“The 2015 results confirm the capacity for LVMH to progress and gain market share despite economic and geopolitical uncertainty”Bernard Arnault
Chairman and CEO
LVMH
INTERNATIONAL. LVMH Moët Hennessy Louis Vuitton’s (LVMH) Selective Retailing division, which includes DFS Group and Starboard Cruise Services, posted a +5% rise in profits from recurring operations in 2015.
Revenue on an organic basis rose by +5% and on reported terms increased +18%.
LVMH noted: “DFS continues to experience an uncertain environment in Asia as a result of currency and geopolitical changes, while its business in Japan benefited from a boom in Chinese tourism. Significant cost containment efforts were continued at DFS.”
LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded groupwide revenue of €35.7 billion in 2015, an increase of +16% over the previous year. Organic revenue growth was +6%. The Group turned in strong momentum in Europe, the USA and Japan while other Asian countries demonstrate contrasting tendencies.
In the fourth quarter, revenue increased by +12% compared to the same period of 2014. Organic growth was +5%.
Profit from recurring operations reached €6,605 million in 2015, an increase of +16%, to which all business groups contributed. Group share of net profit was €3,573 million. Excluding the capital gain realised in 2014 following the distribution of Hermès shares, Group share of net profit increased by 20%.
LVMH Chairman and CEO Bernard Arnault said: “The 2015 results confirm the capacity for LVMH to progress and gain market share despite economic and geopolitical uncertainty. Revenue and operating profit reached new record levels.
“Commitment to excellence, a passion for quality and our capacity to innovate underpin our growth momentum and are all values epitomised by the Fondation Louis Vuitton and its emblematic building that welcomed over one million visitors in 2015.
“All our Maisons demonstrated outstanding flexibility in 2015. By adapting their strategies to global changes and by continuing to evolve, they have shown the creativity and entrepreneurship that drive them forward. In an uncertain economic environment, we can rely on the desirability of our brands and the agility of our teams to further strengthen in 2016 our leadership in the world of high-quality products.”
Key highlights from 2015 included:
• Record revenue and profit from recurring operations
• Strong progress in Europe, the United States and Japan
• Positive impact of exchange rates
• Good performance of Wines & Spirits in all regions with a progressive normalisation of the situation in China
• The success of both iconic and new products at Louis Vuitton, where profitability remains at an “exceptional” level
• Progress with fashion brands, in particular Fendi, Céline, Givenchy and Kenzo
• “Remarkable momentum” at Christian Dior which gained market share globally
• Excellent results at Bvlgari and success of TAG Heuer’s refocusing strategy
• “Exceptional” progress at Sephora which strengthened its position in all its markets and in digital
• Free cash flow of €3.7 billion, an increase of 30%
• A gearing of 16% as of the end of December 2015
Source: LVMH
Source: LVMHANALYSIS BY DIVISION
The Wines & Spirits business group recorded an increase in organic revenue of +6%. On a reported basis, revenue growth was +16%. Profit from recurring operations increased by +19%. Champagne experienced good growth in 2015 with an “excellent performance” in Europe, the USA and Japan. Hennessy demonstrated strong momentum in the USA across all ranges.
In China, the second half of the year was marked by a rebound in revenue during a year characterised by continued destocking by distributors. Other spirits, Glenmorangie and Belvedere, continued a sustained growth.
The Fashion & Leather Goods business group recorded organic revenue growth of +4% in 2015. On a reported basis, revenue growth was +14%. Profit from recurring operations increased by +10%. Louis Vuitton had a “remarkable year”, driven by the enthusiastic welcome of both its iconic products as well as the new models created by Nicolas Ghesquière.
The Cruise Collection shown in Palm Springs and the exhibition at the Grand Palais in Paris retracing the history of the Maison were among the highlights for the year.
Fendi recorded “exceptional” growth with the success of its iconic leathergoods and the inauguration of Palazzo Fendi in the center of Rome. Loro Piana continued to invest in its production capacity and launched an exceptional new material combining vicuña wool and baby cashmere. Celine’s growth was driven by all its product categories. Givenchy and Kenzo each had a good year. Donna Karan and Marc Jacobs continued to work on changes to their product lines.
The Perfumes & Cosmetics business group recorded organic revenue growth of +7%. On a reported basis, revenue growth was +15%. Profit from recurring operations increased by +26%.
Christian Dior accelerated its growth and increased worldwide market share. The new men’s fragrance Sauvage experienced unprecedented worldwide success. The vitality of its iconic perfumes J’adore and Miss Dior together with the excellent reception of new make-up products contributed to the Maison’s “remarkable performance”, LMVH said.
Guerlain demonstrated profitable growth, notably driven by the progress of L’Homme Idéal and the continued success of the skincare ranges Orchidée Impériale and Abeille Royale. Benefit experienced strong growth driven by the originality of its products. Fresh and Make Up For Ever performed very well.
The ,b>Watches & Jewelery business group recorded organic revenue growth of +8%. On a reported basis, revenue growth was +19%. Profit from recurring operations increased by +53%.
Bvlgari had an excellent year driven by its iconic creations and its new Diva and Lvcea collections. Bvlgari’s stores delivered excellent performances. The watch brands were impacted by the cautious purchasing behaviour of multi-brand retailers. TAG Heuer launched with enormous success its smartwatch developed in partnership with Google and Intel while continuing to develop its core offering.
Given its strong growth, Hublot strengthened its production capacity with the opening of a second manufacturing facility in Nyon, Switzerland.
The Selective Retailing business group recorded organic revenue growth of +5%. On a reported basis, revenue growth was +18%. Profit from recurring operations increased by +6%. Sephora had an exceptional year in terms of revenue and results and continued to gain market share in all its markets. The omni-channel strategy accelerated with numerous initiatives in several countries.
“DFS continues to experience an uncertain environment in Asia as a result of currency and geopolitical changes, while its business in Japan benefited from a boom in Chinese tourism,” said LVMH. “Significant cost containment efforts were continued at DFS.”
Confidence for 2016
“Despite a climate of economic, currency and geopolitical uncertainties, LVMH is well-equipped to continue its growth momentum across all business groups in 2016,” the group said.
“The Group will maintain a strategy focused on developing its brands by continuing to build on strong innovation and a constant quest for quality in their products and their distribution.
“Driven by the agility of its teams, their entrepreneurial spirit, the balance of its different businesses and geographic diversity, LVMH enters 2016 with confidence and has, once again, set an objective of increasing its global leadership position in luxury goods.”
Dividend increase
At the Annual Shareholders’ Meeting on 14 April, 2016, LVMH will propose a dividend of €3.55 per share, an increase of +11%. An interim dividend of €1.35 per share was paid on 3 December last year. The balance of €2.20 per share will be paid on 21 April, 2016.
