LVMH Moët Hennessy - Louis Vuitton, Société Européenne

Business Description

LVMH Moët Hennessy - Louis Vuitton, Société Européenne operates as a luxury goods company worldwide. The company offers champagnes, wines, and spirits under the Clos des Lambrays, Château d'Yquem, Dom Pérignon, Ruinart, Moët & Chandon, Hennessy, Veuve Clicquot, Ardbeg, Château Cheval Blanc, Glenmorangie, Krug, Mercier, Chandon, Cape Mentelle, Newton Vineyard, Cloudy Bay, Belvedere, Terrazas de los Andes, Bodega Numanthia, Cheval des Andes, Woodinville, Ao Yun, Clos19, and Volcan de mi Tierra brands. It also provides fashion and leather products under the Berluti, Celine, Christian Dior, Emilio Pucci, FENDI, Givenchy, Kenzo, Loewe, Loro Piana, Louis Vuitton, Marc Jacobs, Moynat, Patou, and RIMOWA brands. In addition, the company offers perfumes and cosmetics under the Acqua di Parma, Benefit Cosmetics, Cha Ling, Fenty Beauty by Rihanna, Fresh, Givenchy Parfums, Guerlain, KVD Beauty, Kenzo Parfums, Maison Francis Kurkdjian, Make Up For Ever, Marc Jacobs Beauty, Officine Universelle Buly, Parfums Christian Dior, and Perfumes Loewe brands; watches and jewelry under the Bulgari, Chaumet, Fred, Hublot, Repossi, TAG Heuer, Tiffany & Co., and Zenith brands; and custom-designed yachts under the Feadship brand name, as well as designs and builds luxury yachts under the Royal Van Lent brand. Further, it provides daily newspapers under the Les Échos brand; Belmond, a luxury tourism service; home other activities under the Belmond, Cheval Blanc, Connaissance des Arts, Cova, Investir, Jardin d'Acclimatation, La Samaritaine, Le Parisien, and Radio Classique brands; and selective retailing products under the DFS, La Grande Epicerie de Paris, Le Bon Marché Rive Gauche, Sephora, and Starboard Cruise Services brands, as well as operates Jardin d'Acclimatation, a leisure and amusement park. The company operates 5,556 stores. LVMH Moët Hennessy - Louis Vuitton, Société Européenne was incorporated in 1923 and is headquartered in Paris, France.

Key Professionals

Name	Title
Arnault, Bernard	Chairman & CEO
Guiony, Jean-Jacques	Chief Financial Officer
Kuhn, Bernard	General Counsel
Bouillonnec, Yann	Vice President of Sales
Gaemperle, Chantal	Group Executive Vice President of Human Resources & Synergies
Arnault, Antoine	Group Chief Image & Environment Officer and Director
Arnault, Frederic	Chief Executive Officer of TAG Heuer
Bazire, Nicolas	Senior VP of Development & Acquisitions and Director
Beaufils, Benjamin	President of North American Operations
Belloni, Antonio	Group MD & Director
Bianchi, Stephane	Head of LVHM's Watch & Jewelry Unit
Das, Ipsita	Managing Director of India
de Lapuente, Christopher	Chairman & CEO of Selective Retailing Division
Guerra, Andrea	Head of Hospitality & Restaurant Business
Mukherji, Shantanu	Managing Director od L Catterton
Rogers, Ian	Chief Digital Officer
Voisin, Jean-Baptiste	Chief Strategy Officer
Beccari, Pietro	Chairman & CEO of Louis Vuitton
Boillot, Laurent	CEO & President of Guerlain
Brocart, Sophie	Chief Executive Officer of Jean Patou
Jamet, Marc-Antoine	General Secretary
Schaus, Philippe Paul Auguste	Chief Executive Officer of Moët Hennessy - Wines & Spirits Division
Toledano, Sidney	Chairman and CEO of the Fashion Group
Hollis, Christopher	Director of Financial Communications
Stalla-Bourdillon, Bertrand	Group Vice President of Retail Development

