Excellent performance for LVMH in the first half of 2015; DFS impacted by currency and geopolitics in Asia

lvmh-logo-460Despite the challenges of the current business environment, leading luxury products group LVMH Moët Hennessy Louis Vuitton last week reported revenue in the first half of 2015 up by 19%. to €16.7 billion with organic revenue growth at 6% compared to the same period in 2014.

Revenues for the second quarter were up 23% (9% in organic terms) and came in at 8.38 billion euros, or $9.27 billion, in the second quarter.

In the first half of the year, profit from continuing operations rose 15 percent to 2.95 billion euros, or $3.30 billion. Net profit increased 5 percent to 1.58 billion euros, or $1.76 billion, LVMH said.

With solid growth in Europe and the United States, all the LVMH business groups contributed to the “excellent” results, said the company.

The Selective Retailing business group recorded organic revenue growth of 5%, (+21% on a reported basis) and profit from recurring operations increased by 7%.

DFS continued to be impacted by the currency and geopolitical environment in Asia, but Sephora benefitted from “remarkable momentum,” –and continued to gain market share in its key countries, particularly France, the United States, Canada and China — which LVMH said strengthened its position in all operating regions and in the digital universe.

“DFS relied on its unique expertise in ‘travel retail’ to address the more difficult context that persists in Asia, linked to the currency and geopolitical environment,” said the company.

The Wines & Spirits business group recorded organic revenue growth of 2%, (15% on a reported basis) and profit from recurring operations increased by 5%. Despite the continued destocking by distributors in China, the second quarter saw a Hennessy returned to growth in the 2Q due to the sustained strong performance in the US.

The Fashion & Leather Goods business recorded organic revenue growth of 5% (18% on a reported basis) in the first half of 2015, with accelerated growth in the second quarter. Profit from recurring operations increased by 12%.

The Perfumes & Cosmetics group recorded organic revenue growth of 6% (17% on a reported basis) and profit from recurring operations increased by 22%, led by Christian Dior, Guerlain and excellent performance from Benefit, Make Up For Ever and Fresh.

Watches & Jewelry recorded first half organic revenue growth of 10% (23% on a reported basis) with profit from recurring operations up by 91%. Bvlgari had an excellent first half, Hublot showed strong progress while TAG Heuer concluded a partnership with Google and Intel for the launch of a smartwatch.

Bernard Arnault, Chairman and CEO of LVMH, commented:

“The excellent results of the first half are witness to the efficiency of our strategy, which relies upon the strength of our brands and a very entrepreneurial style of management. Building on the first half performances, we face the second half of the year with confidence and count on the quality of our products and the talent of our teams to further strengthen our leadership in the world of high quality products.”

Outlook 2015
Despite the context of economic and currency uncertainties, LVMH will continue to gain market share thanks to the numerous product launches planned before the end of the year and its geographic expansion in promising markets, while continuing to manage costs.

LVMH says that its strategy of focusing on quality across all our activities, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce, once again in 2015, LVMH’s global leadership position in luxury goods.

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