Hello, good morning and welcome to this Annual General Meeting. The session is open. I would appoint Nicolas Basieur and Pierre Godet as vote takers. They have the largest amounts of votes. And Bernard Kuhn will be the scrutator.
Now we need a quorum. The quorum has been reached and the attendance sheet has been drafted and completed. The final number of voting shares will be indicated during this session. All the legal documents required for this general annual meeting have been presented at the desk and the office. The other documents are were made available to shareholders at headquarters in the 15 days prior to this meeting.
We also have in the audience 2 bailiffs that are here to ensure the proper running of this assembly including for electronic voting. You have received the agenda for this meeting. And so without further ado, we can move on to the presentation of the numbers, the performance in facts and figures. Mr. Guni, our Chief Financial Officer, will be giving you this presentation of the financial performance.
You have a revenue of upwards of €29,000,000,000 and for the first time running first time in 2013, the profits from recurring operations is above 6 €1,000,000,000 The operating margin stands at 21%. And gearing that is debt to equity ratio. Gearing then is less than 20% and that of course shows the financial soundness of the organization. So I will give you more details about this in a moment, the highlights of the year. But without further ado, I will give the floor to Jean Jacques Bouigny.
Ladies and gentlemen, good morning. As Mr. Hernandez told you, I will be going through the main financials for 2013 with you. Let's begin by looking at the sales figures. 2013 revenue, you can see that we've got 29,149,000,000 for 2013 organic growth excluding changes in the corporate structure and the currency and there were no changes in the corporate structure.
But organic growth is at 8%, rather sustained. Unfortunately, this has to be put is offset by the negative impact of exchange rates. Now if we look at the breakdown of our sales kind of on a country by country basis, which hasn't really changed that much over the years. But it's always interesting to look at this. You can see that we've got 3 more or less roughly 3 thirds.
We've got Europe and France on the one the United States and Asia on another. That also represent about 1 third each. Another thing if you look at this more in details, you'll see Japan, which is a large market, but our overall revenue there has gone down because of the decline in the yen, but Asia excluding Japan is 30% of our sales. Let's look at growth for each region in 2013. Again, this these are revenue figures in local currency.
And you can see how our business has grown throughout 2013. Let's look at the United States first. Business is up 9% there. It's a very good performance. The following excellent years in 20112012.
So business in the United States for the group is holding up well. In Japan, we're up 10% there. This is a good figure, even a very good figure, especially if we compare it to growth rates in recent years. Again, we have to see that this is something that has to be placed in the context of a declining yen. This figure 10% is denominated in yen.
But because the yen has gone down, Japanese customers who habitually buy a lot outside the country are buying more in the domestic market. Asia is up 30% for 2013. This figure has been boosted somewhat by incorporating the Hong Kong duty free concessions that were integrated in 2013. And Europe were up 2%. It's an honorable performance given the general economic circumstances in Europe that I won't dwell on here and now.
We're all familiar with that. Now let's look at the different divisions and business groups. We'll be looking at organic growth. That's the most telling figure compared to last year. We've got 8% for the group as a whole.
And you can see that the figures are more or less around that average. Wines and Spirits are up 6%, Fashion and Leather Goods up 5%, perfumes and cosmetics up 7%, watches and jewelry up 4%. There's one figure that really is the outlier here and that's Selective retailing, Sephora and DFS, up 17% in organic growth. And again, here, this is largely enhanced by the incorporation of the duty free concessions at the Hong Kong airport. Nonetheless, this does show us that selective retailing with Sephora and DFS did turn into very strong performance in 2013.
Summarized income statement. I'm not going to go into the revenue figures. We just look at that. Let's go down through this. We have the gross market.
It's going up slightly more than sales. We're up 5%, which is basically a record level for this. And the marketing and selling expenses have gone up from 7% to 12% on a constant exchange rate and with our wholesale networks as well. Our administrative expenses are 3%. And as Mussandro said for the first time, our profit from recurring operations has gone above the €6,000,000,000 mark, 2 percent growth.
Operating profit here, no comments really. We have other income and expenditures, which basically is due to the depreciation of intangible assets. Now in 2012, we did have an exceptional dividend paid by Hermes International. That was €120,000,000 That was in 2012. It was a non recurring item for 2013, of course.
And so this had a negative impact on our financial result. Income taxes, dollars 1,700,000,000 it's slightly down, which might seem paradoxical given the context that we're operating in, but this is largely due to a slight dip in the tax rate on this. And the net profit before minority interest are up, especially due to growth in mortality and DFS. So this is the highest record highest level of net profit for we've ever seen. Now, let's look at things how things break down on that business by business level.
Wines and Spirits are up 9%, whereas we only have 1% growth in sales in euros. So a lot of growth there. It's a bit more complicated for fashion and leather goods where sales were sales and there was a slight improvement in the operating profit. It's not really due to Louis Vuitton, which has held up well, but other brands that we've made more investments in for the long term. Perfumes and cosmetics have seen growth in profits on a par with the growth in sales.
Watson Jewelry up 12% in their profit from recurring operations. The main benefit is Bulgaria. Bulgaria saw a strong increase in its profits last year. Selective Retailing, a good performance here. Even if the Hong Kong airport concessions has had a slight downward impact on profits from operations.
