Analysis of Sales and Profitability by Business Area

The following table analyses the sales and operating contribution of the Group's five main areas of activity.

	March 2005 € m	March 2004 € m
Sales
Jewellery Maisons	1 956	1 808	+ 8%
Specialist watchmakers	885	780	+ 13%
Writing instrument manufacturers	427	389	+ 10%
Leather and accessories Maisons	265	258	+ 3%
Other businesses	184	140	+ 31%
	3 717	3 375	+ 10%
Operating result
Jewellery Maisons	460	367	+ 25%
Specialist watchmakers	148	95	+ 56%
Writing instrument manufacturers	59	55	+ 7%
Leather and accessories Maisons	(40)	(42)	+ 5%
Other businesses	3	(9)
	630	466	+ 35%
Corporate costs	(125)	(170)	- 26%
Operating profit	505	296	+ 71%

In the table above, those Maisons which are principally engaged in a specific business area have been grouped together. Accordingly, those businesses which have a heritage as producers of high jewellery and jewellery watches - Cartier and Van Cleef & Arpels - are grouped together as jewellery Maisons. Their entire product ranges, including watches, writing instruments and leather goods, are reflected in the sales and operating results for that segment.

The Group's jewellery Maisons reported an 8 per cent increase in sales at actual exchange rates. During the year, Cartier launches included the new Panthère high jewellery range and the relaunch of the Trinity collection. Cartier watch sales included a significant contribution from the Santos range, including the Santos 100 and Santos Dumont models. Van Cleef & Arpels' sales increased, reflecting the effects of boutique openings and the launch of new products, including the Hawaii line. For the segment as a whole, increasing sales and continuing cost control have generated an operating profit of € 460 million and an operating margin of 24 per cent, 4 percentage points above the prior year.

The Group's specialist watchmakers reported a 13 per cent increase in sales, with almost all brands reporting double-digit growth. Operating profit increased by 56 per cent to € 148 million, representing an operating margin of 17 per cent compared with 12 per cent in the prior year. Richemont's writing instrument manufacturers - Montblanc and Montegrappa - reported sales growth of 10 per cent for the year. This was, in part, attributable to the expansion of Montblanc's retail network but also reflected an increase in demand across its product ranges.

Writing instrument sales particularly benefited from continued demand for the StarWalker collection, launched last year. Leather goods, watches and other accessories now account for more than one third of the Maison's sales. Despite the additional costs associated with an expanding retail network, the segmental operating margin was in line with the prior year at 14 per cent. The Montegrappa brand reported strong growth, albeit from a small base, supported by the Group's wholesale distribution network.

The Group's 'Leather and accessories' businesses, being Alfred Dunhill and Lancel, have reported lower levels of losses as the benefits of earlier restructuring steps flow through into results. Despite the weaker currencies in the brand's key Asian markets, losses at Alfred Dunhill were reduced by 20 per cent to € 24 million. Lancel's results included non-recurring charges of some € 7 million principally linked to its French operations as the Maison suffered from weak demand in its principal market, France.

The 'Other businesses' segment includes Chloé, Hackett, Purdey and Old England as well as certain watch component manufacturing activities for third parties. The inclusion of these smaller businesses in one segment recognises the disparity in size between them and the Group's larger operations. Chloé, in particular, has enjoyed an excellent year, with revenue growth of 54 per cent. The Maison has extended its wholesale network, has received numerous design awards and has gained a significantly higher profile in the fashion world.

Operating profit before corporate costs totalled € 630 million, an increase of 35 per cent compared to the prior year. The operating margin before corporate costs consequently increased from 14 per cent to 17 per cent. Corporate costs, which include general administration, central service functions and central marketing initiatives, included certain provisions in the prior year, the nonrecurrence of which contributed to the reduction of 26 per cent overall.

The improvement in the trading result, together with the reduction in corporate costs, has resulted in an improvement in the Group's overall operating margin from 8.8 to 13.6 per cent.

Details of sales by product line are given in the consolidated financial statements.