LVMH Q1 miss expectations, but wine & spirits division shows growth

By Erin Smith

Published: 13 April, 2016

Luxury conglomerate LVMH first quarter results, which were released on Monday, missed analysts growth expectations, but the company's wine and spirits division Moët Hennessy did show sales growth of 4%.

LVMH first quarter sales rose 4% to €8.62 billion, while analysts had expected the company sales for the first three months of 2016 to exceed €8.72 billion (Thomas Reuters).

Wine and spirits sales for Q1 broke through the billion euro barrier coming in at €1.033 billion compared to €992 million for the first three months of last year, with organic revenue growth up 6%.

While Champagne has "experience a strong start to the year especially in Europe where growth continued" according to the results report, Champagne volumes overall were down 1%.

Champagne and wine revenue increased in Q1 by €4 million to €401 million. The value increase with a simultaneous decrease in volume can most likely be attributed to price increases in the US markets. For the Champagne and wine category, LVMH saw continued growth in Europe while US was "impacted by [the] timing of price increases." Although it was not all bad news, as the company attributed the organic growth to mainly being "driven by positive price effect."

Cognac and spirits have seen sustained growth, which is good news for LVMH. Hennessy Cognac, which saw volumes rise by 8%, "maintained its remarkable performance in the United States. In China the first quarter showed better momentum after the impact of restocking by distributors in 2015."

Following a crackdown in luxury gift given in China from 2013- 2015, ultra-premium Cognac producers, particularly those that were over-indexed in Asian market, took heavy losses.

Overall Cognac and spirits saw revenues jump €37 million in the first quarter. While some of this growth came from Cognac, both Glenmorangie Scotch whisky and Belvedere vodka also saw 'sustained growth."

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