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LVMH MOET HENNESSY LOUIS VUI
LVMH MOET HENNESSY LOUIS VUI
The expansion bears fruit amidst a challenging context
11 Oct 16
The world luxury leader impressed once again, outperforming the market with 6% organic growth in Q3 16 to €9,138m. The performance was underpinned by positive momentum experienced by Perfumes & Cosmetics and Selective Retail growing by 10% and 8% respectively. Wines & Spirits slowed to an organic rise of 4% compared to 9% in H1. The Fashion segment accelerated by 5%, while sales were flat in the first half of the year. Watches & Jewellery products maintained the constant growth pace posted in Q2, edging up 2%. Over the first nine months, sales were up 4% (5% organic growth) to reach €26,326m. Perfumes & Cosmetics outperformed with 6% reported growth to €3,578m, i.e. 13.6% of total sales vs. 12.7% by the end of 2015. Both Wines and Selective Retail surged by 5% to reach €3,281m and €8,283m respectively. The spurt in Fashion & Leather goods in Q3 brought the nine-month performance to 1%, to €8,991m. This segment will be enhanced by the German high-end luggage maker Rimowa in 2017. Watches & Jewellery were up 3% to €2,486m. LVMH experienced favourable sales momentum across all regions, even in Asia which posted a significant upturn in Q3. The momentum remains unfavourable in France due to sliding tourist flows. The group has confirmed that its expansion strategy is going ahead in-depth via acquisitions and innovative products as well as in selective promising markets.
Comforting H1 performance
27 Jul 16
The pace of growth in early 2016 was maintained in Q2 amid a challenging global backdrop. Q2 sales grew at a modest 2%, bringing the H1 performance to 3% (€17,188m). Wines & spirits outperformed with a 7% surge to reach €2,056m, boosted by the strong momentum in cognac and spirits (+13% in volume and +10% in value). The core business retreated slightly by 1% to €5,933m despite the good progression of the main brands. All other segments experienced healthy growth (4-5%) with a marked outperformance in perfumes and cosmetics displaying an organic growth of 8%. Watches showed a strong resilience compared to the market, growing at 4% to reach €1,609m. The operating profit remained flat at €2,959m, pulled down by the deteriorating profitability of fashion & leather products, the main contributor to margins, and selective retail. The latter reported a 5% dwindling operating profit to €410m while the core business posted 2% decrease to €1,630m. Wines & spirits impressed with a 17% surge in operating profit to reach €565m. The group’s net profit benefited from lighter currency hedging costs and fewer financial expenses to reach €1,718m (+8%). Geographically, the US market experienced an impressive growth in both quarters bringing the H1 performance to 7% (organic). The market accounts for 26% of total sales. The Asian market (excl. Japan) reported a favourable momentum in Q2 increasing by 3% (-2% in Q1), although sales in Japan turned down (-5%) after a rise of 6% in Q1. Asia is still the main contributor to sales, accounting for 35%, of which 7% in Japan. Europe’s performance slowed down to 3% in Q2, i.e. growth of 5% in the first six months. Its contribution was reduced to 27% of which 10% in the home market. The strength of the financial structure was confirmed again with a drop in net debt of 12% yoy (€5,303m). Gearing was reduced to 16.9% vs. 19.8% a year earlier. The operating cash flow was consolidated from €1,494m in H1 15 to €1,632m in H1 16. The half year FCF gained €83m to reach €761m. An interim dividend of €1.4 will be paid in December 2016.
Healthy growth in Q1
13 Apr 16
LVMH experienced a rather shy quarter marked by the lacklustre demand for luxury fashion goods. Sales increased by 4%, of which organic growth of 3%, to reach €8,620m. Perfumes & Cosmetics outperformed with 9% lfl growth (€1,213m). Watches & Jewellery did better than the market and surged by 7% to €774m. The Wines & Spirits division grew by 6%, to €1,033m. The group’s performance was pulled down by the poor growth posted by the two largest contributors to sales as the fashion segment recorded flat sales at €2,965m and selective retail increased by 4% to €2,747m. Structural growth was nil for all segments. Geographically, LVMH experienced healthy growth (6-7%) in all regions except for Asia which retreated by 2% on an lfl basis. This latter accounted for 37% of Q1 sales compared to 26% in Europe (9% in France) and 25% in the USA.
