Bernard Arnault: Ladies and gentlemen, good evening. We are gathered to review indirectly since we are on Zoom, the results for the year 2021. I apologize for being on Zoom. Last year, we were already on Zoom. And I hope that next year, this pandemic will have left us once and for all, and we will be able to work in our presence, it's a very pleasant meeting, the results are pretty good.

As you can see, in 2021, we achieved pretty good growth because revenue has reached almost €64 billion and profit from recurring operations over €17 billion. Now this performance is all the more remarkable, I believe that the year 2021 was heavily affected by the global pandemic. Let me add that in terms of the results, we've achieved a remarkable level of operating free cash flow exceeding €13 billion growth was strong, especially in Asia and in the United States. And it gradually recovered in Europe towards the end of 2021. And in fact, we saw an acceleration of growth in Q4 because in our Fashion & Leather Goods business, for example, we saw annual organic growth on the year of 47% and in Q4 a growth versus 2019 of 51%.

So that really is a high point of the year 2021 is the expansion of our Fashion & Leather Goods business. And we can also note and our return to that the successful integration of Tiffany that also has achieved a very remarkable performance during the course of 2021. Online sales continued to grow, the development of online sales with the pandemic were particularly sustained. And the only area that remains a bit more challenging is everything that concerns international travel that haven't fully resumed yet. I don't believe that they will fully resume before the year 2023 or possibly even 2024.

Sephora that was quite affected during the course of the year 2021 rebounded well, last year. Before looking at the businesses a few words about our commitments and progress achieved both on CSR and environment that we track particularly closely. We've conducted some major programs to respect each one's dignity and individuality, 71% of women in the group's total workforce, 65% of home occupied managerial positions. We've transmitted the craftsmanship that is our heritage, as well as that of traditional trends across, say thanks to the trades of excellence that is expanding across six countries with some 1,500 apprentices trained and qualified since its creation a few years back, we're also supporting the safety and wellbeing of our employees. 80% of mesons houses have allowed employees to work flexible hours, part time working, remote working, and we commit to supporting individuals in difficulty and we've assisted several 100,000 during the course of the year.

As regards our commitment for the environment, I would like to mention creative circularity that is the recycling of our materials. 30% of our materials are now recycled. And in packaging in particular we have an objective of reaching 70% by 2030. Biodiversity very important 640,000 hectares of fauna and flora habitat have been regenerated with an objective of 5 million by 2026. Traceability in our vineyards in our supplies of raw materials, cotton, leather, gold, we have equipped our various value chains with a dedicated traceability system with a target of achieving a 100% by 2030.

Lastly, the climate. Well we have this LIFE 360 Carbon trajectory and we are pursuing that very actively. Turning now to the various business groups. Firstly, Wines & Spirits with very sustained demand both for champagne and cognac. So strong in fact that as regards the shipments that we are allocating to several regions.

Very strong demand in the U.S. and Europe for champagne with the gradual reopening of restaurants, resumption of tourism in Japan that is still like travel retail impacted by COVID. Things were slightly more difficult. But nevertheless, global demand has exceeded our production capacity very significant success, less constrained by production because it's manufactured outside Europe. With the Chandon Garden Spritz that was launched firstly in Europe and in the U.S.

very successful there. And the rapid growth of our Rosé wines in particular Chateau d'Esclans. I'd also mentioned the first integration of Armand de Brignac, 50% of which was acquired by the Group in partnership with Jay-Z. Also worth noting, the fact that Ruinart Rosé in 2004 Magnum was ranked by Champagne & Sparkling Wine World Championship was designated the best champagne in the world. It's absolutely extraordinary.

I invite you to taste it if you can find some of course. Unfortunately, they won't be any drinks offered today after this reception, we hope to be able to organize that next year that was wonderful. Likewise for Cognac, supplies that are still below global demand. So sales that are strong be up but, as I say limited by these supply constraints. We've opened a great many dedicated stores in a number of Asian countries, notably on Hainan Island, where we're selling directly and we've also seen rapid progress for Glenmorangie an absolutely remarkable whiskey and Ardbeg that received the Master Distiller Prize for the fifth consecutive year.

Moving out of Fashion & Leather Goods, well, Fashion & Leather Goods as you have seen the figures for that Jean-Jacques Guiony will be discussing those in a moment remarkable success. Credit, where credit is due first and foremost, Louis Vuitton remarkable performance buoyed by regular ongoing innovation and Louis Vuitton is far more than just a fashion company. In fact, it's not a fashion company, it's a culturally creative company that reaches out to very important customer base, the most important Gen Z very much fans of Louis Vuitton through to a more mature customer base because Louis Vuitton is a company that is involved in many aspects of cultural life. I would mention the latest fashion shows that we attended last week, the Tribute Fashion Show in memory of Virgil Abloh, who passed away sadly last November where that Fashion Show it was far more than a fashion show. It wasn't really a fashion show because there were garments products, shoes, leather goods, also music images.

An orchestra that was conducted that he himself had chosen had picked before passing away. He wasn't expecting that but this lead conductor Gustavo Dudamel, who now is the conductor of the Paris Opera. That is the spirit of Louis Vuitton, it's not just a fashion brand, it's a cultural brand with a global audience. That's why we can say that Louis Vuitton is very much a part from what we see in the various magazines that talk about fashion. We can return to that but in any event demand is very strong.

