LVMH delivers excellent results in the first half of 2008 – Organic revenue growth of 12% – Further increase in operating margin
LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded revenues of €7.8 billion in the first half of 2008, reflecting organic growth of 12%. The Group had excellent performances in Asia, the United States and Europe.
Profit from recurring operations increased by 7% to €1,541 million. The current operating margin improved to 20%. This performance was achieved in an unfavourable currency environment and is even more noteworthy given the strong growth in the first half of 2007. At constant exchange rates, profit from recurring operations increased by 19%.
Group share of net profit increased by 7% in the first half of 2008.
Bernard Arnault, Chairman and CEO of LVMH, commented:
“The first half results once again demonstrate the exceptional appeal of our brands as well as the effectiveness of our strategy, particularly remarkable given the adverse currency and economic environment seen during this period. LVMH thus proves its exceptional capacity to grow thanks to the strength of its brands, the responsiveness of its organization and the talent of its teams. Reassured by the strong momentum in the first half of the year, the Group approaches the second half with confidence. It will rely upon the creativity and quality of its products as well as the efficiency of its teams to pursue further development in its historical markets as well as in high potential emerging markets. All these elements enable us to confirm our objective of a tangible increase in results for 2008.”
| In million euros | H1 2007 | H1 2008 | % variation |
|---|---|---|---|
| Sales | 7 412 | 7 799 | + 5 %* |
| Profit from recurring operations | 1 440 | 1 541 | + 7 % |
| Operating profit | 1 398 | 1 513 | + 8 % |
| Group share of net profit | 834 | 891 | + 7 % |
| Net cash flow from operations before changes in working capital | 1 108 | 1 148 | + 4 % |
* Organic revenue growth of 12% (with comparable structure and exchange rates)
Highlights of the first half of 2008 were:
– Another period of double-digit organic revenue growth for the Group,
– Further improvement in the operating margin,
– A good balance between growth in historical markets and emerging markets,
– Market share gains of all our brands, achieving strong momentum notably with double-digit organic revenue growth at Louis Vuitton, whose operating margin continues to be at an exceptional level,
– Strong growth in Wines & Spirits in the second quarter,
– Notable progress in Perfumes & Cosmetics and at Sephora,
– Major improvement in the profitability of Perfumes & Cosmetics and Watches & Jewelry.
Revenue by business group:
| In millions of Euros | H1 2007 | H1 2008 | % variation | ||
|---|---|---|---|---|---|
| Reported | Organic* | ||||
| Wines & Spirits | 1 314 | 1 292 | - 2 % | + 6 % | |
| Fashion & Leather Goods | 2 601 | 2 768 | + 6 % | + 14 % | |
| Perfumes & Cosmetics | 1 264 | 1 362 | + 8 % | + 13 % | |
| Watches & Jewelry | 390 | 417 | + 7 % | + 15 % | |
| Selective Retailing | 1 884 | 1 990 | + 6 % | + 13 % | |
| Other activities and eliminations | (41) | (30) | - | - | |
| Total LVMH | 7 412 | 7 799 | + 5 % | + 12 % | |
* With comparable structure and exchange rates
Profit from recurring operations, by business group:
| Euro millions | H1 2007 | H1 2008 | % variation |
|---|---|---|---|
| Wines & Spirits | 393 | 409 | + 4 % |
| Fashion & Leather Goods | 814 | 858 | + 5 % |
| Perfumes & Cosmetics | 108 | 132 | + 22 % |
| Watches & Jewelry | 57 | 74 | + 30 % |
| Selective Retailing | 144 | 151 | + 5 % |
| Other activities and eliminations | (76) | (83) | - |
| Total LVMH | 1 440 | 1 541 | + 7 % |
Wines & Spirits: acceleration of growth in the second quarter
After a first quarter impacted by an unfavorable timing of price increases compared to 2007, Wines & Spirits revenue accelerated to achieve organic growth of 13% in the second quarter. The overall market trends in Europe are positive. Emerging markets, such as Russia, China and the Middle East, recorded sustained growth. The Champagne business was driven by the good performance of Veuve Clicquot Ponsardin and Moët & Chandon. Ruinart also saw strong growth. New World wines registered good progress. Hennessy cognac revenue was boosted by the remarkable performance of its premium qualities in China and Russia.
