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Richemont flags big profit rise in watch market uptick
[ZURICH] Swiss giant Richemont, the world's second-biggest luxury goods company after LVMH, said on Tuesday it expected to post a massive rise in net profit for the first half thanks partly to a recovering watch market.
Richemont, whose portfolio includes flagship brands Cartier, Van Cleef & Arpels, Piaget, IWC and Jaeger-LeCoultre, said net earnings in the six months to Sept 30 would show a rise of 80 per cent when it officially reports next month and profit from ongoing operations a 45 per cent increase.
A year earlier Richemont embarked on a costly buyback of timepiece stocks in Asia in a bid to stop resellers from offering them at steep discount as the watch market weakened.
High-end timepiece sales saw spectacular growth between 2010 and 2014, but started to suffer when in late 2013 China cracked down on expensive business gifts in an anti-corruption drive.
Political turmoil in Hong Kong, Russia's economic crisis, attacks in Europe and the strength of the Swiss franc also all weighed on the market.
These buybacks had now stopped, explaining the sharp increase in net earnings, Richemont said.
Sales were up 12 per cent at constant exchange rates and by 10 per cent once converted into euros, the company's reporting unit.
Swiss stock exchange rules require companies to flag significant changes in expected earnings early. Full results are due on Nov 10.