Richemont Launches Share Buyback, Says Luxury Demand Robust
May 16 2012 - 2:24AM
Dow Jones News
Switzerland's Compagnie Financiere Richemont SA (CFR.VX)
Wednesday said it was launching a share buyback, as it reported
robust fiscal-year profit growth, with sales in April continuing to
grow apace.
The owner of Cartier and Piaget among other luxury brands said
it wanted to buy up to 10 million shares, representing 1.7% of its
capital, over the next two years.
Richemont said sales in April rose 29% on year, slightly slower
than the 32% rate of a year earlier.
The figure is being watched keenly by observers seeking signs
that the recent boom in luxury spending is waning.
Despite the increase, Richemont remained cautious about the
future, saying it is "mindful of the unstable economic environment,
particularly in the euro zone."
The luxury industry has enjoyed massive growth in the past two
years, fueled by strong demand for watches and jewelry,
particularly in China, which now accounts for about a third of
global sales of Swiss watches.
Like with other companies such as Swatch Group AG (UHR.VX) and
LVMH Moet Hennessey Louis Vuitton (MC.FR), China is an increasingly
important market in its own right, as well as the home of
luxury-hungry tourists visiting struggling markets like Europe.
But last week, China reported that its industrial output growth
slowed significantly in April to its lowest level since May 2009,
adding to worries about a slowdown in the world's No. 2
economy.
Value-added industrial output in China rose 9.3% in April from a
year earlier, slowing sharply from a 12% increase in March, data
from the National Bureau of Statistics showed Friday.
Nevertheless, Geneva-based Richemont, which also owns the Piaget
and IWC brands, reported record profit and sales in the 12 months
to March 31.
Net profit attributable to shareholders rose to EUR1.54 billion,
from EUR1.09 billion a year earlier, beating forecasts of EUR1.37
billion in a Dow Jones Newswires poll.
Revenue rose 29% to EUR8.87 billion, beating expectations of
EUR8.61 billion.
Chief Executive Johann Rupert said: "Our Maisons [divisions]
remain entrepreneurial and innovative businesses at heart. More
than ever, we are convinced of their resilience and long-term
prospects. We therefore look forward to the future with cautious
optimism."
Richemont shares closed Tuesday at CHF53.35, valuing the company
at CHF27.85 billion. The stock has gained 12% in value since the
start of the year.
- By John Revill, Dow Jones Newswires; +41 43 443 8042 ;
john.revill@dowjones.com
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