Richemont Group full year profit to drop 36 percent
Richemont Group has warned of a sharp downturn in yearly earnings due to a worse-than-expected performance and investment losses on its 5.4 billion euros ($5.8 billion) cash pile, playing down the drop as due to non-cash accounting factors.
Richemont said net profit for the year ended March 31 would drop by 36 percent and also warned that its tax rate for the year would significantly increase. It said its operating profit for the year was expected to rise 10 percent, including a one-off gain of 226 million euros from the disposal of retail space in New York disclosed at the half-year results.
The company told analysts it had made 4 billion worth of investments in euros which translated into Swiss francs represented a loss of around 450 million euros. It had to make the translation into francs because the entities in which it invested were based in Switzerland, but the losses were purely accounting and non-cash and would not affect its cash reserves, it told analysts. A spokeswoman for Richemont said cash balances held in euros are converted to francs based on the closing rate, which moved 15 percent year on year in the Swiss currency.
Richemont, which reports full-year results on May 22, said including Net-A-Porter its full-year sales to March 31 would have increased by 5 percent and by 2 percent at constant currencies, but excluding NAP they rose 4 percent on a reported basis and 1 percent at constant currencies. Last month, Richemont agreed to sell its online fashion retailer Net-a-Porter (NAP) to Italian rival Yoox in an all-share deal.
adapted from Reuters