FIRST HALF 2004 INTERIM REPORT

PA S S I O N AT E
ABOUT
CREATIVITY
BOARD OF DIRECTORS EXECUTIVE COMMITTEE CONTENTS
Chairman’s Message 01
Bernard Arnault Bernard Arnault Financial Highlights 03
Chairman & Chairman &
Chief Executive Officer Chief Executive Officer
The LVMH Share 05
Shareholder Relations 06
Antoine Bernheim * (1) (2) Antonio Belloni
Vice Chairman Group Managing Director
Wines & Spirits 07
Nicolas Bazire Fashion & Leather Goods 08
Antonio Belloni
Development Perfumes & Cosmetics 09
Group Managing Director
& Acquisitions Watches et Jewelry 10
Ed Brennan
Selective Retailing 11
Delphine Arnault
Travel retail
Jean Arnault
Yves Carcelle
Nicolas Bazire Consolidated
Fashion & Leather Goods
Statement of Income 12
Nicholas Clive Worms * (1)
Pierre Godé
Diego Della Valle * Advisor to the Chairman Activity Review 13

Michel François-Poncet * (1) Jean-Jacques Guiony

Finance
Consolidated Balance Sheet 14
Albert Frère (2)
Patrick Houël Consolidated Statement
Jacques Friedmann *
Finance of Cash Flows 16
Pierre Godé
Concetta Lanciaux
Gilles Hennessy (1) Advisor to the Chairman, Notes to the
Synergies, Consolidated Financial
Patrick Houël President LVMH Italy Statement of Cash Flows 17
Arnaud Lagardère *
Pierre Letzelter
Sephora Notes
Lord Powell of Bayswater
to the Consolidated
Felix G. Rohatyn
Financial Statements 18
Christophe Navarre
Wines & Spirits
Hubert Védrine *
Report
Philippe Pascal from the Statutory
Watches & Jewelry Auditors 21
ADVISORY BOARD MEMBER
Kilian Hennessy* (2) Daniel Piette
LV Capital

Bernard Rolley
Operations

*Independent
Director

(1)
Member of the
Performance Audit
Committee

(2)
Member of the
Nominating
and Compensation
Committee
STRONG GROWTH MOMENTUM
by Bernard Arnault, Chairman & Chief Executive Officer

LVMH GAINED MARKET SHARE ACROSS ALL ACTIVITIES, WHILE IMPROVING

PROFITABILITY AND STRENGTHENING ITS CASH FLOW AND FINANCIAL BASE.
A GOOD OUTLOOK FOR THE SECOND HALF AND EXCELLENT LONGER-TERM
GROWTH DRIVERS WILL ENABLE THE GROUP TO FURTHER STRENGTHEN ITS
GLOBAL LEADERSHIP IN THE SECTOR.

LVMH enjoyed an excellent first half against the background of a patchy reco-
very in the global economy and unfavorable currency movements. Benefiting
fully from US growth, the improvement in Asian consumption, a more modest
upturn in Europe and a recovery in international tourism, our businesses all
achieved organic sales growth and improved market share. The appeal of our
star brands, their remarkable potential for growth and the improvements in
profitability, have enabled the Group to limit the impact of a weak Dollar and
Yen against the Euro and to improve Group’s operating margin.

COHERENT GROWTH STRATEGY

Beyond short-term aspects, the progress of our results over this half demons-
trates once again the advantages and durability of our growth strategy. An
insistence on quality without compromise, a culture of tireless creativity which
in turn drives exceptional innovation across our activities – combined with
flexibility and strict discipline in the allocation of our resources and the selec-
tion of investments - guide our approach and are key to our success.

Over the coming months, LVMH will continue to focus on improving the mar-
ket shares of our star brands while supporting the progress of our ‘rising
stars’, smaller brands that have excellent potential to succeed.

LVMH CONFIRMS ITS OBJECTIVE OF SIGNIFICANT GROWTH

IN OPERATING INCOME FOR 2004
The second half of 2004 will be notable for innovation: Fragrances such as
Pure Poison from Dior, L’Instant pour Homme from Guerlain, the new Bellaix
luggage range, the Trianon canvass and the launch of the first jewelry range
from Louis Vuitton, the Aquaracer timepiece from TAG Heuer, the Chiffre
Rouge watch created by Hedi Slimane for Dior… numerous launches, among
other initiatives, which will be supported by powerful communications cam-
paigns. New stores will open for our Fashion and Leather Goods and Selective
Retailing brands, while the Wines and Spirits brands will continue to reinforce
their distribution networks and leadership in the premium segments of world
markets.

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 01

Growth in profitability - already comfortably meeting expectations in both
Watches and Jewelry and Selective Retailing - cash generation and debt
reduction remain our priorities, supported by a highly selective approach to
investments.

These elements combine to enable us to confirm our objective of a signifi-

cant increase in operating income for 2004 despite the continuing unfavo-
rable environment for exchange rates.

EXCELLENT GROWTH DRIVERS

Beyond the current period, our Group is in a strong position to seize the
numerous development opportunities which present themselves in the form
of new product categories, rapidly expanding markets and newly emerging
consumers.

We continue to expand, evolving and growing our brands without diluting

their tradition of excellence or individuality. Louis Vuitton is without doubt
one of the best examples – from the world of travel to leather goods, through
fashion to watches, the brand has retained and increased its aspirational
appeal, becoming the leading luxury brand in the world and even today, is
making its debut in the promising new area of jewelry.

We have excellent growth drivers for the medium and longer-term in the
countries where increasingly affluent consumers are embracing the luxury
universe – here we will take the time that is necessary to build on the excel-
lent foundations which we have set down in these markets. China, which
represents a fifth of the world’s population, is one such country. Louis Vuit-
ton opened its first store in Beijing in 1992 and now has over ten stores in
the country, Hennessy is growing very strongly there and our perfume and
cosmetics brands are making excellent progress. The increasing number of
Chinese tourists is also an opportunity for the Group and DFS is already seeing
the benefit of this trend. Recently India and Korea, where we already have a
significant presence, are among the territories we are developing on the Asian
continent. In Russia, sales of cognac, perfumes and fashion continue to grow
strongly. In Central and Eastern Europe the success of Sephora has been
such that, in a short timeframe, the brand has achieved a strong market pre-
sence.

Wherever our teams operate in the world, they embrace the challenges of
their local environments, applying their exceptional talents in pursuit of ambi-
tious objectives. It is on them that our confidence in the future of the Group
rests: year after year, LVMH continues to make good progress, actively and
selectively managing its portfolio of brands and further increasing its pre-
eminence in the world luxury market.

