LVMH Moet Hennessy Louis Vuitton SE Earnings - Q4 2025 Analysis & Highlights
LVMH Moët Hennessy Louis Vuitton SE's Q4 2025 earnings call highlighted a solid financial performance despite a challenging economic and geopolitical climate, with a focus on maintaining strong brand desirability, strategic initiatives across business segments, and a cautious but optimistic outlook for 2026.
Key Financial Results
Revenue was just over €80 billion in 2025, which is twice what it was 10 years ago.
Organic growth was slightly negative on the year but positive in the second half.
Operating margin was 22%, which is way above the average of the last 20 years.
Operating free cash flow reached €11.3 billion, an 8% increase despite a 9% decline in operating profit.
Net profit group share stood at €10.9 billion, a 13% decrease.
Sales were down 5% at a current exchange rate in published data due to a negative currency effect.
Gross margin was slightly down by 80 basis points over the year but up €40 billion in H2.
Operating expenses were down 4%, reflecting the agility and discipline of the teams.
G&A expenses were down 5% due to cost-saving discipline and non-recurring costs from 2024.
Business Segment Results
Wines & Spirits displayed good resilience in a challenging context, particularly for cognac due to tariffs in China and the United States.
Champagne is holding up well in a less buoyant market, with Veuve Clicquot growing in volume terms in the US and Asia.
Rosé wines are also growing well, with Château d'Esclans, Minuty, and Galoupet performing very well.
Fashion & Leather Goods saw a significant improvement starting in Q3, driven by local customers and a resumption of growth in Asia.
Dior is fully benefiting from a creative renewal, producing clothes for both men and women.
Louis Vuitton launched a makeup range in 2025 that started off well and continues to deliver double-digit growth in perfumes.
Loro Piana continues to go from strength to strength, with the company needing to slow its growth to maintain product quality.
Parfums Christian Dior continues to innovate, with Sauvage being the world's best-selling men's fragrance and Dior lipstick being the leading luxury lipstick globally.
Tiffany continues its impressive record, with plans to become the world's leading jewelry brand in 5 to 10 years.
Bvlgari posted outstanding figures at the end of the year, with its iconic products being very successful.
Watches & Jewelry saw a significant acceleration in H2, especially in Q3, with a resumption of growth for the Watches business.
Selective Retailing enjoyed significant growth from Sephora in H2, which has become the unchallenged world leader for retailing cosmetic products.
DFS is now breaking even after previously losing hundreds of millions of euros.
Capital Allocation
Operating free cash flow reached €11.3 billion, an 8% increase.
Capital expenditure accounted for 5.7% of sales, in line with the long-term historic average.
Net debt was down in 2025 for the third year running, standing at €6.9 billion.
A dividend of €13 per share will be proposed at the AGM in April, which is stable compared to last year.
The group's dividend policy is to maintain a stable dividend during challenging times and grow it in line with profits during favorable periods.
An interim dividend of €5.5 was paid in December, with the balance of €7.5 to be paid in April.
Industry Trends and Dynamics
The desire for high-quality products goes hand-in-hand with growing living standards in the world.
The global trend for high-quality products is expected to continue despite ups and downs in certain countries.
The watches business is experiencing challenges, as seen with the exports of Swiss watches.
The middle class seems to be slowing down compared to the well-off in the current market.
Competitive Landscape
LVMH is a family group, which allows for medium-term investment and a long-term view, rather than being riveted to quarterly results.
The family group owns about 50% of LVMH's capital and will cross the 50% threshold this year.
Tiffany is likely to become the world's leading jewelry brand.
Cartier is a great company and is expanding well.
Macroeconomic Environment
The economic context is changing swiftly, disrupted, and sometimes unforeseeable.
There is a negative foreign exchange impact that is not expected to improve this year.
Cognac is affected by tariffs in China and the United States.
2026 is not expected to be simple due to continued geopolitical crises, economic uncertainty, and policies of certain countries.
The main invoicing currencies (dollar, renminbi, and yen) were all down, contributing to a negative currency effect.
The currency effect was negative to the tune of minus 6% in Q4.
Tariffs will have a real effect in 2026 over the full year, particularly on Wines & Spirits, and also on Fashion & Leather Goods and Watches & Jewelry.
Growth Opportunities and Strategies
Numerous initiatives have been taken across businesses, including the opening of the Vuitton Ship museum in Shanghai.
Dior opened two houses in the United States (New York and Los Angeles) and a Maison Dior in Beijing.
The Institute of Trades of Excellence has trained over 3,800 apprentices to preserve craftsmanship.
LVMH has reached the best score (AAA) in the CDP (Carbon Disclosure Project) for its environmental leadership.
41% of materials used to make the Maison's products now go through recycling progress.
Recycling raw materials is up, and the company remains mobilized to protect and regenerate ecosystems.
Louis Vuitton is actively developing jewelry, with great potential.
Tiffany is undergoing a transformation plan to focus on jewelry and high jewelry, with high jewelry sales tripling in four years.
Sephora has a very small portion of the world covered, indicating significant growth potential.
The company will apply the same technique as in 2025: create fine products, sell them worldwide, open fine stores, and manage things closely to contain costs.
Financial Guidance and Outlook
2026 is not expected to be simple due to continued geopolitical crises and economic uncertainty.
The company is optimistic in the medium-term but finds it difficult to provide a serious short-term forecast.
The company expects the same currency effects next year as last year, but the timetable will be reversed.
The extra tax in France for big companies is expected to be renewed in 2026, resulting in a tax rate identical to 2025.
The company expects growth to resume, which will lead to better profit margins.
