LVMH outlook cautious ahead of second half results
Slower growth hinted at for Hennessy cognac RETAIL
PARIS • LVMH, the world’s biggest luxury group, cautioned on Wednesday that an uncertain economic climate meant its second half results may not match its sterling performance in the first six months of the year.
LVMH reported a 23 per cent rise in first-half operating profit, driven by strong demand worldwide for its main Louis Vuitton brand and for its wines and spirits.
The group whose brands also include Dior, Fendi, Hennessy cognac and jeweller Bulgari, said it also faces a more demanding year- ago comparison in the second half.
Chief financial officer Jean- Jacques Guiony told a conference call with analysts that Hennessy cognac would see slower growth in sales volumes in the second half of the year due to supply constraints.
“You should expect lowto mid- single digit volume growth at Hennessy,” he said.
This would compare with 16 per cent volume growth for Hennessy in the first half thanks to strong demand in the United States and a rebound in China.
LVMH said first-half profit from recurring operations totalled 3.640 billion euros ( US$ 4.23 billion), below a Reuters poll forecast of 3.75 billion euros.
Second quarter like- forlike group sales rose 12 per cent, a slight deceleration from 13 per cent growth in the first quarter, but beating analysts’ estimates for 9.6 per cent growth.
LVMH, which l i ke the wider industry has benefited from a recovery in Chinese appetite for luxury goods af- ter an economic slowdown, had cautioned in April that its strong first quarter performance may not be sustainable.
LVMH’s fashion and leather division, which accounts for the bulk of its sales and profits and is home to the Louis Vuitton, Fendi and Givenchy brands, had like- for- like revenue growth of 13 per cent in the second quarter, against 15 per cent in the first. This compared with analysts estimates for 12.2 per cent growth.
However, the unit’s profit from recurring operations rose 34 per cent in the first half to 2.192 billion euros, achieving an operating margin of 31.8 per cent of sales, driven by strong growth in Asia, Europe and the U.S.
LVMH’s rivals in the luxury industry such as British brand Burberry and French group Hermes have also signalled better demand in mainland China and improving tourist spending in Europe.