30 percent increase in sales: LVMH remains a cash cow

LVMH confirms its reputation as a cash cow.

Regardless of the global economic slowdown, the world market leader for luxury goods, with its namesake brands Louis Vuitton, Mo

t and Hennessy, remained on course for growth in the first half of the year.

Compared to the same period last year, sales rose by 28 percent to around 36.7 billion euros, and net profit by 23 percent to around 6.5 billion euros.

The group based in Paris announced this on Tuesday evening after the stock market closed.

Niklas Zaboji

Economic correspondent in Paris

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Another record year is on the horizon for LVMH, after the group, with its total of 75 fashion, leather, wine, spirits, watch and jewelry brands, made up for the Corona slump in 2021 and posted sales of 64.2 billion and net profit reached record levels of EUR 12.7 billion.

"LVMH has had an excellent start to the new year involving all of our businesses," said CEO and largest shareholder, Frenchman Bernard Arnault.

In fact, LVMH sales in the first half of the year recorded double-digit growth rates in all business areas, led by fashion and leather goods from houses such as Louis Vuitton and Céline with an organic increase of 24 percent, i.e. adjusted for special effects such as exchange rate effects.

With around 18.1 billion euros, this remains the division with the highest sales in the group, even in absolute figures.

Its operating margin rose 1.3 points to 27.9 percent.

315 billion market value

Geographically, LVMH grew most strongly in Europe.

Here, sales grew by 47 percent compared to the same period of the previous year.

In Japan the increase was 33 percent, in the USA 24 percent.

China remains a problem child.

There and in the other Asian markets excluding Japan, sales were practically flat with an increase of one percent.

The main reason was the strict corona regulations in China, which, among other things, reduced the business with cognac from the group brand Hennessy.

"We are going into the second half of the year with confidence, but given the current geopolitical and health situation, we will remain vigilant," said LVMH boss Arnault on Tuesday evening.

Investors have also recently become more optimistic after Russia's attack on Ukraine hit luxury goods stocks.

The LVMH share has recovered a bit in the past few weeks.

With a stock market value of 315 billion, the group is currently only surpassed in Europe by the Swiss food giant Nestlé.

Just last week, Arnault announced how he intends to consolidate his rule over LVMH in the long term.

His family holding Agache, which holds the majority of the luxury goods group and the fashion house Christian Dior, is to be converted into a limited partnership for shares.

Arnault is to become the company's first managing director and the share capital to be divided equally among his five children.

"This new structure will make it possible to maintain family control in the long term," the holding company said.

The French financial regulator has therefore already approved the conversion.

Also active in the media business

"LVMH (. . .) strives to ensure the long-term development of each of its properties while preserving their unique character and strengths," Arnault said.

He leaves no doubt that he will remain the king of LVMH for the time being.

As recently as April, the group's shareholders at the annual general meeting had approved a change in company status he had proposed, raising the maximum age for CEOs from 75 to 80.

Currently, Arnault and his family together hold 47.99 percent of the capital and 63.5 percent of the voting rights of LVMH.

All of the children of the enterprising entrepreneur are integrated into the operative business of the group, under whose roof he brought together the 75 brands with strategic skill, but also tough business policy through acquisitions.

In Germany, Arnault recently acquired the suitcase manufacturer Rimowa and the shoe manufacturer Birkenstock.

LVMH's global success has made the Frenchman, who turned 73 in March, the richest European and the third richest person in the world after Elon Musk and Jeff Bezos.

The American "Forbes Magazine" estimates his family fortune at 158 ​​billion dollars.

Born in the northern French industrial city of Roubaix and educated at the French elite university for engineers, the Ecole Polytechnique, Arnault is also active in the media business.

He owns large stakes in leading French titles such as Les Echos and Le Parisien.

Arnault's hunger has not been satiated: on Tuesday it was announced that his media group had started exclusive negotiations to become the majority shareholder of the French opinion research institute Opinionway.