Compagnie Financière Richemont SA (CFR) Earnings Call Transcript & Summary

Thank you, Sandra, and good morning to all of you. We appreciate you being with us for Richemont's presentation of half-year results covering the period that ended September 30th, 2026. Joining us today are Johann Rupert, our Chairman, Anton Rupert, Co-Deputy Chairman, Nicolas Bos, CEO, Burkhart Grund, CFO, and James Fraser, Investor Relations Executive. The company announcement along with the results presentation are available for download at richemont.com, as is customary, and a replay of the webcast should be up on our website today by 2:00 P.M. Geneva time. Please note, before we start, the forward-looking statement found in our ad hoc announcement and on slide two of the presentation. Now moving into the presentation, Burkhart will open with key highlights and group sales. After that, I'll give further detail on how our Maisons performed, and finally Burkhart will walk you through the financials and offer some concluding remarks. A Q&A session will follow this presentation. Burkhart, over to you.

Thank you, Alessandra, and good morning, everyone. We appreciate your joining us today. During the first half, Richemont achieved strong results despite a volatile geopolitical and macroeconomic backdrop. Let's begin with several key figures. Sales for the period came to EUR 12.3 billion, an increase of 16%, or 17% at constant exchange rates. Operating profit was EUR 3.1 billion, 33% above the prior year period, or 38% higher at constant exchange rates. Excluding EUR 229 million of positive one-time items, operating profit amounted to EUR 2.9 billion. Profit for the period was EUR 2.5 billion, up 39% from the prior year period. Lastly, the group produced EUR 2.5 billion of cash from operating activities, which further strengthened its already solid net cash position, now standing at EUR 7.7 billion. Let's move to some highlights, beginning with sales. As I just noted, group sales rose 17% at constant exchange rates in the first half, with broad-based strength across business areas and regions; this comprised a remarkable 19% increase at the Jewellery Maisons, a robust double-digit gain at Specialist Watchmakers, and a solid high single-digit result at the other business area, which includes fashion and accessories Maisons; furthermore, most regions recorded double-digit growth, led by Japan, the Americas, and Asia Pacific. Affected by the ongoing conflict in that region, sales in Middle East and Africa saw a modest decline. Overall, following a particularly strong Q1 in which sales climbed 20% at constant exchange rates, the group sustained its strong momentum in Q2, with sales rising 13%; this growth came against a notably elevated comparative of +14% in the prior year period. Turning to our financial performance, operating profit reached EUR 3.1 billion; this figure included EUR 229 million of positive tariff-related one-time items recorded in gross margin. Excluding those, operating profit was EUR 2.9 billion, up from EUR 2.4 billion in the prior year period. Operating profit growth was largely driven by the sales contribution I just described. In a context marked by high raw material prices, the group's Maisons kept their consistent and measured pricing approach. At the same time, they continued investing in selective footprint expansion and impactful communication, resulting in a sustained yet disciplined increase in operating costs. This performance further reinforced the group's financial health, with a resulting net cash position of EUR 7.7 billion for H1. This was accomplished while funding an increased dividend of EUR 2.7 billion in September, up from EUR 1.9 billion a year earlier. Let me conclude these highlights by reminding you that, whatever the context, we continue to cultivate the Maisons' long-term prospects by fueling creativity, investing in manufacturing, and nurturing craftsmanship. Beginning with creativity, our Maisons launched key product novelties that resonate with their cultural heritage. Just to give a few examples, that applied to Cartier's Roadster and LOVE Color novelties, the Fascinating Egypt High Jewellery collection from Van Cleef & Arpels, Piaget's Polo Signature line, and Montblanc's Romeo & Juliet Writing Instrument line. On the fashion side, the second phase of our AZ Academy program, known as A Bunch of Designers, featured six young talents making their debut with collections shown in Paris. At the same time, we kept investing in manufacturing, specifically in jewellery capacities and capabilities in France, along with further expansion of the group's leather goods center of excellence in Florence. Beneath all of that sits our enduring dedication to craftsmanship, which is at the heart of the group's identity and what sets it apart. A clear example is the Pink Enamel Alhambra line from Van Cleef & Arpels, which draws on a crafting technique dating to the 17th century. Another case is the Homo Faber exhibition held in Venice during September, which celebrated artisanship, human talent, and creativity and was open to a broad audience. Let me now take you through the group's sales performance in greater detail, starting with region