* Net profit up 3 pct to 2.07 bln euros in 2013/14
* Full-year sales up 10 pct, April sales up 6 pct
* To pay dividend of 1.40 Sfr, launches share buy-back
* Shares rise more than 4 percent, outstripping European
(Adds CEO, CFO, analyst comments, shares)
By Silke Koltrowitz
ZURICH, May 15 Cartier owner Richemont
reported solid sales growth across most of its regions on
Thursday, including improved demand in China, and announced a
dividend hike and share buyback that sent its stock up more than
The Geneva-based group is enjoying a boom in jewellery sales
driven by consumers in emerging markets who have more money to
spend, and a taste for branded products. Demand for its watches
in China - where a crackdown on giving expensive gifts to
government officials had hit sales - is also improving.
"I think we've reached the bottom (in China). The situation
has improved gradually. The worst was two years ago, but now it
has picked up," Chief Finance Officer Gary Saage told reporters.
The luxury goods company, world No.2 to France's LVMH
, did not provide an outlook but said it remained
focused on long-term growth and value creation.
It raised its dividend to 1.40 francs per share, from 1
franc a year ago and announced a share buy-back of up to 10
million shares, worth around 873 million francs based on
Wednesday's closing price.
"Our dividend strategy is unchanged. We want to increase it
in a meaningful way over the long term, in good and bad times, "
Saage told reporters on a call on Thursday.
April sales at constant exchange rates were up 6 percent, or
8 percent excluding Japan, where consumers rushed to buy
big-ticket items ahead of a value added tax hike on April 1,
resulting in a 47 percent jump in sales between January and
March and lower sales in April.
In the year to March, sales rose 10 percent at constant
currencies to 10.65 billion euros ($14.60 billion), just below
forecasts in a Reuters poll. They were only up 5 percent on a
reported basis, as a weak yen and tumbling emerging market
currencies took their toll.
Net profit rose 3 percent to 2.067 billion euros in the
fiscal year ended March 31, just short of a forecasts.
"Sales growth .. in April shows continuing improvement, but
at a more moderate level to what we've seen recently," Exane BNP
Paribas analyst Luca Solca said. He said the dividend confirmed
the group's cash discipline and investor-friendly attitude.
Richemont shares, which are slightly down on the year so
far, rose 4.4 percent at 0756 GMT, outperforming a firm sector
index. They trade at 17.4 times forward earnings, at a
small discount to LVMH, but at a premium to Swiss rival Swatch
"Richemont is our top pick because it is trading at an
unjustified discount ... considering its superior earnings
growth prospects," Bernstein analyst Mario Ortelli said.
Co-Chief Executive Bernard Fornas said Cartier and Van Cleef
& Arpels jewellery had a "stellar performance" in the year to
March, but sales of Cartier watches had been suffering from
lower wholesale orders.
The group confirmed that it wanted to hold on to its leather
and fashion accessories businesses, after shelving disposal
plans for some underperforming brands last year.
"We have hired the right teams and give them full support in
investing in product development, supply chain, communication
and distribution. We're fully integrating these brands into the
Richemont supply chain," Fornas said, adding he was confident to
turn them around, but it would take some time.
Its 'other business' segment, which includes leather brand
Lancel and fashion brand Chloe, posted an operating loss of 80
million euros in 2013/14. Montblanc, which will from now on be
reported within the 'other' segment, posted a small operating
profit but saw sales decline 5 percent.
"Montblanc certainly didn't have a good performance this
year, the team was in transition, sales were down," co-CEO
Richard Lepeu said, adding the results included a non-recurring
25 million euro charge. Richemont is trying to improve the
brand's performance by focusing on "accessible luxury" watches
and accessories, as demand for high-end pens wanes.
($1 = 0.7294 Euros)
(Reporting by Silke Koltrowitz; Editing by Sophie Walker)