Chow Tai Fook Jewellery Group (1929) H1 2025 earnings summary

Executive summary

• Revenue declined 20.4% year-over-year to HK$39,408 million, mainly due to macroeconomic headwinds and record gold prices impacting demand across key markets.

• Operating profit increased 4% year-on-year to HK$6,776 million, with operating profit margin rising 400 basis points to 17.2% due to disciplined cost management.

• Profit attributable to shareholders dropped 44.4% to HK$2,530 million, mainly due to a HK$3,135 million fair value loss on gold loan contracts amid gold price volatility.

• Gross profit margin expanded by 650 basis points to 31.4%, driven by product mix optimization and higher gold prices.

• Interim dividend of HK$0.20 per share declared, with a payout ratio of 78.9%, and a proposed share buyback up to HK$2 billion.

Financial highlights

• Gross profit was HK$12,378 million, with margin at 31.4% (up from 24.9%), supported by higher gold prices and increased sales of high-margin products.

• SG&A expenses decreased by 2.8% year-on-year, supporting margin growth; SG&A to revenue ratio rose to 15.2% due to revenue decline.

• Free cash flow reached HK$2.7 billion, and operating cash flow net of lease payments was HK$7.3 billion, both higher than the previous year.

• Net gearing ratio (excluding gold loans) was 0.4% at period end; net cash and cash equivalents stood at HK$3,839 million.

• Inventory turnover period increased to 457 days, reflecting weak demand and higher gold prices.

Outlook and guidance

• Sequential improvement expected in the second half, with narrowing same-store sales decline and slower POS closure rate.

• Focus remains on financial health, margin resilience, and disciplined cost and capital management.

• Confident in long-term industry prospects and committed to executing five strategic priorities for sustainable growth.