By  on June 9, 2006

LONDON — Compagnie Financière Richemont, the Swiss luxury goods group and parent of Cartier and Dunhill, continues to ride the luxury boom.

Although profits in the year ended March 31 slipped 9 percent to 1.1 billion euros, or $1.34 billion, from 1.21 billion euros, or $1.52 billion, due to nonrecurring gains, sales broke a company record and underlying profits growth remained strong.

Sales rose 17.4 percent last year to 4.31 billion euros, or $5.25 billion, from 3.67 billion euros, or $4.62 billion, driven by strong double-digit gains in all regions, and in every product category except for leather goods.

"This has been an excellent year for Richemont, and all of our executives and employees are to be commended on their contribution," said Johann Rupert, Richemont's executive chairman, in a statement Thursday.

Indeed, Richemont's bottom line suffered only from tough comparisons with last year. The company had reaped major gains from its stake in British American Tobacco when that company restructured its U.S. operations in the previous fiscal year.

Stripping out last year's gains from BAT, Richemont's profit would have increased 36 percent to 1.13 billion euros, or $1.38 billion, in the year. All currency conversions are made at average exchange rates for the respective periods.

"Analysts tend to view Richemont as a pure luxury group, so we automatically strip out any gains from BAT," said Antoine Belge, analyst at HSBC in Paris. "We focus more on operating profit, and that was an excellent figure."

Operating profits for the year rose 32 percent to 741 million euros, or $902.8 million, from 561 million euros, or $706.5 million, thanks in part to gains from the disposal of London-based men's wear firm Hackett, and on the sale and leaseback of retail property.

Belge said Richemont could have nudged operating profits even higher, had it not been for the firm's increased investment in communication, which rose 21 percent, and in selling and distribution, which rose 12 percent.

"They really decided to push the investments in the second half, and they've got a point. In emerging markets like China, you have to be in there ahead of the competition," said the analyst.

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