Strong Watches and Jewelry Performance Lead to Record 2006 Results for LVMH

LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, reported a 2006 profit of 3 17 billion euros ($4.16 million), an increase of 16 percent over 2005 strong performance. Revenue rose to 15.3 billion euros ($20 billion), showing organic growth of 12 percent to which all business groups and every region contributed. As a result, the group’s operating margin improved to 21 percent for the year.

This performance is even more noteworthy in view of the strong negative impact of exchange rates which particularly affected the second half of 2006, LVMH said in a statement. At constant exchange rates, growth in profit from recurring operations increased by 19 percent in 2006.

The group share of net profit increased by 30 percent to 1.88 billion euros ($2.5 billion) in 2006, following growth of 21 percent in 2005. This increase is mainly attributable to the improvement in the Group’s operating profitability and financial results.

LVMH’s Watches & Jewelry division recorded organic revenue growth of 28 percent (26 percent reported growth) over the year to 737 million euros ($964 million). Profit from recurring operations increased by 281 percent to 80 million euros ($105 million). Operating margin rose to 11 percent in 2006.

TAG Heuer grew its market share and posted an excellent performance worldwide while continuing its upscale positioning. The brand’s Aquaracer and Carrera lines have been very strong. Zenith improved its growth in the U.S., Europe, and Asia and successfully introduced its sports line Defy. Montres Dior continued its development, driven by the success of its Christal line. Chaumet opened its flagship store in Hong Kong and has strengthened its distribution network in Europe. De Beers recorded strong revenue growth in Japan, the U.K., and the U.S., and opened inaugural stores in Dubai and Taiwan.

“The excellent performance in 2006 illustrates the vitality of our major brands which continue to strengthen and gain market share,” said Bernard Arnault, LVMH chairman and chief executive officer. “The year also confirmed the strong potential of our high growth rising star brands and the group’s leading position in emerging markets. LVMH has shown record revenue in 2006 and has once again improved its profitability. In a difficult currency environment at the beginning of this year, we will rely on the strength of our growth model, the exceptional innovation of our brands and the talent of our teams to make 2007 another year of strong growth.”

LVMH reported the following in its other divisions:

Wines & spirits revenue increased 13 percent to 3 billion euros ($3.92 billion), the strongest growth among the four main divisions.

Fashion & leather goods and perfumes & cosmetics posted 11 percent revenue growth—contributing 5.22 billion euros ($6.83 billion) and 2.52 billion euros ($3.3 billion) respectively.

Perfumes & cosmetics profit from recurring operations jumped 28 percent.

The selective retailing division—which includes the DFS and Sephora chains—posted a 15 percent jump in profit to 400 million euros ($523 million) on a 7 percent increase in revenue to 3.89 billion euros ($5.09 billion).

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