September 14, 2004 Bernard Arnault

Chairman & Chief Executive Officer

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 02

 FINANCIAL HIGHLIGHTS

Net sales Income from operations Net income before Earnings per share
(EUR million) (EUR million) amortization before amortization
of goodwill of goodwill
(EUR million) (EUR)

5,818 5,236 5,678 840 874 996 350 408 539 0.72 0.83 1.10

30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06
2002 2003 2004 2002 2003 2004 2002 2003 2004 2002 2003 2004

Net income Cash flow Capital

(EUR million) from operations expenditures(1)
(EUR million) (EUR million)

214 265 396 548 749 828 215 250 236 (EUR million and %) June 30, 2002 June 30, 2003 June 30, 2004

Stockholders’equity (2)
8,589 8,676 8,831
Net financial debt
to equity ratio 88% 75% 69%
Net financial debt to equity
ratio after deduction of
the market value of treasury
shares and of the equity
in Bouygues 78% 71% 63%

30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06 30/06 (2) Includes minority interests.
2002 2003 2004 2002 2003 2004 2002 2003 2004

(1) Acquisition of intangible and tangible assets.

Net sales by business group Income from operations by business group

(EUR million) June 30, 2003 June 30, 2004 (EUR million) June 30, 2003 June 30, 2004

Wines & Spirits 797 911 Wines & Spirits 321 335
Fashion & Leather Goods 1,896 2,023 Fashion & Leather Goods 634 634
Perfumes & Cosmetics 974 973 Perfumes & Cosmetics 39 42
Watches & Jewelry 210 234 Watches & Jewelry (38) 2
Selective Retailing 1,353 1,542 Selective Retailing (15) 76
Other activities and eliminations 6 (5) Other activities and eliminations (67) (93)
Total 5,236 5,678 Total 874 996

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 03

 Store network at June 30, 2004

EUROPE
NORTH 405
AMERICA FRANCE JAPAN
337 279 240
ASIA
302

AFRICA
AND MIDDLE EAST
6

Number
of stores SOUTH
AMERICA
1,467 1,551 1,614 16

PACIFIC REGION
29

30/06 30/06 30/06

2002 2003 2004

Net sales
by geographic 6% 6%
region of delivery Other markets Other markets
13% 18% France 16 % 17% France
(in %) Asia (excl. Japan) Asia (excl. Japan)

20% 19% Europe

17% Japan
Europe 15% Japan (excl. France)
(excl. France)

June 30, 2003

26% United States
June 30, 2004
27% United States

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 04

THE LVMH SHARE

COMPARISON BETWEEN LVMH SHARE PRICE AND CAC 40 SINCE JANUARY, 1, 2003

Trading volume LVMH CAC 40 Average monthly volume

70 12,000,000

60 10,000,000

50
8,000,000
40
6,000,000
30
4,000,000
20

10 2,000,000

0 0
J F M A M J J A S O N D J F M A M J

CHANGES IN THE LVMH SHARE PRICE

During the first half of 2004, geopolitical ten-
sions (such as the situation in Iraq and the
resurgence of terrorist threats) as well as
macro-economic upheavals (fluctuations in the
parity of the euro versus the dollar, a sharp
increase in the oil price and tightening of mone-
tary policies), served to fuel the concerns of
international financial markets. Consequently,
the markets only partially benefited from the
economic recovery in Europe, the confirmed
economic vitality of the United States and Asian
countries, and a marked improvement in busi-
ness profits. The DJ Eurostoxx 50 and CAC 40
therefore rose by 1.8% and 4.2% respectively,
while the Dow Jones Industrial gained 6.2% bet-
ween January 1 and June 30 2004.
In this uncertain environment, the LVMH share
gained a little over 3%. This performance, which
was in line with gains made by the CAC 40 index
during the period, has allowed the LVMH share
to outperform the CAC 40 index by over 16
points between July 1, 2003 and June 30, 2004.
On June 30, the LVMH share closed at €59.45.
LVMH’s market capitalization therefore rose to
€29.1 billion, making LVMH the tenth-largest on
the Paris stock exchange.
LVMH shares are traded on the Premier Marché
of Euronext Paris (Reuters code LVMH.PA,
Bloomberg code MC FP and ISIN code
FR0000121014). In addition, options based on
LVMH shares are traded on the Paris Monep
options exchange.
LVMH is included in the principal French and
European indices used by fund managers: CAC 40,
DJ EuroStoxx 50, MSCI Europe, FTSE Eurotop 100
and Euronext 100.
LVMH is among the French companies recogni-
zed by the three main socially responsible
investment indexes in the United States, France
and Europe.
MARKET CAPITALIZATION
€ millions
June 30, 2002 24,987
June 30, 2003 21,160
June 30, 2004 29,127
INTERIM DIVIDEND INCREASED
The Board of Directors approved the payment of
an interim dividend of €0.25, with a tax credit of
€0.125, payable on December 2, 2004. This com-
pares with an interim dividend of €0.22 in 2003.
STOCK BUYBACK PROGRAM
LVMH has implemented a stock buyback program
approved by the Annual Shareholder’s Meeting of
May 13, 2004 and authorized by the French finan-
cial markets’ regulator, AMF, which authorizes it
to buy back up to 10% of its share capital. Bet-
ween January 1 and June 30, 2004, LVMH bought
a net total of 3,039,116 of its own shares. The
current stock buyback program was authorized
by the AMF under No. 04-290 on April 19, 2004.

BREAKDOWN OF CAPITAL AND VOTING RIGHTS AS AT JUNE 30, 2004

Number Number % %
of shares of voting rights of capital of voting rights
Financière Jean Goujon (1) 207,821,325 407,303,575 42.42% 59.81%
Others2) 282,116,085 273,707,325 57.58% 40.19%
Total 489,937,410 681,010,900 100.00% 100.00%
(1) At December 31, 2004 the Arnault Group held a 47.52% equity stake, including the 42.42% through Financière Jean Goujon.
(2) At June 30, 2004, there were 20,723,448 treasury shares without voting rights.

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 05

SHAREHOLDER RELATIONS
LVMH pays particular attention to its relations
with shareholders. Because their trust is an
essential support to its strategy, the Group is
committed to faithfully and sincerely accounting
for its performance and objectives in all of its
areas of responsibility. To that end, LVMH makes
a broad array of information available to its sha-
reholders.

FULL AND REGULAR REPORTING

In order to provide transparent and regular
information, the Group uses a variety of com-
munications means every year:

• The LVMH annual report, which includes infor-

mation about its policies and accomplishments in
the area of sustainable development, is available
to anyone upon request,
• Both the abbreviated annual report, avai-
lable in March, and the six-month interim
report published in September are widely dis-
tributed as soon as the results are announced.

