Jewellery helps Richemont shine, boosting dividend

Zurich

CARTIER owner Richemont on Friday proposed doubling its dividend back to pre-pandemic levels after strong demand for jewellery helped lift net profit and contain the fall in sales in its fiscal year 2020/21.

Luxury watch sales have been recovering from the severe pandemic hit and Richemont, the global No 2 in luxury goods, has fared better than rival Swatch Group thanks to its exposure to fast-growing jewellery.

"The trend is continuing, not only in Asia and China, but also in regions like the United States. Europe has not recovered," chairman and controlling shareholder Johann Rupert told reporters, adding that Japan was also still suffering.

He said the company had a very strong balance sheet and a strong free cash flow.

"So having been stress-tested, this year, all things being equal, we're optimistic," he said.

Net profit rose by 38 per cent to 1.289 billion euros (S$2.09 billion) in the year to March, beating expectations thanks also to a reversal in net foreign exchange losses and the recalculation of the value of its financial investments.

Richemont proposed a dividend of two Swiss francs per share for fiscal year 2020/21, after halving it to one franc amid the pandemic last year.

Sales fell 5 per cent at constant exchange rates to 13.14 billion euros, although less than expected, as sales of jewellery brands Cartier and Van Cleef & Arpels rose 62 per cent in the final quarter.

Growth in Asia Pacific mitigated declines in other regions.

"In jewellery, basically everything sells," Cartier head Cyrille Vigneron said on the call.

Citi analyst Thomas Chauvet said "it is all about jewellery and the future is bright", reiterating his "buy" rating.

The shares, up over 18 per cent this year, rose 4.6 per cent at 7.50am GMT.

Industry majors LVMH and Kering have also reported rebounding sales as Covid-19 restrictions eased in China and the US.

Asked about potential interest in Kering's watch brands following market rumours, Richemont declined to comment.

Mr Rupert said Richemont had a good relationship with Kering and the Pinault family and had been contacted by them in the past to talk about collaboration, but not about an acquisition. REUTERS