LONDON — Compagnie Financière Richemont SA has begun the fiscal year with a bang, and the future is just as bright.
Although net profits for the first half slid 27 percent to 529 million euros, or $656.5 million, from 727 million euros, or $882.8 million, sales and operating profit both saw double-digit growth.
The slide in net profit was due solely to extraordinary items related to Richemont's 18.5 percent stake in British American Tobacco. All figures have been calculated at average exchange rates for the period to which they refer.
Sales for the period ended Sept. 30 rose 15.8 percent to 1.99 billion euros, or $2.47 billion, from 1.72 billion euros, or $2.09 billion, due to double-digit growth in every product category, except for the leather and accessories houses.
Operating profit rose 68 percent to 334 million euros, or $414.5 million, from 199 million euros, or $241.6 million, thanks to rising gross margins and continuing cost control, the statement said.
The sale earlier this year of the London-based men's wear company Hackett Ltd. to Torreal S.C.R. SA, a Spanish investment company, injected 11 million euros, or $13.6 million, into the company's operating profit. Stripping out that extraordinary gain, Richemont's operating profit would have risen 62 percent to 323 million euros, or $400.8 million.
Richemont's net profit suffered in the half due entirely to comparisons with the corresponding period last year, when it reaped extraordinary gains from BAT.
The decrease this year stems from a major, one-off gain reported by BAT last year, when its North American operations merged with those of R.J. Reynolds to form Reynolds American.
The decrease in Richemont's net profit also reflects one-off expenses incurred by BAT this year. Excluding its stake in BAT, profits at Richemont would have risen 133 percent to 270 million euros, or $335.1 million, from 116 million euros, or $114.5 million.
"The performance of the first six months points to a strong year for Richemont," said Richemont chairman Johann Rupert in a statement Thursday. "I am confident that, in the absence of any external events outside our control, Richemont's luxury businesses will report good growth in terms of sales and operating profit for the year as a whole."
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