Richemont (CFR) H1 2025 earnings summary

Executive summary

• Sales reached €10.1 billion, stable at constant exchange rates but down 1% at actual rates amid challenging macroeconomic and geopolitical conditions, with strong growth in the Americas and Japan offsetting a sharp decline in Asia Pacific, especially China.

• Operating profit was €2.2 billion, down 17% year-over-year, with a reported operating margin of 21.9%, mainly due to lower Specialist Watchmakers sales, adverse currency movements, and continued investment.

• Profit from continuing operations was €1.7 billion, 20% lower than the prior year; net profit fell to €457 million, mainly due to a €1.2 billion non-cash write-down from discontinued operations (YNAP).

• Net cash position remained strong at €6.1 billion after a €1.7 billion dividend payment, with free cash flow of €0.3 billion despite a €0.6 billion year-over-year decline.

• Strategic developments included the acquisition of Vhernier, integration of Gianvito Rossi, and the agreement to sell YNAP to Mytheresa, with Richemont to receive a 33% stake and provide a €100 million credit facility.

Financial highlights

• Sales stable at constant exchange rates, down 1% at actual rates to €10,077 million, against a demanding prior-year comparative.

• Gross profit was €6.8 billion, down 3% year-over-year; gross margin declined to 67.2% (down 100 bps), impacted by FX and higher raw material costs.

• Operating expenses rose 6%, driven by one-off and perimeter changes, network expansion, and salary increases.

• Free cash inflow was €270 million, about €600 million lower year-over-year, with CapEx at €389 million (3.5% of sales) focused on distribution, manufacturing, and technology.

• Ordinary dividend for FY24 was CHF 2.75 per share, totaling €1,710 million.

Outlook and guidance

• Management remains cautious on the macroeconomic and geopolitical environment, especially regarding China and the global watch market, but is confident in Maisons' strong positioning for sustainable value creation.

• No specific guidance on price increases or OpEx run rate for H2; cost base will adapt to business evolution.

• The YNAP sale is expected to close in H1 2025, with further write-downs possible depending on Mytheresa's share price and other variables.