Analyst Note| Jelena Sokolova, CFA |
We maintain our fair value estimate for wide-moat Cie Financiere Richemont. The company reported fiscal 2021 results that largely matched our expectations. Within this, the group’s biggest and most profitable division Jewellery Maisons outperformed with sales growing beyond precoronavirus levels and margins improving to 31%, driven by strong double-digit sales growth in the second half of the year, in line with our expectations. Although the company experienced a tough first half with sales contracting by 25% at constant exchange rates due to pandemic-led closures of point-of-sale stores and a significant slowdown in international tourism, Richemont's performance rebounded sharply in the second half as lockdowns started to ease, with sales growing 17% at constant exchange rates (up 12% at actual rates). Fourth-quarter performance in particular, with sales growth of 36% at constant exchange rates (up 30% at actual rates), helped partially offset the decline in full year sales to 5% at constant exchange rates (up 8% at actual rates). Regionally, the group recorded 19% sales growth in the Asia-Pacific region, with triple-digit year-on-year growth in the fourth quarter, driven by a "strong performance" in mainland China. This strong top-line growth performance was coupled with improvements in operating margins at 11.2%, positively affected by net finance income. Given the improving economic and industry backdrop in combination with solid cash flow generation, the board proposed to double the cash dividend to CHF 2 per "A" share (versus CHF 1 per share before).