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Sustainable Asian business boosts LVMH sales and revenue

French luxury goods group LVMH on Tuesday announced record sales and profits for 2018 and reported that its fast-growing business in Asia has not yet been affected by the slowdown in economic growth in China or the nascent trade war between the US and China.

Net profit for the year increased by 18% to 6.35 billion euros from 5.36 billion euros in 2017, while sales grew by 10% to 46.83 billion euros. The results roughly matched analysts' forecasts.

Bernard Arnaud, chairman and CEO, said LVMH expects its brands and companies, including Louis Vuitton, Christian Dior and Moët & Chandon, to continue to progress in 2019, despite the “situation that remains uncertain at the beginning of the year". ".

Sales growth was stable in all regions in the fourth quarter, except for the US, – by analogy with the figures at the beginning of the year, according to finance director Jean-Jacques Gioni.

Organic growth in Asia, excluding Japan, was 15 percent over last year. Sales in Europe grew by 7 percent to the same extent, while in the US they grew by 8 percent.

“We see no signs of slowdown in the Chinese market,” he said, although purchases from Chinese customers shifted slightly to the mainland from Hong Kong and other East Asian markets, possibly due to a weaker yuan. “The market sees glass half empty. We see it half full. ”

Luxury goods companies and other exporters, dependent on sales to China, are preparing for the effects of the country's economic downturn and the possible consequences of any worsening trade conflict between the United States and China.

In recent days, companies such as the American chip maker Nvidia and Caterpillar, which sells earthmoving equipment, have blamed China's slowdown in disappointing profit forecasts.

Mr. Gioni said that consumers of luxury goods tend to be more prone to sudden shocks than to gradual changes in economic conditions. “If a real trade war broke out between the United States and China – and we are not there yet – it would have an effect,” he said.

The company also performed well in Europe, Mr. Gioni said. Although LVMH had to close early on several Saturdays due to Gilets jaunes During the protests in France, many customers switched to Sunday purchases, and in the last quarter there was no obvious effect on LVMH.

Profit from repeated operations with fashion and leather products, the core business of LVMH, grew by 21% last year, amounting to 5.94 billion euros of the total. The largest increase in profits from repetitive operations was for watches and jewelry (37%), and the slowest growth was for wines and spirits (5%).

The company said it plans to raise the total dividend by 20 percent for the year to 6 euros.

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