ZURICH (Reuters) -Richemont, owner of the Cartier brand, fell on the stock market on Friday after announcing half-year results lower than forecasts and expressing caution about a recovery in China.

At 11:30 GMT, Richemont lost 4.97%, dragging in its wake other stocks in the European luxury sector including LVMH (-3.18%), Swatch (-5.98%), Kering (-6.16%). ), Burberry (-6.55%) and Hermes (-3.99%).

Investors were disappointed by lower-than-expected operating profit across all of Richemont’s divisions, including its watchmaking unit, which continued to struggle.

“Ebit was lower than expected in all divisions, particularly in specialist watchmaking,” said Jean-Philippe Bertschy, an analyst at Bank Vontobel, while noting that Richemont had been hit by non-recurring items. and negative exchange rate effects.

“The results in specialist watchmaking turned out to be significantly worse than expected by sellers,” commented Bernstein.

“First half results were generally weak, with a 9% shortfall in Ebit due to pressure from foreign exchange rates and gold, as well as reduced leverage in the watch sector,” JPMorgan said in a note.

Operating profit in the first half fell 17% to 2.21 billion euros, missing analysts’ forecasts of 2.45 billion euros, according to a consensus provided by Visible Alpha.

Richemont, owner of Swiss watchmakers including IWC, Jaeger-LeCoultre and Piaget, has also been hit by a continued slowdown in Asia-Pacific, its largest region, which generates a third of its revenue and posted revenue of 10.08 billion euros, down 1% year-on-year, below expectations of 10.21 billion euros over the period.

Strong sales increases in the Americas, Japan and the Middle East helped offset the slowdown in Asia-Pacific, where Richemont sales fell 18%.

Nicolas Bos, Richemont’s chief executive, who took over at the start of the year, said China remained a difficult market.

He told reporters that confidence in China was low and he did not know how long the slowdown would last. “We have no idea how long the crisis will last or whether we have reached the trough,” he added.

Nicolas Bos explained that several factors were linked to the Chinese economy, emphasizing that trust was a crucial element for Richemont’s customers.

EXPECTED RECOVERY IN THE USA

Like other companies in the luxury sector, Richemont has had to face weaker demand in China due to the economic slowdown in the world’s second-largest economy, hit by a decline in the real estate market and a rate of high youth unemployment.

Richemont’s competitors in the sector have recently experienced mixed fortunes. LVMH, for example, posted quarterly sales below expectations in the third quarter, indicating that consumer confidence in China had fallen to a low due to the pandemic.

The group said it expects a short-term recovery in the United States following the removal of uncertainties over the outcome of the US presidential election, while monitoring the potential impact on its activities of a possible increase in tariffs. customs proposed by Donald Trump.

Richemont has not yet planned a jewelry price increase for the coming months, despite the surge in the price of gold in recent months, according to group officials.

(Reporting by John Revill; Mara Vîlcu and Elena Smirnova, editing by Kate Entringer and Augustin Turpin)

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