And the result thanks to very dynamic teams, thanks to designers, as was Virgil as is Nicolas Ghesquière really provide wonderful ideas taking this brand from success to success whilst attracting the youngest as well as the most mature of our customer segments in the world. Of course we also have Christian Dior that is a very different brand. It's a brand that is a Couture brand that has very remarkable, has been very remarkable in its success since the two designers Maria Grazia, Chiuri, and Kim Jones are designing it and are really giving life to the spirit of Christian Dior. Kim Jones's latest show was a perfect illustration of Monsieur Dior of his style, his elegance, his refinement, and it was very interesting, because during that fashion show, Mr. Dior was speaking, we managed to get him to speak during the fashion show was both moving and instructive.

I won't go into details of everything that Dior does. It's remarkable, it's magnificent, the Monsieur Dior of Avenue Montaign that was chosen in 1947 by Monsieur Dior, he said, I'm going to establish my shop there and nowhere else we'll be reopening as of early March this year and I invite you all to come and visit it. I believe it will be an unforgettable event and the figures. Well, we won't go into the detail of the figures, but thanks to the management teams of that company, I would say that they are truly dynamic and whilst being contained, they have delivered remarkable growth. Now there are other brands in the Fashion & Leather goods.

Fendi, big success from day one, but accentuated since the arrival of Kim Jones, not only producing great shows, the Couture in Paris and others such as the bag here which is the medal first and it's on waiting list just about everywhere. Celine, our exceptional brand with a very talented designer Hedi Slimane that is created Ready-to-Wear lines that are very successful and during the pandemic, he produced film stage films of his shows all very original, they're all very successful. And today, Celine is one of the brands that has the highest growth rate of all the world's fashion brands in my view. Loro Piana, Loewe, two I won't go into that detail. Great brand, growing strong with JW Anderson, great many products there both fashion, leather goods, Ready-To-Wear.

I won't go to the detail or maybe just to indicate that we have a new designer at Kenzo, great Japanese artistic director, Nigo and the first show was held this past weekend. Moving to Perfumes & Cosmetics, also strong growth, strong growth of perfume and skincare firstly at Christian Dior, well it's the perfume extraordinary success in 2021. The Sauvage lines become the world's leading fragrance not just for men, but also beating all the existing women's perfumes it's the first time it's happened in the perfume universe extraordinary success of this Sauvage perfume, I invite you all to test it. Furthermore, the Miss Dior fragrance, the J'Adore Parfum continue to grow strongly and we've launched several new variations in the La Collection Privée that is very successful. We've got the Rouge Dior, the world's number one lipstick and the very strong performance of skincare line be it Prestige, Capture, and L’Or de Vie I won't go into the detail of that either.

Second, French brand that's very successful Guerlain, growth in its skincare of Orchidée Impériale and Abeille Royale and many perfumes successes with its Haute Parfumerie, L'Art & La Matiere and Aqua Allegaria. Other smaller brands such as Givenchy, Benefit, Fresh, Maison, Kurkdjian, Acqua di Parma and a new has that has just joined the group, small but magnificent now called Officine Universelle Buly headed up. It's founded renowned for very creative products inspired by the great French tradition and an aesthetic design of their boutiques that's quite original and extremely inspiring. Moving on to Watches & Jewelry. Well the high point the event of the year was the integration of Tiffany that achieved a record year, very considerable success of its products, of its iconic lines, the T line.

The Knot line, the HardWear line plus the lines created by that famous French Jean Schlumberger that are absolutely remarkable that have been relaunched and that are very successful. Tiffany achieved a record year, it's interesting to note that Tiffany delivered strong growth, even though its flagship its leading store was closed for the year because of renovation work. During the year, the renovation work was started before we acquired it, and that flagship is said to renew to reopen at the end of the year. So without the flagship that generated several $100 million in revenue, it beat its revenue record both in revenue and profit. Bvlgari there may be questions on that.

Bvlgari was very successful in its stores, it seeks to concentrate now as Tiffany is doing all its jewelry sales in its own stores and numerous iconic lines continued to grow the Serpenti, the Diva lines et cetera. I would also mention the fact that the watch model very, very fine watch. Octo Finissimo achieved the Aiguille d’Or grand prize in Switzerland that's a very prestigious accolade for a watch brand. Next, in the Watches & Jewelry, TAG Heuer continued to grow cementing a major successful partnership with Porsche. It's the watch that I'm wearing here, the Carrera Porsche watch, wonderful watch.

It's so successful that it's difficult to find and they teamed up with various ambassadors including Ryan Gosling, the famous actor, and have also teamed up with the new Formula 1 champion, who won the last Grand Prix and he is World Champion. Hublot continues to grow with several iconic watches, including that with Murakami. Fred, a jewelry company that I know well, because a while back it was led by my sister who unfortunately is no longer with us today. But that company is rebounding with a great team and is offering products that are extremely attractive. And an interesting, Chaumet.

Well, Chaumet needs no introduction or again, very fine jewelry brand, the oldest as a place Vendôme began working for Napoleon and the Emperor. So it has absolutely remarkable legacy history and that is growing very successful in a number of countries including Japan. We believe that the prospects are very good. And lastly Zenith, Zenith this year launched several watches that met with considerable success. There was the DEFY watch and this year they launched the Chronomaster Sport that received the Chronograph Watch prize that the Grand Prix of Geneva.

Selective Retailing Wealth I'll skip over DFS, it's very difficult to get that company to operate work when they're in travel retail in the airports where there are no travelers. Thanks to the teams we're able to limit the difficulties in 2020 it lost quite a bit of money. It lost a lot less this year, a little. But I think that as soon as travel picks up again, but I don't think that's going to happen soon. It's expected to pick up strongly.