LVMH also organizes meetings with sharehol-

ders, financial advisors and asset managers.

The website www.lvmh.com is designed to

enable anyone to obtain information about the
Group and its brands at any time and provides
quick access to a wide range of regularly upda-
ted information.
The section devoted to shareholders targets the
financial community by providing easily accessible,
complete and clear information in real time: the
current stock price, a calendar of major events
(earnings announcements, shareholders’ mee-
tings, dividend payments), press releases and
publications. Earnings announcements and the
Annual Shareholders’ Meeting are systematically
broadcast on the internet, both live and recorded.
THE FRENCH SHAREHOLDERS’ CLUB – AN
INITIATIVE TO FORM CLOSER TIES
Established in 1994 for its French speaking indivi-
dual shareholders, the LVMH Shareholders’ Club
enables its members to learn more about the
Group, its activities and brands.
The magazine Apartés, published in French for
Club members, provides news about the Group,
articles on recent events, and interviews. It also
lets shareholders order products available and
deliverable in France. There are discounted sub-
scription offers to the French journals La Tribune,
Investir, Connaissance des Arts and Le Monde de
la Musique. The Club also provides special access
to certain places suitable for visits like wineries
and wine cellars and VIP passes to art exhibits
funded by LVMH as part of its corporate sponsor-
ship program (“Gauguin – L’atelier des tropiques”
in the fall of 2003, “Montagnes Célestes – Trésors
des Musées de Chine” last spring, “Wang Du
Parade” this fall).
CONTACT
Investor and shareholder relations
Phone number: + 33 1 44 13 21 21

AGENDA
Wednesday, September 15, 2004: Publication of 2004 half year earnings
October 2004: Publication of third quarter 2004 sales
January 2005: Publication of 2004 full year sales
Thursday March 10, 2005: Publication of 2004 annual earnings
Thursday, May 12, 2005: Annual Shareholders’ Meeting

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 06

WINES AND SPIRITS

EUR million june, 30 june, 30 june, 30

2002 2003 2004

Net
sales 916 797 911
Income from
operations 277 321 335

The value growth strategies that have been in place for the last few years within the Wines and Spirits
business group have been validated by consumer trends moving upscale. Integrated into a balanced and coherent
portfolio, with the benefit of the expertise of our teams, as well as reinforced distribution capabilities and communications,
our brands are consolidating their positions as leaders in key markets.

HIGHLIGHTS PRINCIPAL DEVELOPMENTS

The economic turnaround in the first half of The Wines and Spirits business group continued to 23.2

2004, the reorganization of the Moët Hennessy strengthen its distribution network in the United 20.8
19.6
18.6
distribution network and the continuation of Kingdom, Italy, Austria and Australia. 18.2 17.3
publicity and promotional investments have
enabled the brands in the Wines and Spirits Ruinart, Krug, the luxury vodka brands Belve-
business group to perform remarkably well. As dere and Chopin, the “rising stars” of the port-
at June 30, 2004, volumes were up 12% on a folio, performed very well, thus validating the
constant consolidation basis, while sales rose strategy implemented over the last few years.
by 19% on a constant currency and consolida- These high premium brands have already esta-
tion basis. Income from operations was up by blished themselves as true sources of future
June 30, June 30, June 30,
4 % d e s p i t e t h e p a r t i c u l a r l y u n f a v o ra b l e growth. 2002 2003 2004
exchange rate climate. SALES VOLUME
Like other houses, Veuve Clicquot innovated CHAMPAGNE
Champagne business increased in volume by with the release of its “Ice-jacket”. Dom Péri- AND COGNAC
millions of bottles
13% on a constant consolidation basis (exclu- gnon again established itself as one of the best June 30, 2004

ding the effect of the disposal of the Canard- champagnes in the world with the introduction
Duchêne brand which took place in September of its 1996 vintage, hailed by the leading experts.
2003), leading to significant market share gains Belvedere also innovated in 2004 with the intro- 21 28 30
in key markets. The overall performance of the duction to the market of flavored vodkas using
champagne brands was particularly notable in an exclusive and natural fruit crushing process.
the United Kingdom, United States and Japan.
As a result of price increases in all key markets, OUTLOOK INVESTMENTS
EUR million
and the improvement in the product mix, sales Despite the negative currency impact, the value
in the champagne and wines business are up creation strategy in the form of a steady pricing
19% on a constant currency and consolidation policy, generating value from superior quality, June 30, June 30, June 30,
2002 2003 2004
basis. Still wines again met their targets and and cost structure control will enable the
enjoyed double-digit volume and sales increases. brands in the Wines and Spirits business group
to meet their goals for 2004.
Hennessy cognac continued to post good
results in the first half of 2004 with an increase The integrated and improved distribution net-
in volumes of 13% and a particularly strong works from which the companies in the Wines 3%
Other
10%
movement in the high-end segments in key mar- and Spirits business group benefit will contri- markets
kets such as the United States, China, Taiwan bute to supporting the growth of their market
14% France

Asia Europe
and Russia. On a constant currency and consoli- shares in value. (excl. Japan) (excl. France)
dation basis, net sales increased by 18%. 22%
9%
Japan

42%
Americas

NET SALES AT JUNE 30, 2004

BY GEOGRAPHIC REGION

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 07

 EUR million June 30, June 30, June 30,
2002 2003 2004

Net
sales 2,023 1,896 2,023
Income from
operations 646 634 634

FASHION AND LEATHER GOODS

LVMH continues to strengthen its position on the world’s fashion and leather goods market thanks to the
excellent performance of Louis Vuitton and the progress made by other brands, whose development is supported
by our Group. The outlook for growth is reinforced by numerous successes resulting from an exceptional innovation
dynamic, as well as expansion and constant improvement of distribution networks.

