Compagnie Financiere Richemont Sa · SIX:CFR
Compagnie Financiere Richemont Sa — H1 FY2014 Earnings Presentation
59 slides from Compagnie Financiere Richemont Sa's earnings presentation, November 2013
Slide 1: FY14 Interim Results
FY 14 Interim Results As at September 30, 2013
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
Slide 3: H1-14 Results
H1-14 Results Highlights Review of Operations Financial Review Conclusion Q&A Session
Slide 4: H1-14 Key Figures
Sales, € m H1-14 Key Figures + 29% + 14% + 33% 10 150 8 868 + 21% + 4% 6 892 5 106 5 324 Satisfactory sales growth in a subdued environment +9% at constant rates FY11 FY12 FY13 Sept 12 Sept 13 +4% to € 5 324m reflecting negative impact of weakening of US$ and Yen Operating profit, € m Still
Slide 5: Review of Operations
Review of Operations
Slide 6: Sales in Europe
H1-14 Sales in Europe Growth slowing to low double digit Driven by tourism, albeit at a lower rate, and domestic clientele Comparatives affected by exceptional High Jewellery sale in France in H1-13 Supported by Van Cleef & Arpels and the Specialist Watchmakers H1-14 Sales = € 1 653m + 26% +
Slide 7: Sales in the Middle East and Africa
H1-14 Sales in the Middle East and Africa Double digit growth, albeit at a slower pace Good momentum across most countries Strong contribution from premium watches, jewellery and Montblanc H1-14 Sales = € 349m + 39% + 28% + 11% + 6% Sept 10 Sept 11 Sept 12 Sept 13 % change at constant rates
Slide 8: Sales in Asia Pacific
H1-14 Sales in Asia Pacific Contrasted growth continues Double digit growth in HK, Macau & South East Asia (Malaysia, Thailand, Indonesia) Slowdown in China after three exceptional years Retail outperforms wholesale Main performers: Van Cleef & Arpels, Jaeger-LeCoultre and IWC H1-14 Sales
Slide 9: Sales in Americas
H1-14 Sales in Americas Strong double digit sales growth 5% contribution of Peter Millar Solid performances in all segments and product categories Sustained momentum throughout period H1-14 Sales = € 784m + 37% + 35% + 17% + 4% Sept 10 Sept 11 Sept 12 Sept 13 % change at constant rates
Slide 10: Sales in Japan
H1-14 Sales in Japan Robust double digit growth Benefiting from strong domestic consumption enhanced by attractive pricing Excellent performance of most Maisons H1-14 Sales = € 414m + 18% + 9% + 4% + 4% Sept 10 Sept 11 Sept 12 Sept 13 % change at constant rates
Slide 11: Sales by Network
H1-14 Sales by Network Good performance in Retail driven by the Maisons’ existing boutiques, Net-a-Porter group and 29 new stores primarily in Asia Pacific Wholesale performance remains impacted by cautiousness Retail € 2 747m Wholesale € 2 577m + 44% + 35% + 29% + 20% + 15% + 11% + 8% + 7% Sept
Slide 12: Sales by Product line
H1-14 Sales by Product line Core segments generate 77% of Group sales and 89% of growth Jewellery continues to enjoy strong growth Watches, main contributor, grow more moderately after three consecutive outstanding years 6 months €m Sept 13 Sept 12 Constant rates Actual rates Watches 2 710 2 6
Slide 13: Maisons Highlights
H1-14 Maisons Highlights Stability of profitability at exceptionally high level at the Jewellery Maisons and Specialist Watchmakers Montblanc Maison affected by lower sales and one off items Results of Other Maisons affected by soft sales momentum Continued progress at the Net-a-Porter Group
Slide 14: Performance – Jewellery Maisons
H1-14 Performance – Jewellery Maisons Remarkable performance of jewellery compensates slower performance of Cartier watches Stable operating contribution margin of 37% thanks to steady profitability at Cartier and further improvement at Van Cleef & Arpels 6 months €m Sept 13 Sept 12 Actual rates
Slide 15: Jewellery Maisons
H1-14 Jewellery Maisons L’Odyssée Moderate organic sales growth, primarily led by Collection Japan, South East Asia, Americas and Retail Jewellery (double digit increase), thanks to the recently launched Paris Nouvelle Vague and iconic Panther & Love lines Fine Watchmaking watches, Steel wat
Slide 16: Jewellery Maisons