and then moving to distribution channel. Unless stated otherwise, every comment refers to year-on-year changes at constant exchange rates. Every region except Middle East and Africa posted double-digit sales growth. That held true for both the first half and the second quarter, against elevated comparatives. Europe's sales rose 13%, supported by higher local demand and tourist spending from all main nationalities. Growth picked up in the second quarter, with sales climbing 15%, following +11% in the first quarter. Every business area recorded higher sales during the period, with the Jewellery Maisons and Specialist Watchmakers both up by double digits. Sales increased across all major markets, with especially strong results in France and the United Kingdom. Every distribution channel posted growth, led by retail's strength. The region accounted for 23% of group sales, a touch under the prior year period. In Asia Pacific, sales rose 16% in the first half; that included Q2 up 10% against a double-digit comparative in the prior year period. Combined sales in China, Hong Kong, and Macau grew 7% in the first half, with a modest sales increase in the second quarter, despite continued softness in the Mainland. Most other countries in the region grew by double digits, with exceptional results in the South Korean and Taiwanese market. On the whole, sales at the Jewellery Maisons and the other business area rose by double digits, while specialist watchmaker sales were stable. By channel, growth was led by double-digit increases in both retail and online retail, while the wholesale channel was flat. All told, the region contributed 33% of group sales, up from 32% in the prior year period. Sales in the Americas grew 23%, driven by consistently supportive local demand. With Q2 up 19%, the region delivered its 11th consecutive quarter of double-digit growth against a strong +20% comparative in the prior year period. Revenue rose in every market, every distribution channel, and every business area, and the Specialist Watchmakers stood out with especially strong results. The Americas accounted for 26% of group sales, a touch higher than the same period a year earlier. First-half sales in Japan climbed 30%, driven by robust demand from domestic customers as well as tourist spending. Following an especially strong first quarter, when sales jumped 36%, the second quarter carried that momentum forward with 23% growth on top of a +10% comparison in the prior-year period. Every business area posted double-digit sales growth, with the Jewellery Maisons in the lead. Japan made up 10% of total sales, in line with the prior-year period. Moving on to Middle East and Africa. During the period under review, sales in the Middle East and Africa region dipped modestly, falling 2% amid resilient local demand but a steep drop in tourist spending. That weighed particularly on sales in the United Arab Emirates market, where the decline was only partially offset by growth elsewhere, most notably Saudi Arabia. With geopolitical tensions building through the summer, second-quarter sales dropped 7% against a particularly tough +22% comparison in the prior-year period. In the first half, the Specialist Watchmaker Maisons delivered double-digit growth, while sales declined at both the Jewellery Maisons and other. Sales also achieved double-digit growth, led by the Jewellery Maisons and Specialist Watchmakers. The region's share of group sales came to 8% in the first half, down from 9% in the prior-year period. To sum up, in the first half nearly every region added to the group's year-on-year sales growth of EUR 1.7 billion. Measured by value, the biggest contributors were the Americas and Asia Pacific, each adding circa EUR 0.6 billion to group sales. Let us now move to sales by distribution channel, with growth stated at constant exchange rates. Sales increased across every channel in the first half, with direct-to-client sales showing particular strength. I'll begin with retail, which represented 72% of group sales. Retail sales rose 20%, reflecting double-digit growth in every business area, with a standout performance from the Jewellery Maisons. Sales also rose by double digits in most regions, led by Japan and the Americas. Online retail made up 6% of group sales, in line with the prior-year period. Sales were up 17%, reflecting growth in every region except Middle East and Africa, led by strength in Japan and the Americas. Online retail sales at the Jewellery Maisons and the other business area grew by double digits, while sales at the Specialist Watchmakers held steady. All of this meant direct-to-client sales, meaning the combination of sales in directly operated stores and online retail, accounted for 78% of group sales, a 2 percentage point gain versus the prior-year period. Finally, sales through the wholesale channel increased, though at a slower rate than the retail and online retail channels, largely reflecting a different regional mix. That 7% growth likewise made up 22% of group sales, which is lower than the 24% seen before. With that said, I'll now pass things to Alessandra, and she will walk you through the highlights by business areas. Alessandra, over to you.

