Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — Richemont — FY2019 Earnings Presentation

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

1. Slide 1: FY19 Annual Results

   FY19 ANNUAL RESULTS 31 MARCH 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: FY19 Key Figures

   FY19 KEY FIGURES › Sales up 27% at both actual and constant exchange rates Sales * in € million  +8% excluding Online Distributors FY19 13 989 FY18 11 013  +6% excluding Online Distributors and prior year inventory buy-backs Operating profit* in € million FY19 13.9% 1 943 › Operating profit of €1

5. Slide 5: Operations

   Operations RICHEMONT

6. Slide 6: Sales in Europe

   FY19 SALES IN EUROPE › Sales increased by 37% overall reflecting  Impact of first-time consolidation of YNAP and Watchfinder  Strong sales base of Online Distributors in Europe › Progression of 1% excluding Online Distributors  Moderate increase in retail offset limited reduction in wholesale  C

7. Slide 7: Sales in Asia Pacific

   FY19 SALES IN ASIA PACIFIC › Sales rose by 20% overall › Increase of 14% excluding Online Distributors  Double digit growth in all main markets and over all distribution channels  Double digit growth at Jewellery Maisons and Specialist Watchmakers +6% +20% 8% 7% +14% Europe 18% Hong Kong China 29%

8. Slide 8: Sales in Americas

   FY19 SALES IN AMERICAS › Sales increased by 40% overall reflecting  Impact of first-time consolidation of YNAP  Strong sales base of Online Distributors in Americas › Progression of 11% excluding Online Distributors  Growth across all distribution channels, led by double digit growth in retail 

9. Slide 9: Sales in Japan

   FY19 SALES IN JAPAN › Sales grew by 16% overall › Increase of 8% excluding Online Distributors  High single digit increase in retail and double digit increase in wholesale  Strong growth at the Specialist Watchmakers, good momentum at the Jewellery Maisons +8% +16% 8% 7% Europe 18% Asia Pacific +8

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

    FY19 SALES IN THE MIDDLE EAST AND AFRICA › Sales increased by 8% overall › Sales decreased 2% excluding Online Distributors  Wholesale impacted by network optimisation  Growth at the Jewellery and Fashion & Accessories Maisons mitigated lower sales at the Specialist Watchmakers +10% +8% 8% 7% Euro

11. Slide 11: Sales by Distribution Channel

    FY19 SALES BY DISTRIBUTION CHANNEL › Retail up 8% 16%  Double digit growth in Asia Pacific and the Americas 53%  Double digit increases at the Jewellery Maisons and Specialist Watchmakers 31% › Online retail 0% Retail  Includes YNAP, online sales of Watchfinder and Online retail Group Maisons Who

12. Slide 12: Sales by Product Line

    FY19 SALES BY PRODUCT LINE › Double digit growth in jewellery, the largest product line 3% 5% 36% 10% Jewellery › Good growth in watches driven by strong Watches 11% retail demand Clothing Leather goods › Impact of Online Distributors on clothing and Writing instruments leather goods Other 35% Exclu

13. Slide 13: Performance – Jewellery Maisons

    FY19 PERFORMANCE – JEWELLERY MAISONS › Solid performance › Sales increased by 10%  Growth across all regions, with double digit increases in Asia Pacific and Americas  Strong growth in retail and good growth in wholesale › Operating margin improved 160bps to 31.5%  Manufacturing efficiency gains

14. Slide 14: Jewellery Maisons

    FY19 JEWELLERY MAISONS › Main product lines performed well  Double digit growth in jewellery and watches  Success of novelties(e.g. Santos de Cartier) and iconic collections (e.g. Juste un Clou at Cartier, Alhambra at Van Cleef & Arpels)  New corporate campaign at Cartier and 50th Anniversary of

15. Slide 15: Performance – Specialist Watchmakers

    FY19 PERFORMANCE – SPECIALIST WATCHMAKERS › Good progress › Sales increase of 10%, or 2% excluding prior year inventory buy-backs  Strong growth in Asia Pacific, Japan and the Americas  Strong growth in retail  Trade inventory monitoring and upgrade of wholesale distribution network › Higher oper