HIGHLIGHTS PRINCIPAL DEVELOPMENTS

The Fashion and Leather Goods business group
made strong advances in the first half of 2004
and continues to gain market share. Of particular
note were the strong performances of Louis
Vuitton, Celine, Loewe, Marc Jacobs, Pucci
and Berluti, which posted double-digit growth
in net sales, despite unfavorable currency rates.
The organic growth of all the business group’s
activities stood at 11%. The remarkable dyna-
mism of Louis Vuitton and the improved profi-
tability of several brands in the development
stage enabled the business to limit the impact
of a weaker dollar and yen on income from
68 86 89
The first half of 2004 was very dynamic for Louis
Vuitton in terms of innovation, with, most nota-
bly, the launch of Theda and Leonor bags, the
Damier Géant line and Monogram Multipoches-
bags. The Multico, Epi souple and Suhali lines
launched in 2003 continue to perform extremely
well.
As at June 30, 2004, Louis Vuitton had 323
stores (6 more than at December 31, 2003). In
addition to February’s inauguration of the lar- June 30, June 30, June 30,
2002 2003 2004
gest Louis Vuitton store in the world on 5th Avenue
INVESTMENTS
in New York, the main store openings during the EUR millions

operations. half took place in Lugano, Milan (Victor Emma-

nuele gallery), Lisbon and Berlin, as well as in
Louis Vuitton’s activities were driven by the San Diego in the United States and Kagoshima
strong demand of its local customers in all in Japan.
continents, and by the return of tourists to 746 805 837
Europe. The brand again emphasized its The first collections by Antonio Marras for
advance with particularly notable performances Kenzo and by Ozwald Boateng for the Givenchy
in the United States and Asia. Louis Vuitton’s men’s ready-to-wear line were very well recei-
growth continues to go hand in hand with ved. Succeeding Michael Kors, the designer NUMBER
OF STORES
exceptional profitability, due to the quality of its Roberto Menichetti will introduce his first col-
organization and the work achieved to improve lection for Celine in October.
its responsiveness. June 30, June 30, June 30,
2002 2003 2004
OUTLOOK
As expected, sales at Donna Karan, which In the next few months, the Fashion and Lea-
continues its repositioning strategy, reflected the ther Goods brands will continue to focus on
impact of its increased selectivity of distribution, their strategic priorities and the development of
but gains were made in the productivity of retail their market shares.
outlets. In the second half of the year, the brand 2%
Other
9%
should benefit from the launch of a bag collec- In this year that marks its 150th anniversary, markets
tion, which will precede the launch of its acces- Louis Vuitton will continue to develop its distri- 16% France

Asia
sories in fall 2005. bution network (most notably with the opening (excl. Japan) Europe
of a global store in Shanghai, the expansion of (excl. France)

Sales at Fendi are on the rise in the United
States, Japan and other Asian countries. The
focus on the brand’s expertise in leather goods
has yielded very encouraging results. The Com-
pilation bag, in particular, stands out as one of
the season’s best sellers.
the historic Ginza Namiki Dori store in Tokyo and 17%
an initial foray into South Africa), and pursue
its policy of innovation with the launch of a
new collection of Bellaix rigid luggage and a 32%
complete and highly anticipated new line of Japan
jewelry. These developments will be supported 24%
by a strong new advertising campaign. Americas

NET SALES AT JUNE 30, 2004

BY GEOGRAPHIC REGION

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 08

 EUR million June 30, June 30, June 30,
2002 2003 2004

Net
sales 1,059 974 973
Income from
operations 30 39 42

PERFUMES AND COSMETICS

In a contrasted and highly competitive market, brands in the Perfumes and Cosmetics business group took
advantage of strong consumption in Asian markets and the recovery of international tourism to gain market share
and continue to improve profitability. The launch of perfumes this fall and the development of skincare and make-up lines,
driven by sustained demand, will ensure a dynamic year end.

HIGHLIGHTS
In the first half of the year, net sales of the Per-
fumes and Cosmetics business group, which
were stable versus the same year-on-year per-
iod, were limited by the impact of currency fluc-
tuations, the disposal of non-strategic brands in
2003 (US licenses in May and the Bliss cosme-
tics company in December), as well as the
consequences of voluntarily increased selecti-
vity in the distribution of French brands in the
United States. Organic growth stood at 7%.
Parfums Christian Dior, the flagship brand of
this business group, posted growth that excee-
ded the market average in the main regions of
the world. Its performance was particularly
notable in the Japanese market, where its
growth was the strongest among foreign
brands, and the travel retail sector. Make-up and
the Prestige and Snow skincare lines are expe-
riencing strong growth.
Thanks, most notably to a policy of innovation,
the other French brands in the business group
all recorded higher sales. The cosmetics
companies BeneFit Cosmetics and Fresh, and
Parfums Loewe continue to enjoy robust
growth.
Income from operations registered growth of
over 7%.
PRINCIPAL DEVELOPMENTS
During the first half of the year, the dynamism
33 21 25
Guerlain posted substantial growth in its main
markets primarily as a result of growth in per-
fumes. The success of L’Instant de Guerlain was
the primary contributor to this growth, which INVESTMENTS
EUR million
was also driven by the international launch of
Shalimar Eau Légère and the creation of two
new Aqua Allegoria. Guerlain also continued June 30, June 30, June 30,
2002 2003 2004
development of its Issima range of skincare pro-
ducts as well as its make-up lines.
Parfums Givenchy also experienced a good six
months, buoyed by the release of its new Very
Irresistible Givenchy perfume for women, the
22%
launch of the Givenchy Le Make-Up line of pro-
ducts and excellent sales of Givenchy Pour
Skincare products
51%
Homme perfume for men. Fragrances
Parfums Kenzo benefited from the develop-
ment of the FlowerbyKenzo product line and the
gradual release of the KenzoKi line of skincare
products. 27%
Cosmetics
OUTLOOK
The second half of 2004 will be characterized by
strong and dynamic innovation in all product
BREAKDOWN OF NET SALES
segments. The launch of Pure Poison, a new BY PRODUCT CATEGORY
women’s perfume by Dior, and of L’Instant de
Guerlain pour Homme will be the twin highlights
of this period. Other new products will be added
to the Givenchy Le Make-Up and Divinora by
Guerlain make-up product lines. KenzoAir per- 8%
Other
19%
fume for men will be launched internationally. markets
11% France

Asia
of Parfums Christian Dior was due, in particu- (excl. Japan)
lar, to the exceptional success of new make-up
products, especially Addict Ultra Shine lipstick,
9%
Diorkiss gloss and the new foundations. The
Japan
brand also benefited from the launch of Dior
Addict Eau Fraîche perfume and the Capture 38%
First Action skincare product, which comple- Europe
ments Capture R60/80 – a best seller launched 15% (excl. France)
Americas
in 2003.

NET SALES AT JUNE 30, 2004

BY GEOGRAPHIC REGION

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 09

WATCHES AND JEWELRY

EUR million June 30, June 30, June 30,

2002 2003 2004

Net
sales 255 210 234
Income from
operations (7) (38) 2

With an exceptional dynamism within their competitive universe, our watch brands are confirming
the turnaround which started in the last quarter of 2003 and increasing their market shares. The strategy of innovating,
improving productivity and targeting investments is paying off commercially and financially with a significant recovery
in income from operations.

