(AOF) – LVMH has signed another record year in 2023 in a disrupted environment. Over this period, its current operating profit stood at 22.8 billion euros, an increase of 8%. The current operating margin is stable compared to 2022. The group’s share of net income amounts to 15.2 billion euros, an increase of 8%. Its sales amounted to 86.2 billion euros, organic growth of 13% compared to 2022 (79.1 billion euros). In the fourth quarter, organic sales growth was 10%.
“All activities show sustained organic growth in sales, with the exception of wines and spirits which face a high basis of comparison and inventory level. Europe, Japan and the rest of Asia achieve double-digit organic growth,” explains LVMH.
The year 2023 was marked by growth in champagne thanks to the value strategy and a year of transition for cognac after two years of strong growth.
The group posted a remarkable performance in the fashion and leather goods business, in particular Louis Vuitton, Christian Dior, Celine, Fendi, Loro Piana, Loewe and Marc Jacobs, which are gaining market share everywhere and reaching record levels of sales and revenue. results.
It also experienced particularly strong momentum in perfume and makeup in all regions. It showed good progress in jewelry and strong creative momentum for all Watch and Jewelry Houses, in particular Tiffany, Bulgari and TAG Heuer.
At the general meeting of April 18, 2024, LVMH will propose a dividend of 13 euros per share. An interim dividend of 5.50 euros per share was distributed on December 6, 2023. The balance of 7.50 euros will be paid on April 25, 2024.
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Key points
– World leader in luxury born in 1987, bringing together 75 luxury houses, including 25 centenarians (Louis Vuitton, Moët Hennessy, world leaders, Dior, Céline, Givenchy, Guerlain, Kenzo, Bulgari, TagHeuer, Tiffany, etc.);
– Revenues of €79 billion generated between France for 8%, the rest of Europe for 16%, the United States for 27%, Japan for 7% and the rest of Asia for 30%;
– Distribution of activities between the two historic businesses – fashion & leather goods for 42%, wines & spirits for 9% – and selective distribution for 19%, watches & jewelry for 14% then perfumes and cosmetics;
– Operating model based on 6 pillars: decentralized organization, vertical integration of supply into distribution channels (DFS in Asia, Miami Cruise, Sephora and Le Bon Marché), sustainability of know-how, balance of activities and locations, synergies and selectivity of external growth;
– Capital locked by the Arnault family group (47.8% of the capital, directly and indirectly and 2/3 of the voting rights), Bernard Arnault being chairman and CEO of the board of 16 directors;
– Healthy balance sheet with a net debt of €9.2 billion compared to €56.6 billion in equity and €10 billion in free self-financing.
Challenges
– Innovation strategy serving 3 challenges:
– attraction of talents: Institute of professions of excellence in fashion, “inside LVMH” program for students, DARE program for internal innovations, reception of 50 start-ups in the “LVMH Luxury Lab” incubator,
– R&D in cosmetics (200 patents and “research centers”),
– digitalization of distribution networks and customer experience;
– “LIFE 360” environmental strategy:
– climate commitment (100% renewable energy for boutique sites in 2030),
– creative circularity: 100% eco-design of products and 70% recycling of raw materials in 2030 (39% in 2022),
– traceability of all supply chains in 2030,
– biodiversity: certification of the preservation of ecosystems (2026) and regeneration of flora and fauna on 5 Mhas in 2030 (1.4 in 2022);
– Careful rotation of the portfolio with sales of small brands and the acquisition of the Italian luxury eyewear manufacturer Marcolin and the jeweler Pedemonte.
Challenges
– Always a strong sensitivity of the result to fashion & leather goods;
– Impact of inflation offset by the ability to increase prices and by a favorable exchange rate effect;
– After the end of 2022 marked by confinements, expectation of a resumption of sales in China;
– After a record 2022 financial year in terms of sales and profits, 2023 expectations: further increase global leadership;
– 2022 dividend of €12 including a deposit of €5 paid in December and share buybacks.
Find out more about the luxury and cosmetics sector
Contrasting performances in beauty
Penalized by the Chinese market, Estée Lauder suffered a drop in sales of 10% to $15.9 billion for its 2022-2023 annual financial year, which ended at the end of June. The American group’s net profit even fell by 58% over one year to $1.01 billion. In a dynamic global beauty market, the group is therefore showing poor performance, while its rival, Coty, has published very good results. For the year 2022-2023, closed at the end of June, its sales jumped 12%, to 5.55 billion euros, exceeding analysts’ forecasts. Its operating profit more than doubled and its adjusted profit rose 20%. The group intends to continue its move upmarket to exceed 6 billion euros in turnover by 2026. As for L’Oréal, the group recorded a turnover of 20.6 billion euros in first half, up 12% year-on-year. Its net profit increased by 4% to 3.35 billion euros. However, in the third quarter, the growth in activity of the global cosmetics giant slowed down (+4.5% year-on-year), penalized by its sales in China. These players benefit from a beauty market which is expected to grow annually by 6% on average by 2028 according to McKinsey,