LVMH has announced record sales and net profit, although other figures released by the leading global luxury company missed expectations. The maker of Louis Vuitton handbags and Moet & Chandon champagne said sales rose 6 per cent last year to a record 30.6 billion euros ($35.1 billion). Meanwhile net profit at the France-based company came in at a record 5.65 billion euros. However stripping out the 2.8 billion booked thanks to distribution of shares by Hermes, a rival in which LVMH has buil
t up a stake, the net profit falls under 3 billion euros, far below analysts’s expectations and the 3.4 billion euros in net profit the company posted in 2013.
Operating profit at LVMH, which also includes Givenchy and Guerlain in its stable of luxury brands, slid five per cent to 5.7 billion euros.
Its operating margin dropped by two percentage points in 2014 to 19 per cent.
While the sales slightly beat the expectations of analysts surveyed by FactSet, the operating profit was below forecasts of 5.84 billion euros and a net profit of 3.4 billion euros stripping out the effect of the Hermes operation.
CEO Bernard Arnault, said: “The 2014 results confirm the capacity for LVMH to progress despite economic and currency uncertainty.”
Wines and spirits sales dropped by five per cent, but rose in all other business segments.
With 10 per cent growth in sales of fashion and leather goods to 10.8 billion euros, the segment reinforce its top spot in the group.
Net profit from recurring operations fell in all business segments except in fashion and leather goods which managed a two per cent gain.
The net profit from the wines and spirits segment fell 16 per cent to 1.1 billion euros, which LVMH said was primarily due to slowing cognac sales in China.
Luxury companies have been hit hard by a crackdown on corruption in China that has brought an end to expensive gifts like watches and liquor to officials.
Net profit fell by 23 per cent in the watches and jewellery segment to 283 million euros. LVMH said multi-brand retailers held back on purchases of watches in the uncertain economic environment.
LVMH watch brands include Bvlgari and TAG Heuer.
The selective retailing segment posted the fastest growth at seven per cent thanks to an “exceptional year” for its Sephora chain of perfume shops.
“Despite a climate of economic, currency and geopolitical uncertainties, LVMH is well equipped to continue its growth momentum across all business groups in 2015,” the company said.
The company’s management said it would propose to shareholders increasing the dividend payment by three per cent to 3.20 euros.
AFP
