Focus on LVMH - Dexia Asset Management

SRI Company Profiles
March 2012
<strong>Focus</strong> on LVMH

Sustainable
<strong>Focus</strong> on LVMH
LVMH is one of the main global luxury goods conglomerates.
It owns a diversified portfolio of more than 60 brands including
Louis Vuitton, Hennessy, Moët & Chandon Champagne, Fendi,
Parfums Christian Dior, Guerlain, TAG Heuer or Zenith. The group
has 5 operating segments, namely Wines & Spirits (16% of sales
in 2010), Fashion & Leather Goods (37%), Perfumes & Cosmetics
(15%), Watches & Jewelry (5%) and Selective Retailing (27% of
sales including Sephora which accounted for 16% of the group’s
sales). LVMH achieved sales of 20,320 million euros in FY 2010 and
it had 83,542 employees at the end of 2010.
Based on Dexia AM’s SRI Analysis of the Textile & Luxury Goods
sector, LVMH has been included in the SRI universe and categorised
as a “Runner-up” company. A brief description of how the
company addresses its major sustainability-related issues is given
below.
With regard to its Macro score, i.e., the company’s exposure to
the global sustainability trends. LVMH achieved about one quarter
of its sales in emerging markets in 2010. LVMH sells luxury alcoholic
beverages through brands such as Hennessy, Moët & Chandon
Champagne, Veuve Clicquot, Krug, Château Cheval Blanc and
Dom Pérignon. In 2010, champagne, wines, cognac and spirits
accounted for 16% of the group’s sales. However, this exposure
remains rather limited overall and health issues associated with
luxury wines and spirits are much less material than with cheaper
mass-market alcoholic beverages. As a result, the score of LVMH
in Health & Wellness is in line with the score of its peers.
The Labour practices of suppliers is also a relevant factor. LVMH is
committed to ensure that its suppliers respect responsible labour
standards and in particular that they respect the company’s
Supplier Code of Conduct which has been implemented by all
brands since 2008 (principles covering freedom of contract,
discrimination, child labour, etc.). Supplier audits are conducted
and corrective action plans are taken when improvements are
required. In 2010, 262 social supplier audits of the group’s suppliers
were conducted, most of which by third-party organisations. It can
also be noted that LVMH has a good level of vertical integration
which tends to result in lower risks in the company’s supply chain.
LVMH has also a rather limited exposure to corruption in the
countries where it operates in comparison with some of its peers.
Company ranking in the European Textile & Luxury
Goods Sector
Microanalysis
65.00
60.00
55.00
50.00
45.00
LVMH
Median
Median
For the Micro score, i.e., the way in which the company handles
its stakeholder relationships, LVMH has developed significant
policies and programmes in training and career management
covering a broad range of subjects such as remuneration, equal
opportunity, internal promotion, the employment of disabled
persons, as well as the working conditions of senior employees.
40.00
35.00
-5.00 -4.00 -3.00
Source: Dexia AM
Macroanalysis
-2.00 -1.00 0.00 1.00 2.00 3.00 4.00
Editorial date: 15 March 2012
Managing assets March 2012 13

Disclaimer
This document is published purely for the purposes of information, contains no offer for the purchase or sale of financial instruments, does not comprise investment advice and is not confirmation of any transaction unless expressly agreed
otherwise. The information contained in this document was obtained from a number of different sources. Dexia Asset Management exercises the greatest care when choosing its sources of information and passing on this
information. Nevertheless, errors or omissions in those sources or processes cannot be excluded a priori. Dexia AM cannot be held liable for any direct or indirect damage or loss resulting from the use of this document.
The contents of this document may be reproduced only with the prior written agreement of Dexia AM. The intellectual property rights of Dexia AM must be respected at all times.
WARNING :
If this document mentions the past performances of a financial instrument or index or an investment service, refers to simulations of such past performances or contains data relating to future performances, the client is
aware that those performances and/or forecasts are not a reliable indicator of future performances. Moreover, Dexia AM specifies that:
• in the case where performances are gross, the performance may be affected by commissions, fees and other charges;
• in the case where the performance is expressed in a currency other than that of the investor’s country of residence, the returns mentioned may increase or decrease as a result of currency fluctuations.
If this document makes reference to a particular tax treatment, the investor is aware that such information depends on the individual circumstances of each investor and that it may be subject to change in the future.
This document does not comprise any investment research as defined in article 24, §1 of Directive 2006/73/CE dated 10 August 2006 implementing Directive 2004/39/CE of the European Parliament and Council.
If this information is a marketing communication, Dexia AM wishes to clarify that it was not designed according to the legal requirements to promote the independence of investment research, and that it is not subject to any prohibition
on dealing prior to the dissemination of the investment research.