2009 Annual Results - LVMH · 2009 Annual Results February 4, 2010 Bernard Arnault. 3 ... LVMH Group-3% - 18% + 3% Q4 2009-7% - 19% 2009-4% Evolution in local currencies versus same

2009 Annual Results

February 4, 2010

Bernard Arnault

3

Good resistance of LVMH in the context of 2009 crisis

Business rebound in fourth quarter, brought 2009 revenue to 17.1 billion euros

Significant performance improvement for all businesses in fourth quarterRecord revenue reached in December

Profit from recurring operations down 8 %Adjusted costs to environment

Maintained high level of profitability

Strong growth of free cash flowRigorous inventory managementTargeted investments

4

Strengthened star brands in 2009

Market share gains of star brands in key regions

Increasing success with Asian clientele

Exceptional momentum of Louis VuittonDouble-digit revenue growth Exceptional level of profitability

Good resilience at Hennessy and Parfums Christian Dior due to ongoing product innovation

Growth at Sephora in revenue and profit from recurring operations

5

2010: continue to reinforce our competitive strengths

In a context marked by:Uncertainty of the vigor of the recovery Increasing selectivity by clientele

LVMH will pursue:Qualitative innovation and sustained communicationTargeted geographic expansionFlexibility and reactivity of brands

and take advantage of our assets:Quality and durabilityHeritageCreativityKnow-How