Thanks, Burkhart. Now I’ll go through the business areas, with all comparisons at actual rates unless stated otherwise. I’ll begin with the Jewellery Maisons, comprising Buccellati, Cartier, Van Cleef & Arpels, and Vhernier. Sales came to EUR 9.1 billion, up 18% in the first half. At constant exchange rates, sales rose 19%. Q2 carried that momentum forward with a 14% increase against a notably high comparative of 17% in the same period last year. Every Maison and every region posted double-digit growth, apart from Middle East and Africa. Sales increased across all distribution channels, with retail leading the way. The operating result for the Jewellery Maisons was EUR 3.2 billion, compared with EUR 2.5 billion in the prior year period. Against a volatile macroeconomic backdrop marked by raw material costs climbing further, the Jewellery Maisons kept a measured approach to pricing so they could deliver lasting value to clients. At the same time, they went on investing with discipline in their store network and in communication, which helped strengthen brand equity further. Strong sales leverage more than offset the increase in operating costs. Operating margins were 35.3%, and excluding positive one-time items, the margin was 33.4%, 60 basis points higher than in the prior year period. Now let’s look at some notable developments during the past six months. Both jewellery and watches performed strongly, driven by sustained demand for timeless collections, with novelties providing a boost. That was true of Opera Tulle and Étoilée at Buccellati, Clash, LOVE, Panthère, and Santos at Cartier, and Alhambra, Perlée, and Fauna at Van Cleef & Arpels. Notably, Cartier introduced a new Roadster edition in watches and the LOVE Color jewellery pieces, while Van Cleef & Arpels added its Pink Enamel creations to the Alhambra line in September, as mentioned earlier. High jewellery sales increased, led by striking collections including La Serenissima at Buccellati, Le Chœur des Pierres at Cartier, and Fascinating Egypt at Van Cleef & Arpels, backed by exclusive events for the Maisons’ clients around the world. A word on Vhernier, which is now marking two years as part of the group. Following a very intense setup phase, Vhernier successfully capitalised on its reshaped product assortment around core collections such as Abbraccio, Calla, and Freccia, across an upgraded and expanded boutique network. Overall, all the Jewellery Maisons continued to expand their store footprints. Cartier opened boutiques in Orlando and Austin in particular, Van Cleef & Arpels in Madrid, Buccellati in Bangkok and Guangzhou. Vhernier also opened its first boutiques in China, in Shanghai and Beijing, and inaugurated its Old Bond Street boutique in London. Let’s now turn to Specialist Watchmakers. Sales reached EUR 1.7 billion, a 9% growth in the first half. At constant exchange rates, sales were up 10%, accelerating to +12% in the second quarter. Every region apart from Asia Pacific posted double-digit gains during the first half, with the Americas and Japan driving that strength; in Asia Pacific, sales held roughly flat, since softer demand in China persisted but was balanced by increases in other parts of the region. Growth occurred across every channel, with retail posting a double-digit rise that led the way. The operating result climbed to EUR 150 million, versus EUR 50 million a year earlier. Those better results largely came from