LVMH delivers excellent results for the first half of 2004 -Operating income up 14%- Net income up 49%

LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, achieved a 14% increase in operating income during the first half of 2004, amounting to 996 million Euros. This performance is all the more noteworthy in view of the particularly negative impact caused by exchange rates and the fact that during the same period last year the Group’s results were already higher than the year before despite external factors (such as Iraq and SARS) and at a time when most competitors were posting a strong decline in their results. At constant exchange rates, the Group’s operating income increased by over 30%. The Group’s net income increased by 49% compared to the first half of 2003, which was itself up 24% over the previous year’s first half. This significant increase was achieved due to improved operating profitability and further declines in the Group’s financial expenses. Bernard Arnault, Chairman and CEO of LVMH, commented: “Our performance during the first half of the year once again demonstrated the exceptional appeal of our brands as well as the effectiveness of our strategy. Thanks to a successful combination of these factors, we have been able to deliver both an increase in our operating margin, as well as gains in market share. Sales during the summer have continued the strong trend we saw at the beginning of the year. A number of product launches in conjunction with the growth of our core brands in high-potential markets should allow LVMH to continue its progress in the second half of the year. All these elements allow us to confirm our objective of a significant increase in operating income in 2004.”

In million euros 1st half 2003 1st half 2004 % change
Sales 5 236 5 678 + 8 %*
Operating income 874 996 + 14 %
Group share of net profit 408 539 + 32 %
Net income 265 396 + 49 %

*Organic sales growth of 14% (with a comparable structure and exchange rates)

Highlights of the first half of 2004 were: – Double-digit organic sales growth for LVMH Group – Market share gains for all our leading brands – Double-digit organic sales growth at Louis Vuitton while maintaining margins in excess of 45% – Reduction in administrative costs thereby enabling further significant investment in communications – Increase in the Group’s operating margin to a level of 18% in the first half of 2004 – Return to a profitable situation at Watches & Jewelry – Strong improvement in Selective Retailing results – 11% rise in cash flow from operations to 828 million Euros following two years of strong growth – Marked negative currency impact at the Wines & Spirits and Fashion & Leather Goods businesses, which was offset by exceptional growth in both divisions

Operating income by business group:

In millions of Euros 1st half 2003 1st half 2004
Wines & Spirits 321 335
Fashion & Leather Goods 634 634
Perfumes & Cosmetics 39 42
Watches & Jewelry (38) 2
Selective Retailing (15) 76
Other activities and eliminations (67) (93)

Wines & Spirits: strong sales volume growth Operating income for the Wines & Spirits business group rose 4% thanks to the strength of its brands. All the categories – champagne, wines and cognac – achieved double-digit volume growth. The performance of the champagne brands as a whole was particularly remarkable in the UK, the US and Japan. Similarly, Hennessy also contributed to this performance by posting strong growth in the US, China, Taiwan and Russia. In terms of operating income, an improvement in the mix and the policy of maintaining price levels, combined with significant investment in communications partially offset the negative currency impact. At constant exchange rates, Wines & Spirits saw double-digit growth in operating income. The distribution network was strengthened during the first half while costs were kept under control. Fashion & Leather Goods: remarkable performance from Louis Vuitton The remarkable performance posted by Louis Vuitton meant that the operating income of the Fashion & Leather Goods business group reached a level comparable to that of last year despite the negative currency impact and further investments in Fendi and Donna Karan. On a constant exchange rate basis, the division’s operating income saw double-digit growth. Sales to Louis Vuitton’s clientele in Europe, Asia and the US were particularly strong. Sales to our Japanese client base, of which the portion made outside Japan grew strongly compared to the first half of 2003, continued to make advances. The second half will be marked by a number of key events, notably the launch of new products created by Marc Jacobs. The success of our latest collections has resulted in waiting lists all over the world for a number of our products. Finally, Louis Vuitton will be launched in South Africa and will continue its expansion in India and Russia. Perfumes & Cosmetics: success of innovations The Perfumes & Cosmetics business group delivered 7% growth in operating income. Performance was driven notably by sales in makeup and skincare at Parfums Christian Dior, as well as by the success of Guerlain’s new perfume L’Instant de Guerlain. In the US, BeneFit Cosmetics registered a strong improvement in its profitability. During the second half, the ladies’ perfume Pure Poison by Dior (whose sales are already well ahead of forecasts), and L’Instant de Guerlain pour Homme will be launched. A number of major innovations are in the pipeline in makeup and in skincare. Watches & Jewelry: breakeven achieved as strong sales growth continues The Watches & Jewelry business group saw a noteworthy recovery in operating income. The product innovation strategy of each brand contributed to organic sales growth of 32%, well above the market average. Operating income benefited from this increase and also from a continued reduction in costs, despite a high level of marketing investment. Since the Basel watch fair, new models by TAG Heuer and Zenith have been marketed and other launches will take place in the second half, including: the Chiffre rouge line developed by Hedi Slimane for Dior, and Class One rings and Liens watches by Chaumet, which has just renovated its historic boutique on Place Vendôme in Paris. Selective Retailing: strong improvement of results DFS reaped the benefits of the sales and marketing initiatives in its Gallerias and took advantage of an improvement in international travel. In order to maximise the potential growth inherent in the Chinese market, DFS moved its headquarters to Hong Kong and has started to renovate its Gallerias.  Its continued efforts to reduce costs and increase productivity enabled the company to post growth in operating income. Sephora had a strong increase in its operating margin both in Europe and the US.  In France, it continued its innovative strategy and saw an acceleration of its sales resulting in an increase in market share. In the US, Sephora increased its dollar sales by double digits for the fourth consecutive year. Outlook for 2004 Sales figures in July and August confirmed the Group’s previous growth trend.  Louis Vuitton continued its strong progress in the US and Asia and benefited from an improvement in the progressive recovery of tourism in Europe. Louis Vuitton continued to post double-digit organic sales growth during the period. Despite unfavourable exchange rates, LVMH will continue to grow thanks to the Group’s global market leadership, its innovation and marketing strategy, its numerous new product launches and its increasing market share.  All of the above factors allow the Group to confirm its objective of a significant increase in operating income for 2004. Our policy of focusing on quality across our entire product ranges, combined with the dynamism and unparalleled creativity of our teams will enable us, once again in 2004, to reinforce LVMH’s global leadership position in luxury products. An interim dividend payment of 0.25 Euros will be paid on December 2, 2004, representing a 14% increase over 2003.