LVMH 1999 Profits Up 40 Percent; 2000 Shows Signs of Strong Expansion.Business Editors PARIS--(BUSINESS WIRE)--March 9, 2000 The LVMH LVMH Moët Hennessy-Louis Vuitton (upscale retailer) Group, Moet Hennessy Louis Vuitton The Louis Vuitton Company (more commonly known simply as Louis Vuitton) is a luxury French fashion and leather goods brand and company, headquartered in Paris, France. It is a division of the French holding company, LVMH Louis Vuitton Moët Hennessy S.A. , the World's leading luxury products group, today announced an increase of 40% in its net income from current Group operations for 1999, reaching 738 millions Euros (4.8 billion francs), and sales growth of 41% for the first 2 months of financial year 2000.
Consolidated figures as at 31st December:
In Millions 1998 1999 1999 % Change
Euro Euro FRF
----- ----- ---- --------
Turnover 6,936 8,547 56,066 + 23%
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Operating Income 1,184 1,547 10,145 + 31%
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Net income from
current group
operations 525 738 4,839 + 40%
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Net group income 267 693 4,543 + 160%
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1999 was notable for:
- Strong business growth and increased market share in all our
areas of activity, confirming our position as global leader.
- A strong increase in profitability, with exceptional performances
from Louis Vuitton, Moet et Chandon and Givenchy, among others.
- Acquisitions of companies with strong growth potential : Fendi,
Bliss, Hard Candy, BeneFit Cosmetics, Make Up For Ever, Thomas
Pink, Phillips,
- The creation of a Watch & Jewellery division with the acquisition
of Tag Heuer, Ebel, Chaumet and Zenith,
- Significant investments to strengthen the distribution network,
- LVMH is becoming a major player in the 'new economy' on a global
scale : with the launch of Sephora.com, E-luxury.com in the final
stages of development, partnership with Videonetworks and Oxygen
Media, and preparation of several other initiatives.
Commenting on these results, Myron Ullman, Group Managing Director said, "These excellent results confirm the Group's dynamism, the success of its strategy and the quality of our world-renowned brands. All our divisions registered profit growth in excess of growth in turnover. The Champagne & Wines, Fashion & Leather goods and Fragrances & Cosmetics cosmetics, preparations externally applied to change or enhance the beauty of skin, hair, nails, lips, and eyes. The use of body paint for ornamental and religious purposes has been common among primitive peoples from prehistoric times (see body-marking). divisions saw their operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rise by more than 30% in 1999, whilst Cognac Cognac (kônyäk`), city (1990 pop. 19,932), Charente dept., W France, in Angoumois, on the Charente River. The French brandy to which Cognac gives its name has been manufactured and exported from the city since the 18th cent. benefited from renewed growth and DFS (Distributed File System) An enhancement to Windows NT/2000 and 95/98 that allows files scattered across multiple servers to be treated as a single group. With Dfs, a network administrator can build a hierarchical file system that spans the organization's LANs and made a return to profit, stemming from a significant recovery in sales in the second half of the year. The Group capitalised upon this favourable situation to continue with its investment initiatives, particularly in its distribution network, with very rapid development of Sephora in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . In addition, LVMH maintained a high level of investment and marketing to support its brands and the launch of new products; a measure of growth for the future. The launch of Sephora.com in the US is the first evidence of the Group's desire to become a major player in the 'new economy' on a global scale We have set ourselves ambitious targets for the coming years and we will achieve these thanks to the support, talent and willingness of all the men and women who work in the Group and who are key to the success of LVMH".
