LVMH Moet Hennessy Louis Vuitton SE reported its strongest earnings increase in three years as sales of fashion and leather goods accelerated and its drinks unit returned to growth.
First-half profit from recurring operations rose 15 percent to 2.96 billion euros ($3.3 billion), the world’s largest luxury-goods maker said in a statement late Tuesday. Analysts predicted 2.93 billion euros, according to the average of 11 estimates compiled by Bloomberg. The increase was the most since a 20 percent gain in the first half of 2012.
LVMH recorded strong sales in Europe and the U.S., while the unit that includes handbag maker Louis Vuitton overcame declines from the brand in China, Macau and Hong Kong to post 10 percent growth in the second quarter, Chief Financial Officer Jean-Jacques Guiony said on a conference call.
“LVMH reported a solid set of results,” said Luca Solca, an analyst at Exane BNP Paribas in London. “Key divisions were surprising on the upside with both fashion and leather goods and wines and spirits doing better than expected.”
Rivals Burberry Group Plc and Kering SA recently reported sales that showed an increase in the number of Chinese tourists shopping in Europe. The focal point of the luxury market has been gradually shifting westward since late 2012, when China began discouraging lavish spending by officials.
Fashion and leather-goods sales increased at twice the pace analysts had predicted and accelerated from a 1 percent gain in the first three months. Second-quarter wine and spirits sales rose 5 percent, rebounding from a 1 percent drop, as U.S. demand for Hennessy cognac compensated for weakness in China.
Revenue reached 16.7 billion euros in the first half, up 19 percent from a year earlier, or 6 percent on an organic basis, LVMH said.
“We are confident for the remaining part of the year, mostly due to the fact that our important businesses are enjoying strong momentum,” Guiony said.