16. Slide 16: Specialist Watchmakers

    FY19 SPECIALIST WATCHMAKERS › Growth across almost all Maisons  Successful product launches included Polaris, Fifty-Six, Jubilee Collection 150 years, Excalibur Aventador and Datograph Up/Down « Lumen » › Strong retail growth at most Maisons  Jaeger-LeCoultre, Vacheron Constantin and IWC particula

17. Slide 17: Performance – Online Distributors

    FY19 PERFORMANCE – ONLINE DISTRIBUTORS › 11 months of YOOX NET-A-PORTER, 10 months of Watchfinder  15% of Group sales  Low double digit growth › Loss of €264m included  Amortisation of €165m on intangible assets recognised on acquisition  Investment in IT systems, communication and new distribut

18. Slide 18: Online Distributors

    FY19 ONLINE DISTRIBUTORS › YNAP  Double digit growth across all business lines and regions  Launch of the Fine Jewellery and Watch Suite, The Vanguard and Clean Beauty  Migration of MR PORTER progressing  JV with Alibaba › Watchfinder  Single digit growth  Increasing visibility  Expansion int

19. Slide 19: Performance – Other

    FY19 PERFORMANCE – OTHER › Sales increase of 2% overall  Excluding disposals, 5% increase at the Fashion & Accessories Maisons, with all regions showing growth › Operating loss of €100m  Net expenses of €58m, primarily related to Lancel disposal  Contrasted Maison performances 12 months €m FY19 F

20. Slide 20: Other – Fashion & Accessories

    FY19 OTHER – FASHION & ACCESSORIES › Growth across all Maisons  Good performance at Montblanc and Peter Millar › Contrasted channel performance  Retail sales impacted by disposals  Strong online retail sales, led by Europe and the Americas, particularly at Chloé and Azzedine Alaïa  Wholesale gre

21. Slide 21: Financials

    Financials

22. Slide 22: Gross Profit

    FY19 GROSS PROFIT › Gross profit increased by 20%  Manufacturing efficiency gains 8 645 7 918  Higher share of retail and online retail €m 727  Positive overall impact of currencies w/o Online Online Total Group Distributors Distributors › Gross margin impacted by acquisitions  Decline of 340bps

23. Slide 23: Operating Expenses

    FY19 OPERATING EXPENSES 4% Selling and Distribution › Operating expenses up 26% +36% 21% Communications 51% Fulfillment  Excluding Online Distributors, increase of 7% 4% Administrative 20% Other  One-time expenses of €95m, mainly related +21% +11% to Lancel disposal and acquisitions  Amortisation

24. Slide 24: Operating Profit

    FY19 OPERATING PROFIT › 5% increase in operating profit › Operating margin increased to 19.5% excluding  €118m one-time net charges related to buy-backs and portfolio transactions  Online Distributors 12 months €m FY19 FY18* Change Sales 13 989 11 013 +27% Gross profit 8 645 7 184 +20% Net operati

25. Slide 25: Net Finance Income and Costs

    FY19 NET FINANCE INCOME AND COSTS › Higher net finance costs vs. prior year  €69m in interest expense linked to €4bn corporate bond  Loss on monetary items vs. gain in prior year  Negative impact from currency hedging programme 12 months €m FY19 FY18 Change Financial (costs)/income, net -40 4 -44

26. Slide 26: Profit for the Year

    FY19 PROFIT FOR THE YEAR › Strong increase due to post-tax non-cash accounting gain on revaluation of YNAP shares held prior to tender offer › Excluding this gain, 15% increase driven by a higher operating profit 12 months €m FY19 FY18 Change Operating profit 1 943 1 844 +5% Net finance costs -183 -

27. Slide 27: Cash Flow from Operations

    FY19 CASH FLOW FROM OPERATIONS › €392m reduction in cash flow from operations resulting from  Higher investments in inventory  Reduction in creditors and increase in debtors (previous year’s inventory buy-backs)  Partly offset by stronger operating profit 12 months €m FY19 FY18 Change Operating p

