LVMH Moët Hennessy - Louis Vuitton

Ladies and gentlemen, good afternoon and welcome to today's conference call. I'm Rodolphe Feuzin, Director of Financial Communications at LVMH, and with me is Jean-Jacques Guioni, our Chief Financial Officer. Jean-Jacques will start by taking you through the key highlights of the first half of 2024. I will then comment the performance by business group, after which Jean-Jacques will conclude with more detailed comments on the group's financial performance. After these remarks, we'll be happy to take your questions. As a reminder, certain information to be discussed on today's call is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on slide two of our presentation. Turning now to our announcement, our release was issued a short while ago in both French and English and is available on the LVMH website, lvmh.com, as are the slides for today's call. Jean-Jacques will now make a few opening remarks.

Thank you, Rodolphe. We begin on slide three. And for the first half of 2024, LVMH showed good results, delivering €41.7 billion in revenues, up 2% year on year, obviously on an organic basis. This resulted in profit from recurring operations of 10.7 billion, down 8% versus the first half of 2023, including a minus 5 currency impact. The operating margin reached 25.6, significantly exceeding pre-COVID levels, and free cash flow bounced back 74% to a more normative level of 3 billion euro. The gearing is consistent with habitual levels at 18%. Turning to slide four, you can see some of the key trends and highlights for the group and its divisions. The main points to bear in mind are on the negative side, continued economic and geopolitical uncertainties, are still impacting certain businesses, notably wine and spirit, although there are signs of the situation improving for cognac in the US on the positive side. I would mention the continuation of the group's organic revenue growth with consistent trends throughout the first half. Good results in fashion and leather goods, where operating margins remain at an exceptional level. Continued growth from the Chinese clientele and double-digit revenue growth at Sephora on very demanding comps. Rodolphe will now comment on the numbers by business groups.

