The problems continue to pile up for global luxury bellwether LVMH, this time in the wine and spirits division.
First-half results show a 9% year-over-year decline in organic liquid sales in the period, driven by weak local demand and destocking in China, as well as lower demand in Europe and the US.
Liquid profit from recurring operations was down 26%.
The demand situation is “quite negative and difficult to manage”, said analysts at UBS, adding that “and there was no assurance that inventory levels have normalised”.
UBS analysts surmised that LVMH’s wine and spirits sales in the first half were below alpha consensus.
This will come as a concern to FTSE 100-listed drinks giant Diageo, which has a 34% stake in LVMH’s liquid division.
According to UBS, the 26% decline in LVMH’s liquid sales spills over to a -1% earnings-per-share impact on Diageo.
There has been no instant impact on Diageo shares yet though. Despite LVMH flopping 4.5% today, Diageo remains flat as lukewarm lager at 2,497p.