HIGHLIGHTS Dior Watches continued to develop at a steady 12 12 6

Following the sale of Ebel at the end of February pace. The D. Trick collection, replicating the main
2004, the Watches and Jewelry business group lines Riva, Malice and Chris 47, was extremely
is now concentrating its efforts on a clearly successful.
positioned and highly complementary brand port-
folio. Chaumet continued its extremely targeted geo-
graphic growth strategy, and saw its sales invi-
While the export of Swiss watches increased by gorated by the success of the first high-end
10.8% in the first half of 2004, the business Jewelry collection Frisson and of the watch June 30, June 30, June 30,
2002 2003 2004
group’s net sales increased 32% on a constant Dandy.
consolidation and currency basis. All the brands INVESTMENTS
EUR millions
demonstrated strong, double-digit growth. Fred benefited from its strategy of refocusing on
Income from operations has greatly improved France and Japan, and just opened a franchise in
and is in the black. Seoul.

After creating Atelier Horloger for Louis Vuitton,
the Watches and Jewelry business group trans-
ferred this industrial activity to Louis Vuitton
Malletier for total watch integration by that
company.
De Beers* recorded a strong increase in sales in
London and in its three stores in Tokyo, and is
continuing with the improvement of its business
model ahead of its arrival in the United States in
2005.

PRINCIPAL DEVELOPMENTS OUTLOOK

TAG Heuer enjoyed sustained growth and
increased its market share in all countries in the
last twelve months. New products launched in
the first half of 2004 (new Link models and
Formula 1 range) supported growth without
impacting traditional lines. At the Basel Trade
Show, TAG Heuer introduced a true watchma-
ker’s revolution with the Monaco V4 watch
equipped with a belt driven automatic move-
ment, which will be marketed in 2006.
Zenith confirmed the merits of its repositioning
The action plans set out for each brand will
enable growth to be maintained in the second
half. Other new products will be introduced
including Aquaracer by TAG Heuer, which is also
celebrating the 40th anniversary of Carrera, the
Chiffre Rouge watch developed by Hedi Slimane
for Dior. Deliveries will also be taking place of
the first Tourbillons and Open Star for women
by Zenith, Class One rings and Liens watches
by Chaumet which will reopen its renovated 9%
Other
8%
historic flagship store at Place Vendôme in markets
September. 15% France

Asia
and the success of its innovations with Chrono- (excl. Japan) Europe
master Open and the female line Star being the The Watches and Jewelry business group (excl. France)

engines of its strong growth. At Basel, Zenith intro- confirms its objective of a recovery in income 24%
duced the only tenth of a second “Tourbillon” in from operations in 2004.
the industry beating at 36,000 alternations.
16%
* De Beers LV activity is consolidated in the Other activities
Japan
of LVMH. 28%
Americas

NET SALES AT JUNE 30, 2004

BY GEOGRAPHIC REGION

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 10

SELECTIVE RETAILING

EUR million June 30, June 30, June 30,

2002 2003 2004

Net
sales 1,560 1,353 1,542
Income from
operations (39) (15) 76

The efforts that our teams have been making for several years, whether in travel retail or specialized retailing,
are paying off: through more efficient organizations, qualitative and innovative merchandising, and constantly seeking to
provide the best service for customers, our brands are increasing their competitiveness and sales, and continuing to improve
their profitability.

HIGHLIGHTS PRINCIPAL DEVELOPMENTS

Selective Retailing activities in the first half of
2004 achieved organic growth of 21%, and pos-
ted strongly improved income from operations.
DFS sales grew vigorously thanks to the suc-
cess of the sales and marketing initiatives put
in place at its Gallerias, and to the recovery in
tourism, which notably benefits the major stores
in Guam and Hawaii. The strategy to develop
customers from mainland China is also leading
to strong growth in Hong Kong. The recovery in
sales and the reduction in its cost structure
have enabled DFS to contribute to the impro-
23 60 41
In order to be based closer to its fast-developing
Chinese customers, DFS transferred its head
office to Hong Kong, set up marketing teams in
Beijing and Shanghai, and started the renovation
of its Hong Kong Gallerias.
Sephora has established itself as a leader in inno-
vation on the beauty products market in Europe,
by carrying exclusive brands and developing inno-
vative services. In May, the brand inaugurated
June 30, June 30, June 30,
Sephora B in Bercy (Paris), an avant-garde store 2002 2003 2004
that symbolizes its positioning of Advancing in
INVESTMENTS
Beauty. Seven stores have been opened in the EUR millions

vement of Selective Retailing’s income from United States since the beginning of the year. In
operations. New York, the new Sephora “flagship”, which
enjoys strong visibility and an exceptional loca-
Buoyed by increased cruise ship trips and an tion, was opened on 5th Avenue in July 2004.
increase in spending per passenger, Miami 639 655 675
Cruiseline achieved record sales and increased OUTLOOK
its profitability. Over the next few months, DFS will continue to
focus its efforts on the major opportunity repre-
Sephora posted excellent performance, gained sented by the Chinese market. Its development NUMBER
OF STORES
market share in France, and, for the fourth outlook is further reinforced by the upcoming ope-
consecutive year, posted double-digit same ning of a Galleria in Okinawa (Japan) in early 2005.
store sales growth in the United States. Still gro- June 30, June 30, June 30,
2002 2003 2004
wing strongly, sephora.com is establishing itself Sephora’s profitability will continue to increase
as the US leader in online sales of beauty pro- through sustained growth in sales. Faithful to
ducts. Sephora’s income from operations has the strategy that has been in place for several
also progressed significantly, confirming the years, the brand will continue to develop in mar-
brand’s healthy profitability on both sides of the kets where it can build significant positions, be
Atlantic. profitable and create value. 5%
Other
markets
27%
Le Bon Marché had a good first half with an Le Bon Marché will open new female fashion France
upswing in sales due to the combined effect of departments in September that will contribute to
ensuring a dynamic year-end, and enable it to
21%
the return of foreign customers and the excel-
Asia
lent reception of its spring collections. strengthen its unique positioning among Parisian
department stores. In September, La Samaritaine
La Samaritaine is proceeding with the last will roll out its new Men’s department, a major
phase of the work related to its reorganization. step in the reorganization of its sales space. 9%
38% Europe
(excl.
United States France)

NET SALES AT JUNE 30, 2004

BY GEOGRAPHIC REGION

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 11

 CONSOLIDATED STATEMENT OF INCOME

(EUR millions except earnings per share, stated in EUR) June 30, 2004 December 31, 2003 June 30, 2003

