LVMH, the luxury goods giant has announced a profit rise of 27%, slightly weaker-than-expected for 2000, and said sales growth would slow this year due to economic strains in its core international markets.

Operating profit climbed to 1.959 billion euros in 2000 from 1.547 billion euros during the previous year. The rise was in line with the group's own forecast of at least a 25% increase, but failed to match market expectations of a 29% leap (1.996 billion euros).

Net profit rose 4% to 722 million euros, but was below forecasts of 837 million euros, while net profit before exceptionals added 15% to 846 million euros.

Analysts said the company's EBIT (earnings before interest and taxes) was in line with expectations but were disappointed with the "weak" net profit gains.

Wine and spirits failed to reach the exceptional heights of 1999, where operating income rose 34%, only increasing 3% in 2000. Sales volumes declined after the Millennium party, though the company said its Champagne achieved sales above the industry average. Its value strategy, the strength of its international distribution and the power of its brands had helped the company retain growth and profitability increased 30% in 2000.

Hennessy Cognac Paradis

Hennessey Cognac held its sales upswing (up 5% in 1999) and rose significantly in 2000 with growth of 23%. The company praised the rejuvenated image of Hennessey Pure White, plus the success with the top range VSOP and XO products in the US and Asia.

Talk of recession in the US and the economic slowdown in Japan is set to hit this year's sales, LVMH said.

Leather goods such as the Louis Vuitton handbags plus luxury items such as Pucci and Kenzo fashions and Christian Dior scents had already reported a 35% rise in 2000 sales to 11.6 billion euros.

LVMH forecast double-digit sales growth for 2001, but said growth had slowed in the early months of the year from 2000's torrid pace - climbing 13% in January and February 2001 after 35% in the first two months of last year.

In millions of Euros
1999
2000
Growth
Wine & Spirits
655
716
9%
Fashion & Leather Goods
826
1 169
41%
Perfumes & Cosmetics
146
184
26%
Watch & Jewelry
5
59
-
Selective Retailing
(2)
(2)
-
Other activities & write-offs
(83)
(167)
-
Total LVMH
1 547
1 959
27%