28. Slide 28: Capital Expenditure

    FY19 CAPITAL EXPENDITURE › Capex at €826m, 5.9% of Group sales  Increase primarily related to YNAP  Store renovations and relocations  Logistics centres and IT systems €826m €487m Distribution 40% Cartier – New Bond Street, London 53% Manufacturing 9% 5.9% 18% 4.4% Other 51% 29% FY19 FY18 FY19 FY

29. Slide 29: Free Cash Flow

    FY19 FREE CASH FLOW › Increase in free cash flow resulting from  Lower spend on investments and investment property  Partly offset by lower cash flow from operations and higher capex 12 months €m FY19 FY18 Change Cash flow from operations 2 331 2 723 -392 Net change in tangible assets -633 -436 -1

30. Slide 30: Balance Sheet Strength

    BALANCE SHEET STRENGTH €28.0bn €28.0bn Fixed assets 33% 61% Total equity Other non-current assets 6% Inventory 22% Other current assets 5% Investments in money 17% Non-current liabilities market and externally 16% managed funds 22% Current liabilities Cash 18% Assets Equity and liabilities

31. Slide 31: Dividends

    DIVIDENDS › FY19 dividend of CHF2.00 per 1 A share/10 B shares › Increase of 5% in CHF terms

32. Slide 32: Conclusion

    Conclusion RICHEMONT

33. Slide 33: FY 2019 in Summary

    FY 2019 IN SUMMARY › Growth in all business areas and most regions  Solid performance at the Jewellery Maisons  Good progress at the Specialist Watchmakers  Double digit growth in retail at Jewellery Maisons and Specialist Watchmakers › Strong focus on inventory and distribution quality › EBIT in

34. Slide 34: Q&A

    H Z 0 2 " a U a

35. Slide 35: Appendix

    cal fp AR ARALRORAEL of Ss 1h \ ‘ # RICHEMONT

36. Slide 36: Financial Highlights

    FINANCIAL HIGHLIGHTS Sales* Profit for the year* Dividends € million € million CHF 1 A share/10 B shares CR HR ∆% ∆% FY19 13 989 +27% +27% FY19 11.1% 2 787 +128% FY19 2.00 +5% FY18 11 013 +8% +3% FY18 +1% FY18 +6% 11.4% 1 221 1.90 FY17 10 647 -4% -4% FY17 FY17 20.1% 1 210 -46% 1.80 +6% FY16 11 076 F

37. Slide 37: Sales Highlights (Region)

    SALES HIGHLIGHTS (REGION) Europe* Asia Pacific* Americas* € million CR € million CR € million CR FY19 4 118 +37% FY19 5 243 +20% FY19 2 551 +40% FY18 3 019 -2% FY18 4 352 +17% FY18 1 806 +8% FY17 3 068 -8% FY17 3 903 0% FY17 1 781 +2% FY16 3 388 +10% FY16 3 937 -13% FY16 1 745 -1% Middle East and Af

38. Slide 38: Sales Highlights (Channel)

    SALES HIGHLIGHTS (CHANNEL) Retail € million CR FY19 7 320 +8% FY18 6 758 +14% FY17 6 389 +4% FY16 6 142 +5% 16% Online retail € million CR FY19 2 262 NR 53% Retail FY18 156 FY17 NR 31% FY16 NR 0% Wholesale* Retail € million CR Online retail FY19 4 407 +7% Wholesale FY18 4 099 -1% FY17 4 258 -14% FY1

39. Slide 39: Sales Highlights (Product Line)

    SALES HIGHLIGHTS (PRODUCT LINE) Watches Jewellery € million CR € million CR FY19 4 930 +13% FY19 5 061 +11% FY18 4 368 +5% FY18 4 537 +15% 3% 5% 36% FY17 4 340 -15% FY17 4 160 +7% 10% FY16 5 098 -8% FY16 3 881 +8% 11% Clothing Leather goods € million CR € million CR FY19 1 553 +283% FY19 1 402 +79%

40. Slide 40: Sales Highlights (Business Area)

    SALES HIGHLIGHTS (BUSINESS AREA) Jewellery Maisons* Specialist Watchmakers* € million CR € million CR FY19 7 083 +10% FY19 2 980 +10% Chart Title 13% FY18 6 452 +14% FY18 2 714 -2% FY17 5 927 -2% FY17 2 879 -11% 51% 15% FY16 6 048 -1% FY16 3 225 -3% Online Distributors Other* € million € million 21%

