Compagnie Financiere Richemont Sa · SIX:CFR

Compagnie Financiere Richemont Sa — H1 FY2016 Earnings Presentation

54 slides from Compagnie Financiere Richemont Sa's earnings presentation, November 2015

  1. Slide 1: FY16 Interim Results

    FY16 INTERIM RESULTS AS AT SEPTEMBER 30 2015

  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: H1-16 Results

    H1-16 RESULTS › Highlights › Review of Operations › Financial Review › Conclusion › Q&A Session

  4. Slide 4: H1-16 Key Figures

    H1-16 KEY FIGURES › Reported sales* growth up 15%, organic +3% Sales In € million  Strong retail Sept 15 5 821 Sept 14 5 073  Good performance in Japan & Europe offsetting negative environment in Hong Kong & Macau Operating profit  Very strong jewellery In € million Sept 15 23.9% 1 390 › Operatin

  5. Slide 5: Review of Operations Excluding Net-a-Porter

    Review of Operations Excluding Net-a-Porter

  6. Slide 6: Sales in Europe

    H1-16 SALES IN EUROPE › Strong increases across countries and product lines  Increased tourism driven by weak euro 1 943 9% 9% 1 547 15% Europe Asia Pacific 33% Americas Japan Middle East/Africa Sept Sept 34% 14 15 in €m +24% change at constant rates

  7. Slide 7: Sales in Asia Pacific

    H1-16 SALES IN ASIA PACIFIC › Significant sales decline  Underperformance of Hong Kong and Macau  Positive development in other countries  China resumed growth › High jewellery outperformed 2 030 9% 9% 1 972 Europe 15% Hong Kong China 33% Rest of Asia Americas 13% Japan Sept Sept Middle East/Afri

  8. Slide 8: Sales in Americas

    H1-16 SALES IN AMERICAS › Subdued sales growth  Solid contribution of jewellery  Good performance from Chloé and Peter Millar 883 744 9% 9% Europe 15% Asia Pacific Americas 33% Japan Middle East/Africa Sept Sept 14 15 34% in €m +1% change at constant rates

  9. Slide 9: Sales in Japan

    H1-16 SALES IN JAPAN › Exceptional sales growth  Positive impact of weak yen and easy comparables  Strong performance of jewellery and watches 534 9% 9% Europe 358 15% Asia Pacific Americas 33% Japan Middle East/Africa Sept Sept 14 15 34% in €m +44% change at constant rates

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

    H1-16 SALES IN THE MIDDLE EAST AND AFRICA › Softer growth  Challenging comparables  Unfavourable currencies › Jewellery and leather enjoyed strong momentum 489 394 9% 9% Europe 15% Asia Pacific Americas 33% Japan Middle East/Africa Sept Sept 14 15 34% in €m +4% change at constant rates

  11. Slide 11: Sales by Network

    H1-16 SALES BY NETWORK Sept 13 Sept 14 Sept 15 › Strong retail sales in most geographies  In particular in Japan and Europe 52% 49% 51% 54% 48% 46% › Significant decline in wholesale  Primarily impacted by Asia Pacific Retail Wholesale Retail Wholesale 3 149 2 672 2 579 2 494 Sept Sept Sept Sept 1

  12. Slide 12: Sales by Product Line

    H1-16 SALES BY PRODUCT LINE › Watches, down mid-single digit  Primarily affected by wholesale in Asia Pacific and Americas 3% 5% 4% 48% Watches  Positive in retail 6% Jewellery Leather Goods › Jewellery continues to enjoy strong Clothing double digit growth Writing Instruments › Leather goods and

  13. Slide 13: Maisons Highlights

    H1-16 MAISONS HIGHLIGHTS › Cartier and Van Cleef & Arpels continued their strong performance with a contribution margin of 35% › Weak demand in Asia Pacific and strong Swiss franc weighed on Specialist Watchmakers: contribution margin down to 23% › Improvement at Montblanc, Chloé and Peter Millar he

  14. Slide 14: Performance – Jewellery Maisons

    H1-16 PERFORMANCE – JEWELLERY MAISONS › Strong increase in reported sales thanks to jewellery › Watches up in retail; challenging wholesale in Hong Kong & Macau › Growth in operating contribution, margin decreases  Anticipated manufacturing subactivity  Swiss franc strength 6 months €m Sept 15 Sep

  15. Slide 15: Jewellery Maisons

    H1-16 JEWELLERY MAISONS › Very strong retail  Significant jewellery sales across all price points  Good momentum in watches (Clé de Cartier) › Underperformance of watches in wholesale Teinte, Etourdissant collection › Stable retail network with two flagships under renovation  Paris Champs Elysées

