Compagnie Financiere Richemont Sa · SIX:CFR
Compagnie Financiere Richemont Sa — FY2021 Earnings Presentation
51 slides from Compagnie Financiere Richemont Sa's earnings presentation, Mar 31, 2021
Slide 1: FY21 Annual Results
FY21 ANNUAL RESULTS 31 MARCH 2021
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
Slide 3: Agenda
› Highlights › Operations › Financials › Conclusion › Q&A
Slide 4: Highlights
Highlights RICHEMONT
Slide 5: FY21 Key Figures
FY21 KEY FIGURES › Strong financial performance; full year sales down by 5% and 8% at constant and actual rates, respectively Sales in € million ▪ As initial Covid measures eased, H2 sales grew by FY21 13 144 17% and 12% at constant and actual rates FY20 14 238 ▪ Q4 sales up 36% and 30% at constant
Slide 6: Highlights
HIGHLIGHTS Q4-21 vs Q4-20 Q4-21 vs Q4-19 Constant Actual Constant Actual Q4-21 Q4-20 Q4-19 rates rates rates rates Jewellery M aisons 2 032 1 319 1 644 +62% +54% +28% +24% Specialist Watchmakers 523 474 640 +15% +10% -16% -18% Online Distributors 595 578 574 +8% +3% +7% +4% Other 364 325 421 +17% +1
Slide 7: Highlights
HIGHLIGHTS › Operational agility ▪ Strong performance led by the Jewellery Maisons, online retail and Asia Pacific; return to growth for Specialist Watchmakers ▪ Efficient management of challenging manufacturing and distribution context ▪ Strong growth in mainland China, return to growth in other ge
Slide 8: Operations
Operations RICHEMONT
Slide 9: Overview of Revenue by Region
FY21 OVERVIEW OF REVENUE BY REGION 23% -31% › Growth in Asia Pacific partially Europe Japan mitigating declines in other 7% -22% regions 18% -15% 7% Americas Middle East -1% 45%, +19% › Europe and Japan most and Africa Asia Pacific affected by pandemic % of sales, % change at actual rates › Rebalanc
Slide 10: Sales - Europe
FY21 SALES - EUROPE › Sales declined by 30% ▪ Impact from recurring periods of store closures and lack of international tourism; partly mitigated by increased local demand ▪ Improvement in H2 ▪ Triple-digit growth in Maisons’ online retail sales +12% +9% +3% +4% Japan Middle East and Africa -7% 7% 7
Slide 11: Sales - Asia Pacific
FY21 SALES - ASIA PACIFIC › Sales increased by 22% ▪ Triple-digit growth in mainland China, driven by Jewellery Maisons and Specialist Watchmakers; improvement in other main markets in H2 ▪ Q4 growth reflected favourable comparatives and continued outbound travel restrictions ▪ Retail increased in a
Slide 12: Sales - Americas
FY21 SALES - AMERICAS › Sales lower by 10% ▪ Sequential quarterly improvement ▪ Strength of Jewellery Maisons ▪ Growth in online retail more than offset by declines in other channels +21% +10% +3% +5% +6% +6% 0% +1% Japan Middle East and Africa 7% 7% -10% Americas 18%, €2 388m 18% Europe 23% Asia Pa
Slide 13: Sales - Japan
FY21 SALES - JAPAN › Sales 21% lower than prior year ▪ Impacted by lack of international tourism ▪ Lower sales in all business areas ▪ Good growth in online retail +19% +15% +8% +1% Japan -1% 7%, €940m Middle East and Africa -7% 7% 7% -21% -21% Americas -26% 18% Europe 23% -64% Asia Pacific 45% Q1 Q
Slide 14: Sales - Middle East and Africa
FY21 SALES - MIDDLE EAST AND AFRICA › Mid-single digit increase in sales ▪ Resilient local demand and return of international tourism ▪ Double-digit increases at Jewellery Maisons and Online Distributors ▪ Strong growth in retail and online retail; decline in wholesale +36% +27% Japan Middle East an
Slide 15: Sales by Distribution Channel
