Luxury giant Richemont says net profit up 3.0% despite slowing China sales

ZURICH: Swiss-based luxury giant Richemont on Thursday said its net profit rose by 3.0 per cent in its financial 2013-2014 despite falling sales in China and currency instability.

The world's second largest luxury goods group, whose stable of brands includes Cartier, Piaget, Jaeger-LeCoultre and Montblanc, said that its net profit reached 2.0 billion euros ($2.7 billion).

The group said that its results were "satisfactory" Richemont's financial year run from April 1 to March 31, and the profit figure was in line with expectations.

Sales meanwhile rose by 5.0 per cent to reach 10.6 billion euros - analysts had expected 10.5 billion euros.

Taking into account exchange rate fluctuations, sales rose by was 10 per cent, Richemont said, underlining that the Japanese yen and, to a lesser extent, the US dollar had had an unfavourable impact.

Operating profit was unchanged, at 2.4 billion euros, in part due to exchange rates and also because the group set aside 25 million euros for restructuring of Montblanc, known for its luxury fountain pens.

Richemont said that strength in its jewellery and specialist watch segments offset the softness of certain fashion brands and Montblanc.

Sales rose by 2.0 per cent in the Asia-Pacific region, though that marked a slowdown compared with the previous financial year.

Richemont said that while sales held up in Hong Kong and Macao, they slipped in mainland China, a market where the luxury watch sector has been affected by anti-corruption measures that ban luxury gifts.

In Europe, sales rose by 9.0 per cent. While Richemont's boutiques in Geneva, Paris and London continued to benefit from tourist buyers - many of whom are from Asia - the group also pointed to improved demand from European consumers themselves.