a healthy sales increase paired with ongoing cost discipline. The operating margin came in at 8.8% of sales. Once one-time items are excluded, the operating margin was 7.7%, a gain of 450 basis points over the prior year period. Growth was recorded at most Specialist Watchmakers Maisons, with Vacheron Constantin, Jaeger-LeCoultre, and A. Lange & Söhne leading. Broadly, iconic lines and heritage-inspired key novelties drove sales. Among the notable novelties were Vacheron Constantin Overseas Self-Winding Ultra-Thin and the Jaeger-LeCoultre Master Control Chronometre line. A number of Maisons demonstrated their heritage and craftsmanship via high-impact events, among them Panerai's immersive exhibition in Florence, along with a presence at Homo Faber in Venice for IWC, Vacheron Constantin, and Jaeger-LeCoultre. At the same time, the Specialist Watchmakers keep actively reshaping their store network via selective openings, closings, and renovations. A few illustrations include Jaeger-LeCoultre's new boutique in Singapore ION Orchard, Vacheron Constantin's newly renovated boutique in Via Montenapoleone in Milan, and Piaget's store relocation to Hong Kong St. George's. Lastly, allow me to remind you that we completed the disposal of Baume & Mercier to the Damiani Group in July. Let's now turn to the other business area, which comprises the group's fashion and accessories Maisons, Watchfinder & Co., as well as the group's component manufacturing and real estate activities. Sales reached EUR 1.4 billion, an increase of 9% at actual and constant exchange rates in the first half, with momentum continuing in the second quarter. By region, the Americas, Japan, and Asia Pacific were the main contributors to growth, thanks to double-digit progression. Sales rose across every distribution channel, with strong growth in retail and online retail. Overall, the other business area reported an operating loss of EUR 12 million, broadly in line with the prior year period once positive one-time items are excluded. Operating results at the fashion and accessories Maisons improved modestly, supported by solid sales growth and cost discipline amid sustained investment into the Maisons' long-term success. Turning to business highlights, most fashion and accessories Maisons delivered positive performances in the first half, driven by notable product development and momentum and strong communication campaigns. Notably, Alaïa and Peter Millar kept delivering double-digit growth. Alaïa sustained its strong brand heat and cultural relevance with impactful collections such as the winter/spring 2027 archetypes. Peter Millar consolidated its golf anchoring whilst further expanding into a broader lifestyle positioning. Montblanc posted encouraging sales growth, benefiting from brand elevation, the successful launch of key writing instruments novelties, exclusive experiences showcasing the Maison's craftsmanship in leather goods, and focused communication spend. We also saw some noteworthy changes to the store network, such as new Alaïa locations in Bangkok and the Miami Design District, Chloé in Barcelona, and Montblanc in Milan Galleria. At the same time, work on reshaping that network carried on, most notably through the deliberate closure of certain dunhill stores in China and important relocations for Delvaux in Hong Kong and Shanghai. That wraps up the review of first half performance by business area. Burkhart, over to you.