H1-14 Jewellery Maisons Outstanding performance across regions and segments supported by Alhambra and Between the Finger rings jewellery collections Pierres de Caractère - Variations High Jewellery collection Charm and Poetic Complications™ timepieces Ongoing distribution upgrade 6 bouti
Slide 17: Performance – Specialist Watchmakers
H1-14 Performance – Specialist Watchmakers Good increase in sales across most Maisons 7% increase in operating contribution attributable to Pricing power Distribution and product mix Improved retail network performance Largely compensating for substantial forex headwinds Half year oper
Slide 18: Specialist Watchmakers
H1-14 Specialist Watchmakers Robust sales growth, primarily driven Significant growth constrained by shortages by Europe and Japan. Positive sales Good performance of Retail positively development in all other regions supported by new stores Strongest growth achieved in Jewellery Iconic Pa
Slide 19: Specialist Watchmakers
H1-14 Specialist Watchmakers Strong demand for high complications Substantial sales growth & new models launched at SIHH13 Broad based regional growth Grand Complication High end complications : Excalibur Quatuor and The Grand Lange 1 Excalibur Double Tourbillon Velvet line for ladies,
Slide 20: Specialist Watchmakers
H1-14 Specialist Watchmakers Remarkable sales growth across Good growth across most geographies geographies and channels driven by Driven by the Portuguese, Pilot & Portofino All collections lines and launch of the new Ingenieur line Including the new feminine line "Rendez-Vous“ Celebrat
Slide 21: Specialist Watchmakers
H1-14 Specialist Watchmakers Robust sales growth, esp. in Europe, Notable growth in sales, primarily thanks to the Middle East and Japan, led by Europe and easier comparatives The Manifattura Collection Clifton and Classima doing well Notably the Luminor 1950 collection Improvement expec
Slide 22: Performance – Montblanc Maison
H1-14 Performance – Sales momentum supported by watch growth, but negatively impacted by weight of writing instruments, domestic Chinese & Western European clientele Weak Asia Pacific vs growth across all other regions Positive E-commerce development Operating contribution halved due to soft
Slide 23: Performance – Other
H1-14 Performance – Other Improving results at the Net-a-Porter Group and manufacturing as well as positive contribution from Peter Millar partly offsetting underperformance at A Dunhill, Chloé and Lancel Losses reflect primarily lower sales 6 months €m Sept 13 Sept 12 Actual rates Sales 712 672
Slide 24: Fashion & Accessories
H1-14 Fashion & Accessories Challenging trading due to China Decline in sales deriving from French environment market exposure Significant growth in Japan not enough to New models generating strong demand compensate the depreciation of the yen and subsequent shortages New management review
Slide 25: Fashion & Accessories
H1-14 Fashion & Accessories Sales driven by Asia Pacific and the Growth rate remains well above Group Americas, Retail and Ready-to-Wear rates, driven by Americas, MR PORTER and the OUTNET sites Promising debut of Baylee bag website New Baylee Bag
Slide 26: Financial Review
Financial Review “L’école” in Japan – Van Cleef & Arpels
Slide 27: Operating Profit
H1-14 Operating Profit Slight decline in operating profit Strong control of operating expenses 130 basis point reduction in operating margin 6 months €m Sept 13 Sept 12 Period change Sales 5 324 5 106 + 4% Gross profit 3 402 3 310 + 3% Net operating expenses - 2 032 - 1 930 + 5% Selling and di
Slide 28: Gross Profit
H1-14 Gross Profit Another increase in gross profit, but below the rate of sales Primarily reflects negative forex Positive pricing power continues € million as a % of sales + 3% + 24% - 160bps + 160bps - 90bps + 26% 3 310 3 402 64.8 % 64.8 % 2 665 63.9 % 2 113 63.2 % Sept 10 Sept 11 Sept 12 S
Slide 29: Operating Expenses
H1-14 Operating Expenses 3% Increase as planned 1% 1% At constant currency, in line with sales growth -4% 4% + 5% 1 930 2 032 2 032 1 930 Sept12 Fx New A&P S&D Admin Sept13 + 5% boutiques 1 097 1 149 + 0% + 13% 418 419 407 459 8 5 Sept 12 Sept 13 Sept 12 Sept 13 Sept 12 Sept 13 Sept 12 Sept 13 S
