FRANCE: LVMH Posts 99 Per Cent Plunge In Annual Profit
French luxury goods giant LVMH Moet Hennessy Louis Vuitton SA on Friday revealed a 99 per cent plunge in net profit for 2001 to 10 million euros from 722 million euros in 2000.
The group, which sells everything from fashion collections and leather goods to wine and spirits and jewellery and cosmetics, has been hit hard by the travel and tourism slump in the wake of the September 11 terrorist attacks.
In a statement, the group said its operating profit fell an expected 20 per cent to 1.56 billion euros from 1.96 billion euros in 2000. All business units except its fashion and leather goods division reported falls in operating profit.
Louis Vuitton said it saw 19 per cent growth in the US domestic market and 18 per cent growth in the fourth quarter, with 75 per cent of the demand coming from local clients.
However, the company said sales in the first two months of this year were up nine per cent on the prior year as market conditions start to improve, although it warned of an uncertain economic outlook for the rest of 2002.
LVMH also noted its 2001 figures included significant capital gains, including 864 million euros from the sale of shares in Gucci Group NV to retailer Pinault-Printemps-Redoute SA.
It added: "Faced with an uncertain economic climate, which could persist throughout 2002, LVMH will focus its efforts on the growth of luxury products, and particularly the progress of its greatest brands.
"Thanks to measures taken and accounted for financially in 2001 to face the difficult economic environment, as well as the priority given to cashflow, LVMH is well positioned to face 2002 and benefit fully from any possible upturn in the market."
It continued: "As in previous crises, our broad geographical presence, the strength and complementarity of our brands and our exceptionally talented teams will enable the group to continue its development, gain market share and further advance the lead it has on all its competitors."
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