Richemont warns of profit plunge
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Swiss corporate luxury retailer Richemont has warned of a 36 per cent plunge in net profit in the year to March 31, blamed on “derivatives”.
The loss comes despite a 10 per cent improvement in operating profit and capital gains on the disposal of assets.
“This significant decrease reflects non-cash, mark-to-market losses on financial instruments, which include monetary items and derivatives,” the company said. It also warned its tax rate would increase significantly.
Richemont owns Van Cleef & Arpels, watchmakers Piaget and IWC and fashion brands, including Shanghai Tang.
Further details will be revealed when the company reports its full results on May 22. Investors need not be too concerned, however: the company is sitting on cash reserves of around €5.4 billion.
Questions & Answers
Q.What is Richemont blaming for the significant drop in its net profit?
What is Richemont blaming for the significant drop in its net profit?
Richemont attributes the 36 per cent plunge in net profit to "derivatives". The company specified these are non-cash, mark-to-market losses on financial instruments, including monetary items and derivatives.
Q.Despite the profit warning, what positive financial aspects did Richemont report?
Despite the profit warning, what positive financial aspects did Richemont report?
Richemont reported a 10 per cent improvement in operating profit and capital gains from selling assets. The company also holds substantial cash reserves, estimated at around €5.4 billion.
Q.When will the full financial details for Richemont be released?
When will the full financial details for Richemont be released?
Richemont plans to reveal further details of its financial performance when it reports its full results. This official announcement is scheduled to take place on May 22.
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