We've had a large increase in sales, but they won't really start to make major contributions to profitability except in the long term. Let's look at the financial structure of the company. I'm not going to dwell in the details here of this chart, but it does show you that our balance is still very sound. 50% of our total balance is made up of equity €27,000,000,000 So we have a very strong financial position. There are lots of things that aren't included here large amounts of cash flow, large access to credit lines in cases of emergency, etcetera.
Let's look at cash flow and net debt. Let's look at the gray bars in this bar chart. You can see that for 2013, we had net cash flow after investments and the working capital requirements of nearly €3,000,000,000 This is the 3rd best performance in the history of the group. And this just demonstrates how much our business can generate financial surpluses and can make investments and at the same time distribute dividends. So we're very, very pleased to see how things have progressed during 2013.
It's made it possible for us to keep a cap on our debt despite the acquisition of Lower Piana. So you can see we have €5,300,000,000 in debt. That's only 19% of our equity, which gives us a gearing ratio as Mr. Arnott just said, which is quite low. Dividends now.
At this general meeting, we are presenting proposing a dividend distribution of €3.10 per share. So we're up 7% compared to all of the dividends compared to last year. I think the most important thing to note here is that the average annual growth rate of the dividend over the past 5 years is 14%. And in fact, if you go even further back in time, it more or less is on a par with that figure of 14%. So our cash flow, as I was just saying, makes it possible for us to distribute dividends.
And this has been demonstrated by growth in the dividends. We want to make sure that shareholders can get their value for money out of the strong performance of the group. And this is the last slide I'll show you. It's a slide I show you at the end of my presentation every year. It shows you changes in share price performance, but you can see how well the share has hold up, especially over the past 12 years.
You can see over the past 4 years, our share has gone up by 66% whereas the CAC 40 Index in France is only up 9%. So that's what I wanted to share with you this morning.
Ladies and gentlemen, as we have been doing for the past 6 or 7 years prior to the general annual meeting, there's a survey amongst shareholders to find out about their concerns and questions. And after the survey, we produce a video clip, which sort of recaps the major concern and questions expressed by shareholders. So before we get into the year's performance, let's take a look. Like every year, LVMH has run a survey amongst its shareholders to find out about their concerns. It turns out that 95% are mostly concerned about the group's strategy, 94% would like to know more about the medium- and long term prospects of LVMH in the face of challenging economic context and after an outstanding year in 2013, you would like to know what are the international expectations?
What how is the group proposing to adapt to this changing world? You would also like to know more about the new businesses of the group. What are the source of growth? Do you propose to invest in additional activities or completely different activities? You're also concerned about business in emerging economies.
How do you propose to invest in such countries? How do you propose to develop the Asian clientele? Another concern that has come out of the survey, the assets and competitive advantage. How can you meet a competitive environment? What is your strategy in the medium term in terms of strategy and competition?
Will you work on the digital economy? And finally, listing craftsmanship and know how as the main assets of the group, you recognize this to be our main strength. Right then, well, 2013, as we saw, 2013 was an outstanding year for the year for the group even though the economic environment was more challenging than the previous years. Growth then was good, but not as spectacular as in previous years. Now why is that?
How do you account for this highly positive and favorable performance even though the overall economic situation was more challenging. Well, there are three reasons to my mind, three reasons why the performance was so outstanding even though growth was not as buoyant as in previous years. Now, first of all, you have the overall economic context. The global economy was grew in 2013 and significant growth to the tune of 2 percent to 3%. But what we did find was that there were areas where growth was slowed down.
Growth remains good remained good in China, but not as good as it used to be. We also found pressure in South America. And in particular, Argentina has become very challenging countries to the point where we had to close down our shops like our competitors because we could not import goods at all. Brazil is also a growing economy, but it is now facing new challenges as well. And of course, Europe is only just emerging, very slow growth.
Indeed, France has very weak growth indeed. But all this, of course, has weighed upon the performance of the group and the behavior of our customers. But this has meant this has added up to less growth than previous years. Now another phenomenon is exchange fluctuations. In 2014 today compared to where we were a year or 18 months ago, we found that a number of currencies have depreciated considerably vis a vis the euro.
If you look at the Japanese yen, it's down 30%. The the euro. If you look at the Japanese yen, it's down 30%. The U. S.
Dollar is down significantly. And if you well, other currencies in South America have also shown a significant decline. So all this accounts for the sort of less favorable result. Nonetheless, the performance remains excellent and it shows that our group even though the overall position is less favorable. I mean, I'm not saying it's bad, but it's it was rather challenging and especially with the an exchange situation, which was not favorable to exporters.
All this, nonetheless, has not prevented the company from performing quite well. Now there's another aspect, which I would like to emphasize and that's our determination to redeploy some of our businesses. And in particular, Louis Vuitton is trying to identify its best products through its own customers. Of course, Bouygues Vuitton is an extraordinary company whose performance has been based year on year on iconic products, including the monogram canvas is probably the very icon of Louis Vuitton. And yet customers often do not realize that Louis Vuitton is the finest leather good maker in the world.
And that can be verified day after day. I mean, if you look at our craftsmen, we have some of the finest craftsmen in the world. Some of them are in the audience today. And they're the products, the items they manufacture are quite outstanding. And so what we have been doing through our efforts for the past 2 or 3 years is to put forward these products to put them on the front stage with a view to enhance our communication, the visibility of our goods in the shops.
And so we are, in a way, redeploying an activity. And the idea is also not to sort of a not to step up unduly our activity. We talked about the cannabis monogram. We were criticized for having too many products available. And so even with that emblematic product, we've decided to show some restraint.