41. Slide 41: 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 › In the case of USD, the net exposure takes into account purchases of precious metals and precious stones › Realised and unrealised gains/losses on currency

42. Slide 42: Sales by Region and Business Area

    FY19 SALES BY REGION AND BUSINESS AREA Constant Actual % of 12 months €m FY19 FY18* rates** rates total Europe 4 118 3 019 +37% +36% 29% Asia Pacific 5 243 4 352 +20% +20% 38% Americas 2 551 1 806 +40% +41% 18% Japan 1 148 980 +16% +17% 8% M iddle East and Africa 929 856 +8% +9% 7% Total sales 13 98

43. Slide 43: Operating Result by Business Area

    FY19 OPERATING RESULT BY BUSINESS AREA 12 months €m FY19 FY18 Change Jewellery M aisons 2 229 1 926 +16% Specialist Watchmakers 378 262 +44% Online Distributors -264 - +0% Other -100 -65 NR Elimination 2 - NR Operating results 2 245 2 123 +6% Corporate costs -302 -279 +8% Central functions -245 -233

44. Slide 44: Group Results

    FY19 GROUP RESULTS 12 months €m FY19 FY18* Change Sales 13 989 11 013 +27% Cost of sales -5 344 -3 829 +40% Gross profit 8 645 7 184 +20% Net operating expenses -6 702 -5 340 +26% Operating profit 1 943 1 844 +5% Net finance costs -183 -150 Share of equity-accounted investments' results 1 408 -41 Pr

45. Slide 45: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY at 31 March €m FY19 FY18 Non-current assets 10 761 5 974 Current assets 17 278 19 678 Non-current liabilities 4 697 4 605 Current liabilities 6 303 6 409 Equity attributable to owners of the parent company 16 951 14 631 Non-controlling interests 88 7 Equity 17 039

46. Slide 46: Retail Network

    RETAIL NETWORK 31 March 31 March Net change 2019 Internal Franchise 2018 Internal External Internal Franchise Total Jewellery Maisons 399 288 111 401 287 114 +1 -3 -2 Cartier 266 198 68 272 200 72 -2 -4 -6 Van Cleef & Arpels 133 90 43 129 87 42 +3 +1 +4 Specialist Watchmakers 485 295 190 460 284 176

47. Slide 47: Main Product Launches

    FY19 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery  Coloratura – High Jewellery  Quatre contes de Grimm collection – High Jewellery  Reflection set XS  Treasure of rubies collection – High Jewellery  Cactus, new references  Bouton d’or, new references  Galaxies de Cartier  Frivole  Panthère

48. Slide 48: Main Product Launches

    FY19 MAIN PRODUCT LAUNCHES › Watches › Traditionnelle CEP Complete Calendar 100-pieces Limited Edition 41mm  Limelight Gala › Fiftysix New collection (Auto, Day-date, Complete  Altiplano Ultimate Calendar) 40mm  Possession Watch, new references › Overseas: new references including Automatic › Jew

49. Slide 49: Main Product Launches

    FY19 MAIN PRODUCT LAUNCHES › Master Grande Tradition Gyrotourbillon › Jubilee Collection, 150 years Westminster Perpétuel › Master Ultra Thin, new references including Tourbillon Enamel › Reverso Tribute Small Seconds › Rendez-Vous Dazzling Night & Day › Luminor Due, new references including GMT › C

50. Slide 50: Main Product Launches

    FY19 MAIN PRODUCT LAUNCHES › Writing Instruments › Leather  Meisterstück Le Petit Prince  Chloé C, mini & classic  Homage to Kang Xi  Tess  Great Characters: James Dean  Faye Day mini › Watches  Star Legacy  Montblanc 1858  Summit II Smartwatch › Leather › Leather  JFA collection  Meister

51. Slide 51: Richemont

    RI CHEMON T

Richemont — FY2019 Earnings Presentation on 6ix