Jul 26, 2016 - Eva Kubicka. Senior Research Associate. HONG KONG: 10th Floor, LiFung Tower. 888 Cheung Sha Wan Road, Kow
JULY 26, 2016
(ENXTPA: MC) 1H16 Results: Revenues Increase by 3.0%, Above Estimates •
LVMH reported revenues of €17,188 million in 1H16, up 3% from €16,707 million in 1H15, and above the consensus estimate of €16,970 million. Organic growth for both 1H16 and 2Q16 was 4%, marking a sequential quarterly acceleration from 3% organic growth in 1Q16.
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Profit from recurring operations was flat, at €2,959 million, above the consensus estimate of €2,906 million. A 17% increase in recurring operating profit in the Wines and Spirits segment and 9% growth in the Perfume and Cosmetics segment offset profit weakness in other divisions. Selective Retailing posted a 5% decline in recurring profit.
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1H16 reported diluted EPS was €3.39, slightly below the consensus estimate of €3.40.
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The company noted that its US market is strong, and that although most of Europe seemed stable, business in France was affected by a fall in tourism. Trends in Asia improved steadily during the period.
Figure 1. LVMH Key Metrics 1H16
1H15
€17,188
€16,707
YoY Change 3.0%
Gross Margin
65.6%
64.8%
80 bps
SG&A Ratio
48.4%
47.0%
140 bps
Operating Margin
17.2%
17.7%
(50) bps
Reported EPS (EUR)
€3.39
€3.13
8.3%
Revenues (EUR Mil.)
Source: Company reports
1H16 RESULTS For the first half of 2016, ended June 30, French luxury brand LVMH reported net revenues of €17,188 million, up 3.0% from €16,707 million in 1H15, and above the consensus estimate of €16,970 million. Organic revenue growth was 4% during the period. SALES BREAKDOWN BY BUSINESS GROUP • The Wines and Spirits segment increased by 7% year over year and by 9% organically, in 1H16. Champagne performed strongly in Europe and the US. Hennessy reported strong growth in the US and improved momentum in China. • The Fashion and Leather Goods business group reported subdued results, with sales declining by 1% during the period (flat on an organic basis). Fendi, Céline and Kenzo performed well in this segment. Marc Jacobs continued to reposition collections and the Donna Karan sale was announced during the period. • Comparable sales in the Perfumes and Cosmetics segment increased by 5% year over year and by 8% on an organic basis. The company noted strong performance at Christian Dior, driven by the success of the Sauvage, J’adore, Miss Dior and the DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.
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JULY 26, 2016 newly launched Poison Girl brands. Guerlain expanded its La Petite Robe Noire brand to a makeup line based on the success of the perfume by the same name. • The Watches and Jewelry segment saw comparable sales growth and organic growth of 4% in the first half. The company noted that this segment outperformed the market, thanks to the success of Bulgari and the refocusing of the TAG Heuer brand. • In the Selective Retailing business group, reported sales growth and organic growth were 4% and 5%, respectively. The company noted that Sephora continued to gain market share globally, recording double-digit growth in revenues and profits. DFS (which stands for “Duty Free Shopping”) continues to face challenges in Asia due to a difficult tourist environment. PERFORMANCE BY GEOGRAPHY LVMH stated that its business in the US remained strong, resulting in 7% organic growth in the first half. The company noted that while trends are stable in Europe, the France business has been negatively affected by a fall in tourism. Trends in Asia steadily improved during the period. The company reiterated its commitment to strengthening its global leadership position in luxury goods by controlling costs and focusing its investments on the quality and innovation of its products.
Deborah Weinswig, CPA
Managing Director Fung Global Retail & Technology New York: 917.655.6790 Hong Kong: 852.6119.1779 China: 86.186.1420.3016
[email protected] John Mercer Senior Analyst
Eva Kubicka Senior Research Associate
HONG KONG: 10th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: 852 2300 2470
LONDON: 242–246 Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0)20 7616 8988 NEW YORK: th 1359 Broadway, 9 Floor New York, NY 10018 Tel: 646 839 7017 FBICGROUP.COM DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY
[email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.
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