LVMH Profit Beats Forecasts, Sees 'Excellent' 2012

(Reuters) -- LVMH, the world's biggest luxury goods group, said the outlook for 2012 was excellent and hiked its dividend after rapid growth in Asia and at its Louis Vuitton brand helped it post a forecast-beating rise in full-year operating profit.

The French group, which last year bought Italian jeweller Bulgari, shrugged off concerns about the global economy with a 22 percent rise in profit from recurring operations to 5.26 billion euros ($6.9 billion) on sales up 16 percent at 23.66 billion.

It had been expected to make a 5.1 billion euro profit on revenue of 23.3 billion, according to Thomson Reuters I/B/E/S.

LVMH said despite an uncertain economic environment in Europe it enters 2012 with confidence, adding it planned to increase its dividend by 24 percent.

Chief Executive Bernard Arnault said business trends in January had been the same as at the end of last year, adding that the company's priority remained organic growth, with acquisitions the exception.

The luxury industry has been on tenterhooks in recent months over worries that Europe's long-running debt crisis could trigger an economic slowdown in emerging markets such as China, where runaway demand for high-end goods has offset weaker trends in the United States and Europe.

LVMH saw the fastest growth in profit last year at its watches and jewellery business, whose size was doubled by the purchase of Bulgari.

Executives at the Geneva watch fair last month suggested that strong demand from Asia was unlikely to make up for weakness in the U.S. and Europe, with growth seen slowing from the record level achieved last year.

HERMES STAKE 'FRIENDLY'

LVMH's fashion and leather goods unit saw profit rise by a fifth, helped by double-digit revenue growth and exceptional profitability at the Louis Vuitton brand, the group said.

CEO Arnault added that the outlook for Louis Vuitton in 2012 was excellent, without going into financial details. The brand accounts for more than half of group operating profit.

Swiss luxury goods group Richemont said last month sales growth held up in the last three months of 2011, underpinned by buoyant Asian demand and Chinese tourists flocking to European boutiques, allowing it to confirm its fiscal full-year profit goal.

British luxury brand Burberry reported a sharp slowdown in U.S. sales growth in its fiscal third quarter, though it too said demand from Asian shoppers and tourists remained strong.

LVMH said the pricing environment was favourable in terms of being able to raise prices, although it cautioned that it was not possible to generalise.

LVMH, which took the luxury world by surprise in late 2010 by announcing it had built a stake in Hermes, said in December its holding had risen to 22.3 percent though it repeated it did not want to buy the maker of Kelly handbags and silk scarves.

Hermes family shareholders have responded by creating a majority holding to shield it from the threat of a takeover.

LVMH CEO Arnault said again on Thursday the shareholding in Hermes remained friendly, suggesting he did not intend to launch a hostile takeover.

Shares in Hermes are up around 17 percent so far this year, after adding nearly 50 percent in 2011, slightly outpacing LVMH shares, which are up almost 16 percent this year.