Richemont shares jump as full-year profit and sales beat estimates

Investing.com -- Shares in Richemont (SIX:CFR) touched a new high on Friday after the luxury group posted better-than-expected sales and profit in its 2023 financial year thanks to a rebound in Chinese demand.

Annual group-wide sales grew by nearly a fifth compared to the prior year to a record €19.95 billion (€1 = $1.0897), topping Bloomberg consensus estimates of €19.66B. The Swiss firm behind high-end brands like Cartier and Van Cleef&Arpels said the jump was driven in part by strength in its directly-operated stores, which contributed to 68% of total sales.

Growth also resumed in Richemont's key Asia-Pacific region, where sales were boosted by the removal of travel and health restrictions in mainland China in the final quarter of the fiscal period. The Americas, which includes the U.S., luxury's biggest market, also unexpectedly saw sales accelerate year-on-year.

The top-line performance helped lead to a "significant" boost in profitability, analysts at Vontobel noted. Full-year operating income reached an all-time high of €5.03B. The returns represented a 34% surge versus 2022 and handily beat projections of €4.82B.

Citing the results and strong cash flow generation, Richemont unveiled an ordinary dividend of CHF2.50 (CHF1 = $1.1190) per each "A" share, an increase of 11% over the previous year. A special dividend of CHF1.00 per "A" share, which is still subject to stockholder approval, was also proposed.

In a statement, chairman Johann Rupert said he is confident that the company is well-positioned to meet solid demand expected from the resumption of Chinese travel. However, he flagged that "economic volatility and political uncertainty" remain features of the trading environment.

Analysts at ZKB said Richemont's returns "impressed on all levels," adding that any slowdown in the U.S. and Europe should be offset by a continued rebound among Chinese consumers.

Rival luxury firms, including LVMH (EPA:LVMH) and Kering (EPA:PRTP), also saw their shares climb.