LVMH NET UP 17.9% IN HALF
PARIS — Continuing to expand its domain in luxury and beauty products, LVMH Moet Hennessy Louis Vuitton reported Tuesday that first-half net profit from current operations rose 17.9 percent to $318.3 million (1.92 billion francs).
Operating income, excluding minority interests and before goodwill amortization, came to $558.4 million (3.36 billion), up 26.2 percent from a year ago.
Goodwill amortization totaled $36 million (217 million francs) in the first half, against 81 million francs a year ago. Thus, consolidated net income in the latest period, excluding unusual items, came to $277.3 million (1.7 billion), up 10.1 percent from a year ago.
The latest results are skewed by the inclusion of DFS Group; LVMH acquired control of the big traveler-oriented retailing chain in January.
On a comparable structural basis, LVMH said, net income in the half would have been up 8.5 percent.
The firm further noted its net income does not take into account the negative impact of the recent increase in French corporate income taxes, with the company paying an additional $18.8 million (113 million francs).
First-half sales, as reported, rose 61.5 percent to $3.59 billion (21.587 billion francs), with the mammoth gain coming in what the firm refers to as “selective distribution of beauty products,” a segment that includes DFS as well as the firm’s fragrance and cosmetics products. A solid sales increase was also posted in luggage and fashion activities, primarily reflecting gains by the Louis Vuitton business.
Breaking out first-half operating income among its business groups, LVMH reported profit in the “selective distribution of luxury products” jumped to $74.6 million (449 million francs) from 76 million francs a year ago.
The impact of DFS on LVMH income from operations is “largely positive, though results, as expected, are affected by the lower exchange rate of the Japanese yen vis-a-vis the U.S. dollar,” LVMH said.
“Reflecting seasonality factors, results from perfumes and beauty products [including Christian Dior, Givenchy, Kenzo and Guerlain] are not significant in the first six months of the year,” LVMH added.
Sales of this sector soared to $1.84 billion (11.06 billion francs) from 3.91 billion a year earlier.
The company had noted earlier that the latest sales figure includes a contribution of $1.15 billion (6.93 billion francs) from DFS, while sales of perfume and beauty products rose 6 percent.
This distribution segment should see further bolstering in the future.
As reported, LVMH in July acquired Sephora, France’s biggest perfumery chain, and just this week the company announced it had agreed to acquire 30 percent of Douglas International, the non-German operations of Germany-based beauty retailer Douglas, while Douglas will be given 30 percent of Sephora.
In luggage and fashion activities, first-half operating income rose 20.3 percent to $347.4 million (2.09 billion francs), on a sales gain of 20 percent to $948.3 million (5.708 billion francs).
The company noted that “Louis Vuitton’s growth, in particular, was strong across all markets.” This segment also includes the fashion houses of Givenchy, Christian Lacroix and Kenzo.
First-half operating income for champagnes and wines gained 75.4 percent to $55.7 million (335 million francs) on a sales gain of 13.9 percent to $399 million (2.4 billion francs), but cognac and spirits saw operating income drop approximately 19 percent to $107.8 million (649 million francs), as sales edged behind 0.1 percent to $388.6 million (2.34 billion francs).
In other activities, a segment that also reflects elimination of intercompany sales, there was a first-half loss noted of $27.1 million (163 million francs) against a year-ago loss of 143 million, and sales of $12.3 million (74 million francs), down from 228 million francs.
LVMH also reported the board declared an interim dividend of 6.3 francs per share — or about $1 — payable on Dec. 1, up 8.6 percent over the interim dividend paid in November 1996.
But, the firm added, the dividend should not be taken as an indication of the full-year payout.