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Vuitton swings LVMH to profit
PARIS, France (Reuters) -- Global luxury giant LVMH reported a 28.7 percent jump in 2002 operating profit on Thursday, driven by star brand Louis Vuitton, while net profit resurged from its year-earlier collapse. And the world's biggest luxury goods group predicted operating profit would improve again this year. In January it forecast ``tangible growth'' in 2003 operating profit. LVMH, whose powerhouse brands include Christian Dior perfumes, Fendi and Kenzo fashions and Moet & Chandon champagne, said 2002 operating profit emerged at 2.008 billion euros ($2.20 billion) after 1.560 billion last year. The company had forecast a rise of ``at least 25 percent.'' Net profit, which in 2001 plunged to a token 10 million euros as the group wrote down amortisations and made restructuring provisions amid a sharp downturn in luxury sales, recovered to 556 million euros on turnover already reported up four percent at 12.69 billion euros. Before goodwill and exceptional items, net profit leapt to 818 million euros from 334 million before, helped by a reduction in debt. Analysts had pegged operating profit at 1.974 billion euros, and net profit at 600 million. They forecast net profit before goodwill and exceptional items at 866 million euros. LVMH said it had registered seven percent organic sales growth in the first two months of this year, allowing it to beat its targets for operating profit in the period, and said it was driven chiefly by double-digit volume growth at its Louis Vuitton leather goods division. "LVMH will continue in 2003 to focus on internal growth, on the development of its major brands and on exercising very selective investment policy. The group expects, as in 2002, an improvement in profitability and makes cash flow a priority,'' the company said in a statement. Operating profit in the group's fashion and leather division, headed by the Louis Vuitton brand, rose 1.8 percent to 1.297 billion euros as growth at Vuitton was offset by investment in Fendi and Donna Karan. Meanwhile operating losses declined sharply in its Other division thanks chiefly to the disposal of auctioneer Phillips. Selective retail broke into the black, with an operating profit of 20 million euros after radical cost-cutting at upmarket retailers Sephora and DFS. LVMH said it was proposing a dividend of 0.80 euros, up seven percent. Prized for its restructuring, LVMH is the first luxury firm to report its full-year earnings this year, with Hermes, Bulgari SpA, Gucci, Swatch Group AG and Tod's SpA all reporting later this month. But some analysts say the restructuring news is now priced into the stock, and with a travel-discouraging war posssible in Iraq, some say it is hard to predict what might spark a long-awaited rally. LVMH shares closed on Wednesday at 38.08 percent, beating a slightly firmer Dow Jones Stoxx European cyclical goods index that it has outperformed by 8.2 percent this year. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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