Strong Asia demand keeps Richemont optimistic

ZURICH - Richemont, the world's second-largest luxury goods group, said on Wednesday it was cautiously optimistic for the future despite the unstable economic environment as it posted forecast-beating results, driven by strong Asian demand.

Photo: Cartier

The Swiss maker of IWC watches and Cartier jewellery said net profit for the year ended March 31 rose 43 percent to 1.54 billion euros ($1.97 billion). Analysts in a Reuters poll had expected a figure of 1.37 billion on average.

Sales rose 29 percent to 8.87 billion euros, beating an average forecast of 8.59 billion, with sales in Asia-Pacific up 46 percent at constant exchange rates to make up 42 percent of the group total after several years of strong growth.

Richemont Chairman and Chief Executive Johan Rupert said sales in April were up 29 percent on last year, or 20 percent at constant exchange rates, but noted: "We are mindful of the unstable economic environment, particularly in the euro zone."

However, Rupert said Richemont would continue to invest in manufacturing facilities and new boutiques and was convinced of the company's long-term prospects. "We therefore look forward to the future with cautious optimism," he said.

Rivals such as France's LVMH, handbag maker Hermes , French luxury and retail group PPR and jeweller Bulgari posted upbeat first-quarter results as Chinese buyers flocked to stores in both Europe and Asia.

But German fashion house Hugo Boss warned cautious consumer sentiment in China had slowed growth somewhat, while British luxury group Burberry reported a slowdown in quarterly growth raising fears economic woes are catching up on the industry.

Despite fears the global economy is heading for a slowdown, strong growth in emerging markets, plus a tendency among Asian shoppers to buy luxury goods while on holiday in Europe, have buoyed sales at companies like Richemont and LVMH.

Investors are on tenterhooks for any signs consumers may be keeping a tighter grip on their purse-strings, though.

Richemont, which is controlled by South Africa's Rupert family, also announced plans to buy back up to 10 million of its 'A' shares through the market over the next two years, representing 1.7 percent of its capital.