LVMH 2016 profit beats forecasts as U.S. and Asia show solid demand

By Dominique Vidalon

PARIS (Reuters) - LVMH, the world's biggest luxury group, posted a forecast-beating rise in 2016 profit, as solid demand in the United States and improving trends in Asia lifted sales in the final quarter.

LVMH, which raised its dividend by 13 percent, added it was cautiously confident over its prospects for 2017.

The group, whose key brands include Louis Vuitton, Dior, and Hennessy cognac, said 2016 profit from recurring operations rose 6 percent to 7.03 billion euros ($7.5 billion).

This compared with the 6.8 billion euros median estimate in a Reuters poll of 12 analysts.

Fourth quarter sales rose to 11.27 billion euros, a like-for like growth of 8 percent, above analysts' estimates for 5.6 percent growth.

 

LVMH's fashion and leather division, which accounts for the bulk of its sales and profits and is home to the Louis Vuitton, Fendi and Givenchy brands, had like-for-like revenue growth of 9 percent in the fourth quarter - above market forecasts.Analysts had expected growth of 5 percent in the quarter for the fashion and leather part of the LVMH business.

Its wines and spirits division also reported a 7 percent rise in sales, helped by stronger cognac sales in China.

LVMH's rivals in the luxury industry, such as Cartier owner Richemont and British luxury brand Burburry, have also signalled better demand in mainland China and improving tourist spending in the last part of the year. Growth in the luxury goods market had shown signs of a slowdown, notably in the second half of 2015 after attacks in Paris put off tourists travelling to Europe, where many luxury brands make a significant proportion of their sales.

Global spending on luxury goods by tourists was up in December for the first time since February, lifted by strong business in Britain and France, a study by tax-refund services firm Global Blue showed.

"Despite a climate of geopolitical and currency uncertainties, LVMH is well-equipped to continue its growth momentum across all business groups in 2017," LVMH said in a statement.

($1 = 0.9379 euros)

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)