LVMH: an excellent position to continue to reinforce leadership in luxury market

Jean-Jacques Guiony

7

Revenue by business group

- 4%- 1%17 05317 193Total LVMH

--(27)(66)Others and eliminations

+ 1%+ 4%4 5334 376Selective retailing

- 19%- 13%764879Watches & Jewelry

- 5%- 4%2 7412 868Perfumes & Cosmetics

+ 2%+ 5%6 302 6 010 Fashion & Leather Goods

- 14%- 12%2 7403 126Wines & Spirits

Organicgrowth

Reportedgrowth20092008In millions of euros

8

+6% +6%+3%

-3%

+1% +1%

-7% -7%

-3%

+1%

Q1 2009 Q2 2009 Q3 2009 Q4 2009

Currency impact Perimeter impact Organic growth

Quarterly evolution of 2009 revenue

9

- 4%+ 1%- 6%Total LVMH

+ 1%+ 4%-Selective retailing

- 19%+ 5%- 28%Watches & Jewelry

- 5%+ 2%- 7%Perfumes & Cosmetics

+ 2%+ 3%+ 1%Fashion & Leather Goods

- 14%- 6%- 18%Wines & Spirits

2009Q4 20099 months 2009

Fourth quarter 2009 revenueby business group

Organic revenue growthversus same period of 2008

10

2009 revenue breakdown by region

France14%

Europe (excl. France)21%

United States (inc. Hawaii)23%

Japan10%

Other markets9%

Asia (excl. Japan)23%

In % of total revenue

11

* excl. Hawaii

Revenue change by region

- 5%

+ 7%

- 19%

- 12%

9 months 2009

+ 10%+ 19%Asia

Europe

Japan

US*

LVMH Group

- 3%

- 18%

+ 3%

Q4 2009

- 7%

- 19%

2009

- 4%

Evolution in local currencies versus same period of 2008

12

Summarized income statement

- 15%1 9732 318 Net profit before minority interests

(342)(281)Net financial income (expense)(849)(893)Income taxes

37Equity investment income

- 1%(6 051)(6 104)Selling expenses+ 3%(1 486)(1 449)Administrative expenses

- 13%1 7552 026 Group share of net profit(218)(292)Minority interests

- 9%3 1613 485Operating profit(191)(143)Other income and expenses

- 8%3 3523 628Profit from recurring operations

- 3%10 889 11 181Gross margin- 1%17 05317 193Revenue

% Change20092008In millions of euros

13

Profit from recurring operationsby business group

- 8%3 352 3 628 Total LVMH

ns(136) (155) Others and eliminations

-388388Selective retailing

- 47%63118Watches & Jewelry

+ 0.3%291290Perfumes & Cosmetics

+ 3%1 9861 927Fashion & Leather Goods

- 28%7601 060Wines & Spirits

% Change20092008In millions of euros

14

Half-year changes in 2009 profit from recurring operations

- 8%- 5%- 12%LVMH- 8%- 2%- 15%LVMH

at constant currency

-+ 9%- 15%Selective retailing

- 47%- 2%- 73%Watches & Jewelry

+ 0.3%+ 8%- 8%Perfumes & Cosmetics

+ 3%- 0.2% + 7%Fashion & Leather Goods

- 28%- 20%- 41%Wines & Spirits

2009H2 2009H1 2009% Change

15

Change in net financial expense

-61(342)(281) Net financial expense

-2(15)(13)Other items - net

-147(94)53Income relating to investments, assets and other financial instruments

+18(46)(64)Ineffective portion of currency hedge

+70(187)(257)Cost of net financial debt

Change (M€)20092008In millions of euros

16

LiabilitiesDec. 31, 2009

32.1 32.1

Assets

66%46%

35%

Growth of total equity

Decline in net debt

Decreased inventory levels

Solid financial structure

In billions of euros

Non current assets

Inventories

Other currentassets

19%

18%

16%

Total equity

Non current liabilities

Current liabilities

17

Analysis of cash flow from operations

+82191(730)Working capital requirements

+218(729)(947)Operating investments

+8742 205 1 331Free cash flow*

-1652 8433 008Net cash from operations before changes in working capital

-34(900)(866)Income taxes paid

+37(185)(222)Net interest paid

-1683 9284 096Cash from operations before changes in working capital

Change(M€)20092008In millions of euros

Dividend per share of 1.65 euro, an increase of 3 %.

* Before available for sale financial assets and investments, transactions relating to equity and financing activities

18

5 283

4 318

3 4003 094

3 869

2 994

1 297

2 205

1 5061 315 1 539 1 331

20%

61%

25%29% 28%

41%

Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2009

Net financial debt Free cash flow Gearing

Net financial debt and free cash flow

In millions of euros

Antonio Belloni

PERFUMES & COSMETICS

21


2008

2009


Revenue - 4%

Profit from recurring operations + 0.3%

Organic growth - 5%

2008

2009

2 868

2 741

290

291

Key figures

22

PERFUMES & COSMETICS 2009 Highlights

Market share gains and improved current operating margin at 11%

Strategy of excellence, rigorous management

Revenue by region (in local currencies): +9% in Asia ; US, Europe and Travel retail in decline

Parfums Christian Dior: maintained aggressive strategy rooted in the fashion universe

Continued excellent performance of J’adoreSuccessful relaunch of Miss Dior Chérie and Eau SauvageSuccess in make-up of new foundation Diorskin Nude and Sérum de Rouge lipstickPursued growth of Capture Totale skincare

23


Perfumes & Cosmetics visual

24


Guerlain: good momentum in priority markets Remarkable success of new lipstick Rouge GPromising start of new perfume IdylleProgress of premium skincare Orchidée Impériale

Parfums Givenchy: successful launches of Play and Ange ou Démon Le Secret

Parfums Kenzo: strengthened main product lines

Benefit: continued expansion in Asia and Europe

Make Up For Ever: strong progress driven by success of High Definition and Aqua lines

2009 Highlights

25



26

PERFUMES & COSMETICS 2010 Outlook

Continue to gain market share through quality and creativity

Parfums Christian Dior: exceptional image and innovation Strengthen star lines in perfume and make-up segmentsMajor innovation in skincare with One EssentialDraw on the know-how

Profitable growth of other brandsContinue to strengthen the core products at Guerlain and to roll-out Idylle perfumeNew communication and launch of a cologne FlowerbyKenzoto celebrate the line’s 10th anniversaryContinue to expand Parfums Loewe and Acqua di Parma

27



SELECTIVE RETAILING

29

SELECTIVE RETAILING

2008

2009

Revenue + 4%

Profit from recurring operations 0%

Organic growth + 1%

2008

2009

4 376

4 533

388

388


Key figures

30

SELECTIVE RETAILING

Revenue by region (in local currencies): Europe (+2%) and Asia (+7%) ; decline in the US

DFSSolid performance in terms of revenue and profitabilityGrowing importance of Chinese clientele

Confirmed success of Macao GalleriaStrong momentum in Hong Kong thanks to investment in the Gallerias

Good performance of Abu Dhabi concession

Rigorous control of costs and inventories

2009 Highlights

31

SELECTIVE RETAILING

Selective retailing visual

32

SELECTIVE RETAILING

15%

20%

25%

2005 2006 2007 2008 2009

France

5%

10%

15%

20%

2005 2006 2007 2008 2009

US

Sephora – Market share evolution between 2005 and 2009

Source NPD

2009 Highlights

33

SELECTIVE RETAILING

SEPHORARevenue growth in all markets and on InternetIncreased profit from recurring operations Network of 986 stores (+88 net openings)New brands and innovative servicesRapid development of Sephora brand productsFocus on productivity

LE BON MARCHEReinforced store identity and positioningRegrouping of Home and Leisure areas on second floor

2009 Highlights

34

SELECTIVE RETAILING

Selective retailing visual

35

SELECTIVE RETAILING 2010 Outlook

DFSStrengthen Chinese clientele destinations: Hong Kong, Macao, SingaporeDevelop new territoriesMaintain rigorous management of costs and inventories

