News Since January 2004, Swiss watchmaking has experienced something of a boom, particularly firms active in the luxury sector. To prove this point, Richemont published results exceeding expectations for the first half of the 2005-2006 financial year.
The difficult period that followed the attacks of 11 September 2001 is now well and truly forgotten: for two years, all the lights have been green for Swiss watchmakers. The 2005 vintage therefore promises to be exceptional, with expected growth in the order of 10% and, most tellingly, record exports set to exceed 12 billion francs, against 11.1 billion in 2004.
A good example of this rediscovered confidence is the Richemont group, whose results for the first half of the 2005-2006 financial year (April-September) verge on the excellent: removing from the equation an exceptional gain realised last year as a result of the group’s holding in British American Tobacco (BAT), which resulted in a 27% decline in consolidated net profit to 529 million euros, two-figure increases are the rule. Sales of the Geneva based luxury group thus increased by 16% to 1,990 million euros, while figures for operating and net profit literally skyrocketed, to 334 million for the former (+68%) and 270 million for the latter (+133%).
On a closer inspection of these general figures, the picture remains the same: in terms of sectors of activity or from the standpoint of markets, two-figure increases remain the rule, with the sole exception of companies specialising in leather goods and accessories (Alfred Dunhill and Lancel) where turnover grew by only 7% to 124 million euros, with an operating loss up by 4% to 26 million.
Honour where honour is due: the group’s watchmaking firms (Baume & Mercier, IWC, Jaeger-LeCoultre, A. Lange & Söhne, Panerai, Piaget and Vacheron Constantin) made the most outstanding progress, with sales up by 23% to 522 million and an operating profit of 118 million (+64%). Next come the group’s "jewellers" (Cartier and Van Cleef & Arpels), with a turnover of 1,038 million (+16%) and an operating profit of 283 million (+33%), and firms active in writing instruments (Montblanc and Montegrappa), with sales of 208 million (+13%) and an operating profit of 28 million (+65%).
In terms of markets, Richemont scores highly across the board, with +11% to 331 million euros in Japan and +21% to 410 million in the Americas, while Europe registered a 14% increase to 827 million and the Asia-Pacific region an 18% increase to 422 million (at current rates of exchange).
Just one off-key note in this otherwise faultless rendition: a slight slowdown in sales growth was noted in October, particularly in Europe. However the bar had been placed very high last autumn, which is why Johann Rupert declared himself to be completely confident in the results his group is likely to record for the 2005-2006 financial year as a whole, in terms of both sales and operating and net profit.
December 06, 2005