Revenue above expectations for LVMH at 79.2 billion, up 23% year-on-year thanks to stronger organic growth. Despite the impact from China, the group total marks +35% on the fourth quarter of 2019 but the EBIT for the second half was lower than expected, with margins deteriorating.
The company explained the operational deleverage with the decision to maintain marketing investments still with strong year-on-year growth in the second half and with the unexpected worsening of China.
In the call, management appeared optimistic about the reopening of China and overall the deterioration in the fourth quarter both in terms of turnover and margins appears temporary, and the tone of the outlook is one of cautious optimism. Analysts raise FY23-24 revenue and profit by 1-2%, on better FY23 organic growth (+6% to +9%, with F&L +8% to +12%) mitigated by forex, and improving margins (+90 bps), assuming a normalization of the marketing budget. We are in line with the 2023-24 consensus.
According to Equita, after the recent performance the stock could take a break but we think that the newsflow and the momentum of the business will continue to be supported by the recovery in China.