• Sales decreased by 13 % at actual exchange rates to € 5 086 million and by 12 % at constant exchange rates. Excluding exceptional inventory buy-backs, sales declined by 8 % at constant exchange rates
• Globally challenging environment and strong comparatives in Japan and Europe; continued positive momentum in mainland China
• Operating profit decreased by 43% to € 798 million after one-time charges of € 249 million
• Profit for the period decreased by 51% to € 540 million
• Cash flow from operations of € 666 million
Johann Rupert's commentary
Sales and profits for the six-month period ended 30 September 2016 were significantly below the prior year’s level, reflecting the difficult global environment, the exceptional inventory buybacks and challenging comparative figures in the first half of the previous financial year.
Retail sales generated in our owned boutiques and online stores have generally outperformed the wholesale business. Positive developments in accessories and resilience in jewelry partly mitigated poor watch sales. From a geographic perspective, most markets experienced a slowdown in sales with the notable exceptions of mainland China, the UK and Korea.
A number of Maisons proactively assisted their multi-brand retail partners in order to improve the quality of their inventory by buying back slow moving pieces. This initiative, together with the optimisation of certain retail and wholesale locations, led to one-time charges of € 249 million. These, combined with lower sales and lower gross profit, contributed to a 43 % decline in operating profit. Excluding these one-time charges, operating profit would have declined by 25 %. Net profit is down 51 % compared to the prior period.
We will look to deal with overcapacity issues, adapting manufacturing structures to the level of demand.
Richemont acted cautiously, protecting Group cash flow. Working capital requirements have been kept under control, limiting the decline in cash flow from operations. Net cash at 30 September 2016 amounted to € 4 552 million.
Concerning watches, we will look to deal with overcapacity issues, adapting manufacturing structures to the level of demand.
We remain convinced of the long-term prospects for high quality products, in particular for watches and jewellery. Our Maisons stand for timelessness, quality and craftsmanship – values that are particularly sought after in uncertain times. Richemont, with its portfolio of long-established Maisons,
strong balance sheet and worldwide geographic footprint, is well positioned to weather the current difficult environment and emerge stronger when global circumstances improve.