And so there was, of course, the economic situation, but this was a deliberate decision to slow down the development of shops and goods to try and remain within a sort of an attractive proportion. So now the shops that we do have are extremely well located, but we're emphasizing quality rather than quantity. There's no need to, as I said, unduly grow the number of shops or our catalog or the number of items on our catalog. Now we want to give private place to our leather goods and the fact that we have redeployed and given, as I said, a preference to these goods has accounted for the moderate growth. I mean, we could have, of course, generated more growth had we wanted to, but we decided to stick to the or prioritize these highly emblematic leather products.
Now if we looked at the rest of our business, wine and spirits and we saw in the previous video clip, Jeff Koons' creation for Dom Perignon. Dom Perignon, of course, is a very well known champagne, an expensive champagne. And well, I'm told that all the entire production of Jeff Koons bottles has been sold out. But I mean, the fact that this emblematic champagne is associated with Jeff Koons himself, one of the most emblematic artists of the time is highly significant. And I have reason to believe that this work of art, just like Dom Perignon Champagne, will grow in value over the years.
And so this is a as I said, a highly emblematic creation. Cognac did quite well. The performance is all the more remarkable because the Chinese market, as we said, was less buoyant. And indeed, we had to redeploy cognac elsewhere and including States. In the United States, we're able to make up some of the slowdown in China.
Louis Vuitton, as I said earlier, Louis Vuitton the highlight of 2013 at Rivuitton was the development, as I said, of leather goods and in particular, a number of new creative lines of or product lines of leather goods. And we have a new creator, Nicolas Jesquier, whose first show was performed was shown a few was performed a few weeks ago. And of course, Nicolas' creativity will bring something slightly different from what Marc Jacobs used to do, but very much in line with our artistic direction. So I am very confident that Nicolas will carry forward. Together with Michael Burke, We will bring this product line forward.
And not in charge of marketing has been doing quite well. And if you look at the items in the shop windows, well, some of them are simply unavailable. The reason being when you redeploy such a huge business as Louis Vuitton, well, it takes time to train the craftsman, to bring them to change their activity. If we've decided to steer the ship towards more leather goods, well, it takes a while to redeploy the workshops, to retrain or to train the proper craftsmen to be to redirect them towards these leather goods. But of course, we are the victims of our demand with supply.
Now at Rivviton, as you know, we did open a few emblematic stores in particular that in Venice, also another highly emblematic store in Beijing in a luxury district. And that shop is indeed one of the most dynamic, the most profitable. Now if we look at our well, at retail, at retail, especially selective retailing, we found that a number of developments have occurred. 1, of course, in Paris was the renovation of the Bon Marche department store and the renovation of the Grand Epi3 International Food Emporium. There's a restaurant on the 1st floor of La Grande Epis 3 and you should try it out.
DFS and well, selective retailing as a whole, but DFS in particular enjoyed a rebound from Chinese customers. But as Jean Jacques Guioni was saying, there was less Japanese patronage because of the weakness of the Japanese currency. We were in our branches we were very successful with Sephora. And with Christopher Della Puente, Sephora has been actively pursuing its global footprint. We are present in Indonesia, Malaysia.
And last year, we opened the largest Sephora store in Shanghai, China. And so Sephora has been growing steadily. Its digital business has been growing steadily as well. And 2013 was a very successful year indeed. And if you look at perfumes and cosmetics, well, you'll find that there again, there were lots of innovations, lots of creation.
We opened a new research center in the Saint Jean de Bray with 350 people working there. And that's where our cosmetics, health care health and well-being products are developed. And this is when our brands, Dior, Guerlain or the other cosmetics brand, that's where we were able to secure the unequal level of quality and innovation. And indeed, 2013 was a particularly successful year because J'adore, the J'adore's perfume J'adore was one of the best selling perfumes worldwide and indeed far and away the best selling perfume in France. Now if you look still at again perfumes but also leather goods.
We had with the Celine Givenchy. Well, most of the perfumes did extremely well. The revenue has been, as I said, growing steadily. Again, the challenge that we have is to move these small perfume stores, which with small concerns are now moving into the next range of medium sized or medium to big companies. And it is quite a challenge to scale up these companies to reach global size or at least medium size.
And then of course, the big question for the future is how can we ensure this sort of smooth transition to a higher level. And for some of these brands have been almost taken over by events, by the developments. Finally, watches and jewelry. Watches and jewelry, again, we had a good year in 2013. Well, of course, the leader of them all was Bvlgari.
In our stores, Bvlgari had a spectacular year with the new products, in particular the Diva, the new line of watches of timepieces. And that is very promising indeed. But the other brands have done well as well. And in watchmaking, the watches we have been extremely successful. Hublot in particular is the leader of all watches around the world.
And of course, we're fortunate to have Jean Claude Bivert as the CEO of Hublot. And we've asked him to supervise all our brands in watchmaking. Of course, our people are very, very brilliant. And some of them apparently some of them are being hunted down by our competitors. Our HR person told us not to mention this, but one of our people is now being well, is being put in charge of a leading brand of watches and we can be only proud of this.
But I cannot say more this is still under wraps. Any case move on to strategy. But before we do this, we have yet another video clip.
Well, I think that today there are 3 trends afoot, and we have to bear them in mind. First, we see bricks just exploding in midair. I mean, what's really happening is China. China is really taking off. 2nd trend, we're looking for new emerging countries, Philippines, Indonesia, Turkey, Poland, Turkey and perhaps above all of them, Mexico.
