Louis Vuitton 2006 Annual Report Download - page 5

Strengthen,
develop,
anticipate
We approach
the coming months
with confidence
and determination,
buoyed by
excellent results
in 2006, the
strengthening
of our foundations
and the
opportunities
offered by our
numerous growth
drivers.The future
of LVMH is being
built upon solid
foundations and
exceptional brands.
Its long-term
vision, its ability
to anticipate and
the talent of its
teams will enable
our Group
to reinforce its
position as the
global leader in
luxury goods.
2006 has been an excellent year for LVMH
with record sales across all its business lines
and geographic regions, strong growth in pro-
fits, and further debt reduction. Our Group
has gained market share in all of its activities
and has reinforced its position as the leader in
its market. In an unfavourable currency envi-
ronment whose impact was mostly felt in the
second half of the year, we have gained one
point of operational margin for the second
year running and the Group share of net pro-
fit has increased by 30 per cent.
Once again, our teams have performed remar-
kably this year. Our Wines and Spirits houses
have well managed the increased product qua-
lity and range and strong growth in volumes.
Our Fashion and Leather Goods businesses
have performed exceptionally in Europe, Asia
and the United States. The Perfume and Cos-
metics brands have once again gained market
share from their competitors. The Watches and
Jewelry business group has undeniably conti-
nued the successful recovery which has mobi-
lized its teams in recent years. The Selective
Retailing companies have become more com-
petitive and this business group has further
improved its profitability.
A growing success
with customers reflecting
the world’s diversity
The international expansion of our activities is
particularly notable. We sell products from the
best traditional crafts with growing success on
every continent. Our brands are the leading
ambassadors of this excellence with customers
from very diverse origins and cultures. In the
United States, the leading luxury goods mar-
ket where demand is very strong, LVMH has
almost quintupled its sales over ten years. In
Asia, our progress year on year demonstrates
our success with the increasing numbers of
consumers in the region who are accessing
the luxury goods market and recognising
quality. Today in China, for example, we lead
in several areas thanks to the investments the
Group had the foresight to make in a market
with rapidly increasing influence. Our pro-
gress in Europe is also notable, proving the
solidity of our heritage and the loyalty of our
clients in the regions where our crafts and the
culture of luxury first originated. LVMHs
home continent has also, of course, its own
new markets in the Central European coun-
tries, and in particular Russia, where there is
strong potential. Europe also profits from an
increasing influx of tourists, fuelled in parti-
cular by China and Russia.
Strengthened foundations
Another point I would like to draw attention
to is LVMHs capacity to well manage the
strengthening of its leadership both in its tra-
ditional trades - those of champagne, cognac,
leather goods and perfumes - and the develop-
ment, with a momentum of profitable growth,
of some of its more recent activities, such as
selective retailing, watch-making and jewelry.
Another example is that of Moët Hennessys
success in developing a range of exceptional
wines at Estates & Wines. Such successes
enable us, year after year, to reinforce the
Groups foundations.
A richer and more vibrant heritage
than before, together with
an enlightened ability to anticipate
in order to build the future
We are approaching 2007 with confidence and
with renewed energy despite a currency envi-
ronment which remains difficult. Our business
will be carried forward by strong innovation in
all of our business groups, development of new
product categories and continued investment in
distribution in markets with strong potential.
These developments expected in the following
months enable us to fix a new Group objective
of a significant increase in its 2007 results.
LVMH will be 20 years old in 2007. Throu-
ghout the last two decades, the Group has
developed and deployed a consistently success-
ful and unique long-term growth strategy. It
has remained close to this strategy while at
the same time continuing to respond to and
anticipate an ever-evolving world. From its
inherited values, the Group has created an even
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