(AOF) – Interparfums unveiled improved half-year results and confirmed its annual targets despite rising raw material prices and an uncertain environment. Over the first six months of the year, the licensed perfume manufacturer posted a net profit up 19% to 54.2 million euros. Operating profit increased by 9% to 71.8 million, showing an operating margin of 22.5% compared to 24.6% in the first half of 2021. This decline is explained by the 60% increase in marketing expenses and advertising focused on flagship brands and launches.
Sales, published last July, climbed 20% to 318.7 million, supported by Montblanc, Jimmy Choo, Coach and Van Cleef & Arpels.
In terms of outlook, Interparfums has not ruled out strengthening its portfolio if the opportunity arises.
The group confirmed its 2022 targets set last July. Interparfums continues to expect sales of between 630 to 640 million euros. Despite the increase in raw materials and marketing and advertising expenses, which will remain very sustained, the company is aiming for an operating margin of around 16%, compared to 17.6% in 2021.
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Key points
– Distributor of prestigious perfumes created in 1982;
– Turnover of €561 million achieved 94% internationally, of which 40% in North America, 22% in Western Europe (including 6% for France), 14% for Asia, 9 % for Eastern Europe, 8% for Latin America and 6% for the Middle East;
– Business model of creation and long-term development of prestigious perfume lines –Boucheron, Coach, Jimmy Choo, Lagerfeld, Lanvin, Montblanc, Rochas, Van Cleef & Arpels…- with strict control of partner distributors;
– Capital indirectly controlled at 31.7% by the family holding company, Philippe Benacin being Chairman and Chief Executive Officer of the 11-member Board of Directors;
– Sound financial position with €541 million in shareholders’ equity, ie a debt ratio of 20%.
Challenges
– Strategy based on long-term partnerships with perfume brands, on control of the creation and manufacturing process and on the outsourcing of packaging and logistics;
– Limited innovation strategy, the company being both a contractor to creators and a distributor;
– Environmental strategy: support for suppliers, as the company does not have industrial sites, reduction of the ecological footprint by reducing packaging and using recycled and recyclable materials;
– Expected success of sales of Moncler perfumes, launched since the spring;
– Visibility of the activity by the duration – from 10 to 30 years – of the contracts with the brands.
Challenges
– Prolongation of production due to delays or lack of delivery of raw materials, resulting in a reduction in stocks;
– Exposure to Russia: cessation of exports to Russia and limited risk (5.3% of sales in Russia and customer outstandings of €13.5 million, including 10 covered by credit insurance);
– High share -68%- of Montblanc, Jimmy Choo and Coach perfumes in turnover;
– 2022 objectives of revenue of €600 million and an operating margin of approximately 15%;
– 2021 dividend of €0.5 and free share allocation for the 23rd consecutive year.
The axis of sustainable development now a priority
This is one of the strongest expectations of customers aged 25 to 40, who represent a growing proportion of sales. This also represents an advantage in recruitment for major luxury brands. LVMH, Fendi, Imperial College London and Central Saint Martins UAL have teamed up on a two-year research project to develop new biotextiles for fur in the sector. Recently the manifesto for a regenerative fashion, developed in partnership with the Alliance for the circular bioeconomy (CBA) was signed by Burberry, Chloé, Stella McCartney, or Armani. As for Kering, it has developed a tool that measures its CO2 emissions, water consumption and land use throughout the supply chain.