Louis Vuitton 2009 Annual Report Download - page 79

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Profit from recurring operations for Wines and Spirits was 760 million
euros, down 28% compared to 2008. Better control of costs and the
careful targeting of advertising and promotional expenditure were not
able to offset the impact of lower sales volumes. Operating margin
as a percentage of revenue for this business group decreased by
6 points to 28%.
Fashion and Leather Goods posted profit from recurring operations
of 1,986 million euros, up 3% compared to 2008. Exchange rate fluc-
tuations had a favorable impact on this business group’s earnings.
Louis Vuitton once again performed remarkably well, while perfor-
mance by the other brands was more mixed. Nevertheless, operating
margin as a percentage of revenue for this business group remained
stable at 32%.
Profit from recurring operations for Perfumes and Cosmetics was 291
million euros, remaining stable compared to 2008. Tight control over
product costs and other operating expenses once again improved
profitability. Operating margin as a percentage of revenue for this busi-
ness group thus increased by 1 point to 11%.
Profit from recurring operations for Watches and Jewelry decreased
to 63 million euros. Against the backdrop of a slowdown in sales, the
operating profitability for this business group was 8%.
Profit from recurring operations for Selective Retailing was 388 million
euros, remaining stable compared to 2008. Sephora continued to
improve its operating margin, despite expenses resulting from its rapid
expansion in Europe, North America and China, thus confirming its
high-growth momentum. Operating margin as a percentage of revenue
for Selective Retailing as a whole remained stable at 9%.
The net result from recurring operations of Other activities and elimi-
nations was a loss of 136 million euros, representing an improvement
compared to 2008. In addition to headquarters expenses, this heading
includes the results of the Media division and those of the yacht builder
Royal Van Lent, acquired in 2008.
Other operating income and expenses amounted to a net expense
of 191 million euros, compared to a net expense of 143 million euros
in 2008. In 2009, they comprised reorganization costs for commercial
and industrial processes in the amount of 98 million euros. The
balance of other income and expenses consists of accelerated depre-
ciation and asset impairment in the amount of 88 million euros, as
well as various non recurring expenses or provisions amounting to
5 million euros.
The Group’s operating profit was 3,161 million euros, representing a
9% decrease from 2008.
The net financial expense was 342 million euros, compared to 281
million euros in the prior year.
The cost of net financial debt was 187 million euros as of December
31, 2009, down from 257 million euros the previous year. This
decrease reflects the combined impact of a favorable interest rate
environment and the decline in the average net financial debt outs-
tanding during the year.
Other financial income and expenses amounted to a net expense of
155 million euros, compared to a net expense of 24 million euros in
2008. The financial cost of foreign exchange hedging operations had
a negative impact of 46 million euros for 2009; it had a negative
impact of 64 million euros in 2008. The net loss on current and non-
current available for sale financial assets and other financial instruments
amounted to 94 million euros, down from a net gain of 53 million
euros the previous year. This change was due both to the market
downturn and the recognition of impairment losses on current and
non-current available for sale financial assets. Other financial expenses
amounted to 25 million euros, compared to 24 million euros in 2008.
The Group’s effective tax rate was 30% in 2008, compared to 28%
in 2008. The rate in 2008 was primarily attributable to the capitalization
of tax loss carryforwards.
Income from investments in associates was 3 million euros in 2009,
down from 7 million euros in 2008.
Profit attributable to minority interests was 218 million euros as of
December 31, 2009, compared to 292 million euros the previous
year. This total mainly includes profit attributable to minority interests
in Moët Hennessy and DFS and reflects lower earnings by Moët
Hennessy.
The Group’s share of net profit was 1,755 million euros, decreasing
by 13% compared to 2008. It represented 10% of revenue in 2009,
compared to 12% in 2008.