Sephora there is the rebound, hanks to the dynamism of the teams, the success of Sephora in the U.S. and online sales. Sephora has rebounded strongly reaching a very significant level of revenue not far from its record and operating profit in several €100 million and is very good in terms of the current climate even during the year 2021, a number of stores were closed. Let's mention in closing this presentation, the two major Parisian stores we have Le Bon Marché continued dynamic growth. That is off to a good start, since the recovery and the reopening because Le Bon Marché was closed several occasions during the past two years and the launch of La Samaritaine which a wonderful store and that is getting off to a good start that augurs well, even if we don't have the expected tourists for Parisian department stores, and that's the case for all department stores.

For 2022, the outlook. I believe that if the economic climate continues, as it did in January, is expected to be promising the numbers for January confirm growth at a same pace at the end of last year. Got off to a good start. Nevertheless, we need to remain vigilant. Everyone's talking about inflation.

That's interesting because the leading experts and specialists, various Nobel Prize winners have various differing views. Some are saying, well, inflation; its return to inflation like in the 80s will be difficult to stop it. Will have to constantly increase interest rates, it will penalize the economy very bleak picture. There are others who are equally legitimate and reputed some also Nobel Prize winners, some saying that it's transitory and wants the bottleneck created in the global economy by the exit from the pandemic. We know the problems in supply chains and ports, where we can't unload the containers, et cetera.

Once all that is resolved, inflation will calm down and things will resume normally. I can't tell you that I favor one or other the explanations, but those are the two that we have heard and listened to what I believe is that the Group in an inflation situation is a Group that is used to weathering economic crisis or not forecasting an economic crisis. I don't expect such an economic crisis. We've just gone through two very challenging years. I rather think that things will continue to improve.

But we have an advantage on quite a few other companies and groups, which is that we have a degree of flexibility on our prices. So in the face of inflation, we have the ways and means to react, and I believe that demand will remain strong for our products. That's what we're seeing currently. Nevertheless, we are vigilant; we're continuing our management efforts. We're confident.

Thanks to our values, our creativity, constant quest for quality, the spirit of enterprise, the entrepreneurial spirit that motivates everyone. It's one company it's a family operation controlled by a family and employees, be they in management such as those with us this evening. For right to the craftsman in our 100 manufacturing sites in France are part of the family. They are viewed as such, we look after them, we motivate them such that they want to remain with us. And they have long-term motivation.

I think that it also accounts for the Group's successes that were not to seek results for the quarter, but results over several dozen years. That's why a brand such as Vuitton, Dior are so successful. Because in our discussions, we're not just -- we never look just at the results for the next quarter. We realize, and we have in mind that these fabulous brands may continue to increase their desirability over a period of several decades. And lastly, in our values, commitment, environment, corporate responsibility in particular over to Jean-Jacques Guiony, who is unfortunately can't join us here, but will speak from his office, because he's tested positive for COVID.

But even if he doesn't have many symptoms. Jean-

Jacques Guiony: Thank you. Well, you know everything. So good evening, everyone. So I'll give you some details on the remarkable financial performance that Mr.

Arnault outlined. On this slide, we have the numbers that are record numbers €64 billion in revenue, €17 billion in profit from recurring operations, €13 billion in operating free cash flow, operating margin 26%. Of course, this is a recovery from last year, which had suffered the pandemic, but even from the year before that. Let's start with the revenue. This is a rather TDS picture, but it shows our sales, the organic and the structure impacted.

Two benchmarks that is 2020 and 2019. Let's start with 2020 organic growth 36%. And, of course, there's a plus structure impact to plus 10% vis-à-vis 2020. And the currency effect only 2%. It had -- it was stronger in the first half of the year and became positive in the second half.

So all in all, not much of a currency in effect in 2021. So the -- that gives us a growth of 44% compared to 2020. Now it's more significant if you move back to 2019. We have 14% organic growth compared with 2019. And we'll return to that figure in the following slides.

And this shows that the pandemic and the 2020 crisis is behind us. We offset as it were the decline of 2020 and over two year we are registering growth. Let's look at organic growth compared with 2019 and 2020. 2021 compared to 2020, let's not go back to Q1, because that's an easy comparison, because there was the pandemic the year before. But in Q3 and Q4, the situation had normalized and yet compared with that we are 24% up, which is quite significant.

We were not in the trough the first half of the year with the shops closed down. And yet we were up 24%. What is significant is compared to 2019, up until the end of September; we were looking at 11% growth. 11% in H1, and in Q3, and in Q4 significant growth 22%. And so we looking at 14% compared with 2019.

And still compared with 2019 I can't resist the pleasure of showing the figures of Fashion & Leather goods quite dramatic, quite remarkable. We're looking at for Fashion & Leather goods we're looking at 42% above 2019. And there was no slowdown at the end of the year, because in Q4, we were at 51% above the same period in 2019. So let's look at a distribution of revenue per business line. Usually, well, it's not as spectacular, but the first country now is United States with 26%, two points, 2 percentage points.

The first region is Asia 35% of sales, up five points in two years. And these five points and two points were taken away from Europe, which was down 7 points -- 7 percentage points in a matter of two years, while you have several things. Tourism was down in Europe, and that was kind of a significant part of the business and that was transferred to Asia and North America. Now back to the geographical areas and looking at the development quarter-on-quarter. Starting with the United States then.

In the U.S., you look at the last bar on the right, we were up 25%. So its remarkable performance in the U.S. We compare with 2019; it's a two-year growth. And it's, well it's compared with 2019 25%. And if you look at the quarters, quarter-after-quarter, we're looking at growth anywhere between 15% and 30%.

Some volatility, but that calls for no special comments. So steady growth and significant in the United States. Japan had an overall growth of 5% over the year. You shouldn't consider Q4 as an isolated growth, because on the basis of 2019, you had an increase of VAT in Q1 2019. So that upset the applecart.

