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LVMH results underline continued growth of luxury cosmetics

By Simon Pitman , 04-Feb-2013

LVMH, one of the world’s biggest  luxury cosmetics and fragrance player, has revealed continued market-leading growth for its final quarter and full year results, with the Christian Dior brand leading the way.

The company said that strong growth in all geographies, including Asia Pacific, Europe and the United States, had fuelled full year group net sales growth of 19 percent, to €28.1m ($38.1bn).

However, the overall growth did show signs of slowing down in the all-important fourth quarter, when revenues rose by 13 percent to reach €5.92bn. The company did point out that the comparable was strong in relation to the very strong growth recorded in the corresponding period of 2011.

Profit margins rise in line with sales growth

Profit from recurring operations during 2012 increased by 13 percent to €5. 9bn, which the company again said was a strong performance when compared to the significant growth in 2011. The current operating margin was 21 percent in 2012.

Bernard Arnault, Chairman and CEO of LVMH, pointed to the fact that the results had been a very strong again this year and said he expected the performance to continue into 2013 as the company focuses on its major brands

“In 2013, LVMH intends to further strengthen its global leadership position in high quality products by relying on its sound, long-term strategy," said Arnault.

Cosmetics and perfumes builds on previous year's growth

Looking at the performance of the company’s cosmetic and perfume division, the business has continued to build on strong growth from the previous financial year, with the Christian Dior fragrances being the main driving force in both the fourth quarter and full year 2012.

The performance of Parfums Christian Dior was driven by the flagship brands, including Miss Dior and J’adore, while Dior Addict Lipstick and the Prestige skin care lines were also singled out for their strong performance.

During 2012, the cosmetics and perfumes division saw net revenues grow by 13 percent to €3.6bn, which represented an increase of 8 percent in organic terms, while profit from recurring operations increased by 17 percent for the period.

Fourth quarter net sales increased by 13.7 percent, up from €0.87bn to €0.99bn, a figure that represented a slight uptick on the overall trend for the financial year.

Although the company did point out that the economic outlook is unfavorable for Europe in 2013, the company said that it maintains a forecast of continued ‘growth momentum’ during the year ahead.

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