Financial highlights

•Sales grew by 21 % to € 5 106 million, or by 12 % at constant exchange rates

•Solid growth across segments, regions and channels

•Operating profit increased by 28 % to € 1 380 million, benefitting from favourable currency movements

•Operating margin gained 150 basis points to reach 27 %

•Profit for the period rose by 52 % to € 1 081 million

•Cashflow from operations of € 575 million

Financial Review

Sales

Sales in the six-month period increased by 21 % at actual exchange rates, or by 12 % at constant exchange rates. The increase in sales reflected, in particular, sales growth in the Group’s own retail network, bolstered by very strong demand in Europe during the period. Further details of sales by region, distribution channel and business area are given in the Review of Operations on pages 5 to 8.

Gross profit

Gross profit rose by 24 % and the gross margin percentage was 160 basis points higher at 64.8 % of sales. Several factors caused the increase in the gross margin percentage, in particular favourable currency movements. Other favourable factors included the impact of price increases and the growing proportion of sales made through the Maisons’ own boutiques. These favourable factors were partly offset by the impact of the cessation of hedge accounting, which was initiated in the prior year. In the current period, foreign exchange losses recognised in the gross margin were immaterial whereas gains in the prior period added 166 basis points to the gross margin percentage.

Operating profit

Operating profit increased by 28 %, reflecting the significant increase in gross profit, offset by an increase in operating expenses of 21 %, or 14 % at constant exchange rates.

Selling and distribution expenses were 23 % higher, reflecting in particular the increase in sales in the Maisons’ own boutique networks. Communication expenses also increased by 23 % and represented 8 % of sales. Administration costs rose by 19 % and reflected the expansion of certain of the Group’s shared service platforms.

As a consequence, operating margin increased by 150 basis points to 27.0 % in the period under review.

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Source: Richemont