CFRUY Compagnie Financiere Richemont (PK)

By Andrea Figueras

Shares in Compagnie Financiere Richemont fell after it posted first-half results that missed analysts' expectations and showed a slowdown in sales growth.

At 0847 GMT on Friday shares were down 4.3% at CHF107.75.

The Swiss luxury company posted operating profit of EUR2.655 billion, down 2% from the year-earlier period, with an operating margin that fell 210 basis points to 26%. It booked sales of EUR10.22 billion, up 6% at current exchange rates. Sales fell 2% at current exchange rates in the three-month period to September compared with a 14% growth in the first quarter.

The company's performance was softer than expected and likely to be received negatively in the short term, RBC Capital Markets analyst Piral Dadhania said in a research note.

Results were below expectations of EUR10.34 billion and operating profit of EUR2.88 billion, according to analyst estimates compiled by FactSet.

"Growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment," Richemont Chairman Johann Rupert said.

Richemont's figures could be a negative read-across for the luxury sector, as they have provided a first insight into margin evolution amid moderating revenue growth trends, and on the back of peak margins last year, RBC said.

The company has confidence in its long-term prospects and sees a soft-landing scenario with still higher growth expectations from China, but it also signaled a volatile environment and global uncertainties.

Despite a miss in operating profit and the cautious outlook, Richemont is a fundamentally stronger business than during prior industry downturns, Citi analysts Thomas Chauvet and Lorenzo Bracco said in a note.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

November 10, 2023 04:17 ET (09:17 GMT)

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