Board Members

Name	Title	Type	Tenure
			Start date	End date
Arnault, Bernard	Chairman & CEO	Internal	1988	Present
Arnault, Antoine	Group Chief Image & Environment Officer and Director	Internal	2006	Present
Bazire, Nicolas	Senior VP of Development & Acquisitions and Director	Internal	1999	Present
Belloni, Antonio	Group MD & Director	Internal	2002	Present
Beccari, Pietro	Chairman & CEO of Louis Vuitton	Internal	2018	Present
Toledano, Sidney	Chairman and CEO of the Fashion Group	Internal	2018	Present
de Silguy, Yves-Thibault	Independent Director	External	2009	Present
Gaymard, Clara	Independent Director	External	2016	Present
Valla, Natacha	Independent Director	External	2020	Present
de Croisset, Charles	Lead Independent Director	External	2008	Present
Arthus-Bertrand, Yann	Member of Advisory Board	External	2019	Present
Aumont, Dominique	Employees Representing Director	External	2020	Present
Belloeil-Melkin, Marie-Véronique	Employees Representative Director	External	2020	Present
Chassat, Sophie	Independent Director	External	2018	Present
de Chalon, Marie-Laure Sauty	Independent Director	External	2014	Present
Della Valle, Diego	Member of Advisory Board	External	2002	Present
Gancia, Delphine Arnault	Director	External	2020	Present
Kravis L.L.D., Marie- Josée	Independent Director	External	2011	Present
Mignon, Laurent	Independent Director	External	2023	Present
Powell KCMG, Charles David	Member of Advisory Board	External	2020	Present
Védrine, M. Hubert	Independent Director	External	2004	Present

Committees

Committee	Name	Title
Audit Committee	Gaymard, Clara	Independent Director
	de Chalon, Marie-Laure S.	Independent Director
	de Croisset, Charles	Lead Independent Director
	de Silguy, Yves-Thibault	Independent Director
Compensation Committee	Valla, Natacha	Independent Director
	Chassat, Sophie	Independent Director
	de Croisset, Charles	Lead Independent Director
	Kravis, Marie- J.	Independent Director
Corporate Governance Committee	Valla, Natacha	Independent Director
	Chassat, Sophie	Independent Director
	de Croisset, Charles	Lead Independent Director
	Kravis, Marie- J.	Independent Director
Other Committee	de Silguy, Yves-Thibault	Independent Director
	de Chalon, Marie-Laure S.	Independent Director
	Gancia, Delphine A.	Director
	Védrine, M. H.	Independent Director

ESG - Materiality Matrix

Particulars	Wines and Spirits	Fashion andLeather Goods	Perfumes and Cosmetics	Watches and Jewelry	SelectiveRetailing
State of energy resources and climate change	-Grape growing and yield -Packaging production -Distillation -Transportation of products -Soil erosion	-Store lighting, air conditioning and location -Transportation of products and carbon taxes -Production of resources needed to manufacture products: -Plant fibers used for textiles (cotton, etc.) Leather, including exotic leather, Fur, Wool -Customer expectations in relation to more sustainable products -Renewable energy costs	-Packaging production -Store lighting, air conditioning and location -Transportation of products and carbon taxes -Customer expectations in relation to more sustainable products -Renewable energy costs	-Store lighting, air conditioning and location -Renewable energy costs	-Store lighting, air conditioning and location -Transportation of products -Renewable energy costs
Impact on water resources	-Water consumption (vineyard irrigation in Australia, New Zealand, Argentina and California) -Production of effluents containing organic matter during winemaking and distillation	-Water consumption (crocodilian farms and tanneries) -Production Ofeffluents containing organic matter	- Water consumption (production and transformation of raw materials)	-Water consumption during the extraction of mineral resources needed to manufacture products -Production of effluents containing mineral matter
Impact on ecosystems (including deforestation and desertification) and depletion of natural resources	-Production of plant resources needed for other production processes (grape vines, barley, rye, etc.)' - Protecting biodiversity	-Production of resources needed to manufacture products: - Plantfibers used for textiles (cotton, etc.) Leather, including exotic leather Fur, Wool, Eider down -Farming and trapping practices concerning raw materials of animal origin Protecting biodiversity	-Production of plant resources needed to manufacture products (rose, jasmine, etc.) -Protecting biodiversity	-Extraction of resources needed to manufacture products: - Gems and precious metals -Exotic leather -Farming and trapping practices concerning raw materials of animal origin -Protecting biodiversity
Waste production	-Production of residues from winemaking or distillation processes and packaging waste -Circular economy	-Unused raw materials, obsolete and unsold products, window displays and events -Customer expectations in relation to more sustainable products -Circular economy	-Point-of-sale advertising, packaging waste, and obsolete and unsold products Circular economy	-Scrap metal - Circular economy	-Point-of-sale advertising, packaging waste, and obsolete and unsold products -Circular economy

