Compagnie Financière Richemont S.A.

Good morning, everyone. We hope you're keeping well. So here with me are Johan Hooper, chairman, Jérôme Lambert, group chief executive officer, Boca Bruns, group chief finance officer, Cyril Vigneron, Tartier chief executive officer, Nicolas Bosch, Van Cleef & Arcel chief executive officer, and James Fraser, IR executive. We are pleased to welcome you to Richemont Results presentation for the 6th month of June and 30th of September 2021. We would like to remind you that the company announcement and final presentation can be downloaded from richemont.com and that the replay of this audio webcast will be available on our website today at 3pm UNIVAD time. Before we begin, may I draw your attention to the disclaimer on our presentation and company announcement regarding forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 1995. Turning now to the presentation, Burkhardt will begin by discussing the financial highlights and group sales. I will then provide further detail on the performance of our maisons and online distributors. Finally, Burkhardt will walk you through the financials and offer some concluding remarks. This presentation will be followed by Q&A session. I will now hand the call over to Berka.

Thank you, Sophie. Good morning to everyone listening. Thank you for joining us today. Sales for the six-month period ended September 2021 showed solid growth rising by 65% versus the prior year period of constant exchange rates and by 63% at actual exchange rates. Sales are now 24% higher than two years ago at constant exchange rates and 20% higher at actual exchange rates. Our group emerged stronger from the pandemic with double-digit sales growth versus the first half of the prior year across all business areas, channels, and regions. Compared with the same period of two years ago at constant exchange rates, all business areas and channels in most regions also grew. A significantly improved operating leverage due to strong sales with a contained increase in costs led to an operating profit of 1.95 billion euros, up by 331% over the prior year period, with an operating margin of 21.9%. Compared to September 2019, this represents a 67% increase in operating profit and a 620 basis point gain in operating margin. Profit for the period amounted to 1.25 billion euros. The net cash position was very solid at 3.15 billion euros, an increase of 1 billion euros versus September 2020, after the dividend payout of more than 1 billion euros just recently. Benefiting from the enduring appeal of its maisons and businesses, Richemont has significantly exceeded pre-pandemic sales levels overall and across most business areas, channels and regions. Compared to the six-month period ended September 2019, we saw strong sales growth at the Julie Maisons and Specialist Watchmakers. Online distributors recorded steady growth and the other business area consolidated their position. Profitability was enhanced with the Julie Maisons achieving an exceptional 38% operating margin supported by 67% year-on-year sales growth. Specialist watchmakers delivered a strong 22% operating margin fueled by a 74% year-on-year sales growth. Overall, higher sales, improved gross margin, and continued cost control led to a strong operating margin. Richemont's digital transformation continued. We achieved robust growth in online retail sales, notwithstanding the reopening of physical stores. We are transitioning towards a hybrid model, mixing 1P and 3 distribution at Net-a-Porter, Mr. Porter and Jux, to meet the needs of brand partners and offer more choice to customers. In June, we announced the acquisition of Delvaux, the oldest luxury leather goods maison in the world, to strengthen our presence in savoir faire and other. Elbow will be able to leverage the group's global presence and digital capabilities to develop omnichannel opportunities and customer engagement. Let us now turn to sales by business area. On a quarter by quarter basis, sales have continued to sequentially accelerate as evidenced by the strong Q2 performance. and this both on a one-year and two-year comparison basis. Joliet Maisons continued to perform strongly with a high double-digit sales increase year on year. Compared to the same period two years ago, the first and second quarters had solid growth, which led to a 36% increase in the first half. Sales at specialist watchmakers, online distributors, and Maisons under the other business area all accelerated in the second quarter, leading to solid and positive one and two-year sales growth comparisons at constant exchange rates. Let me now discuss the group sales performance in more detail, first by region and then by distribution channel. At actual exchange rates, year-on-year sales grew by 3.4 billion euros to now 8.9 billion euros, with all regions experiencing growth and posting double to triple digit sales increases. The strongest growth came from the Americas, which represented 22% of group sales, up from 16% of group sales a year ago. The Americas' share of group sales is nearly on par with Europe, which after a 63% year-on-year sales increase, accounted for 23% of group sales. Asia Pacific is the largest region in terms of sales, representing 42% of group sales. The largest contributors to the first half sales increase were Asia Pacific and the Americas. I will now discuss the sales performance on a one and two year comparison basis at constant exchange rates. When comparing to the first half of 2019, that is to say two years ago, there were strong double-digit increases in the Americas, Asia-Pacific, and the East in Africa. Asia-Pacific saw robust growth across most main markets, notably China, Macau SDR, and South Korea. Europe and Japan recorded softer sales due to lower tourist spending owing to ongoing COVID-19-related travel restrictions that more than offset encouraging local demand. In the second quarter, All regions accelerated versus the first quarter notably the Americas and Europe where a partial resumption of international travel and sustained local consumption contributed to the improvement. Let us now turn to the sales by distribution