UPDATE 3-LVMH record year fuelled by growing China appetite

Fri Feb 4, 2011 4:42am EST

* 2010 EBIT 4.32 billion euros, vs poll 4.36 billion

* Q4 like-for-like sales up 13 percent, vs poll 11 percent

* Proposes dividend up 27 percent to 2.1 euros

* Shares fall 2.4 pct as profits in line, no 2011 forecasts

(Adds share price, analyst comment)

By Astrid Wendlandt

PARIS, Feb 4 (Reuters) - LVMH (LVMH.PA), the world's biggest luxury group, posted a 13 percent rise in fourth-quarter comparable sales boosted by Chinese shoppers' growing appetite for luxury goods and a steady rise in discretionary spending.

LVMH, whose Louis Vuitton brand accounts for more than half of group operating profit, also proposed raising its dividend by 27 percent on the back of a record year.

LVMH Chief Executive Bernard Arnault told a news conference on Friday he had reason to be optimistic about 2011 and said he was confident the group's performance would beat last year's.

The group will "continue to profit from Asian clients' infatuation with Louis Vuitton," CM-CIC analyst Merav Atlani said, adding that the Chinese had become the brand's top clientele ahead of the Japanese, Americans and Koreans.

LVMH posted a 2010 profit from recurring operations of 4.32 billion euros ($5.95 billion) on revenue of 20.3 billion, in line with forecasts in a Reuters poll. Fourth-quarter like-for-like revenue was seen up 11 percent. [ID:nLDE70U21L]

"Whilst this is a solid set of results, it comes after a number of beats across the European Luxury space. Given that there hasn't been as much operational gearing and not a beat, I expect the shares and sector to mark down," UBS analysts wrote.

Shares in LVMH were 1.3 percent lower at 115.20 euros by 0931 after earlier shedding more than 3 percent, the worst performer on the French blue-chip CAC 40 index .FCHI.

Swiss luxury group Richemont (CFR.VX), British handbag maker Mulberry (MUL.L) and Italian leather goods group Tod's (TOD.MI) have all reported buoyant Christmas trading and expressed optimism about 2011.

In January British luxury brand Burberry (BRBY.L) said it expected full-year profit at the top end of expectations. [ID:nLDE70H09K]

Smaller French peer Hermes (HRMS.PA) posted forecast-beating 2010 results on Thursday and unveiled a hefty interim dividend, its first ever, to be paid out next week using record cash levels. [ID:nLDE7111BI]

LVMH's wines and spirits unit, which includes No.1 champagne maker Moet & Chandon, bounced back from the severe slump of 2009, together with its watches and jewellery division, home to Chaumet, Fred, Tag Heuer and Zenith.

Wines and spirits generated revenue growth of 19 percent in 2010 and lifted their profit from recurring operations 22 percent, as all champagne brands, particularly prestige cuvees, experienced a recovery.

Watches and jewellery saw their profit from recurring operations double last year on 29 percent higher revenue.

Louis Vuitton had another record year, LVMH said, with double-digit growth, while Fendi "performed well".

Global luxury sales climbed 10 percent after falling 8 percent in 2009.

LVMH made a full-year net profit of 3.03 billion euros, which included a gain from its acquisition of Hermes shares.

LVMH stock rose 57 percent in 2010, making it the top gainer on the CAC 40 index.

They have fallen 5 percent this year. The luxury sector suffered a re-rating last month as many investors rotated out of the sector after a strong performance last year.

Analysts said investors were concerned opportunities for earnings upgrades could become scarcer this year, limiting the potential to raise valuations.

LVMH stock trades at 18.5 times current year earnings, compared with the European luxury sector on about 17-18. (Editing by Dan Lalor, Mike Nesbit) ($1=0.7257 euros)

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