Swiss luxury giant Richemont on Friday posted a sharp drop in first half net profit amid weaker demand in China, but saw trading bolstered on a market bracing for worse.
The world's second largest maker of luxury products after LVMH saw its net profit plunge 23 percent during the first half of its 2014/2015 fiscal year to 907 million euros ($1.12 billion).
Analysts polled by the AWP financial news agency had expected to see a net profit of 1.08 billion euros for the six-month-period.
Despite missing the mark, the company, which counts Cartier and Piaget among its luxury brands, saw its share price surge more than four percent, with analysts saying investors had been bracing for far worse.
Richemont also beat expectations on sales, which inched up two percent to 5.43 billion euros, surpassing the 5.3 billion anticipated by analysts.
But sales shrank two percent in Asia, dragged down by dwindling sales in the company's two main markets China and Hong Kong.
The company explained the slide in net profit with a four-percent drop in operating profit, as costs outpaced sales revenue, and the overall negative impact of exchange rates.
Richemont said it had lost 239 million euros on programmes aimed at reducing the risk of currency fluctuations.
That compares to the 127-million-euro profit the company made on those programmes during the same period a year earlier.
"The external environment remains difficult ahead of the holiday trading period," acknowledged company chairman Johann Rupert.
He stressed though that the results "were fairly resilient overall, given the volatility of the environment that affected our clients and retailer partners."
"We remain confident that demand for high quality products will continue to grow in the global market," he said.
Investors appeared to agree.
Following the news, the company's share price jumped 4.04 percent to 83.75 Swiss francs a piece in early afternoon trading on a slightly negative Swiss market.
Observers explained that the market had feared Richemont would fare far worse, and had for instance been bracing for Hong Kong's "umbrella revolution" would take a heavier toll on luxury sales there.
"The current trading looks better than many feared," said J. Safra Sarasin analyst Michael Romer.