But if we look at the first half and the second half of the year. First half, we were at minus 3 in H2 plus 13. So growth accelerated considerably in the second half. Asia, of course, is the record, because we're looking at an overall growth of 30%. You can see this on the last bar for Asia 31%, up 31%.

All quarters were good. So we were anywhere between 25% and 40% quarter-on-quarter. Now Europe is a more challenging story. And we mentioned this before. And it's a more difficult situation.

But here we can draw the lessons, we're looking at an upward trend. We were at minus 18, then minus 15, then minus 6% in Q3, and then plus 1% in Q4. So we were not back to the pre-crisis levels. But we still below, but -- there is a steady improvement. And we can be proud of this, because it means that our people were able to make up for the absence of tourists, instead of that we have local customers and that is much more of a challenge, because looking for new customers is no easy task when all the usual kinds have gone.

Now looking at the various business lines, then the 14% which is an organic growth compared with 2019. If you look at all the business lines, we are doing better than 2019 except for selective retailing. And even then, we're looking at travel retail, as Mr. Arnault said in DFS is of course in tourist areas in Asia that have completely ground to a halt where Sephora, back in 2021 went back over its level its performance of 2019. So fine performance by Sephora.

But of course, challenges remain at DFS, and you know all about that. Regarding Wines & Spirits growth, almost double-digit growth driven by Champagne and Cognac in the United States and in China by the way. Fashion & Leather Goods I mentioned earlier on up 42% compared to 2019. You have the performance of all brands including Vuitton and Christian Dior not only them. Loewe, Celine, Loro Piana, Fendi of course, so all the brands have performed extremely well and they are very much of course they are driving the growth.

Perfumes & Cosmetics are back to the level of 2019 and Watches & Jewelry here we're looking at organic growth, we're not looking at the consolidation of Tiffany up 7% compared to 2019. So, that is of course, better Fashion & Leather Goods were the main driver. Now looking at the same thing, but this time quarter-by-quarter to see what happened. The performance was relatively stable again for Wines & Spirits. Fashion & Leather Goods I mentioned up 42% with 51% in Q4.

Perfumes & Cosmetics back to their levels of 2019. In Watches & Jewelry, there is an acceleration of growth at the end of the year largely attributable to Bvlgari, because Tiffany is in the scope effect in a structure impact. So growth picked up mostly in Q4. That's the retail businesses of Bvlgari. Fine performance and Selective Retailing of course, all in all, in the red at minus 18%.

But Q4 is reaching is getting back to the levels of 2019. For Sephora, we're way ahead of 2019. But DFS is still lagging behind, but we are getting close to the 2019 numbers. So this is very encouraging. And then, for the second half of this presentation, looking at the profit, shown here, you have the income statement, while the first line is revenue.

So that was already discussed. On gross margin, what I can tell you is 2021; we're looking at 68.5% of sales and won't compare with 2019. But we're looking at 2.3 percentage points above 2019. And that is a pretty stable indicator. When you have point 4.5%.

It's already pretty good. And here we are looking at 2.3 percentage points. So remarkable performance. Expenses always a bit complicated especially because there's the scope effect with Tiffany. But if you leave out the currency effect, and the scope effect is quite simple.

Expenses last year, operating expenses were down 14% compared to 2019, which was in itself a good performance, looking at a significant headwind. And here, they were upward expenses were up 20%, which stands to reason because of course business grew. But over two years, expenses not including currency and scope are 5%. That's up 5%, but sales were up 14%, not including scope, or currency, and gross margin was up 2%. You have the financial equation of LVMH in 2021, led to a current operating profit recurring operation of upwards of €1 billion up 50% compared to 2019.

And of course, 100% compared to the previous year. Well, this may not be a significant, but it's still quite good to see that the profits also up. Operating margin stands at 27% so all the numbers are good, including gross margin. But of course, we have the significant the successful integration of Tiffany. And of course, that made a big difference.

Looking at the income statement, well, it's less exciting, but other operating income and expenses are almost nil because some gains made up for losses on intangible assets. Income tax, well, they were up, but the tax rate was slightly down to about 26%. So that was a positive effect. And so all in all, we have a net profit of €12 billion, which is unprecedented in the Group up 68% compared to 2019. So in terms of net profits, this is a remarkable performance.

So now let's look at a profit from recurring operation at €17 billion going line-by-line again. Now, you start with Wines & Spirits up 8% compared to 2019. This is more than the growth in revenue. So we can certainly be pleased with that. Fashion & Leather Goods.

Remarkable performance, because we're looking here at in 2021 we're above the performance of 2019, which in itself was pretty good. We're looking at up in a plus 75% improvement, which speaks for itself. Perfumes & Cosmetics up to the -- back to the 2019 level. Watches & Jewelry, they are above the previous years. But there's a scope effect.

But not only that because of Bvlgari achieved outstanding numbers in 2021 way above 2019. So these brands did extremely well in 2021 and that was completed by TAG Heuer and Hublot and indeed Zenith we don't often mention, but Zenith also had remarkable performance in 2021. Regarding Selective Retailing we were losing money last year. Now we're back to in the black. And that is well DFS losses will compare were offset by the profit generated by Sephora.

So we still in the red, but all in all this is quite a performance considering the circumstances. Now if we look at how we move from organic growth from structure impact and currency. While organic growth is the main factor, the main structural impact was Stephanie, because Stephanie brought in €800 million in profit last year. It was used to be the level of EBIT and EBITDA. Now it's EBIT at €800 million.

So this is remarkable. And in 20 years, this is the first time we have no currency effect. We didn't play around, this is really zero. And so we have a 50% increase in profit from recurring operations compared with 2019. And if we look at the profits from recurring operations year-on-year, if you look at half years, we had a 53% improvement in H2.

