Happy Days Return: Richemont’s Rupert Gleeful as Net Soars

Swiss luxury group Richemont is back on track: Profits are up, debt is down, there’s $236 million in the bank and ceo Rupert is having fun again.

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Johann Rupert

Photo By WWD Staff

The Cartier Roadster.

Photo By WWD Staff

LONDON — Johann Rupert is having fun again.

The executive chairman of Compagnie Financière Richemont SA, like other luxury titans, is kicking up his heels as signs continue that consumers’ appetites for fashion and luxury have returned after last year’s worries over SARS, terrorism and the economy. The Swiss-based Richemont is back on track: Profits are up, debt is down — and there’s $236 million (200 million euros) in the bank.

“The business is back to being fun,” Rupert, who is also Richemont’s chief shareholder, said in a telephone interview Thursday. “We’ve eliminated our debt, and that will help us support our brands. I hope we’ve turned the corner.”

Net profit for the fiscal year ended March 31 soared 55.6 percent to 238 million euros, or $280.8 million, from 153 million euros, or $180.5 million, a year earlier, thanks to an 11 percent dip in net operating expenses linked to the restructuring of the Dunhill and Lancel subsidiaries and tighter cost control measures, Richemont said in a statement Thursday.

As reported, sales in the 2003 fiscal year fell 8 percent to 3.38 billion euros, or $3.99 billion, from 3.65 billion euros, or $4.31 billion, due in large part to the impact of the SARS crisis last spring. In constant currency terms, sales were flat against last year.

Operating profit rose 14 percent to 296 million euros, or $349.3 million, from 259 million euros, or $305.6 million. Currency conversions were made at the average exchange rate during the year of $1.18 per euro.

In addition, cash flow was boosted both by the luxury goods businesses and by Richemont’s shares in British American Tobacco, the statement said. (Just last week, Richemont received proceeds from the disposal of BAT shares, and pulled in an additional cash pile of 828 million euros, or $977 million.)

Indeed, Richemont — parent of brands including Cartier, Montblanc, Chloé, IWC, Van Cleef & Arpels and Piaget — is so confident about the future that it has proposed the yearly dividend be increased by 25 percent to 40 euro cents, or 47 cents, per unit.

“Given the potential of the underlying businesses, and the strength of Richemont’s balance sheet, my colleagues and I look to the future with confidence,” Rupert said in the statement.
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