And the 3rd major trend is going back to what I would call the old classics. That is to say, we can't do anything without the United States and the European Union. I'm convinced that, in fact, those countries that follow the model of democracy and the rule of law are more stable, less unpredictable than others. And then on the extremities, we've got the new, new emerging countries, that is those countries whose new wealthy classes are not yet being held back by fears of social inequality. And then we've got the old powers, the United States and Europe, where well earned, hard earned, lawfully earned money in conditions of transparency has been accepted.
And that's where people can show their individual wealth without feeling any sense of guilt because the wealth gaps have not reached intolerable levels between the rich and the poor. And the existence of democracy and the rule of law makes it possible for all of this to have legitimacy. To understand the way in which your country changes over time, you have to move beyond mere economic data and you have to look at 2 other things. First of all, governance, the nature of leadership. And the second one is its geographical location.
Where is it located? And I think that for the luxury industry, the resources might be the same, but we have to have clear definitions of all of these different challenges. Well, that's what Mr. Moisey says. I'm not sure if you agree with him, but I think he's quite right.
When he talks about the BRICS ticking off. For me, it seems more like there are air pockets. I don't think that we can really say that China will continue to work at growing 7%. Is that really an explosion? I mean, if you compare it to our countries, it is a healthy development.
But there are some countries that are mentioned, for example, Brazil. We were talking about Argentina just a few months ago as well. China slowed down a bit. But many of these countries are experiencing economic realities that are quite different today from what they were just a few years ago. Now we have to see whether or not these countries can actually bounce back.
This might happen, of course, at the price of certain economic and political structural changes. But the responsiveness of these countries might surprise us. I mean, I've always surprised to see that in Europe just a couple of years ago, people were saying that it's end of Spain, Greece is a disaster, it's the end of the history. These countries are on the verge of bankruptcy. Well, what do we see today?
Well, we see that Spain, things are bouncing back. In fact, our businesses, be it Sephora or the other major brands in the group, are starting to see a turnaround in Spain. And with the measures that have been introduced by the government in Spain, it seems that things are turning around. I saw a news report this morning on Greece and people are not talking about recovery. And yet, just a few months ago, people were saying that, Greek is a bankrupt nation.
So there's a real potential for things to turn around and bounce back. In fact, Mr. Morrissey said that the new, new emerging countries, while I would say that there are changes, changes that are inevitable if we look at relative growth rates between different countries. And we are very fortunate, and it's due to our well thought out strategy, we are lucky enough and fortunate enough to have a footprint in all of these different countries in the world. And this means that we can compensate slowdowns in some countries by strong growth in other countries.
For example, as Jean Jacques was just saying, Japan is demonstrating remarkable performance, especially compared to over the last 20 years where we've seen quasi stag flation. But now in Japan, there's a policy. Some people say that it's not really sustainable over time, but we're seeing massive injections of liquidity in the economy. And as a result, the retail trade is picking up and that the economy as a whole is back on track. The older countries, the more mature markets, the United States, for example, as Mr.
Moisey was saying in that video clip, this country is entering a phase of new dynamism. We have a strong presence in the United States as well as in Asia. In South America, things are a bit more challenging because of a slowdown in growth rates, of course, and also because of significant devaluations in their currencies. But all of this is offset by what's going on in the parts of the world. The Middle East, for example, is also experiencing very strong growth.
Of course, there could always be some geopolitical event that would upset the Apple Card. But for the time being, it's a very dynamic part of the world. If we see the performance of our products in that part of the world, Sephora, Vuitton, Dior, etcetera, luxury items or fashion items or perfumes and cosmetics. It's simply amazing to see the kind of food traffic we see in the shopping centers here. At the Dubai Mall, for example, which is the largest mall in the region, more than 75,000,000 people to the Dubai Mall every year.
I mean, you can imagine the huge amount of foot traffic in that shopping center. What all of this means is that today there's still a huge amount of potential out there in the world and I personally am quite confident. Our strategy, in fact, is a long term strategy. I've stated this time and again, and perhaps I'm repeating myself yet again, but what's really important in a group like ours is, of course, the result of any given year, right? Year in, year out, we try to make sure that we have growth in our bottom line.
It's a fundamental part of the business. But what's really even more important is the long term outlook And how will our business prospects evolve over time? How are individual brands going to perform over time? Dom Perignon, Vuitton, Sephora, etcetera. How are they going to perform 10, 15 years down the road?
That to me is the most important thing. This is the type of thinking that we try to instill in everybody in the group to get everybody thinking about the long term prospects and the continuity of our businesses. In each one of the business groups, we look at the potential. We try to develop the potential. Developing the potential of a company like Dior, Sephora, Louis Vuitton, where you've had 10%, 20%, 30% growth rates every year, over time, that makes a huge difference.
And that's what we've been focusing on. And that's what we remain focused on. Now in order to do this, of course, and this is one of the questions that was raised in that video clip about shareholders' concerns and you were talking about innovation. Well, innovation is part and parcel of what we do in the group. We're always trying to come up with new products, of course, new methods for marketing our products, the digital platforms, for example.
We have a strong digital platform and presence today the United States. In fact, our group is, if not the leader, one of the leaders of online cosmetic sales. And we're going to hope well, we hope that we can achieve the same results in other countries. We're also developing sales in China. And little by little, this gives us a competitive advantage that is quite significant compared to the market at large, because we have our presence physical presence in stores, but also our virtual presence online, online communications, online sales, etcetera.