NET SALES 5,678 11,962 5,236

Cost of sales (1,949) (4,171) (1,729)
GROSS MARGIN 3,729 7,791 3,507

Marketing and selling expenses (2,138) (4,401) (2,042)

General and administrative expenses (595) (1,208) (591)
INCOME FROM OPERATIONS 996 2,182 874

Financial expense - net (73) (233) (93)

Dividends from unconsolidated investments 12 18 7
Other income or expenses - net (52) (349) (77)
INCOME BEFORE INCOME TAXES 883 1,618 711

Income taxes (272) (488) (236)

Income (loss) from investments
accounted for using the equity method 2 1 1
NET INCOME BEFORE AMORTIZATION OF GOODWILL,
MINORITY INTERESTS AND UNUSUAL ITEMS 613 1,131 476

Amortization of goodwill (143) (300) (143)

Minority interests (74) (108) (68)

NET INCOME 396 723 265

NET INCOME BEFORE MINORITY INTERESTS 470 831 333

NET INCOME BEFORE AMORTIZATION OF GOODWILL 539 1,023 408

EARNINGS PER SHARE BEFORE AMORTIZATION OF GOODWILL 1.10 2.09 0.83

EARNINGS PER SHARE 0.81 1.48 0.54
Number of common shares and share equivalents 489,937,410 489,844,910 489,752,410
FULLY DILUTED EARNINGS PER SHARE BEFORE
AMORTIZATION OF GOODWILL 1.10 2.09 0.83
FULLY DILUTED EARNINGS PER SHARE 0.81 1.48 0.54
Number of common shares and share equivalents after dilution 490,116,797 489,844,910 489,752,410

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 12

 ACTIVITY REVIEW FOR THE PERIOD ENDED JUNE 30, 2004
At June 30, 2004, consolidated net sales were
5,678 million euros, an 8% increase from the
first half of 2003. The decline in the main
currencies, notably the US dollar and the yen,
in relation to the euro had a negative effect of
5 percentage points on net sales. At constant
exchange rates, net sales increased 13%.
The Group’s change in consolidation scope
resulted in a negative outcome of 1 percentage
point on net sales. On a constant consolidation
and currency basis, organic growth of net sales
was 14%. The main changes in consolidation
scope were the following: in Wines and Spirits,
the sale of Hine at the end of June 2003 and
of Canard-Duchêne at the end of September
2003, full consolidation of the Spirits company
Millennium, previously accounted for using
the equity method; in Perfumes and Cosme-
tics, the sale of US licenses for Michael Kors,
Marc Jacobs and Kenneth Cole in April 2003,
and of the spa and cosmetics company Bliss
at the end of December 2003; in the Watches
and Jewelry business group, the sale of Ebel
at the end of February 2004.
The breakdown of net sales by invoicing
currency changed little: the weight of the euro
went from 32% to 31%; similarly, the yen fell
by 1 percentage point from 17% to 16%.
Conversely, the weight of the US dollar went
up from 31% to 32% of total net sales.
In terms of geographic region, the relative
weight of Japanese sales in the Group’s net
sales fell from 17% at the end of June 2003 to
15% in 2004, to the benefit of Asia (excluding
Japan), which rose from 13% to 16%, and the
United States, which increased by 1 percen-
tage point to 27%.
On a constant consolidation and currency
basis, net sales in the Wines and Spirits busi-
ness increased by 19% due to a 13% rise in
sales volume for Champagne and Cognac.
LVMH’s Champagne and Wine brands are gro-
wing strongly in the United States and in Japan
with 19% and 20% growth respectively on a
constant currency basis. Cognac is growing the
most in the Chinese and duty free markets as
well as in the United States.
Net sales for Fashion and Leather Goods
increased 11% at constant exchange rates.
Louis Vuitton, which is developing strongly in
the United States as well as with Chinese cus-
tomers, continued its double-digit sales
growth. A clear recovery in sales was obser-
ved in tourist areas for all the brands in this
business group.
The net sales figure posted by Perfumes and
Cosmetics was stable compared to the first
half of the previous year. Excluding the unfa-
vorable currency effect and on a comparable
consolidation basis, net sales increased 7%.
This growth in sales was driven by the intro-
duction of new perfumes on all major markets
FIRST HALF 2004 INTERIM REPORT
– L’Instant de Guerlain and Very Irresistible
Givenchy – and by the success of Dior skincare
and make-up lines. Asian markets and travel
retail posted the strongest increases, up 21%
and 20% respectively.
Net sales for Watches and Jewelry increased
by 32% on a constant currency and consoli-
dation basis. TAG Heuer sales benefited from
the success of the new F1 watch, notably in
the American market. The sales of other
brands all rose strongly, continuing the impro-
vement shown in the second half of 2003.
On a constant currency basis, net sales in
Selective Retailing increased 21% compared to
the first half of 2003. The strongest growth
came from Sephora in the United States and
from DFS in the Asia/Pacific region where tou-
rist areas surpassed 30% growth at constant
exchange rates.
Gross margin for the Group amounted to 3,729
million euros, an increase of 6% over 2003; this
represented 66% of net sales, a 1 percentage
point decrease from the first half of 2003 due
mainly to the negative effect of exchange
rates.
Marketing and selling expenses increased to
2,138 million euros, up 5% compared to the
first half of 2003, and 12% on a constant cur-
rency and consolidation basis. This increase
was due to investments in communication by
the main brands and the development of sales
networks.
General and administrative expenses increa-
sed 1% between the two first halfs, and 6% on
a comparable currency and consolidation
basis. At the end of June 2004, these expenses
represented 10.5% of net sales, or nearly 1 per-
centage point less than at the end of June
2003.
The Group’s income from operations totaled
996 million euros, a 14% rise compared to the
end of June 2003.This increase is in line with the
Group’s organic growth. Income from opera-
tions represented 18% of net sales, a 1 percen-
tage point increase over the end of June 2003.
Income from operations for Wines and Spirits
increased to 335 million euros, up 4% compa-
red to the first half of 2003. The growth in sales
volume made it possible to compensate for the
significant negative effect of fluctuations in
exchange rates.
Income from operations for Fashion and Lea-
ther Goods amounted to 634 million euros, the
same level as in 2003, despite an extremely
penalizing currency effect. Louis Vuitton conti-
nued to improve its performance by maintai-
ning a very high level of profitability. Other
brands in this segment are in the investment
phase, notably in terms of communication, a
factor which affected performance.
PA S S I O N AT E A B O U T CREATIVITY 13
Perfumes and Cosmetics posted income from
operations of 42 million euros versus 39 mil-
lion euros in the first half of 2003. Steady sales
performance and the disposal of unprofitable
activities contributed to this improvement.
Income from operations for Watches and
Jewelry improved strongly, going from a nega-
tive 38 million euros at the end of June 2003
to a positive 2 million euros at the end of June
2004. This performance was due in large part
to the very strong growth in net sales for all
brands, and to the positive effect of the sale
of Ebel.
Selective Retailing recorded income from ope-
rations of 76 million euros at the end of June
2004, compared to a loss of 15 million euros
in the first half of last year. The recovery of DFS
sales in the Asia/Pacific region and the conti-
nuation of strong performances by Sephora in
Europe and in the United States facilitated the
strong improvement in income from opera-
tions.
The operating loss from Other Activities was
93 million euros against 67 million euros at the
end of June 2003. Apart from head office costs,
which include non-recurring pension provi-
sions, this item includes the Group’s Media
business, which reduced its losses while the
joint venture De Beers-LV continued its invest-
ments.
The net financial expense was reduced from
93 million euros at the end of June 2003 to 73
million euros at the end of June 2004. This was
mainly due to the reduction in the Group’s ave-
rage debt. Other income and expenses came
to 52 million euros ; this amount includes
exceptional depreciation of tangible, intan-
gible, and financial assets.
The tax rate for the first half of 2004 was 31%,
2 percentage points lower than at the end of
June 2003 due to the improved performance
of previously unprofitable companies.
Net income before amortization of goodwill
rose to 539 million euros, a 32% increase over
the end of June 2003.
Goodwill amortization totaled 143 million
euros, identical to the amount in the first half
of 2003.
Minority interests increased from 68 million
euros in the first half of 2003 to 74 million
euros at the end of June 2004. This change was
most notably attributable to the improved
results of DFS.
At June 30, 2004, the Group reported net
income of 396 million euros, a 49% increase
over 2003. Net income represented 7% of net
sales for the half.
 CONSOLIDATED BALANCE SHEET

