Richemont’s Interim Results Reflect Weakness in Asian Watch Market
Sharp declines in China and Hong Kong drive a 17% drop in Richemont's watch division revenues
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Richemont recently released its semi-annual financial results. Unlike Swatch Group and LVMH, which close their fiscal years on December 31, the Swiss luxury conglomerate aligns its financial year with March 31. As a result, its interim results were published on Friday, November 8.
Following the announcement, Richemont’s shares dropped 5% during Friday’s trading session and continued to decline throughout the week. The market’s reaction reflects the mixed performance outlined in the report. While the company’s overall revenue remained stable at €10.08 billion, net profits plummeted from €1.51 billion to €457 million.
The jewelry division, featuring renowned brands such as Cartier, Van Cleef & Arpels, and Buccellati, provided a glimmer of hope, with revenues increasing by +2% to €7.1 billion, albeit with slightly lower margins.
The watch division, however, presented a starkly different picture. According to Richemont, sales of A. Lange & Söhne, Baume & Mercier, IWC Schaffhausen, Jaeger-LeCoultre, Panerai, Piaget, Roger Dubuis, and Vacheron Constantin fell by -17% year-on-year. This sharp decline was driven largely by a -28% drop in the Asia-Pacific region, which last year accounted for over half of the division’s sales. The downturn was particularly pronounced in China, Hong Kong, and Macau. Conversely, sales in the Americas remained steady, while Japan posted double-digit growth during the same period.
Given the high fixed costs of the watch business, this decline in sales led to a steep -59% drop in operating profit, down to €160 million.
As highlighted in Richemont’s annual report in March, the Asian market—particularly China—continues to face waning demand, significantly impacting the luxury watch industry.
Data from the Federation of the Swiss Watch Industry further illustrate the challenges in the region. The export figures show a stark contrast between positive performances in markets like the U.S. and Japan, and sharp declines in China -24.6% and Hong Kong -20.4%. September was particularly difficult, with exports to Hong Kong down -34.6%, China down -49.7%, and Singapore down -13.9%. Together, these markets accounted for over 80% of the global decline in Swiss watch exports.
Even other Asian countries, such as South Korea -19.8%, Taiwan -29.8%, and Thailand -34.6%, saw significant contractions, resulting in an overall regional decline of -22.6%. Meanwhile, Europe -3.4% fared better, with growth in Germany +5.7% and Spain +5.3% softening the blow. The U.S. +2.4% continued its steady growth, reaffirming its position as the leading market for Swiss watches.
Richemont's results and the decline in Swiss exports highlight the difficulties in the Asian market, with China in particular weighing significantly on an industry seeking balance between regional challenges and positive signals from other areas such as the United States and Japan.