Thanks, Alessandra. Now I’ll take you through the remaining parts of the P&L, beginning with gross profit. For the period, gross profit increased 18% to EUR 8.2 billion, equal to 66.5% of sales, which was 120 basis points higher than in the prior year period. That figure included a positive one-time tariff-related effect of EUR 229 million, amounting to 190 basis points of gross margin. Excluding that item, gross margin fell 70 basis points year over year. The 70 basis point decrease came from several factors together. The group still faced elevated production costs, mainly because of higher raw material prices, with gold the most notable example. Those pressures were largely offset by moderate price increases across our Maisons over the past 12 months, combined with a positive sales mix. In addition, although foreign exchange rate headwinds eased in the first half, their overall effect stayed negative at 40 basis points, driven primarily by a weaker Japanese yen and South Korean won. Turning next to operating expenses, these rose 10% at actual and constant exchange rates, as we keep making strategic investments to support our Maisons’ growth potential while staying disciplined on costs. I’ll now take you through expenses by category. First, selling and distribution expenses increased 9%, or 10% at constant exchange rates. That movement included variable cost increases tied to the group’s current regional mix, along with a higher share of direct-to-client sales. In addition, the group’s Maisons continued selective network expansion. Selling and distribution expenses were 24.2% of sales, 150 basis points lower than in the prior year period amid strong sales growth. Communication expenses rose 14% at actual and constant exchange rates. Through this investment, the Maisons continued to reinforce their brand equity and reach with impactful campaigns and exclusive events. Also worth noting, to a lesser extent, was the phasing of certain specific events, such as the Homo Faber Biennale this year. As a percentage of sales, communication spend was 8.1%, in line with the prior year period. Administrative and other expenses increased 8% at actual and constant exchange rates. The rise mainly reflected higher personnel expenses and positive prior year non-recurring income. Overall, net operating expenses came to 41% of group sales, 210 basis points below the prior year period, showing strong sales leverage on costs; this produced an operating profit of EUR 3.1 billion, or 25.5% of sales. Excluding the positive one-time items mentioned earlier, operating margins were 23.6%, up 140 basis points from the prior year period. The improvement reflected the positive contribution from strong sales growth amid persistently elevated raw material costs. All the while, we continued to invest in nurturing our Maisons’ growth prospects. Let us now review the remaining P&L items below the operating profit line, starting with finance costs. Net finance costs fell to EUR 44 million in the first half, compared with EUR 158 million a year before, and that EUR 114 million improvement broke down as follows. First came a net positive FX-related effect of EUR 21 million, which came from a broad offset between a net loss on the group's FX hedging program and a net FX gain on monetary items. Second, there was an EUR 85 million positive effect from higher fair value adjustments, chiefly tied to the group's investments in money market funds and segregated investment mandates. And last, net interest expense improved slightly, by EUR 8 million versus the prior year period. Going further down the P&L, let's look at profit for the period. Profit for the period was EUR 2.5 billion, a rise of 39% against the prior year period. That mirrored the higher operating profit and the lower net finance costs I just walked through, partly offset by a rise in the group's tax charges. The effective tax rate for the period came in at 19.5%, broadly in line with the prior year period. Cash flow generated from operating activities reached EUR 2.5 billion, an increase of EUR 0.6 billion versus the prior year period. That 35% increase mostly mirrored the higher operating profit, partly offset by greater working capital needs, largely because of cash outflows from the foreign exchange derivatives. Let me add that we saw lower consumption needs from trade working capital, thanks to disciplined inventory management amid strong sales growth. Let us now turn to gross capital expenditure, which came to EUR 0.4 billion, in line with the prior year period, and represented 3.3% of sales. During the first semester, roughly half of the group's CapEx went to the distribution network, with investments mostly relating to the continued upgrade of the Maisons' internal boutique network, as well as selective expansion. Notable examples included the Cartier boutique expansion on Rodeo Drive in Beverly Hills and the opening of the Van Cleef & Arpels boutique in Madrid. Manufacturing made up over a third of our investments, largely dedicated to the continued expansion of manufacturing capacities, notably for jewellery workshops in France. Other investments include disciplined spend on IT and other projects, accounting for 16% of CapEx. Let us now review free cash flow. At EUR 2 billion, free cash flow was EUR 1 billion higher than in the prior year period. The increase was primarily driven by a EUR 0.6 billion rise in cash flow from operating activities, driven by the group's solid results, combined with the EUR 0.4 billion proceeds from the disposal of the group's shareholding in Avolta. Our balance sheet remains strong, with shareholders' equity accounting for 57% of the total. Net cash stood at EUR 7.7 billion at the end of September, down by EUR 0.8 billion compared to the position at the end of March 2026, but up from EUR 6.5 billion in September 2025. Net cash rose compared with twelve months earlier, and we managed that even as we funded a larger dividend payout — a cash outflow of EUR 2.7 billion in September 2026, against EUR 1.9 billion the prior year. Just to remind everyone, the dividend that shareholders approved at the recent AGM and that was paid in September consisted of a CHF 3.3 ordinary dividend plus a CHF 1 special dividend for each A share or each 10 B shares. Before we open it up to Q&A, I'd like to wrap up this first half for the group and offer a few closing thoughts. The group posted strong sales in the first half, with growth in every business area and in most regions, powered by how relevant the Maisons' positioning is — something built consistently over time — and by the group's diversified business footprint. That, together with disciplined execution, let the group deliver both growth and profits even while raw material costs stayed elevated and while we kept investing in the Maisons' appeal and their long-term prospects. Going forward, in an environment that will probably stay volatile, we'll stick with our long-term strategic approach, building on strong products, creativity, unparalleled craftsmanship, and a strong culture — all of them core drivers of our differentiation. Executive and board governance is in place to steward the group responsibly going forward and to create lasting value for all stakeholders. I'd like to close by thanking our talented, hardworking teams and our valued clients for their dedication and loyalty. That brings our presentation to an end. Thank you.

