Demand should remain dynamic in the second half of the year at LVMH, Company news

LVMH’s financial presentation opens with a gorgeous photo of Mont Saint-Michel (and a Vuitton box in front of the building!) under a perfectly blue sky. The luxury giant’s June 30 reports are in unison, barely veiled by logistical difficulties for Hennessy cognac in the United States until April, followed by restrictions in China in the second quarter.

Group (ownerInvest) maintained a significant growth momentum. Its turnover reached 36.7 billion euros, almost as much as it posted for the whole of 2016, thanks to an increase of 28%. Excluding currency effects (+7%) and scale (symbolic) growth was 21%, i.e. the pace of 23% in the first quarter and 19% in the second, despite an 8% drop in activity in China in April-June and a very high base of comparison in 2021 at that time: the turnover of the group then jumped by 84%.

Price growth at the beginning of the year from 3 to 7-8%.

Europe (+47% on a comparative basis), which again found its tourists at the end of the semester, the United States (+24%) and Japan (+33%) took place in China, without threats of economic recession and high inflation does not reduce consumer demand for products groups ” Most of our brands raised prices at the beginning of the year from 3 to 7-8% Jean-Jacques Gioni, CFO, added during the webcast.

At the aperitif, analysts appeared to be enjoying a strong 30% (comparable basis) rebound in Wines & Spirits sales in the second quarter after a modest 2% rise in January-March: in addition to this year’s Chinese New Year run-up, Hennessy’s business was hampered transportation and transportation difficulties on American soil, without demand. ” As soon as we have the bottles, they are sold “, the financial director assured. This division, also thanks to strong demand for champagne (+16% in volume), slightly increased its operating margin above the group average, despite the drop in cognac, which rose in one year from 34.2% to 34.7%.

Another division followed by financial analysts, Fashion & Leather Goods, fared even better, raising its profitability to a new record of 41.4%, up from 40.8%. This division, backed by the Louis Vuitton and Christian Dior brands, showed internal growth of 24% (+19% in the second quarter), which allowed it to reach a turnover of 18.1 billion euros, or less than half that of LVMH.

According to the details traditionally provided by Jean-Jacques Gioni, who does not describe the growth of each brand, “ Vuitton is not too far from the rhythm of the division, Dior is slightly higher and the other brands are more or less average. The CFO also highlighted the contribution of its other brands, such as Céline and Fendi, to the division’s improved operating profitability.

Thanks to its two main pillars (the most profitable) – alcohol and fashion – LVMH’s operating profit increased by 34% in the first six months to 10.2 billion euros. Thus, the margin fell from 26.5% to 27.9%. This is despite the low performance of Perfumes & Cosmetics (the profitability of which fell from 13% to 10%). highly influenced duty free,” explained the group’s CFO, until Asia resumed its international air service. Therefore, LVMH transfers this activity to distribution networks outside airports.” but tax free much more profitable. »

Interim dividends of 5 euros in December

As for net profit, it rose 23% to 6.5 billion euros (close to the FactSet consensus of 6.6 billion), despite a negative financial result of 798 million, when it was positive at 53 million as of June 30 in 2021. True LVMH will distribute an interim dividend of 5 euros in early December, compared to 3 euros last December.

The group (which never gives quantitative annual targets) is very bullish on the rest of the year. ” We are not immune to external shocks “, Jean-Jacques Guillon admitted at the end of his presentation, but” we enter the second half of the year with very dynamic demand. »

In China, in particular, the situation is gradually normalizing “, assures the financial director, this third quarter will show favorable signals of recovery of activity in this capital market for luxury. As the logistical brakes on cognac on the other side of the Atlantic loosen, Hennessy, for its part, must reconnect, with growth during the year. In Europe, finally, the strong return of American tourists since the end of the first half of the year is another manifestation of business normalization.