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Compagnie Financiere Richemont SA CFR

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Morningstar’s Analysis

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Strong Fourth-Quarter Performance for Richemont Signals Recovery Is Well Underway; Dividend Boosted

Jelena Sokolova, CFA Equity Analyst

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).

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Company Profile

Business Description

Richemont is a luxury goods conglomerate with 20 brands. Jewellery and watch brands make up over 70% of sales, but the group is also active in accessories, writing instruments, clothing and online luxury retail. Richemont’s jewellery business Maisons, including Cartier and Van Cleef & Arpels, account for 56% of revenue and over 95% of profits. Its other brands include Vacheron Constantin, Piaget, Jaeger-LeCoultre, IWC Schaffhausen, Lange & Soehne, Officine Panerai, and Montblanc. Online businesses include Yoox Net a Porter.

50, Chemin de la Chenaie, CP 30
Geneva, 1293, Switzerland
T +41 227213500
Sector Consumer Cyclical
Industry Luxury Goods
Most Recent Earnings
Fiscal Year End Mar 31, 2021
Stock Type
Employees 34,760


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