channel. All channels performed well. As stores reopened, traffic returned and retail sales grew by 71% versus the prior year period and by 34% versus two years ago. Performance was strong across all regions and business areas versus last year. Growth was particularly high in Asia-Pacific, Europe, the Americas, and compared to two years ago, Asia-Pacific and the Americas also enjoyed double-digit growth, creating robust increases in China, South Korea, and Macau SAR. All business areas posted significant sales increases, with the jewelry maisons contributing the most to the growth in sales. Compared to two years ago, both the jewelry maisons and specialist watchmakers achieved strong double-digit sales progressions. Sales benefited from 17 new net store openings, mainly in Asia Pacific and Japan, for the jewelry maisons and specialist watchmakers. We also completed renovations at several Cartier boutiques. Retail was by far the largest contributor to group sales, accounting for 56% of sales in the first half of the year, up from 53% a year ago. Online retail achieved a 38% year-on-year sales increase and a 33% increase versus two years ago. The growth in online retail sales is all the more noteworthy as it continued while monobrand and multibrand stores reopened. As with the retail channel, the growth in online retail was strong across all regions and business areas. The strongest increase came from Asia Pacific and the Americas, as well as from the specialist watchmakers, though from a lower base, and the fashion and accessories mazons. Online retail made up 18% of group sales in the period, compared with 22% in the prior year period. Offline and online retail combined, which are the direct-to-client interaction, contributed 74% of sales in the first half of the year. This high level of direct interaction enables us to know our clients better, thereby further improving our quality of service as we gain an increased understanding of what our clients want, when and where they want it. Now moving on to wholesale sales, which includes sales to monobrand franchise partners, to third-party multi-brand retail partners, as well as sales to agents in addition to royalty income. Wholesale sales represented 26% of group sales and were up by 74% versus the prior year periods and by 2% compared to two years ago. The year-on-year increase was broad-based across all regions and business areas. It is worth highlighting that sales returned to growth versus the pre-pandemic period of two years ago. Year-on-year, Europe, Asia-Pacific, and Middle East and Africa all posted double-digit sales increases, while sales in Europe and Japan remained below pre-pandemic levels. Back to you, Sophie.

Thank you, Dr. I will now review the business areas with all comparisons at actual rates. Let me start with the jury maisons, which include Buccellati, Gartier, and Van Cleef & Martel. The jury maisons emerged strong graphs from the crisis. They posted a stellar forecast across all regions and channels versus the prior year period. The strongest growth came from Europe and the Americas. Asia-Pacific enjoyed significant growth and provided the highest contribution to the increase in sales. Compared to two years ago, the jury maisons achieved a 36% sales growth with steady performance from the first to the second quarter. Most regions recorded solid double-digit sales increases, with the exception of Europe, where it is stable, and Japan, down double-digit to partly to reduce, but improving to reach spending. Demand with local clientele was sustained. Operating results rose by 109%, with an exceptional half-year margin of 37.9%. This excellent performance is the result of higher sales, just mentioned, increased manufacturing capacity utilization, and good cost control. Let us look at the main developments over the past six months. The labels benefited from the successful introduction of new references within our Corny collection. These included additions to Panterre and Clash at Cartier, to Frivol and Perlet at Banquer et Martel, and to opera tulle at Buccellati. Hard jewellery also returned to growth with the introduction of new hard jewellery collections and the return of physical events and reopening of stores alongside digital events. To meet the strong level of regional demand, Julie Maison accelerated agility in production and supply management. Store renovations also continued at a high rhythm for Cartier and Van Cleef & Arpels, creating a stable physical store network. Already, 100 Cartier stores out of 268 are under the new concept. Cartier reopened boutiques in Taiwan for Juvia 4 and Fugue 4 Marina Bay Sands. New store openings included Paris La Samaritaine for Cartier and Wynn in Las Vegas for Van Cleef & Arpels. Uchelati is undergoing a qualitative improvement of its distribution network, combined with targeted store openings and the internalization of the Japanese distribution network. At the same time, the jury maisons increased their online reach. The number of markets offering e-commerce facilities almost doubled in two years for Cartier. Our maisons have also continued to be active in advancing the movement for better luxury. Entrusted by Richemont, Cartier, in partnership with Caring and the responsible Jewelry Council, launched the Watch and Jewelry Initiative 2030 with objectives covering environmental, sourcing, and social issues. Van Cleef & Appels partnered with the Musée National d'Histoire Naturelle in Paris to protect nature and biodiversity including botanical gardens preservation and awareness programs, which lastly initiated the process to become certified by the responsible jury council. Let us now review our specialist watchmakers business area, where sales in the first half grew by 74% versus the prior period and by 7% versus two years ago. We are pleased to report that facing the first and second quarter of our financial year, both surpassed pre-COVID levels and accelerated to reach double-digit growth in the second quarter. The first half was characterized by very strong growth across all regions, mesons and channels, with online retail growing by triple digits. Regionally, the