DURBAN – RICHEMONT’S share price rose by more than 6 percent to a year-high of R157.01 a share on the JSE on Friday morning after the Swiss luxury goods company reported a strong surge in earnings for the year to end-March despite its sales falling by 8 percent.
The share closed the day 14.76 percent higher at R154. 17.
The group said full-year sales declined to €13.14 billion (R223.4bn) compared to €14.24bn last year, due to closures of points of sales, logistics centres and manufacturing sites, as well as the halt in international tourism resulting from the Covid-19 pandemic.
The first half of the financial year saw group sales contracting by 25 percent at constant exchange rates, but as initial lockdown measures began to ease, sales grew by 17 percent at constant exchange rates in the second half of the financial year.
The recovery in sales was supported by the Jewellery Maisons, online retail and Asia Pacific performances.
As a result, profit for the year increased by 38 percent to €1.29bn, up from €931 million and operating profit declined by 3 percent to €1.48bn, with operating margin improving to 11.2 percent.
The group said at the beginning of the pandemic, it had implemented strict cash preservation measures which resulted in its net cash position increasing significantly to €3.39bn at the end of the period.
The group’s results were boosted by a strong fourth quarter, with sales growing by 36 percent at constant exchange rates.
Richemont declared a dividend of 2 Swiss francs a share (R31.05), up from one Swiss franc a year earlier due to the Covid-19 impacts.
Chairperson Johann Rupert said during the unprecedented level of global disruption, all of their colleagues demonstrated remarkable agility and discipline, adapting rapidly in the face of repeated closures, a halt in international tourism and an overall lack of visibility.
“As a result, our Maisons and businesses delivered a resilient performance and made good progress on Richemont’s transformation agenda. Online, mobile and distant shopping have proven to be key growth drivers, and we have seen a sharp increase in clients favouring those channels. Higher online retail sales, benefiting from triple-digit growth at our Maisons, partially offset lower retail and wholesale sales. Direct engagement with end clients generated around three quarters of group sales, through off-line and online retail channels,” Rupert said.
Looking ahead, the group said although the pace of vaccination had gathered momentum, volatility and low visibility were likely to prevail until there was herd immunity.
“There are still concerns about Covid-19 developments in parts of the world that could slow down a global recovery, even though underlying demand seems strong with supportive central bank actions, substantial government stimulus packages, and real estate and stock markets at all-time highs. Our focus will, therefore, remain on safeguarding our colleagues, partners and assets while maintaining the necessary agility and flexibility to face uncertainties,” the group said.