Robertet (XPAR:RBT, Financial) is a French fragrance company that is tightly controlled by the top three shareholders. Sales have been strong over the last few years and profit margins quite high. There is very little information out there on a stock that could at some point be interesting.
There are 2.3 million shares, and the stock trades at a market cap of €646 million ($730 million). It takes $1.13 to buy one euro. The dividend was €4, and the dividend yield is 1.42%. Earnings per share last year were €15.66, and the price to earnings ratio was 18. The stock must be bought in France as it has no ADR and does not even trade on the pink sheets.
Sales were €309 million ($349 million) in 2009 and increased to €396 million ($447 million) in 2012 and fell slightly to €389 million ($440 million) in 2013 and rose to €435 million ($492 million) in 2015. The dividend rose from €1.80 to €4 over that time frame. Earnings per share grew from €6.44 to €15.66 over that time frame. Very impressive growth.
The margins are quite high. Gross margins are 56.1%, operating margins 11.9%, and return on equity 12.29%. The balance sheet is solid. Cash is $76 million, short-term investments $7.4 million, and accounts receivable $96 million. The liability side shows $39 million in accounts payable, $67 million in short term debt, and $38 million in debt.
An example of a Robertet product is Gant. The clothing line outsources the production of the fragrance to Robertet and places its name and label on the product. The cologne is available in a 50-milliliter bottle for $65 and a 100-milliliter version for $89.50. Not cheap.
The company also provides the raw ingredients that go into fragrances. Some of these names include: Pacific seawood, Virginia cedarwood oil and African mocha coffee. The company sources hundreds of botanical ingredients. Another division produces flavors at its plants in France, Begium and New Jersey.
According to this report, the global fragrance market was $27.4 billion in 2014 and will grow to $44.6 billion in 2022. I’ve noticed that many reports of this nature seem to extrapolate a return from the past and take it into the future. I doubt if the market will grow north of 6% for that many years.
The Marbet family owns 49.67% of the stock, First Eagle Funds 24.54% and IVA Funds 19.35%. That’s 93.56% of the company! Not a lot of free float.
The problem with Robertet is that there is not a lot of information out there on the company. What you do find is in French. A look at Bloomberg does not provide a lot of information either. Even the latest annual reports are in French. If it weren’t for Bloomberg and the fact that Google can translate sites, I wouldn’t have even written on the company. In management’s defense, the top three shareholders, who control almost all of the company, are either French or speak the language fluently.
I’d have to learn more about the fragrance industry before I’d buy shares. My guess is that people pay less for high-end perfumes when the economy contracts. At the right price, it could be a buy.
Disclosure: We do not own shares in Robertet but do own shares in First Eagle Funds.
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