FY21 SALES BY DISTRIBUTION CHANNEL › Retail sales rose by 2% ▪ Strong double-digit increase in Asia Pacific and Middle East and Africa; growth in Jewellery Maisons more than offsetting declines elsewhere › Online retail sales increased by 9% ▪ Growth in all regions with triple-digit progression at M
Slide 16: Performance - Jewellery Maisons
FY21 PERFORMANCE – JEWELLERY MAISONS › Sales increased by 3% ▪ Double-digit growth in Asia Pacific and Middle East and Africa ▪ Strength in retail and online retail › Operating margin improved to 31.0% ▪ Resilient sales combined with cost control and focus on strategic investments ▪ Successfully mit
Slide 17: Jewellery Maisons
FY21 JEWELLERY MAISONS › Agility and flexibility in manufacturing and global operations, managing a trough in Q1 and a high in Q4 › Enduring appeal of iconic collections supported by product enrichment, with Clash Supple and Santos at Cartier, Alhambra, Frivole and Poetic Complications at Van Cleef
Slide 18: Performance - Specialist Watchmakers
FY21 PERFORMANCE – SPECIALIST WATCHMAKERS › Sales lower by 21%; significant improvement in H2 ▪ Double-digit increase in Asia Pacific, declines in other regions ▪ Triple-digit growth in online retail, decline in wholesale, retail more resilient ▪ Sell out – sell in ratio above 100%; strong partnersh
Slide 19: Specialist Watchmakers
FY21 SPECIALIST WATCHMAKERS › Lasting appeal of iconic collections supported by new references, namely in the Pilot and Portugieser lines at IWC, Master and Reverso lines at Jaeger-LeCoultre, the Luminor line at Panerai, the Possession and Limelight Gala collections at Piaget as well as the Overseas
Slide 20: Performance - Online Distributors
FY21 PERFORMANCE – ONLINE DISTRIBUTORS › Sales contracted by 9%; positive in H2 ▪ Growth in Middle East and Africa; relative resilience in Europe and Japan ▪ Continued competitive environment › Operating loss reduced to €223m, margin 30bps down ▪ Strict cost control contributed to a reduction in ope
Slide 21: Online Distributors
FY21 ONLINE DISTRIBUTORS › NET-A-PORTER, MR PORTER, YOOX and THE OUTNET ▪ New CEO and organisation ▪ NET-A-PORTER replatforming on track ▪ Good development of the JV with Alibaba ▪ Development of the watch and jewellery offer › Watchfinder & Co. ▪ Continued international expansion, with boutique ope
Slide 22: Performance - Other
FY21 PERFORMANCE – OTHER › Sales decreased by 25% ▪ Declines in all regions; notable strength in mainland China ▪ Strong growth in online retail, now 17% of sales, wholesale strongly impacted by travel retail and temporary store closures in Europe ▪ Resilience of Peter Millar › Operating loss of €24
Slide 23: Other - Fashion & Accessories
FY21 OTHER – FASHION & ACCESSORIES › A number of major appointments ▪ New CEO for the F&A Maisons division ▪ New creative directors at Chloé, Alaïa and Montblanc › Digital ▪ New e-commerce platform at Peter Millar ▪ Launch of Tmall Pavilion flagship stores for Chloé, dunhill and Montblanc ▪ Digital
Slide 24: Financials
Financials RICHEMONT WHAT MOVES YOU, MAKES YOU Spike Lee with his Meisterstiick pen. Provoking thought since 1986. MONTBLANC
Slide 25: Gross Profit
FY21 GROSS PROFIT › Gross profit decreased by 9% › Gross margin at 59.8%, down 70bps 8 611 7 861 -9% ▪ Lower manufacturing capacity utilisation ▪ Adverse currency movements ▪ Higher gold prices FY21 FY20 ▪ Higher sales mix towards locations with €m in €m higher import duties 60.5% ▪ Highly competiti
Slide 26: Operating Expenses
FY21 OPERATING EXPENSES › 10% reduction in operating expenses, 4% Selling and Distribution outpacing sales decline -5% 23% Communication Fulfilment 51% ▪ Strict cost control on Selling and Distribution +1% 6% Administrative 16% Other ▪ Communication costs down due to lower -27% -8% spending and phys
