Richemont distanced itself on Thursday from the surging confidence in the luxury goods sector, as the maker of Cartier jewellery and Montblanc pens warned of continuing uncertainties in most markets outside Asia.
While less bleak than during the depths of the downturn, the group’s outlook accompanying its annual results remained vague and executives notably conservative.
“We are more than ever cautious . . . At the least, there will be a lot of volatility”, Richard Lepeu, deputy chief executive, said.
The restraint from Geneva-based Richemont, the second biggest luxury goods group after France’s LVMH, contrasts with a markedly more upbeat mood in the industry as manufacturers emerge from one of the most testing periods in memory.
Shares in the sector have been rising on recovery hopes, fuelled by continuing demand in Asia and an upswing in the US and Europe.
Companies themselves have been ramping up the message, with Louis Vuitton on Friday opening a lavish new flagship store in London and Richemont’s own Cartier subsidiary splashing out in Saint Petersburg.
Richemont’s restraint, along with lower than expected net profits, disappointed some analysts.
Sales fell 4 per cent to €5.18bn ($6.4bn), while net profits from continuing operations dropped 18 per cent to €603m.
The closely watched margin fell to 16 per cent from 17.9 per cent.
However, sentiment was lifted by a 17 per cent dividend rise to SFr0.35 and a more than €1bn leap in net cash to €1.90bn.
Operational cash flow rose to €1.46bn from €819m.
Moreover, Richemont said sales in April were 24 per cent above the previous year, while the first quarter of 2010 had prolonged the upbeat trend of the pre-Christmas period.
“We think the group is in a strong position, continues to generate substantial amounts of cash and is well placed to gain additional market share in the long run”, said Alessandro Migliorini of Helvea, the Swiss brokerage.
The group, which earlier this year spent €272m on full control of internet fashion retailer Net-a-Porter, gave no indication on how it would spend its cash.
“Having cash is more than ever critical in troubled times. Cash is our fortress”, said Mr Lepeu.
He added that Richemont was well placed to “seize opportunities”.
Analysts have forecast consolidation in luxury goods, as weaker brands continue to struggle in spite of the recovery.
But comments by Johann Rupert, chairman and chief executive, pointed more towards organic growth.
Sales of jewellery fell 3 per cent to €2.69bn, watchmaking was down 6 per cent to €1.35bn, while writing instruments declined by 6 per cent to €551m.
In terms of operating profits, jewellery fell 5 per cent to €742m, while watchmaking dropped 23 per cent to €231m.
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