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Research Tree provides access to ongoing research coverage, media content and regulatory news on CIE FINANCIERE RICHEMONT-REG. We currently have 4 research reports from 1 professional analysts.
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CIE FINANCIERE RICHEMONT-REG
CIE FINANCIERE RICHEMONT-REG
CEO and CFO to retire following the sharp dip in H1 performance
04 Nov 16
The challenging environment is still weighing on Richemont. Sales were down 12% at CER in H1 to reach €5,086m. The inventories’ buy-back problem has exacerbated the situation, pulling down the decline by 4pp at CER. Wholesale sales slipped 20% to reach €2,115m. The decline was softer with owned boutiques which slid 5% to €2,971m. All business segments were impacted by the tough market conditions. Jewellery has resisted better with a sales drop of 13% compared to 17% for watches. The market momentum’s deterioration was experienced in all regions, led by Europe which dropped 17% at CER to €1,587m. The continuing growth in mainland China has partially offset the slumping demand in the region and has softened the dip to 8% at CER. In the Americas, revenue retreated slightly by 5% to €821m. The adverse FX moves weakened sales in Japan by 22%. Given the degraded sales growth, profitability has also deteriorated and margins collapsed. The gross margin has fallen by 150bp to 64%, drawing from a gross profit of €3,230m. Operating profit slid by 43% to reach €798m, i.e. an operating margin of 16% vs. 24% a year earlier. It is worth noting that the operating profit includes one-time charges of €249m related to the inventories’ buy-back initiative and the optimisation of some locations. Excluding these exceptional charges, operating profit would have declined by 25%. Net profit has halved to €540m. Capex amounted to €210m, incurred in selective investments in the Maisons’ network of boutiques. The net cash position has narrowed slightly to €4,552m. On the back of this poor performance, the group’s CEO “Richard Lepeu” and CFO “Gary Saage” will retire next year.
14 Sep 16
Sales for the five months ended 31 August were down 14%. Jewellery retreated by 16% and watch sales dropped 19%. All regions posted double-digit declines except for the Americas (-8%) which benefited from a favourable momentum in jewellery and accessories. In Europe (-20%), neither nationals nor the favourable momentum in the UK managed to offset the slowdown caused by the decrease in tourist flows. Macau and Hong Kong continued to deliver weak momentum, tearing down the growth in mainland China and Korea. Furthermore, the policy of inventory buy-backs in order to avoid clearance sales will stretch the balance sheet and weigh on the cash position. Richemont’s other businesses, as a whole, reported sales growth, thanks to positive performances at Montblanc, Chloé, Azzedine Alaïa and Peter Millar. Operating profit could drop by 4.5% in 2016 including one-off restructuring costs of c.€65m.
Bearish short-term outlook
20 May 16
Richemont experienced a tough H2 16 (FY-end March 2016), resulting in a poor sales performance and deteriorating margins. Reported FY16 sales grew by 6% to €11,076m, pulled up by the favourable FX impact as revenues dwindled by 1% at constant rates. The slumping demand in Asia erased the good performance displayed by other regions, mainly Japan. Reported sales posted double-digit growth in all regions except Asia-Pacific, which declined by 4%. Japan impressed with a 27% surge to €1,031m. Profitability has deteriorated and margins have retreated significantly. The gross and operating margins lost 180bp and 700bp respectively. The operating profit dropped by 23% to €2,061m due partially to an unfavourable comparable basis (disposal gain of €234m in the prior year) and one-off restructuring charges of €97m. On a comparable basis, the operating income retreated by 11%. Net profit surged by 67% to €2,227m pulled up by non-recurrent elements including €539m from discontinued operations (merger of Yoox-NAP) and an unfavourable comparable basis (huge forex losses in FY15). Jewellery Maisons showed a relative resilience to the challenging backdrop posting 7% sales growth and 4% lower operating profit (operating margin of 31.3% vs. 34.9% in FY15). Watchmakers reported a modest 3% sales increase while the operating result dropped by 29% (an operating margin of 16.1% vs. 23.4% in FY15). Fashion and accessories business improved by 11% to €1,803m, although the operating profit amounted to €-94m. The cash situation remains strong with an operating cash flow of €2,419m and a net cash position of €5,339m, broadly flat compared to last year. The strong cash generation was sustained by a controlled WCR with slightly decreasing inventories (-1.7%). The net acquisition of tangible fixed assets amounted to €613m, incurred mainly in the manufacturing facilities. The proposed dividend amounts to CHF1.7 vs. CHF1.6 in FY15. FY17 may have a bad omen with reported April sales dropping by 18% (-15% at constant rates). The poor performance is confirmed for all regions while, at constant exchange rates, only the Middle East & Africa posted positive growth. Mainland China was up by 26% at constant rates, offsetting the weakening demand in the rest of Asia.