Fashion & Leather Goods: continued exceptional momentum at Louis Vuitton
Fashion & Leather Goods delivered organic revenue growth of 14%. Profit from recurring operations rose to €858 million. Once again delivering double-digit organic revenue growth, Louis Vuitton continues to strengthen its market position and deliver exceptional profitability. The brand continues to be driven by its incomparable capacity to innovate, illustrated notably by the launch of numerous timeless lines and by the creations of Marc Jacobs in conjunction with the artist Richard Prince, which enjoy a worldwide success with clients.
Fendi continued the excellent trend experienced in 2007. The other fashion brands, notably Marc Jacobs, Donna Karan, Kenzo, Pucci and Loewe have had favorable trends.
Perfumes & Cosmetics: success in all its product categories
Perfumes & Cosmetics recorded organic revenue growth of 13% and a 22% increase in profit from recurring operations in the first half of 2008. Parfums Christian Dior won further market share and continued its remarkable momentum. Dior benefited from the vitality of its major classic product lines, particularly J’Adore, Miss Dior Chérie, Poison and Eau Sauvage, which continue to achieve exceptional growth. The success of its make-up range has been spectacular. Dior skincare is progressing regularly. Guerlain achieved further growth boosted in particular by its star make-up line, Terracotta, its new mascara, Le 2, and its skincare line, Orchidée Impériale. The increasing strength of Ange ou Démon at Givenchy and the strong momentum of BeneFit, Make Up For Ever and Kenzo also contributed to the performance of this business group.
Watches & Jewelry: strong increase in profitability
Watches & Jewelry recorded organic revenue growth of 15%. Profit from recurring operations rose by 30%. TAG Heuer confirmed its momentum with the success of its Grand Carrera line. Zenith saw sustained growth in its high-end classic watch collections. Christian Dior watches strengthened its synergies with fashion and jewelry. Chaumet grew thanks to the launches of Class One “Croisiere” and the new creations in its Attrape-Moi collection. De Beers continued its sustained growth with the expansion of its store network. Fred relaunched the legendary Force 10.
The first half was notable for the acquisition of the Hublot brand which complements LVMH’s watchmaking portfolio.
Selective Retailing: strengthened market positions
Selective Retailing posted organic revenue growth of 13% and increased its profit from recurring operations by 5% in the first half of 2008.
Good revenue growth in US dollars at DFS was led by the increasing contribution from its Chinese clientele. Its recently opened stores had promising starts in the first half, notably in Vietnam and in the new terminal at Singapore Airport. DFS also opened in India and is near completing its Galleria in Macao, which will open in the second half of the year.
In the first half of 2008, Sephora confirmed its excellent momentum in both revenue and profitability in all regions. Thanks to its innovative commercial strategy, Sephora continues to win market share in Europe and the United States. The expansion of its distribution network continued with, notably, the opening of its first store in the Netherlands and further development in Canada.
Outlook for 2008
In an uncertain economic and monetary environment, LVMH will continue to grow thanks to both the numerous product launches planned before the end of the year and to its geographic expansion. These factors allow the Group to confirm its objective of a tangible increase in its 2008 results.
Our strategy of focusing on quality across our entire product range, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce, once again in 2008, LVMH’s global leadership position in luxury products.
An interim dividend payment of €0.35 will be paid on December 2, 2008.
Regulated information related to this press release is available on our internet site www.lvmh.com.
The information on the financial situation and the accounting information in the tables presented in this press release has been approved by the Board of Directors and reviewed by the statutory auditors.