strongest growth came from the Americas and Middle East and Africa, both with triple-digit sales progression supported by strong local demand. Inventory continues to be tightly monitored, with sell-out being above selling. The operating results increased significantly to 376 million euros, achieving a margin of 22.4%. This was largely the result of strong sales, improved manufacturing capacity utilization, and tight cost control. There continued to be solid performance of Iconic collections. Just to name a few, Overseas at Sachon Constantin, Pilot at IWC, Reverso at Gégère Lecoultre, Luminor at Panerai, Possession and Follow-up Piaget and the Odyssey with Atlan Gelsonner. Further development of e-commerce and new omni-channel services, including Click-from-Store and Shift-from-Store, supported the triple-digit growth of online retail sales, albeit from a low base. The first half saw an extension of the retail network, including a greater emphasis on franchise stores with 30 openings. The 14 new internal stores included IWC in Seoul and Jaeger LeCoultre in Wuhan, while renovation related to Piaget flagship stores on London's New Bond Street. Direct to current sales increased from less than 40% of group sales two years ago to close to 50% at the end of September. With a view to further enhance visibility, high investments were dedicated to media and events, such as Watches and Wonders in Shanghai or the IWC Big Pilot Roadshow. The Time Ballet multi-brand concept, managed by our retail partners, was further rolled out with seven openings. The boutiques provide a highly qualitative environment to showcase our creations with many interactive digital features. Now let us move on to online distributors. Sales increased by 37% versus the prior period, and by 8% versus two years ago. All regions achieved double-digit sales growth. The Americas, which is the second contributor to sales, posted the highest growth rate. Growth merchandise value, GMV, was up by 28% during the period, On a two-year basis, we saw an acceleration in sequential growth from the first quarter to the second quarter. The €141 million operating loss was rolling in line in the prior period, notwithstanding high sales and improved gross margin. Results partly reflected the temporary absorption of Brexit's costs for an amount approximating €40 million as well as increased investment in communications. Operating margin improved by almost 400 basis points. The EBITDA loss of 49 million euros was stable compared to the prior period. The first half of the succession completion of the re-platforming journey was started at the outnet, followed by mid-supporter, and now ended with net-apporting. The Net-a-Porter and its Supported Distribution Center in Londriano, Italy, is now fully operational and acting as a central hub serving millions of customers around the world. The move to a hybrid business model in May is progressing well, with some key brands starting to operate on e-concession models. Preparations for the youth marketplace have started. Net-a-Porter's key more luxury pavilion flagship store is now retailing over 400 brands, enabling them to provide a curated assortment, exclusive and limited edition. Net-a-Porter just launched a resale service with Replant, a leading resale technology provider. Mr. Porter and me as met will follow in early calendar 2022. This marks the next step in their long-term mission to unlock circularity. The ongoing internationalization of Watchfinder continued with the establishment of a team and localized business in E2E and new partnerships with the start-up stores. In parallel, Watchfinder further partnered with our maisons and businesses. It further rolled out the watch trading program within our watch maisons, Mont Blanc and Cartier stores. The program is now operational within 89 stores. Watchfinder also launched a partnership to offer pre-owned designer watches to Net-a-Porter and Mr. Fortescue in the USA. Finally, Lesmar moves to the other businesses, which include the fashion and accessories maisons, the group's watch component manufacturing, and real estate activities. Sales increased by 72% year-on-year, or 63% excluding Delvaux. Growth was broad-based across maisons, including at Mont Blanc, despite substantially lower footfalls in airports. Europe, the Americas, and Middle East and Africa recorded the strongest sales growth. Compared to the six-month period ended September 2019, sales are slightly lower, but second-quarter sales exceeded pre-COVID levels with double-digit growth. Operating profit amounted to 29 million euros, and generated a free societal protein margin. This performance reflected higher sales, improved growth margins at most maisons, as well as fixed cost control. The first collections of the new creative directors, Gabriella Hurst at Chloé and Pieter Mullier at Alaya, have been very positively received and generated strong editorial coverage and value interest. Peter Millar has continued to generate a strong performance including a significant increase in their online sales and strong demand for G4. In June, the group acquired Delvaux, the oldest luxury leather goods maison in the world. As the inventor of a modern luxury handbag, Delvaux has an exceptional savoir-faire and creativity. The new management team is overseeing its development. After the tragic passing of Albert & Barthes, The last night of the Paris Fashion Week closed with a very special show entitled Love Brings Love. This collaborative runaway gathered 45 houses and designers to pay tribute to Albert's creative vision and unconditional love of the fashion family. The fashion and accessories maisons continue to focus on developing their digital capabilities to support their growing geographical reach. As an example, Montblanc redesigned its website for improved user experience. In terms of sustainability, Chloé became the first luxury maison to achieve the very demanding B Corp certification, reinforcing its commitment to meeting the highest social and environmental performance standards. This concludes the review of the first half performance of each business area. Back to you.