Slide 30: Net Finance Income and Costs
H1-14 Net Finance Income and Costs Positive net finance income thanks to Hedging gains Positive non cash gains on Euro bonds funds thanks to a weaker CHF 6 months €m Sept 13 Sept 12 Period change Financial (expense)/income, net - 11 - 2 - 9 Net gains/(losses) on monetary items and hedging acti
Slide 31: Profit
H1-14 Profit Net profit up 10% driven by positive impact of Group hedging program 6 months €m Sept 13 Sept 12 Period change Operating profit 1 370 1 380 - 1% Net finance income/(costs) 69 - 99 Share of post taxation results of equity-accounted investments - 2 - 4 Profit before taxation 1 437 1 277
Slide 32: Cash flow from Operations
H1-14 Cash flow from Operations Sept 13 1 292 Strong increase in cash flow from operations Sept 12 577 Decrease in working capital reflects tight control of inventories Receivable portfolio remains healthy Sept 11 606 6 months €m Sept 13 Sept 12 Period change Operating profit 1 370 1 380 - 10
Slide 33: Capital Expenditure
H1-14 Capital Expenditure Capital expenditure in line with last year Annual guidance of €800-850m maintained Vacheron Constantin – Le Brassus Vallée de Joux, Switzerland Gross € 256m € 257m as a % of sales 5.0% 4.8% Sept 12 Sept 13 Sept 12 Sept 13 Cartier – Sowwah Square, Abu Dhabi
Slide 34: Capital Expenditure
H1-14 Capital Expenditure Increased weight given to manufacturing 43% of Group capex € 256m € 257m Retail 37% 32% Retail Manufacturing 38% 43% Manufacturing Other 25% 25% Other Cartier – Le Couvet, Switzerland Sept 12 Sept 13
Slide 35: Free Cash flow
H1-14 Free Cash flow Sharp increase reflects strong cash flow from operations and stable investment programme 6 months €m Sept 13 Sept 12 Period change Cash flow from operations 1 292 577 715 Net change in tangible assets - 208 - 217 9 Net change in intangible assets - 47 - 38 - 9 Acquisition of i
Slide 36: Balance Sheet Strength
Balance Sheet Strength € 15.6 bn € 15.6 bn Fixed Assets 20% Other Non-Current Assets 5% 70% Total Equity Inventories 28% Other Current Assets 9% ST Investments 17% 5% Non-Current Liabilities Cash 21% 25% Current Liabilities Assets Liabilities
Slide 37: Areas of Focus & Conclusion
Areas of Focus & Conclusion
Slide 38: October 2013 Sales
October 2013 Sales Continued satisfactory trend 6% reported growth, 12% constant currency growth Driven by retail and jewellery, particularly in Asia Pacific Growth in all regions in reported terms, except for Japan
Slide 39: Conclusion
Conclusion Piaget jewellery update Shift in Montblanc strategy Continued investment emphasis for Cartier Update on ERP Gemini project Update on Maisons review
Slide 40: Q&A Session
Q&A Session
Slide 41: Appendix
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Slide 42: Financial Highlights
Financial Highlights Sales, € m Gross margin, € m Operating profit, € m 1 380 1 370 + 14% 3 310 + 29% 4 394 5 651 6 519 3 402 2 048 2 426 27.0% 25.7% + 33% 10 150 64.8% 1 355 8 868 63.7% 63.7% 64.2% 63.9% 23.1% 23.9% + 21% + 4% 6 892 19.7% 5 106 5 324 FY11 FY12 FY13 Sept 12 Sept 13 FY11 FY12 FY13 Se
Slide 43: Hedging Policy
Hedging Policy 70% of our forecasted net foreign currency cash flow exposure arising 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 Hedges are entered into each month in respect o
Slide 44: Foreign Currency Hedging Contracts
Foreign Currency Hedging Contracts 6 months average 12 months average versus the CHF Hedge rate to Sept 13 Actual rate to Sept 13 Hedge rate to March 14 YEN 91 105 101 US $ 0.95 0.94 0.92 HK $ 8.17 8.28 8.38 CNY 6.78 6.56 6.78 Average Rates against the CHF 6 months to 30 Sept 13 6 months to 30 Sept
Slide 45: Sales by Region
H1-14 Sales by Region 6 months €m Sept 13 Sept 12 Constant rates Actual rates Europe 1 653 1 529 + 10% + 8% Middle East/Africa 349 328 + 11% + 6% Asia Pacific 2 124 2 103 + 4% + 1% Americas 784 698 + 17% + 12% Japan 414 448 + 18% - 8% Total sales 5 324 5 106 + 9% + 4%
Slide 46: Sales by Business Area
