By Cristina Roca

 

LVMH Moet Hennessy Louis Vuitton SE reported 2019 results on Tuesday after the Paris market closed. Here is what we watched:

 

REVENUE REVIEW: The luxury-goods giant said revenue was 15.27 billion euros ($16.82 billion) for the last quarter of the year, roughly in line with analysts' expectations of EUR15.21 billion, according to a FactSet estimate.

 

NET PROFIT REVIEW: Net profit for 2019 rose to EUR7.17 billion, a record high but slightly below a EUR7.32 billion consensus estimate provided by FactSet.

 

WHAT WE WATCHED:

 

-FASHION & LEATHER GOODS DROVE GROWTH: As most analysts had expected, fourth-quarter sales growth was driven by the fashion-and-leather goods category, although its 15% organic growth rate was slower than in the previous quarter. This may have disappointed investors who have grown used to the division topping expectations every quarter, J.P. Morgan Cazenove analysts said. Still, the result is a "spectacular outperformance" over other luxury players and was achieved against headwinds in Hong Kong and Japan, as well as product shortages at the Louis Vuitton brand, the brokerage said.

 

-WATCHES & JEWELRY, WINES & SPIRITS WEAKNESS: LVMH's wine-and-spirits division posted 3% organic revenue growth in the fourth quarter, which was weaker than expected, RBC analysts said. Company management said this was largely due to restocking in the third quarter, which had a negative impact on the final quarter, and that excluding this impact, the division would have had growth of about 7%, RBC analysts said. The watches-and-jewelry division was weak as expected, with the drag from the Hong Kong protests and a VAT increase in Japan disproportionately affecting this category.

 

-CORONAVIRUS: Chairman and Chief Executive Bernard Arnault said it was still very early to say what the impact of the coronavirus epidemic would be, but struck a rather reassuring tone during the 2019 results presentation. "If it lasts a couple of months or if it's resolved over the next two, two-and-a-half months, then it won't be all that bad. I mean, if it were to last two years, it would be a totally different matter," he said. Company management also said variable costs are high in China, meaning LVMH would be able to adjust its cost base if there is a drop in business there.

 

Write to Cristina Roca at cristina.roca@dowjones.com

 

(END) Dow Jones Newswires

January 29, 2020 11:26 ET (16:26 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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