Richemont signals 36% drop in annual profits

Richemont, the world's number two maker of luxury goods, said Wednesday it expected its annual profit to fall by more than a third due to losses on financial instruments.

The Geneva-based group, which owns top global brands like Cartier, Piaget and IWC, also said its tax rate would rise considerably.

"Compared to the previous financial year, Richemont’s net profit for the year ended 31 March 2015 is expected to show a decrease of some 36 percent," a statement said.

"This significant decrease reflects non-cash, mark-to-market losses on financial instruments, which include monetary items and derivatives.

"The majority of such non-cash losses are not subject to tax. Accordingly, the group’s effective tax rate for the year is expected to significantly increase," it said.

Yet Richemont, which reports full results on May 22, said the losses "had no material impact on the... net cash position which amounted to 5.4 billion euros ($5.8 billion) at the end of March."

The company's full-year sales, excluding the results of Net-a-Porter, grew four percent on a reported basis, and one percent at constant currencies.

Last month Italian online fashion retailer Yoox bought Net-a-Porter in an all-share deal.

Richemont said its operating profit for the year is expected to show a 10 percent rise, including a gain on an investment property disposal.

Following the announcement, Richemont shares fell 1.5 percent at 10:28 am (0828 GMT) on the Swiss stock market.