LVMH saw group sales rise but operating profits fall

French luxury goods group LVMH Moët Hennessy Louis Vuitton has posted a full-year sales and profits slide for its wine and spirits division due to Cognac destocking in China. 

Net sales for the Moët Hennessy unit fell 5% to EUR4bn (US$4.6bn) in calender 2014, the group said yesterday. The unit's operating profits slumped by 16% to EUR1.15bn (US$1.31bn) in the same period.

LVMH, which controls the Hennessy Cognac, Glenmorangie and Ardbeg Scotch whisky and Moët & Chandon and Dom Perignon Champagne brands, blamed the drops on the “continued destocking” of Cognac in China. 

However, in the US, Cognac growth “remains strong”, while Glenmorangie and Belvedere “continue their development” in the country, LVMH said.

The group also said its Champagne business performed well, driven by vintage expressions. “The American and Asian markets benefited from strong demand”, the company added.

Cognac demand in China has been hard hit by anti-extravagance measures but Moët Hennessy's performance last year suggested it had proved more resilient to the slowdown as sales and profits remained buoyant. Yesterday's results show this is no longer the case and LVMH has joined other Cognac makers such as Remy Cointreau in highlighting declines in the category.

Group operating profit, across LVMH's portfolio of luxury goods, fell by 5% to EUR5.7bn despite growth in its core fashion and leather goods unit. Group sales were up by 6% to EUR30.6bn.

LVMH's share price rose by 5% this morning after the release of its results late yesterday.

To access the company's full results, click here.