All this is very important. Of course, we're not going to be selling major luxury items on the Internet, but we can show them on the Internet. We can make people desire them even more via communication on the Internet. I mean, that's really what it's all about. It's making people really desire our products.
Desire is what it's all about and desirability is all about. And this is what we can do through our communications. We have brands that have very long standing histories and that are also very innovative. This makes the desirability of the group's brands and products all the greater. The long term development of our brands will be an emanation of this long term thinking and focusing on continuity and innovation.
Sometimes it's also mindful or it behooves us not to think about the top sellers of the banner products, but also to look at all of the smaller things and in particular the startups. That's another part of our business. Now this year, we've invested in a variety of startup operations. We've invested in a very talented English designer, GW Anderson. It's a small business, very talented outfit.
We'll see what comes out of this, but it could have a huge amount of potential. Look at the example of Marc Jacobs. We invested in the Marc Jacobs business at the end of 1990s. Now at that time Marc Jacobs probably had annual sales of about $10,000,000 It was a rather small company. Maybe it was a little bit more than $10,000,000 but not that much more.
And now 15 years later, I guess it wasn't even $10,000,000 back then. That's what I've just been told. Okay. Now
it's
nearly €1,000,000,000 I said €1,000,000,000 in revenue. That's not bad in 15 years. Okay. We've had other designers that haven't matched that type of performance for a variety of reasons. Perhaps they weren't as talented, things just turn out as well.
But this is an example of things really turned out extremely well. And now this is a company that, over the next few years, will probably have an IPO with Marc Jacobs. And in light of the growing success of this brand and Marc Jacobs is being somewhat overtaxed by this. It's probably going to become a full time job for him and we will stand by him and we'll see what comes of all that. There's another business unit that Mr.
Roussel has been talking to me about. It's not in the group, but there is a similar business. I think it's gone public. I don't know how well it's done. I mean, I'm not going to cast dispersions on anybody.
But Marc Jacobs is the most emblematic designer of the United States. And the other company that shall remain unnamed had an IPO of depending on the days, of course, it's between $15,000,000,000 $1,000,000,000 So if we can do something like that over the next 5, 10 years with Marc Jacobs, everybody will be really happy, especially you, the shareholders, because just this one company and there are 60 different groups, but this would represent 1 third of the value of the group incurred euro value. So you can see the kind of promise that all of this holds. I also want to mention Loro Piana, an acquisition from 2013. This is an emblematic company as well.
It's not a start up, of course. It's a company that's been around for over 100 years. It was started by a family on the basis of exceptional cashmere, vicuna fibers, beautiful fine wools. And today, this company is considered by the experts to be one of the brands that offers the world's best quality fabrics. It's an excellent brand.
We signed an agreement with the family that still owns the company. And we are going to be involved in the development of business, which is now in which we now have an 80% stake. We're going to be able to help this brand grow internationally, thanks to our own know how in terms of brand management, etcetera. In fact, I would invite you all to go and visit their 2 boutiques here in Paris, 1 in Rue Fables Centre Noiret on Avenue Montaigne. You'll see that these products are truly exceptional.
Another point that I haven't mentioned yet for 2013, but was nonetheless very successful is something that you saw in the opening video clip, which is the journee Partufilliere. We organized in house visits for the general public to come and see different production sites and facilities in not just in France, but also in England and in Spain. It was a very successful operation. We had more than 100,000 visitors for a weekend. So another major success.
And this clearly shows how interested the public is in what the group is doing. So returning to the strategy. I've told you about our long term focus. I've told you about focusing on the major brands without, at the same time, ignoring our interest in helping start ups, helping them grow. One of the keys to success within the group and its strategy is diversity.
We've got 60 brands and we have a foothold in a variety of different countries and regions around the world that are complementary to another. And if you look at the business cycles of wines and spirits, it's very different from the business cycle you see in selective retail or in perfumes and cosmetics. So whenever there's a crisis or an economic downturn somewhere in the world, the group can continue to grow and thrive, especially better than its competitors and can even increase its market share. Now a third thrust of our strategy is continuity. On Thiago O'Day, as you just said, this is our 20th 25th general meeting of LVMH.
It's very difficult to have a political career that lasts that long, right? And I'm not going to say that everybody in the management has been around for the last 25 years, but there are people who have been around for longer than 25 years who are by my side. And then we have all of the other people who work in the group and who are here today. And I would like to thank everybody in the company for their hard work and dedication, because the success of the group is something that goes down to the success of everybody in the group. I would like to commend them all on turning into strong performance.
It's not always easy in a group like this. You always have to resist the temptation of becoming complacent and smug. Because when you work in a company that's doing so well, you say, oh, we're doing fine. No, you always have to challenge yourself. And I want people to at least my way of managing the company is managing it as if we're always on the verge of a crisis because that means that I'm always vigilant.
If you operate otherwise, you're setting yourself up for a disaster. But I think so far we've done a good job in resisting that temptation and to rest on our laurels. Another key to success is our human resources. You've probably seen this. If you look at all the rankings that have been coming out of the past 10 years, LVMH is the group that is the one that has the highest appeal for young people coming out of, schools.
