Cie Financiere Richemont SA Profit Drops 31%

14 may 2009 - source Bloomberg USA

May 14 (Bloomberg) -- Cie. Financiere Richemont SA, the world?s largest jewelry maker, reported a 31 percent profit drop and said Chief Executive Officer Norbert Platt will retire.

Platt, 61, will step down at the end of the year for health reasons, Chairman Johann Rupert told reporters on a conference call today. Rupert declined to comment on a successor for Platt, who before becoming CEO in 2004 spent 17 years as head of the company?s Montblanc watch unit.

Net income slid to 1.08 billion euros ($1.5 billion) in the 12 months through March, Richemont said. Operating profit fell 12 percent to 982 million euros, beating the 945 million-euro average of seven analysts? estimates compiled by Bloomberg.

The luxury industry is reeling, with shipments of Swiss watches to the U.S. down by 50 percent in March, according to trade group statistics. Bulgari SpA, the world?s third-largest jeweler, reported its first quarterly loss in a decade this week and said a return to the company?s growth rate in the boom year of 2007 may not take place until 2012.

?A recovery is still far away,? Aurelie Husson Dumoutier, an analyst at Societe Generale, wrote in a May 12 note as she cut her rating on Richemont to ?sell? from ?hold.?

April sales dropped 19 percent, Richemont said today.

The owner of the Vacheron Constantin and Piaget brands cut its dividend to 30 cents a share from 78 cents, mostly because of the spinoff of a stake in British American Tobacco Plc.

Buyback Extended
Richemont also said it?s extending a stock buyback program, and will repurchase as many as 10 million so-called A shares over the next two years, which is 5.4 million more than previously planned and would be a 1.7 percent stake.

The company said it?s in talks to sell two ?small? units, one being the Montegrappa pen brand.

Net income beat the 799 million-euro average analyst estimate. Sales rose 2 percent to 5.42 billion euros.

LVMH Moet Hennessy Louis Vuitton SA, the world?s largest luxury-goods maker, last month said first-quarter revenue was little changed as falling demand for Tag Heuer watches and Moet champagne offset increased handbag sales. About 15 percent of jewelry shops in the U.S. closed last year, Paramus, New Jersey- based watchmaker Movado Group Inc. said in April.

Richemont said Jan. 19 that market conditions are the ?toughest? since its creation 20 years ago. Swiss watchmakers have been forced to curtail production and cut jobs after exports of their timepieces slumped. Shipments dropped 27 percent in March, the most on record.

Richemont shares have dropped 42 percent in the past 12 months, more than the 24 percent decline in LVMH.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net.