LVMH(US:LVMUY)2022-01-28 01:33Financial Data and Key Metrics Changes - In 2021, the company achieved revenue of nearly €64 billion and profit from recurring operations exceeding €17 billion, marking a significant recovery from the pandemic-affected year of 2020 [3][37] - Operating free cash flow surpassed €13 billion, with an operating margin of 26% [37][55] - The company reported a net profit of €12 billion, up 68% compared to 2019, indicating a strong financial performance [55] Business Line Data and Key Metrics Changes - Fashion & Leather Goods experienced remarkable growth, with a 42% increase compared to 2019 and 51% growth in Q4 alone [41][49] - Wines & Spirits saw almost double-digit growth, driven by strong demand for champagne and cognac, particularly in the U.S. and China [49] - Perfumes & Cosmetics returned to pre-pandemic levels, while Watches & Jewelry showed a 7% organic growth compared to 2019, boosted by the integration of Tiffany [50][56] Market Data and Key Metrics Changes - The U.S. market accounted for 26% of sales, with a 25% increase compared to 2019, while Asia represented 35% of sales, up five percentage points over two years [42][43] - Japan experienced an overall growth of 5% for the year, with significant acceleration in the second half [44] - Europe faced challenges, with a gradual recovery noted in Q4, but still below pre-crisis levels [46] Company Strategy and Development Direction - The company emphasizes a long-term view, focusing on brand desirability and customer relationships, particularly with local customers in the absence of international tourists [74][82] - There is a commitment to sustainability, with goals for recycling materials and biodiversity initiatives [7][8] - The company remains open to future acquisitions but is not in a rush, focusing on nurturing existing brands [87][89] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather inflationary pressures, citing flexibility in pricing and strong demand for products [33][34] - The outlook for 2022 appears promising, with growth trends continuing into January [32] - Concerns about inflation and supply chain issues were acknowledged, but management believes these challenges can be managed effectively [33][34] Other Important Information - The integration of Tiffany has been successful, contributing significantly to revenue and profit despite the flagship store being closed for renovations [23][94] - The company has made significant strides in corporate social responsibility, with a focus on employee well-being and diversity [6][7] Q&A Session Summary Question: Growth drivers in U.S. and European markets - Management noted that U.S. and European customers are becoming more selective, prioritizing brands that offer cultural value beyond fashion [72][74] Question: Sustainability of margin growth - Management indicated that current margin levels are expected to be sustainable moving forward [76] Question: Factors affecting Wines & Spirits margins - The cyclicality of demand and marketing expenses were cited as reasons for margin fluctuations in the Wines & Spirits segment [78] Question: Implications of China's market being closed - Management observed that Chinese customers are purchasing more domestically, even without international travel, indicating a shift in consumer behavior [81][82] Question: Concerns about price increases - Management acknowledged the need to balance price increases with demand, emphasizing that high-quality products can command higher prices [84][86] Question: Future acquisitions and brand management - Management stated that while they are open to acquisitions, they focus on nurturing existing brands and do not frequently dispose of them [88][89] Question: Impact of Virgil Abloh's passing - Management expressed that the loss of Virgil Abloh was a significant shock, and they are currently in mourning while considering future creative directions [90]