We're always at the top of the list. This is quite telling. This shows that we can attract the best talent out there, either in terms of business management, but also in manufacturing and design. In fact, we just created a new prize, the LVMH Creation Prize, where we've designated it a shortlist of young designers. The final decision will be made by a team of extremely well renowned designers who work with LVMH.
They'll be coming together over the next few months to decide upon the laureate for this year's prize. All of this shows that we have this strong attractiveness for all these young people. And once they're in, there's a room for them to grow, room for them to And can offer fewer prospects of career development, fewer prospects of taking on new responsibilities, especially for younger managers. I mean, we really have strong growth. We always have new projects in the pipeline.
And this means that we can attract young talent extremely well. And for those people who start taking on more responsibilities, they can have strong professional development. And in fact, we are always on the lookout for new talent. So if there's anybody in the room who's interested, just come up here and talk to Madame Compherlet, Human Resources Director. She's more than happy to welcome new talent into the group.
And in the event, again, I would like to express my gratitude to everybody working for the group, and I would like to congratulate them on a job well done. Now let me move on to another important part of our meeting, which is the general business environment of the environment and what the group does for the environment. Let me just not forget one thing and that is that our group has a major social responsibility because we have more than 110,000 people working for the group today, a very large number of people, nearly 30,000 in France. And we last year in France, hired more than 2,500 new people. So whenever the I hear the people in the government say that it is doing everything it can to help companies, well, I can say that we are doing everything to help France.
And we've proven this by contributing to economic growth and creating jobs. Let me just say as an aside, in fact, we also pay a lot in tax as well. How much did we pay last year? We paid nearly €1,000,000,000 in taxes last year to the French government. It's a huge contribution to the country.
Of course, it's not something that we're always that happy about, but that's the way it goes. Training and recruitment. I'm not going to dwell on the details here because it would take too much time, but we are currently developing an institute for the various crafts and we have a large number of very interesting training prospects in all of our brands for young talent. Now the environment. What can I say here?
For many years, we've been extremely attentive into protecting the environment and improving our environmental performance. We've introduced a variety of initiatives that are underway. Our products are basically designed in France or in Europe. And we have a code of conduct with our suppliers where we state our requirements in terms of respect for the environment, social relations and anti corruption efforts. All of this is something that we take very seriously indeed.
We've identified a list of suppliers that we check on regularly to make sure that they are abiding by these requirements, these moral social requirements, environmental requirements. In fact, we have more than 700 social or environmental audits of our suppliers every year. We also provide them with training. One of the problems we have is also securing access to the finest raw materials. This applies not just to fashion and leather goods, but also perfumes.
I mean, I told you this last year that we have a crocodile farm in Southeast Asia. And we are always very attentive to sourcing the best and tracking where it comes from. We try to minimize the amount of shipments via air because that is the form of transportation that generates the most amount of pollution. If you look at whites and spirits, I think 90% of the shipments are done by ship instead of by air. Louis Vuitton's logistics and supply chain has been has received environmental certification.
We're also doing everything planned to make sure that our shops are more energy efficient with better lighting, etcetera. And here on the screen, you can see the life project. I'm not going to go into all the details because it would take up too much time. But this is a project or a program that is constantly tracked by management. Now just to conclude, let me say a little bit about the Louis Vuitton Foundation, because it's going to come into being at the end of this year, the last quarter of 2014.
It will really be emblematic and be a showcase for all of the talent and creativity of our craftspeople. It's designed by Frank Gehry, one of the most renowned architects in the world. The building has more or less been completed. You can actually go and see it from the outside. It's really beautiful.
And once it's open to the public, of course, our shareholders will be able to have
preferential treatment when they go
and visit the patronage of the arts, something that we've been involved in for more than 20 years. This is why today, LVMH is one of the leading patrons of the arts in France. We are patrons to and sponsors to a large number of internationally renowned exhibits in French museums and galleries. And a few years ago, we decided to try to take this one step further by creating the foundation. And I think that this foundation will be one of the main tourist attractions of Paris and France.
And so we invite you all to visit the foundation. It hasn't been an easy road. People are always whenever you do something a bit bold, you set yourself up for criticism. So there are a couple of times where the job site was shut down a couple of times. I think there were some environmental activists who challenged some of the things that we were doing, but we've managed to deal with all of that.
The building has now been practically fully constructed. I think it's really something that's quite remarkable. And as I said, you will all, as shareholders, have special treatment to go and visit the exhibits in the building once it is completed. So I'll wrap up there and I'll give the floor now to our statutory auditors.
Ladies and gentlemen, good morning. It is my pleasure on behalf of the auditors to present the findings of our work. The reports that were made available to you were held by the company at headquarters and the self part of the reference documents that you have at the entrance of this room. I will not read them out, but we could leave it to the resolutions that are being put to the vote today. There are 4 reports, 2 on the accounts, 1 on the related party agreements and commitments and one on an operation regarding the company's capital.
Now if you look at Page 190, 215,216 of the reference documents, let me point out that our order took on board the specificities of the company in terms of activity, organization, accounting standards and internal audits. Our work and conclusions were summarized in reports sent to your audit committee, your Board of Directors and the executive committee. The report on the consolidated accounts is based on the service conducted by our auditors in as many as 54 business units in foreign countries, and we approve of the accounts without reservations or observations. Likewise, the consolidated accounts of the company. And we point that the changes made in terms of commitments vis a vis human resources were adequately addressed.
