(Adds further detail, comment, shares)
By Laura MacInnis
GENEVA May 22 Swiss luxury goods maker
Richemont CFR.VX met expectations with its full-year net
profit and said it may set up an investment vehicle for its
The maker of Cartier watches, Piaget jewellery and Montblanc
pens said on Thursday its profit for the year ending March 31
rose 18 percent to 1.57 billion euros ($2.5 billion), in line
with analysts' forecasts, but said the current economic crisis
was a cause for concern.
Investors have been looking at Richemont and other luxury
goods makers like France's LVMH (LVMH.PA) -- which have been
boosted by several years of heady growth powered by Asia -- for
any signs of cooling in demand for luxury items like watches and
jewellery, but sales seem to be holding up so far.
"Strong set of figures while April data is obviously a cause
for optimism," said Landsbanki Kepler analyst Jon Cox.
Richemont said it was mulling a plan to split into a luxury
business in Switzerland and an investment vehicle which could be
based in Luxembourg, holding a 30-percent stake in British
American Tobacco (BATS.L), in an effort to boost its shares.
"We would have preferred a cleaner announcement on the BAT
unbundling but the writing is on the wall and it looks certain
that the businesses will be split into two, itself an end to
major uncertainty," Cox said.
Richemont has been trading at a discount to sector peers
because of the combination of the two businesses and also
because some investors will not buy into firms earning their
money from tobacco or alcohol.
It had already said last year that it was studying plans
which could lead to a splitting of the two interests but
Thursday's announcement provided more details. Richemont and its
joint venture partner Remgro Ltd (REMJ.J) hold a 30 percent
stake in BAT.
Richemont shares were flat at 64.85 Swiss francs by 1100
GMT, outperforming a 0.9 percent drop in the Swiss blue chip
Richemont expects the market for luxury goods to expand
further, Executive Chairman Johann Rupert said, but expects some
softness in the United States as a result of the decline of the
U.S. dollar that has slashed the purchasing power of American
Rupert stressed that the high-end of the U.S. luxury goods
retail market would be more resilient than the lower-end, and
that demand in China was by contrast "exuberant."
Richemont trades at 13 times forecast earnings for its
2009/10 fiscal year, at a slight discount to its main rival
LVMH, which trades on a 2009 multiple of 15.
LVMH said last week that it still expected a "sharp" rise in
2008 earnings despite a difficult economic climate.
(Additional reporting by Douwe Miedema in Zurich; Writing by
Sam Cage; Editing by Elaine Hardcastle)