We're going to take questions from the floor now, so please say your name and your company, and try to keep it to two questions. Thank you.

Yes, good morning. Antoine Belge here from BNP Paribas, and I will keep to two questions. First, could you revisit how Asia performed, still up 10% in Q2, perhaps the moving part? I believe you mentioned Greater China was up modestly, but might you comment on Mainland China compared with Hong Kong and Macau? And on Korea, would it be fair to say the numbers remain strong, perhaps somewhat below Q1? My second question concerns your pricing strategy; it appears we have not seen many price increases in Q2 and so far in Q3. First, if you could specify what you have done, and also, what would explain why you do not appear to be in a hurry to raise prices? Is it because gold prices have declined and FX has moved in the right direction? Any information on the pricing strategy. Thank you very much.

You answer. Nicolas, can you answer on China, and then I am not sure I understand the pricing. I will ask him again. You can start.

Okay, sure. This is Nicolas Bos speaking. Good morning. Regarding Asia Pacific, I believe we've recorded solid growth during the period. It's fair to say performance still varies a great deal from one country to another. In Greater China specifically, sales have held steady, coming in slightly lower than a year ago, with continental China down 3%. That decline is more than compensated for by extremely strong growth elsewhere in Greater China, especially Hong Kong and Macau, where we've posted very high double-digit gains. So overall we've seen a positive result with Chinese clients across the region, largely outside continental China; yet our sense is that the trend for this clientele is positive on the whole. I'm not certain whether that addresses your question, but performance does remain differentiated by country.

Perhaps quite a bit regarding Japan—sorry, Korea.

When it comes to Korea, performance remains extremely, extremely robust, with growth well into high double digits. It has held quite steady across the period, so our confidence in that market is extremely, extremely high.

Antoine, can you repeat. Explain the question about pricing.

Yeah. It looks like you made that large price hike back in September 2025. Since then, unless I'm wrong, there hasn't been much on the pricing front. So what's the thinking there? Is it because gold is falling now? Yeah.

Sorry for cutting in. The thinking is exactly what it's been for 20 years. What we sell is high-value, low-volume product. We employ every tool available to keep one universal pricing approach, even factoring in the different tax gaps. We don't want customers traveling around and shifting where they buy. And lastly, we feel a certain link between price and value has to be preserved; unlike some rivals, we didn't gouge our clients once COVID was gone. Customers remember things for a long time. On top of that, we want resale values such that when you visit Christie's or Sotheby's and look at jewellery auctions, it's typically Cartier and Van Cleef that hold their value. So our pricing is strong. We simply don't want to be greedy.

Thanks a lot. That makes sense. Appreciate it.

Morning, everybody. I've got two questions, if I may. First, on Specialist Watchmakers, which came back to double-digit growth in Q2. If I'm not wrong, that's the first time in more than four years. In your view, does that show structural improvements in the market, or are you perhaps seeing some gains at certain of your own specialist watchmaker brands that give you confidence for the medium term? And after getting back to a high single-digit percent margin in the first half, what does that imply for profitability ambitions in this division? Second, on gross margin, the pressure there had been easing in the first half. Of course, I mean excluding tariff refunds. Burkhart, could you perhaps give us more detail on that gross margin bridge you showed on the slide deck, especially the impact from commodity headwinds and inventory revaluation, and how you're thinking about gross margins from here, not only in the second half but also beyond, given what you said on pricing, but also lower gold prices? Thank you.

I don't believe we've ever provided forward guidance on gross margins. We did once, Jan du Plessis, and I nearly killed him, where in the same presentation he bragged about his low tax rate. We don't do that.

That's not something we're going to do.

No, we won't be doing that. That's beyond what we can forecast. Too many factors are in play. Metal prices aren't the only thing, and so on. There really are too many moving parts. What I don't want is for you to put together your models and then come back and hold us responsible down the road.

Yes, this is Nicolas speaking. Good morning. Regarding your first question about Swiss watchmakers, we are indeed very pleased that double-digit growth has returned. As we've had the chance to talk about previously, the market looks increasingly polarized, which makes it very hard to pin down structural trends, especially in that watchmaking category; individual brands have performed extremely well during the period. That has been true for some time now at Vacheron Constantin and A. Lange & Söhne, which speak to different collector groups or communities. We saw very strong performance, which the chairman mentioned earlier, from Jaeger-LeCoultre during the period, also rebounding very strongly with the Reverso collections and the new Master Control. There's good traction at other brands too: Panerai, following the relaunch of its historic Luminor collection at the Watches and Wonders fair this year. Also IWC, where the Ingenieur launch is doing very well. It really is brand by brand, but it's fair to say that the combination of these performances delivers double-digit growth for the period, which we hope will continue. Naturally, sales growth returning comes along with better profitability, but we aren't able to provide any guidance or forecast on how that will develop going forward.

