Demand for LVMH should remain strong in 2H, company news

LVMH’s financial presentation opens with a beautiful photo of Mont Saint-Michel (and a Vuitton suitcase in front of the building!) under a stark blue sky. The luxury giant’s June 30 reports are united, barely disguised by difficulties with the logistics of Hennessy Cognac in the United States until April, and then restrictions in China in the second quarter.

Group (ownerInvest) maintained a strong growth momentum. Its turnover reached 36.7 billion euros, almost the same as its accounts for all of 2016, thanks to a 28% increase. Excluding currency effects (+7%) and coverage (symbolic), the increase was 21%, i.е. 23% in the first quarter and 19% in the second, despite an 8% decline in activity in Asia (excluding Japan) in April-June and a very strong base of comparison in 2021 over this period: the group’s turnover then jumped by 84%.

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

Europe (+47% on a like-for-like basis), which again found its tourists at the end of the semester, the US (+24%) and Japan (+33%) replaced China without the threat of an economic downturn and runaway inflation not dampening consumer demand for the group’s products. ” Most of our brands increased their prices at the beginning of the year from 3% to 7-8%. “, added Jean-Jacques Guiony, CFO, during the webcast.

During the aperitif, analysts appeared to be enjoying a strong rebound in Wines & Spirits sales of 30% (on a comparable basis) in the second quarter after a slight increase of 2% compared to January-March: in addition to the start of the Chinese New Year this year Hennessy’s business was hampered by shipping and transportation difficulties on American soil, and demand was undeniable. ” As soon as we have bottles, they are sold. “, the CFO assured. This division, also driven by strong demand for champagne (+16% in volume terms), slightly improved operating margins above the group average, despite the decline in cognac sales, which increased from 34, 2% to 34.7%.

Another division closely watched by financial analysts, Fashion & Leather Goods, did even better, boosting its profitability to a new record of 41.4%, up from 40.8%. The division, based on the Louis Vuitton and Christian Dior brands, posted 24% internal growth (+19% in the second quarter), bringing it to a turnover of 18.1 billion euros, or half that of LVMH.

According to the details traditionally provided by Jean-Jacques Guiony, who does not detail the growth of each brand, ” Vuitton is not very far from the rhythm of the division, Dior is slightly higher, and the rest of the brands are more or less in the middle.. The CFO also highlighted the contributions of his other brands such as Céline and Fendi to the division’s operating margins.

Thanks to 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%. And this despite the low performance of the perfumery and cosmetics industry (the profitability of which fell from 13% to 10%). very prone duty-free,” explained the group’s chief financial officer, until Asia restored its international air service. Therefore, LVMH is moving this activity to distribution networks outside airports.” but duty free zone much more profitable. »

Interim dividend of €5 in December

As for net income, it increased by 23% to 6.5 billion euros (close to the FactSet consensus of 6.6 billion), despite a negative financial result of 798 million, while on June 30, 2021 it was positive at 53m. Correct According to the form, LVMH will pay an interim dividend of 5 euros in early December, compared to 3 euros in December last year.

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

In China, in particular, the situation is gradually returning to normal “, the CFO says this third quarter will show positive signals of a recovery in activity in this capital’s luxury goods market. As the logistical brakes on Cognac across the Atlantic loosen, Hennessy, for its part, must re-establish communications.” with growth per year. In Europe, finally, the strong return of US tourists since the end of the first half of the year is another manifestation of the normalization of business.