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Nov 14, 2008
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Richemont H1 net up 11 pct, turmoil hits Oct demand

By
Reuters
Published
Nov 14, 2008

* H1 profit 543 mln euros vs poll avg of 511 mln * Turmoil hits demand in October

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ZURICH, Nov 14 (Reuters) - Swiss luxury goods group Richemont posted a better-than-expected 11 percent rise in first-half net profit but said financial turmoil had weighed on demand in October.

Net profit rose to 543 million euros ($678.2 million), ahead of the average estimate of 511 million euros in a Reuters poll of 15 analysts, the group said on Friday.

Richemont, the world's largest luxury goods group behind France's LVMH , said sales in October rose 1.6 percent from the year-ago period as the turmoil hit demand.

"The largest decline was seen in the Americas region. Although Asian markets also continued to grow at a double-digit rate, Europe also registered a decline despite strong sales to non-European customers," the group said.

"Sales in Japan were also below the prior year in yen terms but showed growth on conversion into euros," said Richemont, which is controlled by South Africa's Rupert family.

Revenue for the first half at the seller of Cartier jewellery and high-end watch brands such as Vacheron Constantin, rose 10 percent to 2.8 billion euros, boosted by demand in Europe and Asia Pacific regions.

The outlook for luxury goods groups is growing increasingly gloomy as consumers rein in their spending, scared by signs the financial crisis is spilling over to the wider economy.

Last week, Paris-based European luxury group Hermes cut its sales growth target and said trading had worsened in October, while on Thursday Italy's Bulgari reported a big fall in third-quarter profit and said it couldn't make a forecast for 2009.

Analysts have predicted Swiss watchmakers would suffer their first significant slowdown in half a decade in 2008 and that 2009 would be even worse.

Richemont trades at around eight times expected 2009 earnings, a slight discount to LVMH, which is trading at around nine times, according to Reuters data. (Reporting by Katie Reid)

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