Financial Highlights

Key Consolidated Data (EUR Millions)	2020	2021	2022
Revenue	44,651	64,215	79,184
Profit from recurring operations	8,305	17,151	21,055
Net profit	4,955	12,698	14,751
Net profit, Group share	4,702	12,036	14,084
Cash from operations before changes in working capital	13,997	22,621	26770
Operating investment	2.478	2,664	4,969
Operating free cash flow	6,117	13,531	10,113
Total equity (a)	38,829	48,909	56,604
Net financial debt (b)	4,241	9,607	9201
Adjusted net financial debt/Equity ratio	10.9%	19.60%	14.30%

(a) Including minority interests

(b) Excluding “Lease liabilities” and “Purchase commitments for minority interests’ shares” included in “Other non-current liabilities”

Business Group - Highlights

Revenue by business group (EUR Millions)	2020	2021	2022
Wines and Spirits	4,755	5,974	7099
Fashion and Leather Goods	21,207	30,896	38,648
Perfumes and Cosmetics	5,248	6,608	7722
Watches and Jewelry	3,356	8,964	10,581
Selective Retailing	10,155	11,754	14,852
Other activities and eliminations	-70	19	281
Total	44,651	64,215	79,184

Profit from recurring operations by business group(EUR millions)	2020	2021	2022
Wines and Spirits	1,388	1,863	2,155
Fashion and Leather Goods	7,188	12,842	15,709
Perfumes and Cosmetics	80	684	660
Watches and Jewelry	302	1,679	2,017
Selective Retailing	-203	534	788
Other activities and eliminations	-450	-451	-274
Total	8,305	17,151	21,055

Financial Statements

LVMH's Annual Income Statement

EUR €, Millions, except for earnings per share data	2020	2021	2022
Period Ending:	31-Dec	31-Dec	31-Dec
Revenue	44,651	64,215	79,184
Revenue Growth (year to year)	-16.80%	43.82%	23.31%
Cost of Goods and Services	-15,871	-20,355	-24,988
Gross Margin	28,780	43,860	54,196
Marketing and selling expenses	-16,792	-22,308	-28,151
General and administrative expenses	-3,641	-4,414	-5,027
Income/(Loss) from joint ventures	-42	13	37
Profit from recurring operations	8,305	17,151	21,055
Other operating income and expenses	-333	4	-54
Operating profit	7,972	17,155	21,001
Cost of net financial debt	-35	41	-17
Interest of lease liabilities	-281	-242	-254
Other financial income and expenses	-292	254	-617
Net financial income/(expense)	-608	53	-888
Income Tax Expense	-2,409	-4,510	-5,362
Net Income to Company	4,955	12,698	14,751
Minority Interest in Earnings	-253	-662	-667
Net Income to Stockholders	4,702	12,036	14,084
Basic EPS, (EUR)	9.34	23.90	28.05
Basic Weighted Average Shares Outstanding	503,679,272	503,627,708	502,120,694
Diluted EPS (EUR)	9.33	23.89	28.03
Diluted Weighted Average Shares Outstanding	504,210,133	503,895,592	502,480,100
EBITDA	13,780	23,280	26,720

LVMH's Annual Balance Sheet

Year end date (31/12)	2020	2021	2022
Assets (EUR millions)
Brands and other intangible assets	17,012	24,551	25,432
Goodwill	16,042	25,904	24,782
Property, plant and equipment	18,224	20,193	23,055
Right-of-use assets	12,521	13,705	14,615
Investment in joint ventures and associates	990	1,084	1,066
Non-current available for sale financial assets	739	1,363	1,109
Other non-current assets	845	1,054	1,186
Deferred tax	2,325	3,156	3,661
Non-current Assets	68,698	91,010	94,906
Inventories and work in progress	13,016	16,549	20,319
Trade accounts receivable	2,756	3,787	4,258
Income taxes	392	338	375
Other current assets	3,846	5,606	7,488
Cash and cash equivalents	19,963	8,021	7,300
Current Assets	39,973	34,301	39,740
Total Assets	108,671	125,311	134,646
Liabilities and Equities (EUR millions)
Long-term borrowing	14,065	12,165	10,380
Non-current lease liabilities	10,665	11,887	12,776
Non-current provisions and other liabilities	3,322	3,980	3,902
Deferred tax	5,481	6,704	6,952
Purchase commitments for minority interests' shares	10,991	13,677	12,489
Non-current liabilities	44,524	48,413	46,499
Short-term borrowing	10,638	8,075	9,359
Current lease liabilities	2,163	2,387	2,632
Trade accounts receivable	5,098	7,086	8,788
Income taxes	721	1,267	1,211
Current Provisions and other liabilities	6,698	9,174	9,553
Current Liabilities	25,318	27,989	31,543
Total Liabilities	69,842	76,402	78,042
Equity, Group Share	37,412	47,119	55,111
Minority Interests	1,417	1,790	1,493
Total Equity	38,829	48,909	56,604
Total liabilities and Equity	108,671	125,311	134,646
Total Debt	37,531	34,514	35,147