ASSETS June 30, 2004 December 31, 2003 June 30, 2003
(EUR millions)

CURRENT ASSETS

Cash and cash equivalents 742 823 611

Short-term investments 238 231 217
Treasury shares 787 427 441
Trade accounts receivable 1,115 1,375 1,034
Deferred income taxes - net 376 451 513
Inventories and work-in-progress 3,665 3,415 3,575
Prepaid expenses and other current assets 992 1,202 1,155

TOTAL 7,915 7,924 7,546

INVESTMENTS AND OTHER ASSETS

Investments accounted for using the equity method 32 49 51

Unconsolidated investments and other investments 851 848 853
Treasury shares 188 404 348
Other non-current assets 414 338 416
Goodwill and similar intangible assets - net 3,467 3,410 3,599
Brands and other intangible assets - net 3,923 3,902 4,082
Property, plant and equipment - net 3,684 3,668 3,699

TOTAL 12,559 12,619 13,048

TOTAL 20,474 20,543 20,594

As at June 30, 2004, LVMH’s consolidated
balance sheet totaled 20.5 billion euros and
was stable versus December 31, 2003.
Cash and short-term investments amounted
to 1.0 billion euros, a stable amount in rela-
tion to December 31, 2003.
Inventories rose to 3.7 billion euros compared
with 3.4 billion euros at the end of 2003, due
to the seasonal changes which characterize
most of the Group activities and the gradual
rebuilding of inventories in the Wines and
Spirits business.
Investments, treasury shares and other non-
current assets fell slightly to 1.5 billion euros
from 1.6 billion euros six months earlier. This
decline was primarily due to the transfer of
treasury shares formerly classed as fixed
assets to current assets.
Tangible and intangible assets rose slightly to
11.1 billion euros versus 11.0 billion euros at
the end of 2003. This increase was essentially
due to the full consolidation of Millennium, in
a time of restraint regarding capital expendi-
tures.
Fixed assets totaled 12.6 billion euros, which
was identical to December 31, 2003. This
amounted to 61% of the balance sheet total,
an unchanged proportion.
Current liabilities amounted to 6.3 billion
euros as at June 30, 2004 versus 6.1 billion
euros at the end of 2003, chiefly as a result of
an increase in short-term financial debt, which
exceeded the seasonal decline in supplier
accounts. Their share of the balance sheet
total edged slightly higher to 31%.
At the end of June, long-term liabilities rose
to 5.3 billion euros, including 4.1 billion euros
in financial debt. Their relative share of the
balance sheet total fell slightly to 26%.
Minority interests fell slightly to 1.6 billion
euros against 1.7 billion euros six months ear-
lier. This decline resulted from the purchase of
an additional minority interest in Fendi and
Donna Karan in accordance with previous
agreements and in reduction of our off-balance
sheet commitments, as well as from the divi-
dends paid to minority stockholders, net of the
minority interests in half-year income.

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 14

LIABILITIES AND STOCKHOLDERS' EQUITY June 30, 2004 December 31, 2003 June 30, 2003
(EUR millions)

CURRENT LIABILITIES

Short-term borrowings 2,719 1,245 1,853

Accounts payable 1,320 1,639 1,108
Accrued expenses and other current liabilities 1,905 2,302 2,103
Income taxes 56 61 90
Current portion of long-term debt 303 871 956

TOTAL 6,303 6,118 6,110

DEFERRED INCOME TAXES - NET 158 158 162

LONG-TERM LIABILITIES

Long-term debt, less current portion 3,951 4,207 4,357

Other long-term liabilities 1,106 1,133 1,099
Repackaged notes 125 158 190

TOTAL 5,182 5,498 5,646

MINORITY INTERESTS IN SUBSIDIARIES 1,607 1,735 1,747

STOCKHOLDERS' EQUITY

Common stock 147 147 147

Additional paid-in capital 1,736 1,736 1,736
Cumulative translation adjustment (534) (623) (373)
Retained earnings 5,875 5,774 5,419

TOTAL 7,224 7,034 6,929

TOTAL 20,474 20,543 20,594

Group stockholders’ equity increased to 7.2
billion euros versus 7.0 billion euros at the end
of 2003, thanks to the income earned and des-
pite payment of most of the dividend in the
first half of the year.
Total stockholders’ equity and minority inter-
ests stood at 8.8 billion euros, representing
43% of the balance sheet total.
Long-term resources therefore totaled 14.1
billion euros and exceeded total fixed assets.
ted 69% of stockholders’ equity. After deduc-
ting the market value of the equity stake in
Bouygues and treasury shares not allocated
to option plans, net financial debt was 5.5 bil-
lion euros or 63% of stockholders’ equity, in
line with our forecasts.
The financial debt reduction program, which
was initiated at the end of 2001 with the dis-
posal of our stake in Gucci, continues in 2004.
Given the seasonal nature of activities and
cash flow, the decline in our debt load should
be sizable during the second half of the year.
Confirmed lines of credit amounted to
approximately 4.3 billion euros as at the end
of June, of which only 0.6 billion euros was
drawn. The amount of undrawn confirmed
lines of credit therefore notably exceeds the
back-up of the commercial paper program,
whose outstanding amount was 1.6 billion
euros as at June 30, 2004.

