Richemont Achieves Record Sales in Q3 2024 Amid Strong Growth in Key Regions

LOCAL MARKET COMMENTARY

The JSE Top 40 index rose 0.24% to close at 75,255.7 points, while the All Share index increased 0.17% to 83,658.7 points. Amazon.com launched a walk-in center in South Africa, aiming to assist independent sellers in expanding their customer base and growing their businesses, as the U.S. e-commerce giant seeks to solidify its presence in the local market. The South African government announced ongoing collaboration with the Johannesburg Stock Exchange to explore listing struggling state-owned enterprises, intending to attract investment and stimulate economic growth.

EUROPEAN MARKET COMMENTARY

European markets closed higher on Thursday, buoyed by robust performance in luxury stocks, with Richemont, the owner of Cartier, delivering strong earnings results. A Bank of England survey highlighted expectations of declining mortgage demand in the UK over the coming months, despite an anticipated increase in credit availability. The survey’s secured lending demand index fell to its lowest point since Q3 2023. In Ireland, annual inflation climbed to 1.4% in December from 1% in November, according to Central Statistics Office data. Excluding energy and unprocessed food, the CPI rose by 2.1% year-on-year, with a 0.9% month-on-month increase from November to December.

US MARKET COMMENTARY

U.S. markets dipped slightly on Thursday, as investors evaluated corporate earnings and economic data for insights into the Federal Reserve’s potential rate adjustments. Morgan Stanley gained 4.03%, driven by strong Q4 earnings from increased dealmaking, while Bank of America slipped 0.98%, projecting higher interest income for 2025. Comments from Federal Reserve Governor Christopher Waller hinted at earlier and faster rate cuts if inflation continues to ease, pushing Treasury yields lower. The S&P 500 recorded 21 new 52-week highs and nine new lows, while the Nasdaq Composite registered 58 new highs and 101 new lows. Total trading volume on U.S. exchanges reached 14.31 billion shares, falling short of the 20-day average of 15.75 billion shares.

ASIA MARKET COMMENTARY

Asia-Pacific markets traded mixed this morning as investors processed a series of economic data releases from China. The Chinese economy expanded by 5% year-on-year in 2024, with Q4 growth surpassing forecasts at 5.4%. Retail sales in December rose 3.7% year-on-year, slightly ahead of the expected 3.5%, while industrial output increased 6.2%, exceeding the projected 5.4%. In India, Reliance Industries posted a 7.4% year-on-year rise in Q3 net profit to ₹185.40 billion ($2.14 billion), supported by strong festive retail demand and growing 5G subscriptions, alongside higher telecom tariffs.

CURRENCY MARKET COMMENTARY

The South African rand weakened on Thursday, reflecting pressure from U.S. labor market data showing a rise in weekly jobless claims. In the UK, the pound depreciated after lower-than-expected economic growth figures for November, possibly granting the Bank of England additional room for rate cuts. The U.S. dollar slid to a near one-month low against the yen, driven by subdued U.S. economic data and growing expectations of a Bank of Japan rate hike. The yen is on track for its strongest weekly gain in over a month, with markets pricing in a potential shift in Japanese monetary policy that has further pressured the dollar.

COMMODITY MARKET COMMENTARY

Gold prices reached their highest levels in over a month on Thursday, supported by weaker U.S. economic data that further weighed on Treasury yields, increasing the likelihood of a more accommodative Federal Reserve policy stance. Oil prices extended gains this morning, marking a potential fourth consecutive weekly rise, amid concerns over supply constraints following U.S. sanctions on Russian oil producers. Investors are also monitoring the Biden administration’s expanded sanctions against Russia's military-industrial base and oil-related activities, which have disrupted supply chains and driven up global shipping costs.

Compagnie Financière Richemont SA (CFR) +14.51%

Compagnie Financière Richemont SA has delivered an exceptional performance for its third quarter ended 31 December 2024, with sales rising 10% year-on-year at constant and actual exchange rates to a record €6.2 billion. Growth was driven by double-digit increases in key regions, including the Americas, Europe, the Middle East & Africa, and Japan, alongside a moderated decline in Asia Pacific, where demand in China remains challenging. The Jewellery Maisons category led the growth with a 14% increase, supported by an 11% rise in the “Other” category and a 7% uplift in Fashion & Accessories Maisons, while Specialist Watchmakers experienced an 8% contraction. Retail channels outperformed, achieving an 11% growth at constant and actual exchange rates. For the nine months ending 31 December 2024, Richemont recorded sales of €16.2 billion, reflecting a 4% increase at constant exchange rates and a 3% rise at actual exchange rates, underpinned by continued investments in its Maisons’ long-term growth. The group maintains a robust net cash position of €7.9 billion, highlighting its financial resilience and ability to navigate market dynamics.