44% in H1 compared to the same period in 2019. And all in all, we're looking at 49% improvement. So if you look at the financial results, well, we have a significant net financial debt, and I will give details about that. And yet we generated a negative cost of net financial method is an income. That is the paradox of negative income interest rates.

The interest of lease liabilities well, this is accretion expense. And that means because you have leases that are shouldn't be there, but are there on this slide, and thank God it's stable year-on-year. Hedges -- currency hedges that the cost of derivatives slightly down, but this is a cyclical situation, it will be back in 2022 to the levels of 2020. And that bit of the fair value adjustment of available-for-sale financial assets, and that is the variation of the value of our portfolio of financial investments €500 million. Last year, there was no changes in the value, it were more or less stable, but now it's up €500 million, the value is up this year, that of course, this is unrealized capital gains, these we didn't actually sell off these assets.

We don't turn our portfolio around. So just because there's an unrealized capital gain, doesn't mean we go sell these dispose of these properties. And then cash well, when you have negative interest rates, we might as well invest it elsewhere and that investment was profitable in 2021, we were able, therefore to generate a €500 million gain. Regarding the balance sheet that's pretty stable, while we have the consolidation of Tiffany, which brought in some debt, about €13 billion of intangible assets between the brand and the goodwill. But equity still accounts for about 40% of the whole line.

If you didn't get the €125 billion 40% in total equity is not bad. Now looking at the cash flow, and that is a significant, we're looking at €13.5 billion cash flow over the year that the previous record was €6.2 billion the year before. This is a significant improvement. Now the payment of taxes in 2021 for 2020. Well, that brought in some cash, there was operational investment in H1, which was not as high as in previous years.

And of course, there were -- there was an increase in activity in business in revenue, which generated more cash. We can't expect the same results next year. But that improvement nonetheless, is quite remarkable. Looking at the debt position, and I'll look more closely at the last two items on the next slide. Debt is high, it's still below €10 billion having acquired made an acquisition in €16 billion that year.

So we worked hard to bring that debt down. It's above what we had in 2017 after the acquisition of Dior Couture. But we are close enough to that level. And on the next slide, you have the explanation for the change in the debt position. So you have the debt level in 2020 at the end 2020 and at the end of 2021 on the right-hand side.

So what happened we invested €13 billion in what, mostly it was Tiffany. Available operating free cash flow was also €13.5 billion. So it's as if we offset the acquisition of Tiffany with the cash flow. It's not quite true, because there were dividends and other things. But I mean on the picture, it looks pretty convincing, then there were dividends paid that's €4 billion.

That includes shareholders of LVMH, but also minority interests, including more at NC plus taxes. So we're looking at €4 billion cash out and then various others that we had buyback of shares and technical things. I won't get into the detail of that, but that's why the net financial debt was short of €10 billion, which is not bad considering the amount of acquisitions in that year. And then to complete a few words about the dividends. But we will propose to the AGM in April €10 per share a dividend of €10.

This is a significant growth, but it is in line with the improvement in the net performance, net profits. Thank you for your attention. A -

Bernard Arnault: Ladies and gentlemen. We're now available to answer a few questions. If you have any.

If that's the case, to ask you to kindly introduce yourself. Oh, Antoine Belge, for the first question.

Antoine Belge: Yes, good afternoon. I hope you can hear me from BNP Paribas exam three questions, if I may. First of all we saw the surprise since the start of COVID.

Is this extraordinary growth with U.S. and European customers because if we look at the figures in Europe, Europe was up in Q4 with no tourists, at least no Chinese visitors? That means that the French, Italian customers have grown strongly. What are the drivers behind this growth and to what extent would you say they are cyclical and what are the more structural strengths? Second question margins have grown strongly. Are there certain divisions where there's a need perhaps to reinvest a bit more or do you consider that the sort of a new normal on the margins that we've seen? And thirdly, more specifically on Wines & Spirits with dip at the margin in the second half the factors to account for that? Thanks.

Bernard Arnault: Well, to answer your first question, as regards growth with U.S.

and European customers difficult really to draw general conclusions from that, I think that these customers are becoming increasingly selective and really show a priority for a number of brands that offer more. And that's what I said earlier. With Vuitton offering more than just fashion, Vuitton sells culture to the Americans and to Europeans that Vuitton, we offer far more than just fashion. We have for example, the Vuitton Foundation, I don't know if you've been able to visit the show that currently there that's remarkably successful. We just topped the 800,000 visits a month.

I mean, we can't, you can't generalize. When we look at what's happening elsewhere, the number of brands including the brands of the LVMH Group are somewhat different in terms of their development with than others. And then there are markets, there markets as Mr. Guiony said, where we have greatly developed customer relations with local customers. And so there were previously visitors were extremely numerous in European countries and in the U.S.

Those numerous customers, I won't say were pervasive but were very present in certain stores, when they gradually disappeared, well we were able to replace that, thanks to focus on proximity relations, the fact that the appeal of our brands is quite special Louis Vuitton, Christian Dior and the others. And so it's, I would say something that is set to last and that we're developing and in fact, we don't expect the Asian visitors to return any time soon. I think that Asian visitors will remain quite far from Europe, the U.S. at least for this year was already absent last year, we saw that it didn't prevent our brands from operating well. So selectivity and I would say, great devotion by our sales forces and our ambassadors with local customers now, Mr.

Guiony on the margins and the calculations, maybe you could say a word. Jean-

Jacques Guiony: Yes, well, what I can tell you is that we have to watch things pretty carefully. Members of the Executive Committee are attending this Zoom discussion. So we're looking very carefully at margin levels. No person in charge expects us to go back to previous margin levels.

