Louis Vuitton 2004 Annual Report Download - page 97

LVMH annual report 2004
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◆Income from operations of the
Wines and Spirits business group
totaled EUR 806 million, up 1%
over 2003. The depreciation of
currencies against the euro had a
significant negative effect on inco-
me from operations, which was off-
set by the increase in volumes, sale
prices and product-mix.
◆The Fashion and Leather Goods
business group posted income from
operations of EUR 1,329 million,
up 1% over 2003. Louis Vuitton
income from operations continued
its progression while maintaining a
very high margin. Other brands in
this business group are still in the
phase of investments in their retail
networks as well as in media
expense, thus impacting the results
negatively.
◆Perfumes and Cosmetics recor-
ded an income from operations of
EUR 181 million compared with
EUR 178 million in 2003.
Successful product launches in the
second half of 2004 offset the
effects of an unfavorable economic
environment in Europe.
◆Watches and Jewelry reported a
substantial improvement in income
from operations, from a EUR 48
million loss in 2003 to a EUR 13
million income in 2004. This sharp
improvement in income from ope-
rations was driven by a strong sales
recovery in 2004 as well as the
deconsolidation of Ebel following
the disposal of the brand.
◆Income from operations for
Selective Retailing totaled EUR
244 million in 2004 compared
with EUR 106 million in 2003.
This significant improvement is due
to the turnaround in DFS sales and
the continued growth in Sephora
sales in the United States and
Europe.
◆The operating losses of EUR
153 million for Other Businesses
were down 5% from the previous
year despite a non-recurring increase
in pension provisions. Other Busi-
nesses include headquarter costs,
the Media division (with operating
losses at 2003 levels), and the De
Beers joint venture, which conti-
nues its investements.
◆Financial expenses were down
from EUR 233 million in 2003 to
EUR 197 million in 2004. This
change is due to the reduction in
the Group's average net debt and
declining interest rates.
◆Other income and expenses pri-
marily correspond to non recurring
asset depreciation for EUR 63 mil-
lion and to restructuring provisions
for EUR 38 million. The exceptio-
nal asset depreciation relates to
overseas commercial fixed assets,
either fully owned or owned under
capital lease agreements, as well
as to non strategic brands of insi-
gnificant value. The restructuring
costs are related to various brands
or tradenames of the Group: they
concern the closure costs of some
markets or the discontinuation of
non profitable secondary busines-
ses. Lastly, this account includes
the results generated by the LVMH
share portfolio as well as the
results related to the investment in
Bouygues (whether net gains on
disposals or changes in the provi-
sion for impairment), which repre-
sented respectively a loss of EUR
12 million and a gain of EUR 21
million. This account also includes
an increase in provisions for
various commitments and contin-
gencies for an amount of EUR 19
million.
◆The tax rate for 2004 was 29%,
down 1 point from the previous year,
due to the improvement in 2004 of
previously unprofitable companies
results.
◆Amortization of goodwill was
EUR 284 million, lower than the
previous year because of extraordi-
nary amortization recognized in
2003.
◆In 2004, income from invest-
ments accounted for using the
equity method includes a deprecia-
tion of the investments in the
amount of EUR 15 million.
◆Minority interests rose from
EUR 108 million in 2003 to EUR
202 million in 2004, primarily due
to DFS, whose figures are only
comparable after taking into
account the impact of its 2003
common stock issuance.
◆Net income before amortization
of goodwill amounted to EUR
1,294 million, up 26% over the
previous year.
◆Net income was EUR 1,010
million, a 40% increase over 2003,
representing 8% of the Group's net
sales compared with 6% in 2003.