LVMH Announces 1998 Year End Results; Laying the Foundation for Future Growth.

PARIS--(BUSINESS WIRE)--March 18, 1999--LVMH Moet Hennessy Louis Vuitton (Nasdaq:LVMHY), the world's leading luxury products group, today announced financial results for the year ended December 31, 1998 and a 9.5% increase in sales for the first two months of 1999.

The Group announced 1998 sales figures in January 1999, reporting a decline of 5% over 1997 primarily due to the weakness in the Asian economy in the first three quarters of the year. Today's operating income figures show a corresponding decline of 7%. Net income from current operations totaling 525 million Euros (FRF 3,446 million, $613 million(1)) is down 29% due mainly to the deconsolidation of Diageo which took place in the second half of 1998. The Group's share of net income after exceptional items totaled 267 million Euros (FRF 1,754 million, $312 million). Exceptional items totaled 161 million Euros (FRF 1,059 million, $188 million) and relate to the restructuring provisions for DFS and the Wines and Spirits group. -0-

                         FINANCIAL HIGHLIGHTS

-------------------------------------- -------------------------------
In Millions            1998                   1997            % Change
-------------------------------------- -------------------------------
               $       FRF     Euro       FRF       Euro
-------------------------------------- ---------------------- --------
Sales        8,091   45,497    6,936    48,035     7,323          -5%
-------------------------------------- ---------------------- --------
Operating
Income       1,381    7,764    1,184     8,322     1,269          -7%
-------------------------------------- ---------------------- --------
Net Income
from current
operations     613    3,446      525     4,869       742         -29%
-------------------------------------- ---------------------- --------

     Key elements of this announcement include:
--   Consolidation of world market leadership in luxury goods, with
     increased market shares across most businesses.
--   Significant progress in achieving operational synergies across
     the Group.
--   Strong 4th quarter recovery in Group sales carried through to the
     first two months of 1999.

(1) U.S. dollar equivalents are provided for reader convenience at the
December 31, 1998 exchange rate of $1 = FRF 5.6233

--   The completion of a number of acquisitions with significant
     growth potential, notably Krug Champagne and Marie-Jeanne Godard.
--   Important investments to strengthen the distribution network.
--   Outstanding performance of Louis Vuitton Malletier during 1998,
     showing operating margin of 46% and a return on capital of 117%.

     Commenting on the announcement, Bernard Arnault, Chairman & Chief
Executive Officer said, "After a decade of significant growth, 1998
was a year of consolidation and restructuring, aimed at laying strong
foundations for resumed growth in 1999. I am happy to report that
despite the short-term impact of the Asian crisis on our 1998 results,
particularly during the first three quarters of the year, the worst
appears to be behind us with all branches of the Group performing
according to plan and generating record sales in December. This
positive trend has continued into this year and we are optimistic for
the future.
     "Market conditions aside, 1998 proved to be an important year for
LVMH. We were able to take a long hard look at our market and examine
how best to face the challenges of the next decade. I believe that we
have used the time well, putting in place the structure and systems to
ensure that we remain more efficient than the competition in our
markets whilst also creating value for our shareholders. We have set
ourselves tough performance targets for the years ahead and achieving
them would not be possible without the support of everyone at LVMH
whose talent, drive and determination are central to the success of
the Group."

                   Financial breakdown by activity:

------------------------------------------   -------------------------
In Millions                    1998                 1997      % Change
------------------------------------------   -------------------------
                       $      FRF     Euro      FRF      Euro
------------------------------------------   -------------------  ----
Champagne and Wines   379    2,131    325      1,642      250     30%

------------------------------------------   -------------------  ----
Cognac and Spirits    245    1,380    210      1,357      207      2%

------------------------------------------   -------------------  ----
Fashion and Leather
Goods                 723    4,067    620      4,306      656     -6%

------------------------------------------   -------------------  ----
Perfumes and
Cosmetics             128      720    110        618       94     16%

------------------------------------------   -------------------  ----
Selective
Retailing             (39)    (222)   (34)       667      102      NS

------------------------------------------   -------------------   ---
Other                 (55)    (312)   (48)      (268)     (41)     NS

------------------------------------------   -------------------   ---
TOTAL               1,381    7,764  1,184      8,322    1,269     -7%
------------------------------------------   -------------------   ---

DETAILED OPERATIONAL REVIEW

The Wines and Spirits group made good progress in 1998, with operating profit growing 17% against 1997.

In Champagne and Wines, operating profit grew 30% to 325 million Euros (FRF 2,131 million). This increase was the result of a combination of increased volumes and sustainable price increases. By market, the best volumes were generated in Italy (+13%), Japan (+13%), the United States (+12%) and sales to the French market were stable against 1997.