PPC Limited (PPC) -3.16%

PPC Ltd has formalized a memorandum of agreement with Sinoma Overseas Development Company Ltd, the global leader in cement equipment and engineering, for the construction of a R3 billion state-of-the-art integrated cement plant in the Western Cape. This initiative builds upon the strategic co-operation agreement established in July 2024 to enhance PPC’s operational efficiencies and identify growth opportunities. The planned facility, with an annual production capacity of 1.5 million tons, will replace and expand PPC’s current operations, serving customers across the Western, Eastern, and Northern Cape regions. Utilizing advanced technologies, including a dedicated solar generation system, the plant will significantly improve energy efficiency, lower coal consumption, and reduce emissions, translating into lower production costs and enhanced competitiveness. PPC CEO Matias Cardarelli emphasized that the plant aligns with the company’s “Awaken the Giant” strategy, focusing on sustainability and market leadership in a competitive industry. While feasibility studies are near completion, finalization of scope and EC agreements will occur within the next three months, pending board approval. Construction is scheduled for Q2 2025, with commissioning expected by the end of 2026. PPC’s existing Western Cape facilities will remain operational during this period to ensure funding support and a smooth transition. The project adheres to PPC’s rigorous capital allocation criteria and is anticipated to be financed within current debt covenants, bolstered by operational cash flow and milestone-based payments agreed with Sinoma. This endeavor is a pivotal step in PPC’s sustainability journey and its vision for operational excellence in a competitive future market.

Compagnie Financière Richemont SA (CFR) +16.56%

Richemont exceeded expectations with 10% year-on-year growth in Q4 2024 sales, reaching €6.2 billion ($6.37 billion). This strong performance, driven by a 22% sales surge in the Americas, suggests potential recovery for the luxury goods sector. Richemont’s strategic investments in marketing and exclusive client events paid dividends, particularly during the critical holiday season. The uptick in U.S. consumer spending on luxury items marks a positive shift, providing European luxury brands with a critical growth opportunity amidst weakened Chinese demand.

Taiwan Semiconductor Manufacturing Company Limited (2330) +3.76%

Taiwan Semiconductor Manufacturing posted record quarterly profits, signalling strong momentum for AI chip demand. The company reported a 57% year-on-year increase in net income to T$374.68 billion ($11.4 billion) for Q4 2024, aligning with market estimates. Revenue grew 39% compared to the prior year. TSMC forecasts Q1 2025 revenue to rise by approximately 37% to $25-25.8 billion, reflecting ongoing robust demand for AI-related chips. For the full year, the company anticipates revenue growth between 20% and 30%, further underlining its optimistic market outlook.

Morgan Stanley (MS) +4.03%

Morgan Stanley’s Q4 profit more than doubled, driven by surging dealmaking and stock sales activity, propelling the bank to a full-year revenue record. Investment banking revenue rose by 25% to $1.64 billion, with global banking revenues growing 26% to $86.80 billion. The bank’s Q4 net income soared to $3.7 billion, or $2.22 per share, compared to $1.5 billion, or 85 cents per share, a year earlier, significantly outperforming analysts’ expectations of $1.70 per share (LSEG). Wall Street executives project more large-scale deals under the Trump administration, contributing to a favourable dealmaking environment.

Bank of America Corporation (BAC) -0.98%

Bank of America exceeded profit expectations for Q4 2024, benefiting from heightened trading activity and strong wealth management performance. Net income rose to $6.7 billion, or 82 cents per share, surpassing analysts’ forecasts of 77 cents per share (LSEG). Trading revenue climbed 10% to $4.1 billion, with notable growth in fixed-income (+13%) and equities (+6%). The wealth management division reported record client balances of $4.3 trillion, driving a 15% increase in revenue to $6 billion. However, higher expenses in personnel and technology tempered net income growth within the global banking unit, despite a 44% jump in investment banking fees to $1.7 billion.

American Express Company (AXP) -0.27%

American Express agreed to a $230 million settlement to resolve U.S. criminal and civil investigations into alleged deceptive sales practices targeting small business customers. The agreement includes $138.4 million in penalties, with $108 million allocated to fines. The settlement concludes probes led by the U.S. Department of Justice, allowing American Express to focus on business operations while addressing compliance concerns.

Would you prefer a full in-depth report that you can read offline? Click here to download the full report.