H1-14 Sales by Business Area 6 months €m Sept 13 Sept 12 Constant rates Actual rates Jewellery Maisons 2 667 2 607 + 8% + 2% Specialist Watchmakers 1 587 1 459 + 13% + 9% Montblanc Maison 358 368 + 1% - 3% Other 712 672 + 12% + 6% Total sales 5 324 5 106 + 9% + 4%
Slide 47: Reported Operating Result by Business Area
H1-14 Reported Operating Result by Business Area 6 months €m Sept 13 Sept 12 Period change Jewellery Maisons 984 958 + 3% 66% Specialist Watchmakers 504 470 + 7% 34% Montblanc Maison 24 53 - 55% 2% Other - 35 - 12 n/a -2% Operating contribution 1 477 1 469 + 1% 100% Corporate costs - 107 - 89 + 20%
Slide 48: Group Results
H1-14 Group Results 6 months €m Sept 13 Sept 12 Period change Sales 5 324 5 106 + 4% Cost of sales - 1 922 - 1 796 + 7% Gross profit 3 402 3 310 + 3% Net operating expenses - 2 032 - 1 930 + 5% Operating profit 1 370 1 380 - 1% Net finance income/(costs) 69 - 99 Share of post taxation results of equ
Slide 49: Summary Balance Sheet
Summary Balance Sheet €m Sept 13 Sept 12 Non-current assets 3 921 3 340 Current assets 11 688 9 895 Non-current liabilities - 819 - 529 Current liabilities - 3 800 - 3 436 Equity attributable to owners of the parent company - 10 994 - 9 268 Non-controlling interests 4 - 2 Equity - 10 990 - 9 270 inc
Slide 50: Inventory
Inventory €m Sept 13 Sept 12 Period change Finished goods 2 667 2 500 167 + 7% Raw materials and work in progress 1 677 1 538 139 + 9% Total 4 344 4 038 306 + 8% Rotation Sept 13 Sept 12 Number of months of COGS 16.6 16.4
Slide 51: Retail Network
Retail Network Sept 13 Internal External vs PY Internal vs PY External March 2013 Montblanc 446 233 213 + 5 + 8 433 Cartier 292 196 96 + 4 - 288 Alfred Dunhill 235 147 88 + 1 - 234 Chloé 171 92 79 + 2 - 10 179 Lancel 120 76 44 - - 4 124 Van Cleef & Arpels 102 69 33 + 6 - 2 98 Piaget 89 61 28 - + 2 8
Slide 52: Main Product Launches & Events
H1-14 Main Product Launches & Events Jewellery Jewellery L’Odyssée HJ collection (Sept launch) Pierres de Caractère – Variations HJ Alhambra Malachite Paris Nouvelle Vague Two Butterfly launches for the Between the Maillon Panthère Fine Finger rings collection Watches Bridal “Blossomin
Slide 53: Main Product Launches & Events
H1-14 Main Product Launches & Events Watches Watches Limelight Gala (Sept launch) Métiers d’Art Florilège (Sept launch) Piaget Altiplano 40mn with date (Sept launch) Métiers d’Art Hommage à l’Art de la Danse Piaget Emperador Minute Repeater (Sept launch) Events Jewellery Watches & Wonder
Slide 54: Main Product Launches & Events
H1-14 Main Product Launches & Events Watches Watches 1815 Up/Down Excalibur Quatuor Grand Lange 1 (WG) Excalibur 42 Chronograph & Skeleton Grand Lange 1 “Lumen” Excalibur 36 on metal bracelet – July 2013 Saxonia Annual Calendar in platinum Excalibur 45 Double Tourbillon Skeleton and
Slide 55: Main Product Launches & Events
H1-14 Main Product Launches & Events Watches Watches Grande Reverso Ultra Thin Duoface Blue Ingenieur Automatic Master Ultra Thin Jubilee Ingenieur Chronograph Racer Master Grande Tradition Tourbillon Cylindrique Ingenieur Chronograph Silberpfeil à Quantième Perpétuel Jubilee Portugues
Slide 56: Main Product Launches & Events
H1-14 Main Product Launches & Events Watches Watches Luminor Marina 1950 3 Days Automatic - 42mm Clifton: New collection Luminor Submersible 1950 2500m 3 Days Hampton Lady, two tone & double wrap-around Automatic Titanio - 47mm Linea Automatic, 27mm Radiomir 1940 - 42mm Capeland, World
Slide 57: Main Product Launches & Events
H1-14 Main Product Launches & Events Writing Instruments FP Heritage Collection Resin 1912 FP Honoré de Balzac Limited Edition Watches Star Roman Quantieme Complet Nicolas Rieussec Rising Hours Leather Meisterstück Selection Double Gusset Briefcase Cognac Events Young Director Project Pr
Slide 58: Main Product Launches & Events
H1-14 Main Product Launches & Events Leather Leather L de Lancel Baylee bag 48 50 Events Opéra Chloé Summer Collection Fashion Show at Lycée Carnot – Sept
Slide 59: Richemont
RI CHEMONT
Compagnie Financière Richemont — H1 FY2014 Earnings Presentation on 6ix