(The following statement was released by the rating agency)
Dec 20 - Luxury goods manufacturers won't retain the immunity from tough global economic
conditions they've enjoyed for the past two years in 2013, but they'll still grow and hang on to
their decent credit metrics, said Standard & Poor's Ratings Services today in the report:
"The Luxury Goods Industry's Lustre Will Fade But Not Disappear In 2013".
The French luxury goods manufacturers LVMH Moet Hennessy Louis Vuitton S.A.
(LVMH; A/Positive/A-1), PPR S.A.'s luxury division (BBB/Stable/A-2), and Remy
Cointreau's cognac division (BB+/Positive/--) should post high-single-digit
revenue growth and see slightly falling margins next year, the report says. In
2011 the three posted soaring organic growth rates of 14%, 22%, and 25%,
respectively, and 2012 growth has so far been lower, especially in the third
"We believe luxury goods makers' profit margins are likely to be a bit lower
this year, but they'll probably still be the highest in the consumer goods
sector," said Standard & Poor's credit analyst Caroline Duron. We expect cash
flow generation to remain fairly strong, and despite our expectations for
sluggish economic conditions, all of the industry's groups have stable or
positive outlooks, reflecting our view that credit quality should be preserved
unless there is a severe economic downturn.
"Luxury goods makers have already proved their ability to manage in a crisis,"
said Ms. Duron. "They've protected their credit metrics by increasing prices,
cutting capex, postponing external growth, reducing shareholder remuneration,
and entering buoyant new economies. Their liquidity also protects them against
The luxury goods industry's robust performance translated into numerous
positive rating actions this year. With the exception of Aston Martin Holdings
(UK) Ltd. (B+/Stable/--), premium carmakers like Volkswagen AG
(A-/Positive/A-2), which owns Audi and Porsche, have also seen positive rating
actions in 2012.
Potential acquisitions would pose the main threat to luxury goods
manufacturers' credit profiles, the report concludes.