Slide 27: Operating Profit
FY21 OPERATING PROFIT › Operating profit lower by 3% › Operating margin up 50bps to 11.2% 12 months €m FY21 FY20 Change Sales 13 144 14 238 -8% Gross profit 7 861 8 611 -9% Net operating expenses -6 383 -7 093 -10% Selling and distribution expenses -3 241 -3 512 -8% Communication expenses -1 030 -1
Slide 28: Net Finance Income/(Costs)
FY21 NET FINANCE INCOME/(COSTS) › €362m swing in net finance income due to ▪ Negative swing of €72m in financial expense line and of €124m in hedging activities ▪ More than offset by a favourable variance of €294m in net forex on monetary items and €255m improvement in fair value adjustments 12 mont
Slide 29: Profit for the Year
FY21 PROFIT FOR THE YEAR › Profit up by 38% to €1 289m, reflecting primarily a €362m swing in net finance income › Profit margin up 330bps to 9.8% 12 months €m FY21 FY20 Change Operating profit 1 478 1 518 -3% Net finance income/(costs) 25 - 337 NR Share of equity-accounted investments' results 12 1
Slide 30: Cash Flow from Operating Activities
FY21 CASH FLOW FROM OPERATING ACTIVITIES › €848m increase in cash flow from operating activities due to ▪ Stringent inventory control and working capital management ▪ Sequential normalisation of debtor and creditor positions as trading conditions improved 12 months €m FY21 FY20 Change Operating prof
Slide 31: Capital Expenditure
FY21 CAPITAL EXPENDITURE › Capex 30% lower than prior year ▪ Selective investments in store network, and manufacturing facilities for Cartier ▪ Investments in IT, mainly at NET-A-PORTER and YOOX €513m €735m Cartier - Saint Honoré, Paris Distribution 45% 44% Manufacturing 13% 13% 5.2% 3.9% Other 42%
Slide 32: Free Cash Flow
FY21 FREE CASH FLOW › Strong increase in free cash flow ▪ Higher cash flow from operating activities, lower capital expenditures and lease payments partly due to rent relief ▪ Partly offset by investment in Farfetch convertible notes 12 months €m FY21 FY20 Change Cash flow from operating activities
Slide 33: Balance Sheet Strength
BALANCE SHEET STRENGTH €35.4bn €35.4bn Fixed assets 34% 51% Total equity Other non-current assets 6% Inventory 18% Other current assets 4% 26% Non-current liabilities Investments in money market and externally 16% managed funds 23% Current liabilities Cash 22% Assets Equity and liabilities
Slide 34: Dividend
DIVIDEND › The Board proposes a dividend of CHF2.00 per 1 A share/ 10 B shares › 100% increase, given an improving economic environment, solid cash flow generation and attractive long term prospects for the luxury goods industry
Slide 35: Conclusion
Conclusion RICHEMONT
Slide 36: Progress on Our Movement for Better Luxury
PROGRESS ON OUR MOVEMENT FOR BETTER LUXURY › Good progress made on sustainability roadmap ▪ Strengthened governance with new Board committee and SDG Taskforce initiative ▪ More robust initiatives to support colleagues around wellbeing, education and diversity, equity & inclusion ▪ Continued Covid-19
Slide 37: Sustainability Initiatives
SUSTAINABILITY INITIATIVES › ‘Cartier for Nature’ fund and zero single-use plastics initiative › IWC RJC COC certification › Panerai’s Submersible eLAB-ID concept watch › Sustainability indicators for Chloé management, sourcing and social initiatives › Infinity programme at YOOX NET-A-PORTER to prom
Slide 38: Summary
