Richemont, the Swiss luxury group behind Cartier and Van Cleef & Arpels, reported a 39% rise in half-year profit to €2.5 billion on Friday, as strong jewellery demand carried sales 16% higher to €12.3 billion. The result beat analysts' expectations and stood out in a luxury sector that has otherwise faced weak demand.

Sales for the six months to 30 September rose 17% at constant exchange rates, including growth of 13% in the second quarter. Quarterly sales of €5.95 billion came in ahead of the €5.895 billion expected by analysts, according to Visible Alpha consensus figures cited by Dow Jones Newswires.

Jewellery drives the result

The group's Jewellery Maisons, which include Cartier, Van Cleef & Arpels, Buccellati and Vhernier, delivered the strongest performance. Jewellery sales rose 18% to €9.1 billion, and the division's operating result climbed to €3.2 billion from €2.5 billion a year earlier.

Specialist Watchmakers recorded sales of €1.7 billion, up 9%, while the group's other businesses, which include fashion houses Chloé and Alaïa, Montblanc pens and Delvaux handbags, generated revenue of €1.4 billion, also up 9%. Richemont said all business areas performed strongly, with double-digit sales growth across most regions, led by Japan, the Americas and Asia Pacific.

Operating profit rose 33% to €3.1 billion, or 38% at constant exchange rates, despite what the group described as persistently elevated raw material costs, with gold in particular squeezing margins across the industry. The operating margin widened by 330 basis points to 25.5%.

Margins widen despite gold costs

The headline operating result included €229 million of positive tariff-related one-off items. Excluding those, operating profit was €2.9 billion and the operating margin was 23.6%, still 140 basis points higher than a year earlier. Diluted earnings per share rose to €4.29 from €3.08, and the group ended September with a strong net cash position of €7.7 billion.

Chairman Johann Rupert said the group had delivered a strong first half, carried by the sustained excellent performance of its Jewellery Maisons, in a volatile geopolitical and macroeconomic environment. Richemont said sales rose across all distribution channels in the first half, with retail leading the way.

The figures offer a bright spot for the luxury sector, where demand has been uneven and several rivals have struggled with weaker spending in China and higher input costs. Richemont's jewellery-led model, built around hard luxury pieces that hold their value, has proved more resilient than fashion-led luxury. European stocks closed at a record high on Thursday, with the pan-European STOXX 600 up 0.14% at 664.01, as strong corporate earnings helped offset worries about technology shares and US-Iran tensions.