGHLIGHTS (BUSINESS AREA) Jewellery Maisons Specialist Watchmakers € million € million CR CR Sept 19 3 736 +5% Sept 19 1 567 -1% 12% Sept 18 3 454 +12% Sept 18 1 550 +4% FY19 16% 7 083 +10% FY19 2 980 +10% 51% FY18 6 452 +14% FY18 2 714 -2% 21% Online Distributors Other € million € million CR

  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 versus CHF › The USD exposure is offset by purchases of precious raw materials which are denominated in USD › Realised and unrealised gains/losses on currency deriva

  41. Slide 41: IFRS 16

    IFRS 16 › Net present value of committed lease payments capitalised as right of use asset and lease liability › Income statement  Right of use asset depreciated on a straight line basis over the lease term  On like-for-like basis, positive impact on operating profit  Front-loaded lease interest e

  42. Slide 42: Sales by Region and Business Area

    H1-20 SALES BY REGION AND BUSINESS AREA Constant Actual % of 6 months €m Sept 19 Sept 18 rates* rates total Europe 2 221 2 071 +7% +7% 30% Asia Pacific 2 729 2 548 +5% +7% 37% Americas 1 347 1 213 +6% +11% 18% Japan 647 534 +13% +21% 9% M iddle East and Africa 453 442 -1% +2% 6% Total sales 7 397 6

  43. Slide 43: Operating Results by Business Area

    H1-20 OPERATING RESULTS BY BUSINESS AREA 6 months €m Sept 19 Sept 18 Change Jewellery M aisons 1 219 1 167 +4% Specialist Watchmakers 284 286 -1% Online Distributors -194 -115 NR Other 3 -46 NR Elimination -2 -6 NR Operating results 1 310 1 286 +2% Corporate costs -145 -156 -7% Central functions -12

  44. Slide 44: Group Results

    H1-20 GROUP RESULTS 6 months €m Sept 19 Sept 18 Change Sales 7 397 6 808 +9% Cost of sales -2 787 -2 552 +9% Gross profit 4 610 4 256 +8% Net operating expenses -3 445 -3 126 +10% Operating profit 1 165 1 130 +3% Net finance costs -110 -47 NR Share of equity-accounted investments' results 12 1 408 N

  45. Slide 45: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY at 30 September €m 2019 2018 Non-current assets 14 014 10 503 Current assets 17 148 18 281 Non-current liabilities 7 285 5 130 Current liabilities 6 701 7 437 Equity attributable to owners of the parent company 17 061 16 131 Non-controlling interests 115 13 764 Eq

  46. Slide 46: Retail Network

    RETAIL NETWORK Net change Sept 19 Internal Franchise March 19 Internal Franchise Internal Franchise Total Jewellery Maisons 453 311 142 399 288 111 +23 +31 +54 Cartier 267 199 68 266 198 68 +1 0 +1 Van Cleef & Arpels 136 93 43 133 90 43 +3 0 +3 Buccellati 50 19 31 0 0 0 +19 +31 +50 Specialist Watchm

  47. Slide 47: Main Product Launches

    H1-20 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery  Magnitude – High Jewellery  Romeo & Juliet thematic collection – High Jewellery  Reflection  Frivole – new references  Clash de Cartier  Perlée – new references  1895 paved coloured stones  Cactus – new references › Watches  Sweet Alhambr

  48. Slide 48: Main Product Launches

    H1-20 MAIN PRODUCT LAUNCHES › Watches › Fiftysix self-winding, steel, blue dial, 40mm  Altiplano Meteorite › Patrimony Ultra-thin Perpetual Calendar, blue  Limelight Gala – new references dial, 41mm  Possession – new references › Overseas Tourbillon, blue dial, 41.5mm › Historiques Cornes de Vach

  49. Slide 49: Main Product Launches

    H1-20 MAIN PRODUCT LAUNCHES › Master Grande Tradition Minute Repeater › Pilot's Watch – new references including Perpetual Calendar/Tourbillon Céleste Timezoner Spitfire Ed. “The Longest Flight” › Polaris Date Blue Limited › Aquatimer Chronograph Ed. “Laureus” › Rendez-Vous Dazzling Red Limited Edit

  50. Slide 50: Main Product Launches

    H1-20 MAIN PRODUCT LAUNCHES › Writing Instruments › Bags  StarWalker  Annie  Writers Edition R. Kipling  Aby  Meisterstück Calligraphy  Abylock › Watches  1858 Geosphere Green  Bohème Full Calendar › JFA collection (Japanese Football  Star Legacy Full Calendar Association collaboration)  H

  51. Slide 51: Richemont

    RI CHEMON T

Compagnie Financière Richemont — H1 FY2020 Earnings Presentation on 6ix