Thomas, I’ll say just a brief word about gold prices. You mentioned that gold prices have declined. They are down from a recent peak of roughly $5,600 per ounce. However, if you look at our income statement, there is a lagging effect in both directions from movements in raw material prices on our income statement, or more specifically on our gross margin; for us, gold prices in the first half remain up about 40% versus the first half of last year. The decline from the recent peak has not yet shown up in our income statement.

Thanks.

Morning, all, and I appreciate you fielding my questions. To start, nice work to every team on superb results and an outperformance that far exceeded the industry. I simply hoped to get clarity on a couple of things. Perhaps to begin, on a regional basis, you had a fair amount of a slowdown in the Middle East, which strikes me as understandable considering the sad renewed outbreak of the conflict. But I was curious whether there might be something, I am not sure, such as events called off, I am not certain, high jewellery events called off in that region, anything along those lines. What prompted that question is this: I'd have thought the conflict peaked during your fiscal Q4, when you posted -3%, and since things have softened a bit now, I'd have assumed the hit might be somewhat smaller than it was then. Maybe some one-time factor also weighed on the region — I'm not sure. That's my first question. My second concerns possible trends in the business. Following what Mr. Rupert advised, I visit the stores fairly regularly and ask questions, and it really looks like a good number of products remain on waiting lists, particularly at Cartier. It doesn't appear that momentum is slowing at all. Since the drop-off from the prior quarter to this one was fairly large for Jewellery Maison, I wanted to verify whether it's reasonable to think growth stayed pretty consistent across the quarter. At the group level, you were still posting double-digit growth. Thank you.

Thank you. Good morning. This is Nicolas. Regarding your first question about the Middle East, the picture has been very mixed, naturally, in light of what has happened there. Obviously, the places most dependent on purchases by tourists have taken the biggest hit. You're right that Dubai specifically has seen a decline, especially at major malls that historically drew a lot of tourist traffic. Meanwhile, local customers—particularly in Abu Dhabi and elsewhere across the region—are still performing very, very well. Overall things have stayed fairly steady, though the drop in tourism is clearly what's weighing on sales. I can't think of any events or activities that were specifically canceled. We kept our activities going, naturally, while also making the security and safety of our teams a priority; we coordinate closely with our partners and the authorities on the ground. Turning to the second question, which focused more on trends, the trends we see remain extremely strong. Sure, ideally our lineup includes items that customers seek out eagerly, spanning both our heritage range and newer releases. You've picked up on this, and I appreciate it, that certain items are in short supply while demand runs high. Of course, because quality sits at the top of our priorities and our brands carry strict sourcing requirements, delivering every unit customers might expect isn't always achievable—but I'd characterize that as just part of how we run things. Overall, we're truly witnessing extremely powerful momentum. Whenever the topic of speeding up or slowing down comes up, keep in mind that we lean toward long-term patterns, so we look at results over an extended period. Usually, if you run the exercise of examining figures over a two-year span, you'd do the math yourself and find growth that's quite extraordinary for both the quarter and the half year once combined with last year's results—which were already very, very high. Here we're discussing close to 30% growth across 24 months for businesses that have existed for over a century. If I may, deceleration isn't really a topic we discuss.

Thank you.

Thank you.

Morning, and many thanks for taking my questions. I'll stick to two as well. First, maybe going back to how the Jewellery Maison did in Q2, could you give us any specifics about the price mix and how much volume contributed to that result? On volume in particular, what's your view on the structural drivers that would keep volume growing so healthily ahead, especially across the next two years, or is that just an exceptionally strong performance? Then, as a follow-up, my second question: the market has had plenty of debate, and it continues, around excessive reliance on certain family lines, at both Van Cleef and Cartier. Please share your view on how this will evolve going forward, and is there anything that worries you right now? Thanks.

