LVMH's first-half profit grew at the fastest rate since 2011 as Japan and Europe joined a luxury industry recovery led by China, showing double-digit sales increases in the second quarter.
The world's biggest luxury-goods company said Japan was boosted by promotional activity like staging Louis Vuitton's latest runway show there, while Europe was helped by more favorable comparisons in France after a decline in tourism a year earlier. The Paris-based company sounded a cautious note about the second half, citing "geopolitical and economic instability."
LVMH's report Wednesday underlined a luxury industry recovery that began in China after a multiyear slowdown caused in part by a crackdown in corruption. The company's shares are up about 20 percent since the start of the year, as investors have welcomed the improved outlook and a €6.5 billion deal for LMVH to take full control of Christian Dior. In May, LVMH surpassed energy giant Total SA to become France's most valuable company.
"LVMH has enjoyed an excellent first half, to which all our businesses contributed," Chief Executive Officer Bernard Arnault said in a statement. "In an environment that remains uncertain, we approach the second half of the year with caution."
Profit from recurring operations rose 23 percent to €3.64 billion ($4.23 billion) in the first half, LVMH said. Analysts expected €3.61 billion. Second-quarter sales rose 12 percent on an organic basis, slower than the first quarter's 13 percent jump but above analyst predictions.
While sales gains in the second quarter were led by China, up 17 percent, Japan and Europe showed increases of 11 percent each. Luxury companies have been focusing promotional activity on a new shopping center in Tokyo.
"It's a pretty healthy situation in Japan, particularly the local customers," Chief Financial Officer Jean-Jacques Guiony said on a conference call.