FY21 SUMMARY › Strong performance in exceptional circumstances ▪ Following Covid-19 impact in H1, strong rebound in H2 led by the Jewellery Maisons, online retail and Asia Pacific ▪ Continued strength of Jewellery Maisons with sales exceeding FY19 levels › Discipline and agility in execution ▪ Swift
Slide 39: Richemont Digital Journey Acceleration
RICHEMONT DIGITAL JOURNEY ACCELERATION › Unprecedented growth of online retail and digitally enabled sales at our Maisons ▪ Triple-digit growth in our Maisons’online retail, now 7% of sales ▪ Digital enabling more diverse customer journeys and underpinning retail sales › Reinforcement of Richemont’s
Slide 40: Conclusion
CONCLUSION › Strength of Richemont in FY21 supported by: ▪ Maisons’ brand equity rooted in heritage, craftsmanship, creativity and innovation ▪ Customer centricity and the ability to connect with clients through ‘new retail’ initiatives and strong local presence in markets with faster demand recover
Slide 41: Q&A
Q&A At Richemont, we craft the future
Slide 42: Appendix
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Slide 43: Financial Highlights
FINANCIAL HIGHLIGHTS Sales Profit for the year Dividends € million € million CHF 1 A share/10 B shares CR HR ∆% ∆% FY21 13 144 FY21 9.8% 1 289 +39% FY21 2.00 100% -5% -8% FY20 14 238 0% +2% FY20 6.5% 931 -67% FY20 1.00 -50% FY19 13 989 +27% +27% FY19 19.9% 2 787 +128% FY19 2.00 +5% FY18 11 013 +8% +
Slide 44: Sales by Product Line
FY21 SALES BY PRODUCT LINE 2% 3% 9% 42% Jewellery Watches 13% Clothing Leather goods Writing instruments Other 31% Group total Excluding Online Distributors Constant Actual Constant Actual 12 months €m FY21 rates rates FY21 rates rates Jewellery 5 553 +10% +7% 5 500 +11% +7% Watches 4 085 -13% -15%
Slide 45: 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
Slide 46: Sales by Region and Business Area
FY21 SALES BY REGION AND BUSINESS AREA Constant Actual % of 12 months €m FY21 FY20 rates* rates total Europe 2 955 4 298 -30% -31% 23% Asia Pacific 5 937 4 992 +22% +19% 45% Americas 2 388 2 806 -10% -15% 18% Japan 940 1 212 -21% -22% 7% Middle East and Africa 924 930 +4% -1% 7% Total sales 13 144 1
Slide 47: Operating Result by Business Area
FY21 OPERATING RESULT BY BUSINESS AREA 12 months €m FY21 FY20 Change Jewellery Maisons 2 309 2 077 +11% Specialist Watchmakers 132 304 -57% Online Distributors -223 -241 +7% Other -241 -141 -71% Elimination -6 -2 NR Operating results 1 971 1 997 -1% Valuation adjustments on acquisitions -197 -196 +1
Slide 48: Group Results
FY21 GROUP RESULTS 12 months €m FY21 FY20 Change Sales 13 144 14 238 -8% Cost of sales -5 283 -5 627 -6% Gross profit 7 861 8 611 -9% Net operating expenses -6 383 -7 093 -10% Operating profit 1 478 1 518 -3% Net finance income/(costs) 25 -337 NR Share of equity-accounted investments' results 12 17
Slide 49: Summary Balance Sheet and Inventory
SUMMARY BALANCE SHEET AND INVENTORY at 31 March €m FY21 FY20 Non-current assets 14 153 13 660 Current assets 21 206 16 801 Non-current liabilities 9 339 7 327 Current liabilities 8 136 5 875 Equity attributable to owners of the parent company 17 774 17 136 Non-controlling interests 110 123 Equity 17
Slide 50: Retail Network
RETAIL NETWORK 31 March 31 March Net change 2021 Internal Franchise 2020 Internal Franchise Total Internal Franchise Jewellery Maisons 463 326 137 457 321 136 +6 +5 +1 Cartier 269 201 68 270 203 67 -1 -2 +1 Van Cleef & Arpels 139 102 37 140 99 41 -1 +3 -4 Buccellati 55 23 32 47 19 28 +8 +4 +4 Specia
Slide 51: 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. • NET-A-PORTER • MR PORTER • THE OUTNET • YOOX • ONLINE FLAGSHIP STORES • Alaïa • AZ F
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