LVMH's Cash Flow Statement

EUR €, Millions	2020	2021	2022
Cash flow operating activities
Operating profits	7,972	17,155	21,001
Income/loss and dividends received from joint ventures and associates	64	41	26
Net increase in depreciation, amortisation and provisions	3,478	3,139	3,219
Depreciation of right-of-use assets	2,572	2,691	3,007
Other adjustments and computed expemses	-89	-405	-483
Cash from operations before changes in working capital	13,997	22,621	26,770
Cost of net financial debt: interest paid	-58	71	-74
Lease liabilites: interest paid	-290	-231	-240
Tax paid	-2,385	-4,239	-5,604
Change in working capital	-367	426	-3,019
Net cash from/ (used in) operating activities	10,897	18,648	17,833
Cash flow investing activities
Operating investments	-2,478	-2,664	-4,969
Purchase and proceeds from sale of consolidated investments	-536	-13,226	-809
Dividends received	12	10	7
Tax paid relates to non-current available for sale financial assets	-	-	-
Purchase and proceeds from sale of non-current available for sale financial assets	63	-99	-149
Net cash from/ (used in) investing activities	-2,939	-15,979	-5,920
Cash flow financing activities
Interim and final dividends paid	-2,799	-4,161	-6,774
Purchase and proceeds from sale of minority interests	-67	-435	-351
Other equity-related transaction	27	-552	-1,604
Proceeds from borrowings	17,499	251	3,774
Repayment of borrowing	-5,024	-6,413	-3,891
Repayment of lease liabilities	-2,302	-2,453	-2,751
Purchase and proceeds from sale of current available for sale financial assets	69	-1,393	-1,088
Net cash from/ (used in) financing activities	7,403	-15,156	-12,685
Effect of exchange rate changes	-1,052	498	55
Net increase/ decrease in cash and cash equivalents	18,773	-43,124	-717
Cash and cash equivalents at the beginning of period	5,497	19,806	7,817
Cash and cash equivalents at end of period	19,806	7,817	7,100
Total tax paid	-2,501	-4,464	-5,933
Alternative performance measure
EUR €, Millions	2020	2021	2022
Net cash from operating activities	10,897	18,648	17,833
Operating investments	-2,478	-2,664	-4,969
Repayment of lease liabilities	-2,302	-2,453	-2,751
Operating free cash flow	6,117	13,531	10,113

Risks

Investing in any company, including LVMH Moët Hennessy, carries various risk factors. These risks should be carefully considered by potential investors before making a decision. Some risks specifically associated with LVMH Moët Hennessy might include:

1. Economic Fluctuations: As a luxury goods company, LVMH's success is strongly correlated with the global economy's performance. During periods of economic downturn, consumer spending, especially on luxury items, often decreases. This could negatively impact LVMH's revenues and profits.
2. Foreign Exchange Risk: Since LVMH operates worldwide, it's exposed to fluctuations in various currencies. If the euro strengthens against other currencies, it could reduce the company's profits when overseas earnings are converted back into euros.
3. Fashion Trends and Consumer Preferences: The fashion industry is notably fickle, with trends and consumer tastes constantly changing. If LVMH fails to anticipate or adapt to these changes, its brands might lose popularity, impacting the company's financial performance.
4. Regulatory Risks: As a global company, LVMH must comply with a wide array of regulations and laws across multiple jurisdictions. Changes in these regulations, including import/export laws, environmental laws, and taxation policies, could affect its operations.
5. Brand Reputation: The value of LVMH's brands is one of its key assets. Any events that damage these brands' reputations – such as product quality issues, scandals involving brand ambassadors, or negative environmental or social impacts – could harm LVMH's business.
6. Competition: The luxury goods market is highly competitive. LVMH competes with other large luxury groups, as well as smaller, more nimble brands and emerging digital-native brands. If LVMH can't maintain its competitive advantage, it could lose market share.
7. Supply Chain Disruptions: LVMH relies on a complex global supply chain. Disruptions to this chain – such as those caused by natural disasters, geopolitical events, or pandemics – could impact its ability to produce and distribute its products.
8. Intellectual Property Risks: As with many companies in the fashion industry, LVMH faces risks from counterfeiting and other intellectual property violations, which could harm its brands and its financial performance.