News The world leader in the luxury products sector LVMH chalked up an outstanding 2006 financial year. Watches and jewellery first in class. Favourable prospects for 2007.
Since 2004, the Swiss watch industry has been on song, improving in leaps and bounds to an extent unheard of in many years. Where will it end? A difficult question, insofar as records established today seem to be overtaken in the twinkling of an eye.
The latest proof of the industry’s vitality: the 2006 results of the watch and jewellery arm of the Moët Hennessy Louis Vuitton (LVMH) group. With sales of 737 million euros, it registered growth of 26%, rising to 28% on a comparable structure and exchange rate basis. And what can be said of the sector’s operating profit, save that it literally rocketed: +281% to 80 million euros!
Adopting a low-key approach, the world’s number one in the luxury sector was content to note that “watch and jewellery activity recorded sales growth over the year well in excess of the industry average and increased its operating margin to 11%. TAG Heuer further increased its market share and recorded an excellent performance worldwide while continuing a highly innovative move upmarket. The iconic Aquaracer and Carrera lines showed great vitality. Zenith confirmed its progress in the United States, Europe and Asia and successfully introduced the Defy sports line. Montres Dior continued to grow, buoyed by the success of the Christal line. Chaumet opened a flagship store in Hong Kong and strengthened its distribution network in Europe. The joint enterprise with De Beers saw its sales increase considerably in Japan, the United Kingdom and the United States and gained a foothold in Dubai and Taiwan.”
By comparison, the group’s other sectors of activity might almost be viewed as poor relations with increases in turnover of 7% to 3,891 million euros for selective distribution, 13% to 2,994 million for wines and spirits, 9% to 5,222 million for fashion and leather goods and 10% to 2,519 million for perfumes and cosmetics. In terms of operating profit too, other growth figures took a back seat: +28% to 222 million for perfumes and cosmetics, +15% to 400 million for selective distribution, +11% to 1,633 million for fashion and leather goods and +11% to 962 million for wines and spirits. All of which gives a global operating profit of 3,172 million (+16%) on turnover of 15.3 billion euros (+10%). Net profit meanwhile rose by 30% to 1,879 million.
After results such as this, LVMH is well placed to succeed in 2007. The group will pursue its strategy of focusing on internal growth and developing key brands. The launch of new products is planned, including a Christian Dior perfume for women, and expansion of the network of Louis Vuitton boutiques with the opening of 20 new stores. The group has accordingly set itself the target of further “significant improvement” in its results this year. A target well within reach in the light of the current economic situation.
March 06, 2007