SEPHORAAnother year of growthSame pace of store openings as in 2009 Focus on exclusivity of product offeringExpand on-line sales in EuropeStrong potential of “multi-channel” clients

WINES & SPIRITS

Christophe Navarre

37

WINES & SPIRITS

2008

2009

2008

2009


Revenue - 12%

Profit from recurring operations - 28%

Organic growth - 14%

3 126

2 740

1 060

760

Key figuresChampagne and Wines Cognac and Spirits

1 4371 689

1 383 1 357

607 453

358 402

38

WINES & SPIRITS 2009 Highlights A very difficult year, marked by destocking at retailers and change in consumer behavior

Impact of destocking accounted for half of decrease in sales volume

Optimized level of inventories at retailers at end December

Change in consumer behavior

Lackluster demand

Growth in consumption at home

Trend of trading-down

39

WINES & SPIRITS 2009 Highlights In this difficult environment, our brands resisted and reinforced their value creation strategy

ChampagneVolumes down 4 % in fourth quarter (-16 % in 2009)

Effective commercial promotions at year- end at point of sale

Positive signs in second half in Europe (particularly in France)and AsiaLesser demand for prestige vintages

40

WINES & SPIRITS 2009 Highlights In this difficult environment, our brands resisted and reinforced their value creation strategy

WinesVolumes up 6 % in fourth quarter (-2% in 2009)Strong rebound in Argentina and Brazil at end of yearGood momentum for sparkling wines in US

41

WINES & SPIRITS

CognacVolumes up 11 % in fourth quarter (-5% in 2009)Market share gains China: Hennessy’s largest contributing market

Solid revenue progress at end of the yearStrong recovery of consumer demand

US: back to positive momentum in fourth quarter Russia: market still affected

SpiritsGlenmorangie: encouraging performance in US and Continental EuropeBelvedere: good resilience in US market and strong growth in all other export markets ; sustained product innovation

2009 Highlights Strong rebound of cognac business in fourth quarter

42

WINES & SPIRITS

Wines & Spirits visual

43

WINES & SPIRITS 2009 Highlights Pursued innovation strategy and strong and targeted communication

Scarlett Johansson, face of Moët & Chandon’s new advertising campaign

New packaging: the Design Box at Veuve Clicquot and the Krug Treasure Box at Krug

Champagne bucket Fusion, for Ruinart, conceived by the artist Maarten Baas (nominated as Designer of the Year 2009 in Miami)

Launch of Hennessy Black in the US

Continued roll-out of Hennessy Artistry platform throughout the world

Success of novelties at Ardbeg and GlenmorangieArdbeg ranked best whisky in 2009 for the second consecutive year (Jim Murray’s Whisky Bible)

Launch of Belvedere IX and macerated vodkas

44

WINES & SPIRITS 2009 Highlights Confirmed value creation strategy, coupled with strong response to crisis

Maintained prices, and even slight increase

Strengthened commercial promotion

Adapted operational costs Adjusted communication costsOptimized distribution networkControl of administrative costs

Optimized supplies of eaux-de-vie and grapes

Capital expenditures adapted to crisis situation

Rapid reaction to crisis of unusual dimension

45

WINES & SPIRITS

125

150

175

200

225

250

275

300

325

350

375

1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Champagne shipment forecasts by CIVC

Source: CIVC

6 years5-6 years

5 years

In millions of bottles

Better than forecast end 2009Rebound linked to past destocking

46

WINES & SPIRITS 2010 OutlookAggressive image and value creation strategy to benefit most from recovery

New strategic initiatives to accelerate growth in key markets Strengthen marketing programsContinue product innovation, for spirits as well as champagne

Maintain pricing policy consistent with brand positioning

Simplify legal structure in champagne and optimize logistics

Pursue rigorous cost control

Continue to strengthen leadership in luxury wines and spirits

WATCHES & JEWELRY

Philippe Pascal

48

WATCHES & JEWELRY Key figures

2008

2009

Revenue - 13%

Profit from recurring operations - 47%

Organic growth - 19%

2008

2009

879

764

118

63


49

WATCHES & JEWELRY 2009 Highlights

Decreased demand, destocking at retailers

Improved trends in Q4 and in December particularly

Strong exposure to US and Japan, good resilience in Europe and progress in Asia

Market share gains for TAG Heuer and Hublot

Confirmed productivity of retail network

Reinforced key lines through innovation and pursuit of upmarket positioning

Cost reduction, optimization of inventories

Targeted strategic investments

50

WATCHES & JEWELRY

Watches & Jewelry visual

51

WATCHES & JEWELRY 2009 Highlights - WatchesTAG Heuer

Launch of Monaco V4 for the 40th anniversary of the collectionGood performances of Carrera and Monaco linesInvestment in movements production Store openings: Tokyo, Hong Kong, Beijing, Shanghai…Successful roll-out of Meridiist phone in Asia

Hublot “Grand prix de L’Horlogerie de Genève”Successful launch of King PowerNew automatic chronograph movement UnicoInauguration of manufacturing plant in NyonStore openings: Prague, Doha, St Thomas, Istanbul...

