By  on September 7, 2006

PARIS — The U.S. dollar may be weak, but not enough to dent Bernard Arnault's gold-plated optimism about the high-flying luxury sector.

"The performance is extremely good. We are very confident in our objectives," the chairman of LVMH Moët Hennessy Louis Vuitton said Wednesday in reporting a 46 percent leap in first-half net profits to 817 million euros, or $1 billion. "The economic environment is mostly positive, even if the dollar is a little lower."

Looking rested and happy after summer vacation, an upbeat Arnault said organic sales continued to grow at a double-digit pace in July and August, including for the cash cow Louis Vuitton brand. He also assured that a slate of product launches, such as iconic Vuitton leather goods and high-end Tag Heuer watches, would drive sales through the balance of the year.

"We've increased our market share in all our businesses," Arnault told an audience of analysts and journalists at LVMH headquarters here as images of the company's celebrity-studded ad campaigns flashed behind him on giant screens. "The outstanding performance shows our growth model is particularly effective."

Operating profits at the French firm increased 35 percent in the half to 1.26 billion euros, or $1.55 billion at average exchange, as sales rose 12.9 percent to 6.97 billion euros, or $8.57 billion.

Arnault reiterated an objective of a "very significant" increase in results for the full year and trumpeted a goal to double the group's profitability in five years.

By category, watches and jewelry logged the biggest gains in profits from recurring operations, zooming 164 percent to 37 million euros, or $45.5 million. Perfumes and cosmetics also had a stellar half, with profits up 80 percent to 79 million euros, or $97.1 million, thanks to products such as Dior Capture Totale skin cream, pitched in ads by actress Sharon Stone.

"You ladies in the room may be too young to try it, but have a go anyway," Arnault said with a sly smile.

The LVMH chief, who has likened Vuitton to Micro­soft, reined in the hyperbole Wednesday, but still touted the "dynamic" wines and spirits business and Vuitton's "remarkable" performance. He also boasted that LVMH shaved 1.3 billion euros, or $1.59 billion, off its debt last year to 4.61 billion euros, or $5.67 billion. "Soon it will disappear at this rate," he quipped.

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