Chairman's message

Ensuring our long-term success

LVMH enjoys a unique position in today's competitive landscape. Our success is built on a portfolio of captivating, iconic brands that continue to weave their magic and perpetuate their exceptional know-how. It is fueled by a distribution network of extraordinary scope and quality. It is anchored in a coherent strategy that consistently delivers growth around the world, without ever losing sight of our core values. The Group’s leadership position is firmly rooted in its peerless heritage and a management style that nurtures creativity, quality and entrepreneurship. In 2012, we continued to recruit and train craftspeople in pursuit of excellence, develop our array of skills, innovate, enhance the quality and appeal of our stores and increase our market share. Confident in its competitive edge, LVMH blends modernity with tradition, creative flair with quality, and power with agility to develop our stable of brands, build tomorrow's growth drivers and ensure our long-term success.

Our Group exhibited excellent performance in 2012 and continues to expand market share in a mixed international environment. Our brands are strong, our teams are committed and react fast, with an obsession for quality, creativity and excellence. This is what is driving the Group forward at every level and has sustained our business at a time of economic uncertainty in Europe and a temporary period of slower growth in Asia.

A wealth of achievements in all our business lines

This year has been marked by a wealth of achievements. Here are just some of the many accomplishments we can be proud of in 2012: very solid growth in wines and spirits, in terms of both volume and value; ceaseless excellence at Louis Vuitton as it achieves growth in all of its business lines and continues to build up its multiple areas of expertise; sustained improvement thanks to thoroughgoing efforts at the fashion brands (Céline is currently the most outstanding example of this); the success of our perfume and cosmetics brands, with their genuine message of unfailing quality and authentic innovation in a market saturated with new, sometimes short-lived products; the healthy momentum of our watch and jewelry brands, fed by the vitality of their iconic product lines and expanded manufacturing capabilities; a full-year contribution from Bulgari ; the fortified positions of DFS and Sephora, which continue to win over and keep new customers from a wide range of cultures thanks to the most innovative products and services in their sector... the list goes on. I would also like to mention our achievements in emerging markets, where the prospects for growth are excellent and we are building solid foundations for the future.

Talented teams, ambitious goals

What lies behind these successes? Talented management teams setting ambitious goals, creative talents inspired by brands destined to become modern icons, dynamic employees delivering our success on the ground.... 100,000 passionate, dedicated individuals working for our brands and subsidiaries around the world, spanning a wide spectrum of roles. These are the men and women who amplify our success, thanks to their diversity and the broad range of skills in which they excel.

Moving forward with confidence

Against a backdrop of economic and monetary uncertainty, which we see continuing as 2013 gets underway, our Group is moving forward with confidence. As always, LVMH can count on the outstanding quality of its foundations, its highly effective business model and robust financial position. With very limited debt and free cash flow of 2.5 billion euros, we can invest whenever and wherever it is necessary to support and develop our brands, seize new opportunities as they arise and stay on track for consistent growth. A substantial number of projects are ongoing or will come to fruition over the course of 2013. Our brands will continue to innovate, cultivate their appeal and take centre stage. As we explore new territories and strengthen our production capabilities, our unwavering desire to maintain the quality that guarantees the reputation and success of our products and brands remains right at the heart of our objectives.

Responsiveness and long-term vision

Aside from our Group's intrinsic stability and financial strength, I would like to reiterate the importance of its intangible assets, and in particular the fantastic human capital that it can boast. In this period of limited visibility into the future, the responsiveness afforded by our decentralized structure is one of our key strengths. This is what enables us to remain close to the markets and stay abreast of new developments as they occur. This is what gives us the flexibility to make good decisions fast and then seize every opportunity to increase our market share by meticulously implementing those decisions on the ground. We manage the situations facing us and the challenges that lie ahead by rallying all of our insights and energy at our brands and across the world’s markets, without ever losing sight of our long-term goals and the sense of dedication they entail. Moët & Chandon was founded in 1743, Hennessy in 1765, Guerlain in 1828, Dior in 1947. A brand is built over time, and patience is an essential virtue. As is an awareness of issues that are part and parcel of our long-term strategy: the riches of nature - to which we owe so much - the wellbeing and development of our employees, our company’s social responsibility, the ethical standards that we share with our suppliers as partners in our value-creation strategy, our customers' loyalty and the trust of our shareholders. These components of our intangible capital are so precious for our future success.

Exciting prospects

What matters most to me is keeping firm focus on the long term. Our business - excellent products - is experiencing a growing influence from new customers expressing a desire for authenticity, aspiring towards custom-made items or services and increasingly aware of what makes our products special: their creative appeal and finely crafted quality. This deeply-rooted trend will open up a panoply of exciting prospects for us.

Bernard Arnault
Chairman & Chief Executive Officer