Financial Data and Key Metrics Changes - Sales for the first half of the year were stable at constant exchange rates and just 1% lower at actual exchange rates, with an operating profit of EUR2.2 billion, a 17% decrease compared to the prior year period [6][7] - Profit from continuing operations decreased by 20% to EUR1.7 billion, with a reported operating margin of 21.9%, down 410 basis points from the previous year [6][7][38] - Cash flow from operating activities amounted to EUR1.2 billion, reflecting a decrease of EUR417 million compared to the prior year period [7][42] Business Line Data and Key Metrics Changes - The Jewellery Maisons, the largest business area, achieved sales of EUR7.1 billion, up 2% in the first half, with a 32.9% operating margin [21][22] - Specialist Watchmakers saw a 17% decline in sales compared to the prior year period, primarily due to a 29% drop in the Asia Pacific region [26][27] - The Other business area reported a 4% increase in sales, driven by a strong double-digit increase at Watchfinder [30] Market Data and Key Metrics Changes - The Americas region experienced double-digit sales growth, contributing 23% of group sales, up from 21% in the prior year [12] - Asia Pacific sales declined by 18%, largely driven by a 27% drop in China, Hong Kong, and Macau combined [13] - Japan's sales increased by 42%, supported by solid domestic demand and inbound tourism [15] Company Strategy and Development Direction - The company made significant investments in manufacturing capacity for its Jewellery Maisons, including the acquisition of the Italian Jewellery Maison Vhernier [10] - The group aims to strengthen its corporate governance and leadership across its Maisons, with new appointments in key positions [11] - The company is focused on maintaining a balanced regional footprint to offset declines in specific markets, particularly in Asia Pacific [8][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current macroeconomic challenges and emphasized the importance of maintaining a disciplined approach [49] - The outlook remains cautious due to the uncertain environment, but the company believes in the strong positioning of its Maisons for sustainable value creation [49] Other Important Information - The company announced the agreement to sell YNAP to Mytheresa, with the transaction expected to close in the first half of calendar year 2025 [46][47] - The net cash position remained solid at EUR6.1 billion, despite a decrease due to dividend payments [45] Q&A Session Summary Question: Growth of various nationalities in Jewellery Maisons - Management noted a significant increase in domestic clients across regions, with a decrease in purchases by Chinese nationals due to macroeconomic factors [54][56] Question: One-off costs impacting margins - Management confirmed that one-off costs related to acquisitions and communication expenses contributed to the lower operating margin, with approximately EUR125 million attributed to one-off items [59][60] Question: Recent sales trends in September and October - Management refrained from commenting on short-term trends but noted stable sales evolution across most markets [67] Question: Inventory situation in China for watches - Management assured that inventory levels in China are healthy and closely monitored to avoid overstocking [90] Question: Mitigating actions for rising gold prices - Management indicated a cautious approach to pricing, aiming to maintain attractiveness for domestic clients while absorbing some cost increases [85][86]
Richemont(CFRUY) - 2025 Q2 - Earnings Call Transcript