  16. Slide 16: Jewellery Maisons

    H1-16 JEWELLERY MAISONS › Excellent performance  New Seven Seas high jewellery collection  Perlée and Alhambra jewellery collections  Rejuvenated Cadenas timepieces › Continued qualitative retail development  New Avenue Mall boutique in Kuwait City Cadenas Sertie  Cannes boutique relocated to L

  17. Slide 17: Performance – Specialist Watchmakers

    H1-16 PERFORMANCE – SPECIALIST WATCHMAKERS › Slight decline in organic sales; +8% in reported growth › Lower operating contribution  Difficult environment in Hong Kong and Macau  Strong CHF  Manufacturing subactivity 6 months €m Sept 15 Sept 14 Actual rates Sales 1 749 1 625 8% Operating contribu

  18. Slide 18: Specialist Watchmakers

    H1-16 SPECIALIST WATCHMAKERS › Good growth across Jewellery › Good organic growth in Europe, (Secrets & Light, Possession) Japan and the Middle East › Lower watch sales reflecting › Momentum driven by the 260th positioning and exposure to anniversary collection Hong Kong and Macau (Harmony), high en

  19. Slide 19: Specialist Watchmakers

    H1-16 SPECIALIST WATCHMAKERS › Good performance of high end › Impacted by HK & Macau watches (e.g. the 1815 Tourbillon) › Confirmed success of the › Extension of manufacturing site Excalibur collection completed › Growing appeal to women (Velvet) › First deliveries of Hommage Minute Repeater Hommage

  20. Slide 20: Specialist Watchmakers

    H1-16 SPECIALIST WATCHMAKERS › Continued good performance › Good organic growth across of Master, high complications channels and Rendez-vous › Driven by the rejuvenated › Roll out of the new POS concept Portugieser and Portofino lines Hybris Artistica Portugieser Perpetual Calendar Digital Date-Mon

  21. Slide 21: Specialist Watchmakers

    H1-16 SPECIALIST WATCHMAKERS › Successful launches included › Strong foothold in Europe the Luminor 1950 Equation of Time › Classima relaunch › First e-commerce site in the USA Luminor 1950 Classima Automatique Equation of Time 8 days Acciaio

  22. Slide 22: Performance – Other

    H1-16 PERFORMANCE – OTHER › Losses reduced to 11 million euros › Improving results at Montblanc, Chloé and Peter Millar offsetting deterioration at Alfred Dunhill and Lancel 6 months €m Sept 15 Sept 14 Actual rates Sales 895 765 17% Operating contribution -11 -17 35% Contribution margin -1.2% -2.2%

  23. Slide 23: Other

    H1-16 OTHER › Good organic sales growth › Excellent performance across channels and product lines  Leather strongest growth driver  Positive trend in watches  Resilience of writing instruments › Good retail performance including e-commerce and Korea Montblanc Meisterstück Sfumato SS15 campaign fe

  24. Slide 24: Other

    H1-16 OTHER › Western markets and Japan › Predominance of French continued to grow while Asia clientele and downsizing of Pacific struggles wholesale distribution network affecting sales › Menswear down; leather in line › Increasing share of tourism driven by successful launches (Charlie, Pop, Graph

  25. Slide 25: Financial Review

    Financial Review RICHEMONT

  26. Slide 26: Operating Profit

    H1-16 OPERATING PROFIT › 6% increase in operating profit  Good cost control in constant currency  Resilient operating margin of 24% despite CHF strength Period 6 months €m Sept 15 Sept 14 change Sales 5 821 5 073 15% Gross profit 3 786 3 349 13% Net operating expenses - 2 396 - 2 034 18% Selling a

  27. Slide 27: Gross Profit

    H1-16 GROSS PROFIT › 13% increase in gross profit  Weak euro and higher share of retail  Negative impact of CHF  Subactivity in manufacturing 3 786 66.0% 3 349 +13% -100bps 65.0% Sept Sept Sept Sept 14 15 14 15 in €m as a % of sales

  28. Slide 28: Operating Expenses

    H1-16 OPERATING EXPENSES › Increase of 18% reflects  Negative foreign exchange  Higher rentals and depreciation 5ppts -1ppt 0ppt +1ppt +1ppt €2 396m 12ppts €2 034m +18% 2 396 +22% Sept FY15 FX new boutiques A&P Admin S&D Other Sept FY16 2 034 1 440 1 179 +7% +13% 437 468 419 474 -1 14 Sept 14 Sept