FY15 results, beyond Chinese worries
04 Feb 16
LVMH outperformed all expectations posting 16% FY15 sales’ growth within a general economic slowdown, to €35.7bn. The organic growth was limited to 6% which is a strong figure in an industry expected to slowdown. The revenues benefited from the positive forex impact and the strengthening US$, as 32% of 2015 sales are invoiced in $. The underlying operating profit was up by 16%, worth €6.6bn, generating a net profit of €3,573m, i.e. 20% increase on a constant base. The selective retail impressed with 18% sales’ rise to €11.2bn boosted by an exceptional progress of Sephora. The core business, Fashion and leather goods grew by 14%. All segments posted significant profit growths pulled up by a 19% increase for Wines & Spirits and 10% for Fashion goods. The financial structure strengthened with ballooning FCF up by 30% and net debt decreasing by 12%. The proposed annual dividend is at €3.55, up by 11% compared to 2014.
Panmure Morning Note 01-12-16
01 Dec 16
Consistent with the FY16 trading update/pre-close on September 14, today’s FY16 results are in line with our and consensus underlying PBT expectations of £12.5m (+22.5% YoY). The total FY16 dividend is up 36%, covered 3.4x, whilst net cash is £6.9m (+53%). FY16 represented another good year of execution, and FY17 has started well. The company's business mix is now more diverse across geographies (International accounted for 26% of total sales vs 21% in FY15) and we see CCT’s increasing diversity in retail distribution as both a further risk-mitigation and opportunity driver. We make no changes to our FY17 and FY18 PBT forecasts of £13.5m and £14.5m (albeit, we make some changes to the constituent parts) and introduce a FY19 PBT of £15.5m. We maintain our BUY and TP of 635p.
Strong H2 expected
30 Nov 16
H1 results were in line with expectations with PBT of £9.0m, EPS of 9.9p and DPS of 7.2p. The NAV / share is 253p. We expect the company to have a strong H2 based on its forward sales position and the timing of developments coming through. Telford has a strong balance sheet, a large development pipeline and impressive forward sales position, as well as good levels of demand for its product and geography from a diverse group of buyers. No change to forecasts at this stage.
US$500m to be invested in start-ups by 2026
28 Nov 16
BMW started a venture capital fund in 2011 with an initial investment of $100m. This is now to be expanded to $500m within the next ten years. The fund, called ‘BMW i Ventures’, has been moved from NYC to Mountain View, CA, to have closer access to the technology developed in the Silicon Valley. The investment focus will be on Enabling Technology and Digital Vehicle Technology, Mobility and Digital Services, Customer Experience, and Advanced Production Technology. According to BMW, the fund has closed 15 deals in ‘mobility-related’ technologies so far. It typically acquires a minority stake in start-ups which allows it to gain access to external innovations (so-called ‘outside-in’) that secure the company’s role as a technology pioneer. Simultaneously, it provides support for start-ups by offering internal resources (so-called ‘inside-out’) such as technical expertise and access to its own network of an established car producer.
N+1 Singer - Morning Song 29-11-2016
29 Nov 16
Vp has reported another impressive set of interims, confirming strong growth in most markets and a positive outlook. Recent acquisitions are bedding in well and the full year outturn is set to exceed previous expectations (5%/6% EPS upgrades in FY17/FY18). The recent Capital Markets Day provided a reminder of Vp’s qualities (specialist focus, high returns, strong cash generation) and its growth potential, which in our view are not reflected in a modest <11x P/E rating. We firmly believe the shares are due a re-rating and see intrinsic value in excess of 800p.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Small Cap Breakfast
29 Nov 16
Asia Pacific Investment Partner - the research-driven emerging and frontier markets real estate development business intends to float on AIM and conduct a placing in December RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.