So we're looking here at something that is sustainable at least in the context, we expect to find in the years to come. As to your last question, Antoine about wines and spirits in H2, we have this almost year-on-year, this is a traditional cyclicality. We have a certain number of bottles available in H1. And when demand is greater than supply well, there tends to be H1 higher than in H2 in terms of top line. But then of course in marketing expenses and advertising, it's the other way around.

We spend less in H1 than in H2, except for the Chinese New Year. So there's a disconnect between sales that are high in H1 and lower in H2, and expenses higher in H1 and then in H2, so there's the scissors effect that you note for that profit margin.

Bernard Arnault: We have another question from Erwan Rambourg.

Erwan Rambourg: Erwan, no Erwan Rambourg from HSBC from New York and thank you for this presentation and congratulations on the performance. If I may, we have a couple of questions.

And the third one, the first point on China and the risk that China must remain closed off for the next couple of years. What are the implications in terms of expenses we have, well when the Chinese travel, they tend to spend more than at home, but that may not necessarily be the case, the Chinese ecosystem being locked down as it were or locked up. Do you see more expenses simply because prices are higher or there's more cross selling? What do you expect? The second question is about inflation? There are a number of brands within the group but indeed outside the group as well that have increased their prices significantly. Do you think it is realistic? Is there a risk of going too far in terms of pricing of increasing the prices too much? And then to respond to that well, of course you have the cash flow more or less being equal to the price of Tiffany, but do have priorities in terms of possible future consolidations in wines and spirits or cosmetics or I mean, are there any gaps that need to be filled for the group?

Bernard Arnault: Well, regarding our Chinese customers, as we told you in the presentation, maybe it was Jean Jacques who mentioned this, but we found in 2021, that our Chinese customers, even though they couldn't travel outside the country, our Chinese customers then were buying, were buying more from us than in 2019. And so and I certainly agree with you.

I mean, International travel is not about to resume anytime soon. But that trend is here to stay. And the question is, I mean, as we're doing in Europe, how can we remain close to our Chinese customers? How can we ensure that we provide them with the best products, the most creative products? And indeed, how can we reach out to them with the best quality we have to offer showing all aspects of our brands, we have to show them that Christian Dior the iconic, remarkable creator is at the same time a very modern creator and Louis Vuitton is much more than fashion indeed, that keep saying this Louis Vuitton is not a fashion company and all this is very attractive to our Chinese customers. And of course, we have to keep a long-term view of these things, and to see what it is that attracts our customers well, what stimulates, what creates this desire for our brands? What causes our customers to aspire to acquire products, whether they be European or Asian? And having said all that, I'm not concerned. Now, regarding the prices, of course you shouldn't, you shouldn't go too far there's only but nonetheless, if the demand is high, if a product is highly desirable, well it comes at a high price.

Let me just give you an example. Recently at Tiffany, we've just celebrated the 170th Anniversary of the collaboration between Tiffany and Patek Philippe and on that occasion, well, Patek Philippe produced a special edition of a watch called Patek Tiffany. It had the watch was blue and there were only 170 watches. And of course, it is this close bond between Patek Philippe and Tiffany that goes back 170 years because ever since its inception, Tiffany had been selling Patek Philippe watches in United States. And so I'm not saying that we should sell all the watches at the same prices that have the unique Patek Philippe watch, but of course for customers, when you want a high quality watch, you pay a high price.

It's something like $50,000. But we decided to sell one of these watches up for auction. And for our charity and you may have heard, I think it's I think it's also $5 million with one watch. So and that's how much it fetched at an auction. But of course, all that comes is the quality of the product.

And then of course people will pay the price they deem worth it. As to acquisitions, we're in no hurry. I've been making acquisitions for the past 40 years. People tell us we're making many acquisitions. We only have one every so often he had this was a big one.

And thanks to the good work of our CFO, we've more or less paid off the cost of that, the price of that acquisitions way, if you see another attractive acquisition, why not but it's not a matter of looking for possible acquisitions, as you said. It's just a matter of finding them. And then for the questions, yes. There's another question, I'll give the floor now to .

Unidentified Analyst: Yes, thank you.

Good evening, Mr. Arnault about M&As, you have 75 brands in the group. Do you sometimes consider that you should dispose those certain brands? I mean, there was a few years back I believe that some you dispose of some brands and then who is going to replace Virgil Abloh at Louis Vuitton?

Bernard Arnault: Well, what are the skills required, I'd like to take the job, but regarding the brands, we look at every company in the group, we analyze the performance, we see how we can boost the performance, it may happen, but very rarely, indeed. I mean, Jean-Jacques Guiony and myself might decide that that maybe, we might not be able to get through with it, it may not be suited, it may have happened, what maybe two or three times in the history of the group. But that is very incidental.

But indeed, whenever we make an acquisition, whenever we have a brand, we nurture it, we must not be in a hurry because of course, we can't expect performance to occur overnight, you have to take the time it takes for this or that company to prosper. But indeed, after a long time, we don't believe in it anymore. Well, then we will draw the lessons. But again, that is very exceptional. Over several dozens of years, it may have happened two or three times.

Regarding Virgil, we were I mean, this was a shock nobody expected him to die so young. That was a real tragedy. Virgil was an extra ordinary creative, more than a fashion designer. He was a very cultivated man, and as I was saying in his last show that he had actually designed prior to his death, that was a cultural event. It was not just a fashion show.

And so we're still mourning him. And I will tell you once that is behind us, we will consider the next move. Thank you. The next question comes from Edouard Aubin, Edouard, Edouard Aubin from Morgan Stanley.

