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LVMH profits up, despite poor wine and spirits performance in 2014

Published:  04 February, 2015

Moët Hennessy Louis Vuitton reported €30.6 billion in revenue for its full year financial results for 2014, which was up 6% over 2013, with revenue increases in all business groups except the wine and spirits arm of the company.

Group share of net profit was up +64% for LVMH, but its wine and spirits division saw revenue fall by -5% dropping from €4.173 billion in 2013 to €3.973 billion in 2014. Primarily, the decline was driven by poor performance in Asia, with the report stating "this situation is essentially explained by the evolution of cognac in China linked to the continued destocking by distributors".

Champagne and wines were up by volume and value, with revenues growing by 2.47% in 2014, up from €1.937 billion in 2013, to €1.985 billion.

Champagne grew in volume by 3.8% from 57.4 million bottles in 2013 to 59.6 million bottles in 2014. Still and sparkling wines volume also increased from 44.7 million bottles in 2013 to 45.1 million bottles sold in 2014.

Cognac and spirits performance is struggling and saw revenue decline, despite volumes increasing. This could signal that the company is simply trying to move the excess stock in China through the market and sell more for less.

LVMH's Cognac and spirits division saw revenue decline by -11.09% from €2.236 billion in 2013 to €1.988 billion in 2014.

Simultaneously, Cognac increased its volume sales to 70.4 million bottles in 2014, up from 69.1 million bottles in 2013. Other spirits also increased to 17.3 million bottles up from 16.9 million in 2013.

The US market was a key region for LVMH wine and spirits, with 27% of revenue coming from the US in 2014 compared to 23% in 2013. Equally, Asia was the worst performing market for LVMH with 24% of revenue coming from the region in 2014 compared to 31% of the revenue coming from region the year before.