Zenith Restructured manufacturing plant 40th anniversary of movement El Primero and refocus on classicsStore openings: Moscow and Dubai

Montres Dior New versions of Christal lineLaunch of Mini D and Chiffre Rouge diving

52

WATCHES & JEWELRY


53

WATCHES & JEWELRY


54

WATCHES & JEWELRY 2009 Highlights - Jewelry

ChaumetVery good resilience of own retail stores Success of Liens and Attrape-Moi linesLaunch of Lune de Miel collectionDeveloped watches: jewelry models and Dandy Arty

De Beers Continued progress of “classic” collections and solitairesLaunch of Lotus line

FredSuccess of jewelry versions of Force 10 lineLaunch of automatic chronograph Gladiateur

55

WATCHES & JEWELRY 2010 Outlook

Objective of market share gains in a recovery environment

Maintain rigorous cost management

Focus on development of key markets, notably in China

Innovation and product creativity centered on “icons”

Celebrate TAG Heuer’s 150th anniversary

Prioritize industrial integration of TAG Heuer and Hublot

Improve productivity of existing retail networks

Very selective store openings

56

WATCHES & JEWELRY


57

WATCHES & JEWELRY


FASHION & LEATHER GOODS

Yves Carcelle

59

FASHION & LEATHER GOODS Key figures

2008

2009

Revenue + 5%

Profit from recurring operations + 3%

Organic growth + 2%

2008

2009

6 010

6 302

1 927

1 986


60

FASHION & LEATHER GOODS 2009 Highlights

Revenue by region (in local currencies): good performance in Asia (+20%) and Europe (+5%), decline in US and Japan

LOUIS VUITTONDouble-digit revenue growth in 2009

Market share gains

Excellent performance in Asia, Europe, Middle East and US

Strong growth of sales to Chinese clientele

New territory: Mongolia

61


Fashion & Leather Goods visual

62



63


LOUIS VUITTONExcellent performance of Damier Graphite line and of overall Men’s businessNew popular models of historic linesSuccess of collections in tribute to Stephen SprouseStrong progress of other product categories Launch of high-end jewelry line created by Lorenz Bäumer: L’Ame du VoyageMaintained strong communication

New iconic stars for institutional campaignNew advertising campaign centered on know-howDigital communication

Increased efficiency and flexibility of Supply ChainNew shoe production site in ItalyTake-over of a tannery in Belgium specializing in production of leather tanned with plant extracts

64



65


Fendi: good resilience and efficient inventory managementConfirmed success of leather goods line Peekaboo

Selective extension of store network

187 stores at end December 2009: openings in Middle East and Asia

Donna Karan: record results in a difficult environmentGood reception to Fall 2009 fashion show

New Cashmere line

66


Marc Jacobs: solid progress of Marc by Marc Jacobs line, good start of jewelry and success of new perfume Lola

Givenchy: successful introduction of “capsules” collections and success of Nightingale line

Loewe: strengthened offer in leather and accessories

Berluti: good resistance due to successful launch of city shoes line Pierre and performance of new territories (particularly China and Korea)

Kenzo: reorganization of distribution network and launch of e-commerce website

First collections of new designers at Céline and Pucci

67



68

FASHION & LEATHER GOODS 2010 Outlook

Consolidate the good fundamentals of FendiStrengthen iconic leather goods products Selectively expand store network, notably in Asia and Europe

Continue to develop the star products of each line at Donna KaranAccelerate the development of Marc Jacobs, particularly the second lineTurn creative renewal of Céline, Pucci, Givenchy and Loewe into commercial successes

Dynamism of creative teamsSelective investments in store networks, particularly in emerging markets

Pursue reorganisation of other brands

69

FASHION & LEATHER GOODS 2010 Outlook

LOUIS VUITTON

Strong momentum in creation and communicationContinue innovation in leather goodsFashion campaign with Lara Stone and develop Know-How campaignNew exceptional locations for the Louis Vuitton Trophy

Targeted expansion of store networkPriority on major architectural projects Open new Maison in London Singapore store inauguration New territories

70



Documents

2009 Annual Results - LVMH · 2009 Annual Results February 4, 2010 Bernard Arnault. 3 ... LVMH Group-3% - 18% + 3% Q4 2009-7% - 19% 2009-4% Evolution in local currencies versus same