Let we also produced a report on related party agreements and commitments in pages 217, 218 regarding the relationship between your company, its executive officers or companies that have joint directors. The agreements are as follows: 1st, a rider to the assistant convention with the group Arnaud SAS renewing of the joint venture convention between Christian Gort Couture SA and LVMH regarding the manufacturing and distribution of Dior watches by the watchmaking workshops. The agreement between the Ara Ponsais and Louis Vuitton Malte and LVMH and finally, the disposal that is the sale of the building on 100 and 60 New Bond Street, which is a 100% subsidiary of our LVMH, sold to Christian Gourne Dior Couture S. A. The conventions and commitments that were approved in previous years, which were continued and renewed in 20 13, are also listed in this report.
Finally, regarding the extraordinary part of the general annual meeting, we have a report on a resolution that may affect the capital. This report is on Page 272 of the reference document. It is a reduction of capital through the cancellation of shares. Our role is to ascertain that the conditions under which such capital reduction is performed is appropriate. We do confirm this and this is in line with the conditions provided by the Court of Commerce.
Thank you for your attention. And now together with members of the Executive Committee who will join me up on stage, we are here to take your questions, if there are any. It's number 4. Good morning, Mr. Arnaud.
My name is Des Lange and I represent an association of individual shareholders. First of all, I should like to thank you very much for the numbers, the performance for this year. This presentation was highly didactic, and you were very reassuring as to the course for the group. But for the past 25 years together with Mr. Goudet, you have always emphasized that you were firmly in control of this organization.
As you know, in Caron Companies, you need to work about the succession. Now of course, I'm not saying that you should leave now, but nonetheless, could you tell us I mean, it is a sort of thing which is only fair. What would you what would your adviser tell you about a possible successor? That's my question number 1. But if I'm I have 3 questions.
Please go ahead. Well, that was question number 1. The question number 2 is about affordable luxury. You're well aware that one of your former officials had been appointed head of the management board of a company that specializes in what is known as affordable luxury. How do you see this new sort of consumer behavior on the part of the younger generation?
And 3rd, the appointment of your Chairman of Moet NC to the Federation of Exporters of French Wines and Spirits. What will his agenda be, especially as we see a significant lowering of consumption of cognac in China? Thank you. Now regarding question number 1 is that, well, there is a plan. And should my plane collapse, everything has been planned.
But you will find out when this happens and I hope it happens as late as possible. Regarding affordable luxury, of course, the two words sound like an oxymoron, don't they? We are looking at luxury or high quality items, indeed the highest quality in the world. And we are not directly concerned with products that are more affordable. Now you seem to imply that affordable luxury items will promise to well, a buoyant future.
There's nothing new there. A number of products have started off with such brands as Zara H and M, where you had an upmarket catalog made more affordable. And you have in retail, some of the stores may have highly affordable goods, go to car food for one or not. I have hold no brief car food, but you can go to supermarkets and get items at a much lower price. But what happens usually is that if you buy something cheap, it's simply that it doesn't compare with high quality product.
The cheaper item will not last as long. It won't be the same quality. And we're not, in fact, competing. We're not in the same spheres. I mean, each sphere can be successful in its own right.
But as I said, there's no competition and the success cycles may be the same. Look at the automotive industry, you have Mercedes Benz or BMW or these are, of course, the midrange. Then you have the high end, Bentley and Rolls Royce. But then you have small Japanese cars that are entry level. But that's only fair.
You have a well distributed competitive purchasing power, you find different markets. Now the concern the market we're concerned with is that for the highest possible quality items that is lasting products that will make a difference, items which in some cases are almost investments. I mean you can actually buy them for the long term. Now I'm not saying that cheaper items are disposable, but in a way that's the difference between a disposable pen and a high quality fountain pen. Christophe?
The first thing I will say about the role of the federation is not to stand in for companies or act in their stead. We were there to help winemaking companies better to export their production, and they've done remarkable work with China. You may remember there was a complaint lodged with China against French wine and spirits companies. They said that they were accused of dumping. That complaint was withdrawn and we were able to wind this up just prior to the visit of the Chinese President.
China has had a long love story with cognac. We've been there for many, many years. There have been ups and downs as Mr. Arnaud says, but China has enjoyed a 7% growth. Cognac is being consumed widely throughout China, in some places more than others, and the potential is huge.
We have to look at things over the long term that the role of brands to address your question, the role of brands are there to well, make brands desirable and entice Chinese consumers to consume our products. And we are very confident for the future. Already then, I believe there's a question at the back of the room. Number 10. The microphone is not working.
We seem to have a problem with the microphone. If I may, I have how can LVMH attract such people as Jonathan Anderson, Maximo Simorquez and Mako from Series Z SENSO. How what did you do to rope them in to attract them to join you? And then another question regarding Hermes. Have you met with the new CEO of Hermes Alexander Hermes?
And I believe that you signed a partnership agreement with Monferme. Do you propose to have similar partnerships partnership agreements with urban ghettos in that in the outskirts of Paris? And will you repeat the journee visitor that you had? That We work with them regularly. We recently had an initiative with Delfin to organize the LVMH prize for creation.
We are in touch with some of the finest talents of the world amongst the younger talents. And it is only fair that young creators that propose to start a brand that want to become involved maybe with our own brands. It is only fair that such people might be attracted and might be interested in working with us. And it is for us, of course, to identify, to recognize the better talents. But believe you me, it is quite easy to forge links and then there's a lot that we can bring them.
