Compagnie Financière Richemont said on Friday that profit for the six months to September rose 39% to 2.53 billion euros, as the owner of Cartier and Van Cleef & Arpels posted double-digit sales growth in Japan, the Americas and Asia Pacific and a 30% jump in Japan at constant exchange rates.

For investors in Asia, the Geneva-based group's numbers are a useful read on the region's top-end shoppers. Richemont reported robust growth in combined sales across China, Hong Kong and Macau, led by Hong Kong and Macau rather than the mainland, and strong gains in South Korea and Taiwan. Its watch brands, by contrast, faced continued soft demand in China, the company said. The split points to a luxury market where jewelry buyers are spending again while watch collectors are still holding back.

Richemont's numbers

Group sales rose 16% to 12.28 billion euros from 10.62 billion euros a year earlier, according to the company's results announcement. At constant exchange rates, sales grew 17%. Growth slowed from 20% in the April to June quarter to 13% in July to September, though the company noted that the second quarter faced a tough comparison with 14% growth a year earlier.

Operating profit rose 33% to 3.13 billion euros, or 38% at constant currencies, and the operating margin widened to 25.5% from 22.2%. Those figures include 229 million euros of positive one-time items related to tariffs. Excluding them, operating profit was about 2.9 billion euros and the margin was 23.6%, up 1.4 percentage points, the company said.

Diluted earnings per share were 4.29 euros, against 3.08 euros. Net cash stood at 7.73 billion euros at the end of September, helped by 2.5 billion euros of operating cash flow and about 0.4 billion euros from the sale of its stake in travel retailer Avolta.

Business Day, the South African newspaper, reported the same headline figures and noted that the Rupert family-controlled company expects conditions to stay volatile.

Jewelry carries the group

The jewelry houses, which also include Buccellati and Vhernier, did most of the work. Their sales rose 18%, or 19% at constant currencies, and their operating result climbed to 3.2 billion euros from 2.5 billion euros. The division's operating margin was 35.3%, or 33.4% without the one-time gains.

The watch business, home to Vacheron Constantin, Jaeger-LeCoultre, A. Lange & Söhne and IWC, grew sales 9% to 1.7 billion euros. Its operating profit tripled to 150 million euros from 50 million euros, though its margin remains far below the jewelry side at 8.8%. Chairman Johann Rupert said in the statement that a recovery for the watch makers was "unlikely to be linear" in a difficult market for the industry.

The "Other" business area, which includes fashion houses Chloé and Alaïa as well as Montblanc, increased sales 9% but booked a 12 million euro operating loss.

Costs remain a pressure point. Gross margin rose to 66.5%, but the company said that without the tariff-related items it would have fallen by 0.7 percentage point, because higher raw material prices, gold in particular, raised production costs. Price increases over the past year and a richer sales mix covered most of that, Richemont said.

Japan, Hong Kong and the Asia picture

By region, Asia Pacific sales rose 17% in euro terms and 16% at constant rates, led by double-digit gains at the jewelry houses and the "Other" business area. Richemont said the combined China, Hong Kong and Macau market posted robust growth, led by higher demand in Hong Kong and Macau. It singled out South Korea and Taiwan among other markets in the region that grew by double digits.

Japan, which Richemont reports separately, was the standout. Sales there rose 18% in euros and 30% at constant rates, with both local customers and tourists spending more.

For Hong Kong retailers, the result adds to the picture in Hong Kong's jewelry and watch retail data.

Elsewhere, sales in the Americas rose 23% and Europe grew 13% at constant rates. The Middle East and Africa was the only region to shrink, falling 2%, as the conflict in the region since March hurt tourist spending, especially in the United Arab Emirates.

Shoppers are also buying more directly from the brands. Retail stores accounted for 72% of sales and online for 6%, lifting the share of direct-to-client sales to 78% from 76%. Wholesale sales grew 7%.

Rupert said the group could not predict what lies ahead and expects the macroeconomic and geopolitical environment to stay volatile for the foreseeable future. The next number to watch is Richemont's third-quarter sales update for October to December, which will cover the holiday shopping season.