  29. Slide 29: Net Finance Income and Costs

    H1-16 NET FINANCE INCOME AND COSTS › Increase in net finance income  Higher mark to market (non cash) gains on cash holding  Substantial reduction in hedging losses Period 6 months €m Sept 15 Sept 14 change Financial expense, net -4 -9 +5 Net foreign exchange gains on monetary items 130 39 +91 Net

  30. Slide 30: Profit from Continuing Operations

    H1-16 PROFIT FROM CONTINUING OPERATIONS › Net profit impacted by  Higher operating profit  Reversal in finance costs › Profit margin of 20.5% Period 6 months €m Sept 15 Sept 14 change Operating profit 1 390 1 315 +6% Net finance income/(costs) 76 -217 Profit before taxation 1 461 1 095 +33% Taxati

  31. Slide 31: Cash Flow from Operations

    H1-16 CASH FLOW FROM OPERATIONS* › Solid cashflow from operations maintained at over €1bn  Receivable portfolio remaining current  Cash investment in inventories flat Period 6 months €m Sept 15 Sept 14 change Operating profit* 1 311 1 311 - Depreciation and amortisation 271 233 38 Other items 31 1

  32. Slide 32: Capital Expenditure

    H1-16 CAPITAL EXPENDITURE* › Marked increase in capex  Investment programme continues  5% of Group sales Piaget – New flagship, Rue de la Paix, Paris 282 5.1% 260 +8% 4.8% A. Lange & Söhne – New manufacturing site, Glashütte Sept Sept Sept Sept 14 15 14 15 Gross in €m as a % of sales * including d

  33. Slide 33: Capital Expenditure

    H1-16 CAPITAL EXPENDITURE* › Significant investments in points of sales and manufacturing €260m €282m 33% Retail 45% Retail 28% 17% Cartier Joaillerie, Le Locle Manufacturing Manufacturing 39% 38% Other Other Montblanc, Taipei * including discontinued operations Sept 14 Sept 15

  34. Slide 34: Free Cash Flow

    H1-16 FREE CASH FLOW* › Increase in free cash flow to over €0.5bn  Higher cash flow from operations  Lower net tax payments Period 6 months €m Sept 15 Sept 14 change Cash flow from operations 1 055 1 008 47 Net change in tangible assets -242 -201 -41 Net change in intangible assets -35 -43 8 Net c

  35. Slide 35: Balance Sheet Strength

    BALANCE SHEET STRENGTH €18.9bn €18.9bn Fixed assets 17% Other non-current assets 6% Asset held for sale 4% Inventory Total equity 27% 74% Other current assets 8% Investments in money market and government 15% bond funds Non-current liabilities 5% 1% Liabilities held for sale Cash Current liabilities

  36. Slide 36: Conclusion

    Conclusion RICHEMONT

  37. Slide 37: October 2015 Sales

    OCTOBER 2015 SALES › -1% reported, -6% at constant currencies  Persistent weakness in Hong Kong & Macau  Retail and jewellery outperform  Wholesale watches challenging

  38. Slide 38: Post H1-16 Closing Events

    POST H1-16 CLOSING EVENTS › Yoox Net-a-Porter  Net gain of €623m  Expected net income from discontinued operations of €530m for FY16  50% of shares, 25% voting rights  Assets of €1.1bn recorded under investments in equity accounted investments

  39. Slide 39: Conclusion

    CONCLUSION › Volatility, primarily due to geopolitical risks and foreign exchange fluctuations, likely to continue to prevail › Long term strategy reaffirmed  Fostering organic growth through investments in all our Maisons  Jewellery ›A resilient product category ›Strong focus at Cartier, Van Clee

  40. Slide 40: Q&A Session

    ETOURDISSANT CARTIER Q&A Session

  41. Slide 41: Appendix

    Ix Append H Z ) 2 hl Me e) M

  42. Slide 42: Strategic Objectives

    STRATEGIC OBJECTIVES › Achieve long term organic growth building goodwill, rather than acquiring goodwill › By further developing competitive advantages through  Attraction and retention of entrepreneurial & creative management as well as skilled craftsmen  Control over production & product develo

  43. Slide 43: Financial Highlights

    FINANCIAL HIGHLIGHTS Sales* Gross profit* Operating profit* € million € million € million Sept 15 +15% 5 821 Sept 15 65% 3 786 Sept 15 24% 1 390 Sept 14 -5% 5 073 Sept 14 66% 3 349 Sept 14 26% 1 315 FY 15 +4% 10 410 FY 15 66% 6 876 FY 15 26% 2 670 FY 14 -1% 10 023 FY 14 65% 6 491 FY 14 24% 2 427 FY