Evolution of operating profit by division:
In Millions (Euros) Year
----------------------------------
1998 1999 Change
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Champagne and Wines 325 434 + 34%
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Cognac and Spirits 210 221 + 5%
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Fashion and Leather goods 620 824 + 33%
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Fragrances and Cosmetics 110 146 + 33%
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Selective Retailing (34) (29)
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Other activities and write-offs (47) (49)
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Total for LVMH 1,184 1,547 + 31%
-0-
In Champagnes and Wines operating income grew by 34%. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased by two percentage points, thereby reaching 28% of turnover. This significant increase in profits is primarily due to the growing success of our premium cuvees and our entry strategies for high value-added markets, such as the US and Japan. This profit growth was achieved in the face of increased investments in marketing and communications to support our new products and to prepare for the post- post- word element [L.], after; behind. post- pref. 1. After; later: postpartum. 2. Behind; posterior to: postaxial. Millennium period. In Cognac, operating income grew by 5% and sales rose by 7%. Sales in the USA are now clearly compensating for the situation in Japan. Productivity gains were achieved mainly due to the first positive effects of the Hennessy 2001 plan. Agreements made with Diageo also allowed us to reduce distribution costs distribution costs distribute npl → Vertriebskosten pl considerably, particularly in Japan and France. The division also benefited from reduced eau de vie eau de vie n. pl. eaux de vie Colorless brandy distilled from fermented fruit juice. [French eau-de-vie : eau, water + de, of + vie, buying costs. In addition, communications expenditure increased significantly to support the launch of new products, such as Pure White and Hennessy Classique and to accelerate diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. into new markets. The Fashion & Leather Goods division saw an increase of 33% in operating income, with operating margins up 2 percentage points to 36%. This excellent performance results from the success of the new products of the Group's brands; the number of visits to Louis Vuitton's 15 global stores has exceeded all expectations. Recruitment of new consumers for the LVMH brand has increased and this should accelerate further in the future, through our policy of constant new creativeness for the brand and expansion of its network. Celine is seeing a marked recovery, following the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of its network and rejuvenation Rejuvenation Aeson in extreme old age, restored to youth by Medea. [Rom. Myth.: LLEI, I: 322] apples of perpetual youth by tasting the golden apples kept by Idhunn, the gods preserved their youth. [Scand. Myth. of its product lines. Loewe is improving its performance and investing in its stores. Elsewhere, initial synergies in management, buying and production are being implemented between different brands. The Fragrances & Cosmetics division performed excellently in 1999, with a 33% increase in operating income. Operating margins improved and the problem of parallel sales was stabilised Adj. 1. stabilised - made stable or firm stabilized stable - resistant to change of position or condition; "a stable ladder"; "a stable peace"; "a stable relationship"; "stable prices" . Most notable in the synergies programme were the integration of research teams, consolidation in buying and the setting up of joint offices for foreign subsidiaries. Considerable investments in advertising were made to support the launch of new products - J'Adore, Indecence, Aqua Allegoria and Rouge Rouge, river, United States Rouge (r  zh), river, c.30 mi (50 km) long, rising in S Michigan and winding S and SE to the Detroit River at the city of River Rouge. Miroir , all of which are very successful.The profitability of the Selective Retailing division is improving. DFS showed a distinct increase in its profits, linked to the rapid recovery in its turnover in the second half of the year, the result both of an increase in tourism and of its new merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. policy. Le Bon Marche continues to perform extremely well. Otherwise, very significant investments were made to safeguard the development of Sephora in Europe, the US and Japan, and for the launch of Sephora.com. At the end of 1999, Sephora had 50 stores in the USA and had increased its European network to 91 stores. These investments took their toll on the division's results, but their benefit will be seen in the future. Outlook for 2000 LVMH starts 2000 in a particularly favourable position Noun 1. favourable position - the quality of being at a competitive advantage favorable position, superiority advantage, vantage - the quality of having a superior or more favorable position; "the experience gave him the advantage over me" . Turnover at the end of February was up by 41% and sales at Louis Vuitton increased by 50% over the same period. The economic climate is positive in all of our markets and the success of recently launched products, the rapid expansion of our distribution network and the growing influence of recent acquisitions should all be catalysts for growth. LVMH has set itself an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. growth target for 2000 of at least 20%. At the AGM AGM annual general meeting AGM n abbr (= annual general meeting) → AG f AGM n abbr (= annual general meeting) → JHV f on 17th May 2000, LVMH will propose the payment of a dividend of 3.40 Euros. An interim dividend of 0.96 Euros per share was paid on 1st December 1999. The balance of 2.44 Euros will be paid on 1st June 2000. "Certain information included in this release is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. The Company's businesses include its wines and spirits, fashion and leather goods, fragrances and cosmetics, watches, and selective retailing activities, and its outlook is predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. based on its interpretation of what it considers to be the key economic factors affecting these businesses. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. with regard to the Company's businesses involve a number of important factors that are subject to change, as are mentioned under "Risk Factors" in the Company's Form 20-F for the year ended December 31, 1998, which is on file with the United States Securities and Exchange Commission". --30--tas/cgo CONTACT: Analysts and Investors: Didier Guigou - LVMH +33 1 44 13 21 22 Press contacts: France - DGM DGM Deutsche Gesellschaft für Muskelkranke DGM Discipline Global Mobile (record company) DGM Deputy General Manager DGM Devlet Güvenlik Mahkemesi DGM Digimon DGM Dirección General de Migración (Guatemala) Michael Calzaroni/ Olivier Labesse +33 1 40 70 11 89 U.K. - Financial Dynamics Hugh Morrison/ Shirley-Anne McAndrew +44 171 831 3113 US - Kekst and Company Jim Fingeroth/Michael Freitag +1 212 521 4800 Italy - D&C Financial Communication Fabio Raineri Paolo Di Raimondo +39 02 43 81 141 KEYWORD: INTERNATIONAL EUROPE INDUSTRY KEYWORD: FOODS/BEVERAGES RETAIL APPAREL/TEXTILES EARNINGS |
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