Many thanks for raising that. In fact, what you asked first matters enormously to us. Earlier there were a few remarks and references regarding pricing policy as well as international and fair pricing policy; that ties closely to how strongly we care about tracking, or witnessing, volume growth — and not merely witnessing value growth that price rises would push along. While I can't provide the precise breakdown, what's certain is that during this timeframe the Jewellery Maison experienced gains in volume—additional customers and higher unit sales—alongside increases in value, and that combination matters greatly since it demonstrates the genuine vigor and strength of the Maison. Apologies, I—

The dependence on—

On your second question, the reliance on particular categories is something I think has been asked about almost forever. When a brand has very iconic, successful collections, that of course creates dependence. Having that is a great thing, and when you don't have it, you're trying to build it. Once you have it, you're watching to see whether it could be or could turn into a liability. What we observe at Cartier and Van Cleef typically, but at Buccellati as well, and I believe that would hold for quite a number of the watch brands, is that we have a very, very important historically successful line—LOVE, Alhambra, Trinity, Juste un Clou—that are still performing very, very well and continue to perform very, very well, both with historical pieces and references and with novelty. For example, for Cartier, the most recent introduction of the color stone set LOVE Bracelet has been extremely successful, with new versions, new editions, bringing some excitement and novelty around the LOVE collection; so that's very, very strong, but it's true that we also monitor how well a more recent collection is doing. If I think of the Perlée collection, for instance, at Van Cleef & Arpels, which we discussed a few times in the past, or the Clash collection, probably the most recent collection in Cartier jewellery, they are performing at a very, very high rate too, so that shows there really is creativity and vitality that's appreciated beyond the historical lines. It's true that we look at both, and so far, we don't see a liability as long as we have a combination of success on historic and new collections for this Maison.

Thanks.

Morning, everyone. One quick point to clear up, then a question. Nicolas, to start with that clarification — you said demand remains robust for your iconic lines. Specifically for the U.S., a market where you've clearly performed very strongly these last few years and one that matters a great deal to you: have any trends shifted? I raise it because, as you may have seen, there's been some debate in the market lately about a bit of softness in recent months — that's the first thing. Second, a question for Mr. Rupert on corporate activity. I won't bring up that deal the press has been talking about lately. Instead, looking at the bigger picture, how do you plan to deploy your strong balance sheet for acquisitions over the coming two to three years? And if you were to make acquisitions over the medium to long term, would you lean more toward jewellery brands or toward fashion and leather goods brands? Thank you very much.

Hi, Nicolas. Right, let me take a shot at the first question. To be honest, weakness in the United States and across America more broadly is not something we're seeing. I mean, you're looking at 23% growth in a market where-

It is for other brands that have softened.

My apologies.

That contradicts the nonsense people write regarding soft goods versus hard goods. A few of our rivals have experienced weakness in hard goods. That is not the case for us.

Certain soft goods lines do carry hardness.

Right. A few of them also come with hard selling. Not a single one of our icons is suffering.

Absolutely.

Thanks. The second question-

As for acquisitions that might be possible, nothing has been decided on our side. Whatever money we might put into diamonds won't have any real impact on either our balance sheet or our profit and loss account.

Let's take the next question, please.

Yes, good morning, and congratulations on those numbers. I'd like to circle back briefly to jewellery: you referenced Clash and Perlée as well as a few of the new collections. I'm curious what you might have lined up for us when it comes to innovation in the pipeline, or whether you feel able to discuss that competitively, in terms of sustaining the momentum in jewellery. My second question concerns watches: do you believe all the self-help steps you've been pursuing in watches across the last 12, 18 months are now essentially complete? Again, it really comes down to the profitability improvement we witnessed in the first half, and assuming the top line holds up, we ought to see a margin somewhere around high single-digit for the year. Apologies for adding one small technical question: are there further tariff refunds still to come in the second half of the year, or have all the claims now been settled? Thank you.

Jon, allow me to begin with that last one. That one's simple; we aren't anticipating any further tariff refunds during the second half of the year.

Regarding your first point, since you noted we operate in a competitive environment, it's obvious that any upcoming initiatives, new products, or innovations we intend to bring out soon won't be disclosed or talked about in this setting. I feel quite assured in observing that we are—as you're aware, this sector, especially jewellery and watchmaking, truly operates with a long-term view. What we observe—and the Chairman touched on this before—what we observe within our brands' workshops and design studios gives us tremendous confidence about what lies ahead.

We are looking currently at 2029 products.

They look good.