Today, the quest for great global winners today leads us to a niche sector very interesting: luxury goods.
This is an extremely competitive sector with special challenges and characteristics, where brand value, marketing channels and other intangibles assets like history and taste for fashion well mix them all with other real assets as retail force and new market development.
Warren Buffet’s winning criteria push to search for strong companies with great advantages compared to competitors and with honest, ethic and forward-thinker management.
LVMH and its great maître Bernard Arnault well represent the answer to our search.
This France-based worldwide company is more than a reference for what concern the world of luxury goods with more than 60 world well known brands of absolute value:
Wines & Spirits (Hennessy, Moët & Chandon, Dom Pérignon, Krug,…)
Fashion & Leather Goods (Luis Vuitton, Fendi, Donna Karan, Berluti, Givnchy, Kenzo, …)
Perfumes & Cosmetics (Christian Dior, Acqua di Parma, Make Up for Ever, …)
Watch & Jewellery (TAG Heuer, Chaumet, Hublot, …)
Mr Arnault has been able to build up this amazing war machine in luxury batterfield during last 30 years and it has became thanks to his management ability and foreseen one of the world riches man.
Let’s have a look on LVMH financial data according to 2007 annual report.
Balance Sheet tells us that the company has a good level of solvency with a Total Debt/Total Capital ratio equals to 0.33 and a Total Debt/Total Equity equals to 0.48: LVMH is not leveraging a lot on debts and looking at the last years the debts are slowly decreasing against an increase of assets. Working capital is positive too and increasing year by years guarantying the good financial condition of the company in short term and long term.
Cash flow: Total cash from operation is increasing and it fully cover the investments and the dividend payables and other financial itms. We remember that it is good news when a company shows negative Cash from financing because it means that they don’t need to rise funds with financial ways and that normal operations perfectly cover the expenses and investment. In 2007 LVMH increased its cash reserved by 42% with a cash flow margin of 15%.
Income statement. Return on Equity of 18.25 % and Operating margin at 20% well represent the company efficiency. With a long term average growth rate (EPS) of 25% by 2004 to forecast on 2009. Total revenues have passed by 11,962 millions in 2003 to 16,481 in 2007, over the same period the net income has passed by 723 to 2,025 millions of euro. An excellent results that shows the great management capabilities in this kind of business.
Other data: P/E 17.14, reasonable compared to 25% average growing rate.
Dividend yield 1,73%
This is LVMH financial picture that shows us a healthy company, but what more? Which are behind the numbers? In next post we’ll discuss a about the company weight around the world.
This is an extremely competitive sector with special challenges and characteristics, where brand value, marketing channels and other intangibles assets like history and taste for fashion well mix them all with other real assets as retail force and new market development.
Warren Buffet’s winning criteria push to search for strong companies with great advantages compared to competitors and with honest, ethic and forward-thinker management.
LVMH and its great maître Bernard Arnault well represent the answer to our search.This France-based worldwide company is more than a reference for what concern the world of luxury goods with more than 60 world well known brands of absolute value:
Wines & Spirits (Hennessy, Moët & Chandon, Dom Pérignon, Krug,…)
Fashion & Leather Goods (Luis Vuitton, Fendi, Donna Karan, Berluti, Givnchy, Kenzo, …)
Perfumes & Cosmetics (Christian Dior, Acqua di Parma, Make Up for Ever, …)
Watch & Jewellery (TAG Heuer, Chaumet, Hublot, …)
Mr Arnault has been able to build up this amazing war machine in luxury batterfield during last 30 years and it has became thanks to his management ability and foreseen one of the world riches man.
Let’s have a look on LVMH financial data according to 2007 annual report.
Balance Sheet tells us that the company has a good level of solvency with a Total Debt/Total Capital ratio equals to 0.33 and a Total Debt/Total Equity equals to 0.48: LVMH is not leveraging a lot on debts and looking at the last years the debts are slowly decreasing against an increase of assets. Working capital is positive too and increasing year by years guarantying the good financial condition of the company in short term and long term.
Cash flow: Total cash from operation is increasing and it fully cover the investments and the dividend payables and other financial itms. We remember that it is good news when a company shows negative Cash from financing because it means that they don’t need to rise funds with financial ways and that normal operations perfectly cover the expenses and investment. In 2007 LVMH increased its cash reserved by 42% with a cash flow margin of 15%.
Income statement. Return on Equity of 18.25 % and Operating margin at 20% well represent the company efficiency. With a long term average growth rate (EPS) of 25% by 2004 to forecast on 2009. Total revenues have passed by 11,962 millions in 2003 to 16,481 in 2007, over the same period the net income has passed by 723 to 2,025 millions of euro. An excellent results that shows the great management capabilities in this kind of business.
Other data: P/E 17.14, reasonable compared to 25% average growing rate.
Dividend yield 1,73%
This is LVMH financial picture that shows us a healthy company, but what more? Which are behind the numbers? In next post we’ll discuss a about the company weight around the world.
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1 comment:
The very high end is always in style.
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