Edouard Aubin: Good evening, Mr.

Arnault. On Tiffany, you said that you would be telling us more about the merits of this acquisition. But could you tell us more about your main operations, what you communicated about Tiffany? And then on the Cosmetics division, that is the one division that underperformed in terms of revenue, the main leaders of that segment? How can you, how do you account for this? And how do you see the performance in the long run? And then one question about the Metaverse, what is your opinion? I mean is that a significant concern for the main brands of the group? Do you believe that in say, five or 10 years' time a substantial portion of the revenue or the profitability could come from the net from the Metaverse?

Bernard Arnault: Well, Tiffany, you referred to the products. And of course, what makes such a company as Tiffany so successful is of course, the product it makes and sells. What you can say is that this year was a major turnaround for the company because of course we knew the teams, the people working there, but we have people who have the experience, they know our group, and we were able to bring some people in from day one when we came in and took over Tiffany.

It should also be pointed out that Tiffany for at a time where luxury industry grew remarkably all the way up to 2019. But during these years, which was a period of growth, Tiffany stagnated both profit and revenue were flat. So we came at an opportune time. People said you're paying a lot for that company, but I think it was not expensive at all. In fact, well, Mr.

Guiony was able to pay it off very quickly. But it wasn't such an expensive acquisition considering and looking at the performance, and I'll say a few words about that. But considering the performance achieved, just because again, once again, from day one, when we came in, at the head of Tiffany, we had a team of professionals, a very dynamic team that was that knew all about products, communication, retail. We have a team of high professionals and should Tiffany still be listed, it probably would be worth it will be worth twice its share price, maybe it's an exaggeration. But I still think in terms of value, this was a great acquisition.

Now, of course, the products of Tiffany iconic, you have the , but production was too low. Likewise, for hardware, the shops lacked momentum. Maybe some of them had to be redesigned, and business was sluggish. And so we were able to turn it around and bring it up to extremely high performance. While all the time the flagship store had been closed since the end of 2020.

And yet, we were able to pull this off. So we are very confident as to the future of Tiffany, we that you may remember that with Beyoncé there was a big event that stirred a lot of interest on the part of the -- while the younger generation. There's this song which Beyoncé herself Moon River, which is the song of the movie of breakfast of Tiffany where you saw Audrey Hepburn eating her breakfast in front of the Tiffany window. I saw people weep when they heard that song. So I mean, this was great fun.

But of course, our teams were highly motivated. And they did quite well. Now Perfumes & Cosmetics, you say we are lagging behind. It's true in terms of revenue, we may not be doing as well as other brands. But this is a deliberate move.

You have many brands that flaunt their huge revenue, but they said, well, part of the revenue was achieved last year in duty free stores. But that's odd. How can you generate revenue in shops that have no customers. And we know about this because we have a business called DFS, what happens is you have products that don't even go through the stores, because there are no customers there. They go straight from that store, or rather from the basements of that store, to retailers in China, who sell them at a discount.

And that has a terrible negative effect on the image of the brand. And we are not dealing this. Look at , beautiful brand, they refuse to do that. And I won't name names and tell you who is doing this. But there are at least two of us refusing to do this.

The reason is we want to preserve the brand image, the image of our brands and I'm fine with other brands doing it. Fine, let them do this. They want to generate revenue in this cheap way. They want to -- they have to produce revenue figures maybe in the short run. It's looks good, but it's pretty bad in the long run as to the metaverse well.

At this stage, all we can say is that you do realize this is a virtual world. And right now, as far as we know, we are very much in a down to earth world. We want real product selling for real. Now, fair enough. There is some it is rather thought provoking to see a virtual universe generating profit it would be good to see how this can generate profit and this non-fungible tokens generating profits.

I'm sure this will probably have a positive effect. If things are done properly. This could this might do. Useful services for certain brands, but say we are not interested in selling a pair of sneakers for virtual sneakers for €10. We're not into that, but there may be more relevant applications, we have to see what these applications might be, what universe is might actually be in a way profitable.

I believe there are a few dozen nurture verses out there. But we're looking at this. But again, we're not in the business of selling virtual shoes. And we also have to be wary of bubbles. At the beginning of the internet in the year in the 2000s.

There were all sorts of things grow, cropping up, left, right and center. And that was a bubble that burst All right. Facebook's they were they were quite a few of them trying to do it only one pulled through. And the others failed. So we have to sell the note of caution.

Maybe we have time for final question for yes, that will be Zuzanna Pusz. Zuzanna take it away. Just yes, yes, yes.

Zuzanna Pusz: It's perfect. Great.

Sorry, just wasn't aware of the technology. So I have three questions, please. First of all, maybe a follow-up on Outlook. I think you there's a statement in the press release, say that you're expecting the current momentum to continue. So would you be able to tell us maybe you know how we should read it? Does it mean that this would be growth on a two year stock? Or maybe growth and kind of 20s range? And then the second question on pricing.

I understand that you're probably reluctant to comment exactly on pricing that you may push this year. But obviously we're in a very high inflation environment. And it would be just interesting to know what we should be expecting in terms of pricing, especially for the flash leather goods division, maybe at least some sort of a magnitude, mid-single-digit, high-single-digit. I know you can't tell us exactly in case we were to rush to the stores? And then final question on the U.S. market.

We've pleased, we make sure they grow for the U.S. in the last 18 months. And there's a debate whether this is structural or just cyclical. And I think we already discussed it, but I guess if we were to assume that there is some cyclicality, but most of the growth is structural. What then happens to your distribution in the U.S.? Are you already considering maybe expanding some of the stores in the U.S.

or just maybe enlarging them because I guess at this rate of growth, probably customer service may at some point start to suffer? Thank you.