  44. Slide 44: Hedging

    HEDGING › 70% of our forecasted net foreign currency cash flow exposure arising primarily in USD block, HKD, JPY, CNY is hedged versus CHF and Euro › In the case of USD, the net exposure takes into account purchases of precious metals and precious stones › Different types of currency derivatives can

  45. Slide 45: Sales by Region and Business Area

    H1-16 SALES BY REGION AND BUSINESS AREA Constant Actual 6 months €m Sept 15 Sept 14 rates* rates Europe 1 943 1 547 +24% +26% 33% Asia Pacific 1 972 2 030 -17% -3% 34% Americas 883 744 +1% +19% 15% Japan 534 358 +44% +49% 9% Middle East/Africa 489 394 +4% +24% 9% Total sales 5 821 5 073 +3% +15% 100

  46. Slide 46: Operating Result by Business Area

    H1-16 OPERATING RESULT BY BUSINESS AREA Period 6 months €m Sept 15 Sept 14 change Jewellery Maisons 1 101 973 +13% Specialist Watchmakers 402 461 -13% Other -11 -17 +35% Operating contribution 1 492 1 417 +5% Corporate costs -102 -102 - Central support services -95 -97 +2% Other operating (expense)/

  47. Slide 47: Group Results

    H1-16 GROUP RESULTS Period 6 months €m Sept 15 Sept 14 change Sales 5 821 5 073 +15% Cost of sales - 2 035 - 1 724 Gross profit 3 786 3 349 +13% Net operating expenses - 2 396 - 2 034 +18% Operating profit 1 390 1 315 +6% Net finance income/(costs) 76 -217 Share of post-tax results of equity-account

  48. Slide 48: Summary Balance Sheet and Inventory

    SUMMARY BALANCE SHEET AND INVENTORY €m Sept 15 Sept 14 Non-current assets 4 471 4 150 Current assets 14 476 13 321 Non-current liabilities -861 -749 Current liabilities -4 012 -4 458 Equity attributable to owners of the parent company -14 094 -12 268 Non-controlling interests 20 4 Equity -14 074 -12

  49. Slide 49: Retail Network

    RETAIL NETWORK vs Period change Sept 15 Internal External March 15 Internal External Montblanc 527 279 248 537 8 -18 -10 Cartier 284 200 84 286 -1 -1 -2 Alfred Dunhill 208 148 60 214 2 -8 -6 Chloé 173 100 73 171 1 1 2 Van Cleef & Arpels 109 73 36 105 0 4 4 Piaget 98 67 31 94 3 1 4 Lancel 91 68 23 10

  50. Slide 50: Main Product Launches

    H1-16 MAIN PRODUCT LAUNCHES › Jewellery › Jewellery  Etourdissant HJ collection  Seven Seas HJ collection  Panthère de Cartier  Alhambra one-motif long necklace  Amulette de Cartier  Two Butterfly Tsavorites  Bridal “Your Poetic Setting” › Watches  Clé de Cartier, precious › Watches  Clé de

  51. Slide 51: Main Product Launches

    H1-16 MAIN PRODUCT LAUNCHES › Watches › Harmony – 260th Anniversary collection  Altiplano Chrono 883P › Métiers d’Art Florilège › Jewellery  Secrets & Lights HJ  Mediterranean Garden  Possession new references › Saxonia Automatic & other references › Hommage Minute Repeater Tourbillon › Lange 1

  52. Slide 52: Main Product Launches

    H1-16 MAIN PRODUCT LAUNCHES › Hybris Artistica collection › Portugieser, new references › Rendez-vous chocolat › Portofino Hand-Wound Monopusher › Master Control Calendar Meteorite › Luminor 1950 Equation of time 8 Days - › Classima new references 47mm › Capeland new references › Radiomir 8 Days Acc

  53. Slide 53: Main Product Launches

    H1-16 MAIN PRODUCT LAUNCHES › Writing Instruments › Albany LLG new collection  M – new collection › Bourdon SLG new collection › Watches › Seasonal colours on Boston, Bourdon,  StarWalker Urban Speed Chassis and Guarsdman  Star Roman › Leather  Meisterstück Sfumato  Montblanc Nightflight › Char

  54. Slide 54: Richemont

    RI CHEMONT

Compagnie Financière Richemont — H1 FY2016 Earnings Presentation on 6ix