For Cognac, 1998 saw a further reduction of 12% in Japan, whereas sales to the United States grew strongly by 14%. Operating profit increased by 2% against 1997, sales to the United States compensating for the fall in Japan.

The Fashion and Leather Goods group proved fairly resilient against the Asian crisis, posting operating profit of 620 million Euros (FRF 4,067 million), a fall of only 6% on last year. Louis Vuitton Malletier achieved sales in line with those of 1997 -- on a constant exchange rate basis, sales grew by 3%. The strong performance of Louis Vuitton towards the end of the year largely offset the reductions in the first three quarters. This performance can be largely attributed to an expanded product range -- to the harnessing of new customers, a new communications campaign, and the opening of 4 global stores in the Champs Elysees, New Bond Street, Soho and Osaka. The Louis Vuitton network grew by 18 new stores bringing the total to 244 by the end of 1998.

The Fragrances and Cosmetics group did well with operating profit growing 16% to 110 million Euros (FRF 720 million). Within the group, sales at Parfums Christian Dior were slightly down due to a reduction in Asian Duty Free sales combined with the continuing campaign against parallel sales networks -- an essential initiative to safeguard the future image of the brand. Towards the end of the year, Hypnotic Poison was successfully launched, exceeding expectations. Guerlain benefited from the launch of Coriolan, while the success of Extravagence and the launch of (pi) both enabled Givenchy to gain sales. Lastly, Parfums Kenzo continued to develop its Jungle line in 1998 and launched Kenzo Jungle for men. The synergies between the different Perfume Houses are being achieved, not least through the creation of local subsidiaries and centralized administration overseas.

The Selective Retailing group included both Le Bon Marche, from June 1, and the Marie-Jeanne Godard network, from July 1, 1998. Operating income fell to -34 million Euros (FRF -222 million). DFS was significantly affected by the Asian crisis and by the weakness of the Yen against the U.S. Dollar. The number of Japanese tourists and the spend per head both fell against 1997. The end of the Hong Kong airport concession also contributed to the reduction in sales. Taken together, these elements combined to reduce sales figures by over a third. In response, we took rapid action, restructuring the group and closing a number of stores in order to reduce costs and reduce our break-even by around $200 million. This action will enable the group to reap significant benefits as the Asian situation stabilizes. We firmly believe that Asia will encompass some of the fastest growing economies in the first decade of the new millennium and the acquisition of DFS remains part of our long-term strategy to exercise greater control over distribution in the region.

In Europe, the Sephora network is growing fast with 11 openings in France and the addition of 7 stores in Italy (Kharys), as well as 5 in Spain, bringing the total number of stores to 162 by the end of 1998. Elsewhere, 14 Sephora stores were successfully opened in the United States.

Outlook for 1999

1999 has started well for LVMH. The recovery we experienced towards the end of 1998 has continued in the first two months of the current year confirming this trend and we are pleased to report a sales increase of 9.5% for this period. At the same time, sales in Louis Vuitton increased 20%. Providing current progress continues, we have set ourselves a target to achieve at least 15% increase in operating income for 1999 as a whole.

At the Annual General Meeting of shareholders, to be held on May 12, 1999, LVMH will propose a dividend of FRF 22.3 per share (3.4 Euros per share, $3.97 per share).

An interim dividend payment of FRF 6.3 per share (0.96 Euros per share, $1.12 per share) was distributed on December 1, 1998. The outstanding balance of FRF 16 per share (2.44 Euros, $2.85 per share) will be paid on June 1, 1999.

LVMH Moet Hennessy Louis Vuitton is the world's leading luxury products group. Its prestige brands include Dom Perignon, Moet & Chandon, Veuve Clicquot, Krug and Pommery champagnes; Hennessy and Hine cognacs; Louis Vuitton, Loewe, and Celine luggage, leather goods and accessories; Christian Dior, Givenchy, Kenzo, and Guerlain perfumes and cosmetics; Sephora, Marie-Jeanne Godard, and Le Bon Marche in selective retailing; Fred in jewelry; and Givenchy, Christian Lacroix, and Kenzo in couture and fashion. LVMH holds a 61.25% interest in DFS, the world leader in luxury goods distribution.

LVMH Moet Hennessy Louis Vuitton ordinary shares, traded on the Paris Stock Exchange, may be accessed on the Reuter Equities 2000 Service under LVMH.PA, on Quotron under LVMHF.EU, and on Bloomberg under MC FP. Its ADRs, each equal to one-fifth of an ordinary share, trade on the NASDAQ National Market System in the United States.

Additional information on LVMH can be accessed on the company's home page: http://www.lvmh.com.