Bernard Arnault: Well I'll answer in French, if you don't mind, but regarding the outlook, as we say in the press release where we're confident, okay, the results in January are considering at the same growth pace at the end of last year. Demand is very much still present. Of course, we can't make any economic forecast for the long-term. But as I said in my brief presentation as regards inflation, whose right, is it those who are very worried about inflation, fearing, galloping inflation that will lead to a recession has happened several times 20, 30 years back, or is it those who believe that inflation is something that is just appearing for short-term cyclical reasons linked to the pandemic and will disappear over the next 12, 18 months.

It's rather difficult to say the pricing. Well, we're trying to adjust but you must. And you'll see the margins were achieving pricing of our products offers very acceptable margins, but we also need to be responsible to our customers. Can't give the impression as some brands do that we can go to figures that don't correspond to the economic reality of the price of the product. We need to be reasonable.

We try and be reasonable so that our customers do sense, do feel that with us. They are with brands that bring them something that realistic and there's no artificially, even if they're very fine products, but not artificially inflated as to the U.S. market. Well, we already have a presence on the U.S. market, very, very extensive present, because Louis Vuitton was the leading brand on the U.S.

market. Tiffany and it's feel far and away. Number one on the U.S. market, some of our brands need to increase their presence such as , for example needs to up its present, Duo has increased its presence significantly. We only do that in light of our ability and the ability as a group.

And that's an advantage to be a group as we are the finest brands in the world is to be able to obtain the best locations. I was in November as it happens when that unfortunately, we learnt that time. The passing of July was in Miami with the teams and we saw the strength of the group at work in a location, the design did streak that we were arriving with all our brands to obtain excellent locations, but we mustn't be in a hurry. I mean, we're not too much why we got great locations likewise in New York. Good results, good earnings, very good growth, that sales in our stores and boutiques are increasing naturally.

We're seizing opportunities as and when they arise at the right time. Well, thank you Mr. Guiony. Do you have anything to add?
Jean-

Jacques Guiony: No, I won't speak again after you. You don't have a few figures to give us.

You've given them all. But you're really amazing. Is there one last question . One last question if you like. Okay, one final question.

It's

already 7:30. And we can't offer there's not a cocktail party for our guests this evening. That's really a shame, but if things next year improve, I promise you will taste the best champagne in the world the 2004. Thomas Chauvet the last question from you.

Thomas Chauvet: Thank you, Chris.

I'm really look forward to tasting the next year. First question for you, second for George. Fashion and leather goods, the growth of that division plus 42% organic two years that's about 20% growth per annum over the past two years to be compared to 15% growth rate over the three previous years '17 through '19. What are the main drivers of that significant acceleration five points, market share gains versus your peers price increases higher or postponing spending, travel et cetera. That may be temporary its operating margin rise sharply.

600, 700 basis points versus 2019, 50% EBIT margin, what's the share of that margin progression that comes from gross margin. Thanks to the outstanding growth of volumes and price increases not come on abnormally low cost base of marketing spend because of the pandemic. Just wanted to check with Jonzac. Or maybe it was you Mr. Arnault that the operating margin for Vuitton this year is a good basis for the next two years? Thanks.

Bernard Arnault: Well, why do we have this growth that is really helping us to gain market share. I mean that is your first question, there are several factors. The first is probably thanks to the work put in by the teams that design teams, the production, manufacturing teams, distribution, customer relations are brands are more desirable than the market as a whole. So customers turned first and foremost and more strongly to our brands than to others. I could explain all that, but it would take rather a long time.

The reasons why our products, our brands are extremely appealing. Once again, it's we sell a lot more than just fashion, I think as the most important thing. Next, our customers, our teams, really are producing products that are increasingly sophisticated, okay, that won't repeat what I said about that Tiffany watch that we sell it quite a high price, but also more and more sophisticated products of return. Delfin in particular, is in charge of all the leather goods that are growing in sophistication increasingly appealing increasingly successful, which means that the average price because the product is more sophisticated. The average price increases.

So revenue sales increase as it occurs at a given scale that explains why growth is higher that those who sell more ordinary products that are a lot cheaper. But since we're speaking about pricing, we try and ensure that the customer buys a sophisticated leather product from that it really does get an outstanding product. We have Louis Vuitton, we have machines of torture for all the leather goods if you like one day, maybe invite you to visit what remains of certain products of certain competitors when they emerge from the torture machines of Louis Vuitton. Sometimes there's not much left whereas the Vito has to remain in the machine for a week before it can go to the stores that's the difference. It's really there's some focus on quality.

Thomas Chauvet: I think was another question it was for you Guiony. Say you're going to have the last word you see. Jean-

Jacques Guiony: Yes, I will answer and that will bring this session to an end. So I can confirm that the profit margins of Vuitton have not come down. In fact, well, they may have in fact increased, but I'm not going to confirm the numbers you have given, because we do not go into the specifics of Vuitton, but admit it is assuming that margins may have gone up.

There are two factors to explain this. Number one, we had a significant increase in volumes. And so that meant there was less depreciation especially finished products in 2021 than in previous years, because of the volumes. And because of the volumes, there is also a better absorption of operating expenses. However, then there no one of items there had been some in 2020, but not in 2021, such as renegotiated leases.

Did we renegotiated the leases in 2021. The shorts were closed, but there was no significant effects in 2021. But it's true. We were able better to absorb our operating expenses.

Bernard Arnault: Well, ladies and gentlemen, thank you so very much for attending this presentation of the 2021 results.

And I certainly hope that next time around it will be an actual in presence meeting it will be my pleasure to let you try out our best champagnes. Thank you.