Watches needed new batteries in Q3
14 Jan 16
Q3 sales grew by 3% at current currencies, and saw a 4% yoy decrease at constant rates. On a lfl exchange basis, only Japanese sales posted an increase (9%), albeit at a slower pace than in H1 (+44%). The Middle East & Africa activity remained modest showing unchanged sales. Otherwise, the other regions posted a yoy drop. By channel, retail sales outperformed wholesale with unchanged revenue vs. a 8% decline at constant rates. From a business standpoint, brands like Chloé and Montblanc drove growth for the other businesses segment out of Jewellery Maisons and Specialist Watchmakers which reported respective sales falls of 5% and 4% (at constant rates). Over the first nine months, the favourable exchange rates pulled up the sales which remained flat at constant currencies and up by 11% at actual rates.
Panmure Morning Note 01-12-16
01 Dec 16
Consistent with the FY16 trading update/pre-close on September 14, today’s FY16 results are in line with our and consensus underlying PBT expectations of £12.5m (+22.5% YoY). The total FY16 dividend is up 36%, covered 3.4x, whilst net cash is £6.9m (+53%). FY16 represented another good year of execution, and FY17 has started well. The company's business mix is now more diverse across geographies (International accounted for 26% of total sales vs 21% in FY15) and we see CCT’s increasing diversity in retail distribution as both a further risk-mitigation and opportunity driver. We make no changes to our FY17 and FY18 PBT forecasts of £13.5m and £14.5m (albeit, we make some changes to the constituent parts) and introduce a FY19 PBT of £15.5m. We maintain our BUY and TP of 635p.
Strong H2 expected
30 Nov 16
H1 results were in line with expectations with PBT of £9.0m, EPS of 9.9p and DPS of 7.2p. The NAV / share is 253p. We expect the company to have a strong H2 based on its forward sales position and the timing of developments coming through. Telford has a strong balance sheet, a large development pipeline and impressive forward sales position, as well as good levels of demand for its product and geography from a diverse group of buyers. No change to forecasts at this stage.
US$500m to be invested in start-ups by 2026
28 Nov 16
BMW started a venture capital fund in 2011 with an initial investment of $100m. This is now to be expanded to $500m within the next ten years. The fund, called ‘BMW i Ventures’, has been moved from NYC to Mountain View, CA, to have closer access to the technology developed in the Silicon Valley. The investment focus will be on Enabling Technology and Digital Vehicle Technology, Mobility and Digital Services, Customer Experience, and Advanced Production Technology. According to BMW, the fund has closed 15 deals in ‘mobility-related’ technologies so far. It typically acquires a minority stake in start-ups which allows it to gain access to external innovations (so-called ‘outside-in’) that secure the company’s role as a technology pioneer. Simultaneously, it provides support for start-ups by offering internal resources (so-called ‘inside-out’) such as technical expertise and access to its own network of an established car producer.
N+1 Singer - Morning Song 29-11-2016
29 Nov 16
Vp has reported another impressive set of interims, confirming strong growth in most markets and a positive outlook. Recent acquisitions are bedding in well and the full year outturn is set to exceed previous expectations (5%/6% EPS upgrades in FY17/FY18). The recent Capital Markets Day provided a reminder of Vp’s qualities (specialist focus, high returns, strong cash generation) and its growth potential, which in our view are not reflected in a modest <11x P/E rating. We firmly believe the shares are due a re-rating and see intrinsic value in excess of 800p.
Small Cap Breakfast
29 Nov 16
Asia Pacific Investment Partner - the research-driven emerging and frontier markets real estate development business intends to float on AIM and conduct a placing in December RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.