LVMH(US:LVMUY)2021-07-27 05:15Financial Data and Key Metrics Changes - The company reported a 53% rise in organic revenue compared to H1 2020 and an 11% rise compared to H1 2019, primarily driven by the Fashion & Leather and Wines & Spirits businesses [43][44][46] - Profit from recurring operations increased by 44% to €7.6 billion, with operating margins reaching 26.6%, up 5.5 points compared to H1 2019 [47][49] - The group's share of net profit reached €5.3 billion, marking a record for the first half [48] Business Line Data and Key Metrics Changes - Wines & Spirits: Revenue reached €2.7 billion, a 44% increase on an organic basis versus H1 2020, and a 12% rise compared to H1 2019 [6][14] - Fashion & Leather Goods: Revenue was €13.9 billion, an 81% increase on an organic basis versus H1 2020, and a 38% rise compared to H1 2019 [14][15] - Perfumes & Cosmetics: Revenue rose to €3 billion, a 37% increase on an organic basis versus H1 2020, but a slight decline of 3% compared to H1 2019 [23][24] - Watches & Jewelry: Revenue increased to €4 billion, a 71% organic revenue increase versus H1 2020, with profit from recurring operations rising to €794 million [30][31] - Selective Retailing: Revenues rose to €5 billion, a 12% increase on an organic basis versus the same period last year [36][37] Market Data and Key Metrics Changes - The geographic performance showed positive growth across all regions compared to 2020, with notable improvements driven by the U.S. and Asia [45] - The company experienced strong growth with American clients, while the growth with Chinese clients was in line with overall brand growth [62][63] Company Strategy and Development Direction - The integration of Tiffany is progressing well, contributing positively to the Watches & Jewelry segment [5][31] - The company plans to continue investing in marketing and distribution strategies, particularly in the second half of the year [70][71] - There is a focus on maintaining high margins while increasing the cost base to support growth initiatives [70][74] Management's Comments on Operating Environment and Future Outlook - Management noted that demand remains very strong across all brands, with no signs of a change in consumer behavior, particularly in China [64][65] - The company is optimistic about the second half of the year, despite potential challenges in certain segments like DFS and Belmond [81][82] Other Important Information - The company announced an interim dividend of €3 per share to be paid on December 2, 2021 [54] - The net debt reached €15.3 billion at the end of June, primarily due to the acquisition of Tiffany [55] Q&A Session All Questions and Answers Question: Product availability and constraints in the business - Management indicated that while there are some production capacity constraints, particularly in the Wines & Spirits division, overall operations are running smoothly without major bottlenecks [60][61] Question: Growth by nationality and recovery patterns - The growth with Chinese clients was strong but consistent with overall brand growth, with significant advances also seen with American clients [62][63] Question: Reinvestment readiness and profitability outlook - Management confirmed readiness to reinvest in H2, with expectations of maintaining margins despite increased costs for marketing and distribution [70][71] Question: Profit trajectory in the second half - The aim for DFS is to break even, but challenges remain due to limited recovery in certain markets [81][82] Question: Sephora's profitability and concession model - Sephora was profitable last year, and the concession model is not feasible within its store format [84][87] Question: Tiffany's performance and management changes - The strong performance at Tiffany is attributed to both favorable market dynamics and changes implemented by the new management team [85]