Clock turns for Richemont
Is Richemont a buy?
Will luxury goods regain their shine?
Operating profit of Richemont’s watch manufacturing division collapsed by over 70% in its latest financial year.
Last year produced another dismal performance for Richemont, the world’s second-largest luxury goods group, owner of iconic brands such as Cartier, Van Cleef & Arpels, Piaget and Montblanc. Since 2015 the company’s results have made for sorry reading. It must come as good news for the company then that luxury goods are selling again and the headwinds of its past three financial years are finally abating, positioning it for a powerful profit rebound. Profit after tax from continuing operations, which peaked in Richemont’s financial year to March 2014 at €2.08bn, went on to slump by 42% to €1.21bn in its latest year. Operating profit margin also took a big hit in 2016, falling from 24.2% to 16.6%.For Richemont the biggest setback came from its watch manufacturing division, which offers time-keeping wonders such as its Vacheron Constantin unit’s diamond-studded Malte Tourbillon Regulator, priced at a cool US$700,000. Since 2014 the division’s sales have plunged by €828m to €4.34bn. Eve...
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