Thank you, Jean-Jacques, and we'll start as usual with wines and spirits. As slide 7 shows, the wines and spirits business group delivered €2.8 billion in revenue in the first half of 2024. This represents a 9% decrease on an organic basis versus the same period last year, improving sequentially in the second quarter, and a 12% decrease on a reported basis after taking into account a negative 4% currency impact and a positive 1% perimeter impact related to the acquisition of Minuti. Profit from recurring operations reached 777 million euros, down 6% year-on-year, with an operating margin for the division of 27.7 in the first half. Broken down, champagne and wines generated 1.4 billion euros of revenue in the first half, representing an 8% decrease on an organic basis. and a 12% decrease on a reported basis after taking into account a negative 7% currency impact, which was magnified by the devaluation of the Argentinian peso and a positive 3% perimeter impact. cognac and spirits also delivered 1.4 billion euro of revenue in the first half representing a 10 percent decrease on an organic basis and a 12 percent decrease on a reported basis after taking into account a negative two percent currency impact On slide eight, the first half performance of Champagne & Wines was impacted by weak demand for Champagne in our key markets, notably in Europe, although revenue for Champagne remained significantly above pre-COVID levels in both value and volumes. Meanwhile, Château Lesclans pursued its international development and enjoyed strong revenue growth, particularly in the US, whilst we consolidated the prestigious Château Minuti for the first time. In cognac and spirits, Hennessy returned to growth in the US in the second quarter as depletions stabilized and retailers had to reorder despite cautious inventory management. Against this backdrop, Hennessy gained market share in the first half of the year. The Chinese market for cognac remains challenging. Demand is soft and retailers are cautious. However, Hennessy is keen to control inventories and selling was, as a result, significantly below depletions. Finally, in spirits, Belvedere's high-end vodka, Belvedere 10, saw a promising start, while Glamour NG enlarged its product range with a new triple cask reserve whiskey. Turning to fashion and leather goods, on slide 10, Revenue reached €20.8 billion for the first half of 2024, up 1% on an organic basis and down 2% on a reported basis after taking into account a negative 3% currency impact. Profit from operations reached 8.1 billion euros, down 6% year-on-year. The main drivers of this decline are continued investments in distribution, which were partially offset by communication expenses, and more importantly, significant direct and indirect impact from currencies. Operating margins remained at an exceptionally high level of 38.8% in the first half. Moving to slide 11, which details performance by brand, Louis Vuitton once again had a good start to the year, marked by several high-profile events. Nicolas Ghesquière celebrated a decade of visionary designs at Louis Vuitton with a show in the Courcaille du Louvre, where he presented his very first collection in March 2014, followed in April by a pre-fall show in Shanghai, and in May by the cruise show held in Parc Güell in Barcelona. Pharrell Williams celebrated Louis Vuitton's spirit of travel with an excellent show at UNESCO's headquarters in Paris entitled The World is Yours. The Maison unveiled the latest chapter of its iconic core values campaign, with yet another memorable image featuring legendary tennis champions Roger Federer and Rafael Nadal hiking in the Dolomites. And as always, Louis Vuitton continued its constant innovation in Leathergoats, including the low-key bag, and filed Williams' reinterpretation of the mythical Speedy bag with the Speedy P9. Christian Dior continued to show remarkable creative momentum, driven by the desirability of collections designed by Maria Grazia Chiuri and Kim Jones, whose fashion shows achieved record visibility. The women's collections shown in the magnificent garden of German Castle in Scotland and the Brooklyn Museum, both receiving an extraordinary welcome. Victoire de Castellane unveiled a dazzling new high jewelry collection called Diorama, which reinterprets the emblematic toile de jouy. Finally, a new TV series, The New Look, showcased the origins and rise of Christian Dior as one of the most influential couture maisons. To give a bit of highlights of happenings at other brands in the first half, Celine continued to unveil new women's and men's collections and saw a strong growth in accessories. Jonathan Anderson continued to showcase his bold creativity at Loewe, which celebrated its heritage, Spanish roots, and 178 years of commitment to craftsmanship with an exhibition in Shanghai called Crafted World. Fendi launched a collection of seven exclusive fragrances, evocative of the origins and places dear to the Fendi family. Loro Piana continued to expand in leather goods, and for those of you unwilling to compromise on comfort or elegance, I encourage you to discover the new Into the Wild collection, specifically designed for outdoor activities. Rimova revived the Hammerschlag collection and communicated on a lifetime warranty, whilst Berluti unveiled its designs for Team France's uniform at the opening ceremony of the Olympic and Paralympic Games, which we all look forward to starting in just a few days. Moving now to perfumes and cosmetics, on slide 13, revenue rose to €4.1 billion for the first half, reflecting the ongoing success of its flagship lines as well as its selective distribution policy. Revenue increased by 6% organic and 3% reported after taking into account a negative 3% currency impact. Profit from recurring operations remained stable year on year at 445 million euros and the operating margin was broadly unchanged at 10.8%. On slide 14, looking at some brand highlights specifically, Parfum Question Dior continued to enjoy an excellent performance in all product categories, thanks to the ongoing success of its iconic franchises, including Sauvage, J'adore, and a contemporary reinterpretation of Miss Dior in fragrances, as well as Dior Addict, Forever, and the relaunch of Rouge Dior in makeup. The brand also continued to grow in non-Japan Asia, supported by the success of the Prestige and Capture skincare lines, and reinforced its leadership in Japan, Europe and the Middle East. Among other brands in this group, we again saw good momentum driven by continued innovation across all product categories. Guerlain was buoyed by the strong performance of its fragrance innovation, in particular within the Haute Parfumerie line, L'Art et la Matière, as well as the Aqua Allegoria range. Parfum Givenchy saw market share gains for L'Interdit and further success in its star makeup line, Prisme Libre. and Fenty Beauty launched a new range of hair care products and expanded its retail presence in China. now moving on to watches and jewelry on slide 16 revenue for the first half of 24 came to 5.2 billion euros down three percent organic and five percent reported after taking into account a negative three percent currency impact and a positive one percent perimeter impact related to the first integration of jewelry producer pedemonte Profit from recurring operations came to 877 million euros in the first half, down 19% year on year, including a significant negative currency impact. Turning to slide 17, we outlined various initiatives exemplifying our watches and jewelry maison's focus on high quality, starting with Tiffany, which accentuated its strategic focus on its iconic lines, Tiffany T, lock, hardware, and not, with a new marketing campaign called With Love Since 1837. Tiffany was equally active on the innovation front with a new Titan by Pharrell Williams collection, whose striking contemporary design received an excellent response. The brand kept reinforcing its legitimacy in high jewelry with Celeste unveiled in Beverly Hills in May, and displayed its 187 years of craftsmanship and creativity in exhibition in Tokyo called Tiffany Wonder. Tiffany also progressed rapidly on a store renovation program with nearly 30 projects in the first half of the year and one quarter of the store network now renovated. Borgri celebrated a 140-year-long legacy of endless renewal with its new Eterna high jewelry collection in Rome, featuring the 140-carat Eterna necklace adorned with seven flawless diamond drops cut from the same rough stone and a new communication campaign aptly named Eternally Reborned. Borgry also celebrated the 25th anniversary of the B01 collection and reiterated its 15-year partnership with Save the Children. Finally, Chaumet unveiled the medals for the Paris 2024 Olympic and Paralympic Games, created by its design studio and adorned with fragments of our Iron Lady, the Eiffel Tower. In watches, Tag Heuer strengthened its ties with the world of sports, in particular motorsports, with the successful relaunch of its 1986 classic, the Formula One collection. Tag Heuer, Hublot and Zenith also unveiled many new designs at the RVMH Watch Week held in March in Miami, which has become a leading event on the international watch scene. Lastly, at the end of June, LVMH announced the acquisition of Suiza, the owner of the prestigious Swiss manufacturer of high-end clocks, Lepe 1839. Turning now to our last business group, Selective Retailing, on slide 19, revenue rose by 8.6 billion euros, reflecting an 8% increase on an organic basis and a 3% increase on a reported basis, after taking into account a negative 1% currency impact and a negative 3% perimeter impact related to the exit of Starboard. Profit from recurring operations reached 785 million euros in the first half, an increase of 7% year-on-year, with a broadly stable operating margin of 9.1%. Moving to slide 20, Sephora had an excellent first half of the year, achieving record sales and profits, as well as significant market share gains, notably in the US, Canada, France, and the Middle East. And Sephora also continued to invest in customer experience with an ongoing store renovation program and flagship openings in Florence and Manchester. DFS continued to be affected by the uneven recovery of global travel, including very gradual return of tourists to Europe, Hong Kong and Macau, where revenue is still below 2019 levels. However, DFS enjoys strong performance in Japan and at US airports, and work on the new Yalong Bay Galleria project in Sanya, on the island of Hainan, has officially kicked in. Le Bon Marché continued to grow, driven by the department store's unique differentiation strategy and exciting program of events. This ends the business group presentation, and I'll hand you back to Jean-Jacques, who will go through the main figures of the semester.