After all, we are the number one organization, the number one company in the industry. And so for young men with potential, well, surely, we're far and away the best possible partner they could hope for. You had a question about Hermes. The question the answer is always the same. We're very happy.
I mean, as shareholders, we're very happy with our stake in the company. This is a well run organization very well. And we certainly hope that our peaceful presence there will be recognized as such by the other shareholders. That's all I can say. Regarding the special days, the visitors' day, as you know, this is something that shareholders are invited to, and they are very they very much appreciate these events.
And we will certainly renew this, and we will extend it to other places that we have and we'll certainly make it as attractive as possible to shareholders. Are there any other questions? Yes. Number 4. Mr.
Arnaud, my name is Christian Jaffray. I've been a shareholder for the past 20 years. A brief comment, if I may, then a question to comment. This is the first time that when we arrived at the General Annual Meeting, we have been received we have heard the international anthem song. And I find
that
the security arrangements were a bit much and we here we're wearing bracelets. I found it difficult to the audience that there are 300 available seats and that was sent to another adjoining room with the screen. Surely, arrangements could be improved. Having said that, the LVMH chair has enjoyed a remarkable development and it's certainly attributable to the management team. The share is now worth €140 Would it not be time to halve it so as to make for more cash?
On the first item, I do want to apologize to all of you. We had 2 options. Either we could have total chaos in the room with some agent provocateur those who sang the International anthem and that could have shown chaos in the room. And so that meant it was either that or going through extremes of security so as to avoid chaos. And I'm surprised that there should be such a security issue, but there we are.
And I hope that the revolutionaries will cut it out and calm down next year. As to the share, well, maybe let's wait till it's worth €200 before we split it in half. Are there further questions? Number 6. Number 6.
Hello. My name is Serge Girusso. I'm an individual shareholder. And I would like to know how many new stores you propose to open in 2014, 2015? Well, I'm afraid we can't help you with that.
We do not divulge the number. But I can you one thing. And as I said in the earlier presentation, we are now focusing on existing stores, embellishing and enhancing existing stores rather than opening new ones. So we're trying to make them as attractive as possible. And we already have a sizable number of stores.
Just the Louis Vuitton stores selves, of course, are flagship stores. We want to make them even more attractive or make them bigger. The one on Avenue Montaigne, that store that shop is closed right now for repair and extension work and it will be it will reopen at the end of the year and will that will be one of our magnificent emblematic stores. Now of course, this is less the case for selective retailing, Sephora. And Christopher wanted to say something about Sephora there.
Our policy is a more aggressive store opening policy, especially in the countries where we are settling in, such as Indonesia or Malaysia, we are making inroads there. Yes, for Sephora, we're continuing our expansion plan and there'll be more than 150 stores opened this year. And we'll have more than 10,000 Sephora stores around the world. And then question number 5. Number 5.
Mr. Arnaud, my name is Herve DuGastier and also an individual shareholder. And I had a question. What will be the growth engines for the group in the years to come? Well, look, there are 2 types of countries that are that show a significant promise.
First, of course, you have the traditional countries, traditional but nonetheless dynamic countries such as the United States, highly resourceful countries that are now recovering, rebounding. I mean, we talk a lot about China, but the number one market for the time being and for years to come is still the United States of America. And so here for these traditional economies, the outlook is still highly promising for our traditional brands, our MVMTIC brands, but also for Sephora for our digital business or indeed for the new brands that we are trying to develop. But then you have a number of emerging economies and there of course growth is stronger and the outlook is also highly promising, but you can have air pockets like you had in Brazil or like we have in Argentina. In China, you could well, it's not as though there was a sudden drop.
I mean, it's like flying at a sort of a cruise altitude. It's still pretty high. Indonesia is a fascinating country where there are many opportunities. Indeed, it's a highly populated country, which is experiencing an extremely steady growth, extremely fast growth. And of course, this means that there are opportunities around the world.
Indeed, one of the one of our challenges there when we arrive in such countries is to find people who are capable of running local branches. We either have to recruit them locally or to bring them from France and such. People are sometimes hard to come by. That is the main challenge to find our executives, the people who can manage and ensure the future of that of these branches. Maybe one final question, number 4.
Number 4? Hello. Good morning. My name is Jacques Villeva. I'm also an individual shareholder, and I would like us to tell us about the future of the emblematic stores of the Saint Martin.
Where do we stand? There's renovation work going on. What's where are we? Where do we stand with that? Well, Jean Jacques Guilloty has been in charge of that.
I mean, he was getting second tired of numbers. And so he's now in charge of that project, and he will speed things up. Well, yes, this is indeed a rather long term project. At the end of 2012, we received permits to conduct construction work. There were some appeals made, some remedies and not all of it have not all of them have been addressed.
So there are still some things being held up. But we expect to open by 2017. There were a hotel, 50,000 square meters, department store, office space and then social housing. So this is a sort of a combined use building. It will require a significant financial investment.
But now we've moved into the business end of the deal with the actual Parisian public. I see a very final question. Somebody is raising their hand or not. Yes. My name is Jean Patrick Mourazzien.
I'm also an individual shareholder. Mr. Arnaud, last year you told us at €120 per share, I would buy it. So, no, it's $148,000,000 What do we do this year? Do we buy it?
Do we buy it? Do we sell? I'm always buying, but it's not for me to advise you. I mean, we're not but ever since I've bought the share, it's always kept going up. I hope it will continue like this.
Let's move on to the resolutions now.