LVMH reports ‘robust’ first half of the year
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LVMH reports ‘robust’ first half of the year

The world’s largest luxury group, Moët Hennessy Louis Vuitton (LVMH), released results for the second quarter this week that demonstrated a ‘robust’ first half of the year. The company reported a 23% rise in first-half operating profit, driven by strong demand for both its wines and spirits and the Louis Vuitton brand. It also reported 12% organic growth, beating out analysts’ expectations of 9.6%. However, it warned that an uncertain economic climate and stronger second-half comparables could make the latter months of the year less positive than its first six.

LVMH’s share price is up by 21% so far this year

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SOURCE: Yahoo Finance

Thanks to continued strong demand from the U.S. and a strong recovery in China, Hennessy’s spirits business saw an impressive 16% volume growth. Although LVMH’s CEO Jean-Jacques Guiony pointed out that supply constraints would dent growth throughout the rest of the year. On a conference call with investors he said: “you should expect low- to mid-single digit volume growth at Hennessy,” in the next six months.

The company also saw strong performance from its fashion brands, which include Louis Vuitton, Fendi and Givenchy. Like-for-like revenue growth for the quarter came in at 13%. For the first half overall, it stood at 15%. Both of these figures are given year-on-year, and beat analysts’ expectations of 12.2%.

Reiterating his message that the business was performing well but the second half may look muted, Guiony said:

“In a nutshell, I think we need to be both positive and cautious. Clearly, most of our markets are well oriented as H1 numbers show, the US [is growing] well, Japan is showing very strong progress, Asia is more than recovering, while Europe continues to benefit from both strong local consumption and rising number of choice. This said, as we pointed out many times already this year, the comparison base is much more challenging in the second half, both in terms of topline but also in terms of bottom line. Some geographies like Asia and China saw marked improvement from July onwards last year.”

Disclosure

Dominion holds LVMH in its Global Trends Luxury Fund.


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