Short- and long-term financial debt, net of At 67% of the total net debt of the Group, the
cash and short-term investments, totaled 6.1 share of long-term financial debt remains at
billion euros as at June 30, 2004. It represen- a satisfactory high level.

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 15

 CONSOLIDATED STATEMENT OF CASH FLOWS

(EUR millions) June 30, 2004 December 31, 2003 June 30, 2003

I. OPERATING ACTIVITIES
Net income 396 723 265
Minority interests 73 108 68
Equity interest in undistributed earnings of associated companies,
net of dividends received 2 5 4
Depreciation and amortization 372 914 443
Change in provisions (86) 11 (99)
Change in deferred taxes 66 130 71
Gain (loss) on disposal of fixed assets or treasury shares 5 58 (3)

NET CASH PROVIDED BY OPERATING ACTIVITIES

BEFORE CHANGES IN CURRENT ASSETS AND LIABILITIES 828 1,949 749
Inventories and work-in-progress (241) (222) (254)
Trade accounts receivable 266 (1) 387
Accounts payable (364) 88 (380)
Other current assets and liabilities (160) 28 (129)

NET CHANGE IN CURRENT ASSETS AND LIABILITIES (499) (107) (376)

NET CASH PROVIDED BY OPERATING ACTIVITIES 329 1,842 373

II. INVESTING ACTIVITIES

Purchases of brands and other intangible assets (18) (70) (25)
Purchases of property, plant and equipment (218) (508) (225)
Sale of non-financial fixed assets 27 82 41
Acquisitions of investments (11) (78) (13)
Proceeds from sale of unconsolidated investments 3 13 9
Change in other non-current assets (14) 19 (7)
Net effect of acquisitions and disposals of consolidated companies (199) (209) (267)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (430) (751) (487)

III. FINANCING ACTIVITIES

Shares of minority interests in proceeds from issuances of common stock - 70 70
Change in treasury shares (142) 196 152
Dividends and interim dividends paid by the parent company (including related tax) (295) (374) (271)
Dividends and interim dividends paid to minority interests of consolidated subsidiaries (100) (74) (14)
Proceeds from short-term borrowings and long-term debt 1,497 1,452 1,106
Principal repayments on short-term borrowings and long-term debt (1,170) (2,114) (945)
Change in listed securities - (170) (80)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (210) (1,014) 18

IV. EFFECT OF EXCHANGE RATE FLUCTUATIONS 5 (18) (8)

NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (306) 59 (104)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (NET OF BANK OVERDRAFT) 603 544 544

CASH AND CASH EQUIVALENTS AT PERIOD-END (NET OF BANK OVERDRAFT) 297 603 440

Non-cash transactions :
- lease financing operations – 2 1

The statement of cash flows shows the change in cash (net of bank overdraft) and cash equivalents consisting of short-term investments that can be readily conver-
ted into cash, excluding listed securities.

As of June 30, 2004, net cash and cash equivalents, as (EUR millions) June 30, 2004
shown in the statement of cash-flows, amount to 297
millions euros. The reconciliation of this amount and the Non quoted short term investments 29
cash and cash equivalent account as shown in balance Cash 742
sheet is as follows: Bank overdrafts (474)
Net cash and cash equivalents 297

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 16

 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

The consolidated statement of cash flows, as
shown opposite, details the principal cash
flows for the first half of the year.
The Group’s net cash provided by operating
activities before changes in current assets and
liabilities amounted to 828 million euros, an
11% increase over the 749 million euros recor-
ded a year before.
Working capital requirements increased by
499 million euros. Specifically, inventory
changes generated cash flow requirements
of 241 million euros, primarily due to the
rebuilding of Hennessy inventories and the
increase in Louis Vuitton inventories as a result
of increased reliance on maritime transport.
Due to the seasonal nature of activities, the
change in accounts receivable made a positive
contribution of 266 million euros, while the
change in accounts payable absorbed 364 mil-
lion euros.
In total, net cash provided by operating acti-
vities was 329 million euros.
Net cash used in investing activities, i.e. capi-
tal expenditures and acquisitions less dispo-
sals represented an outflow of 430 million
euros.
The Group’s capital expenditures represented
236 million euros. Their stabilization reflects
the continued selectivity of investments and
a focus on the Group’s leading brands, firstly
on Louis Vuitton.
Financial investments (acquisition of invest-
ments and change in other non-current assets)
for the year-to-date totaled 25 million euros for
the first 6 months of the year, and the net
effect of acquisitions and disposals of conso-
lidated companies another 199 million euros.
Essentially, these amounts relate to the pur-
chase of minority interests in Fendi and Donna
Karan amounting to 207 million euros. Inver-
sely, the Group received the proceeds from the
disposal of Ebel.
The disposal of fixed assets (non-financial
assets and unconsolidated investments)
contributed 30 million euros in cash.
In the first half of the year, the Group’s pur-
chase of treasury shares, net of disposals,
resulted in a cash outflow of 142 million euros.
Dividends paid by LVMH S.A. during the first
half of the year, excluding treasury shares,
rose to 295 million euros for the final dividend
payment of 2003. In addition, the minority sha-
reholders of consolidated subsidiaries received
100 million euros in dividend payments.
Financing requirements after all operating and
investing activities and after dividend payouts
for 2003 amounted to 638 million euros.
These requirements, as well as rolling requi-
rements for loan amortizations and financial
debt in the amount of 1,170 million euros,
were satisfied by new borrowings and finan-
cial debt.
New borrowings and financial debt provided
1,497 million euros. The Group continued to
broaden its investor base and benefit from
opportunities with private placements of 252
million euros under its Euro Medium-Term
Notes Program. Moreover, it took advantage of
its commercial paper program, increasing the
outstanding amount by 1,145 million euros
during the first half of the year. However, the
public bond issue of 600 million euros, closed
at the beginning of July, should reduce
recourse to this form of financing.
At the close of the half year, the net cash posi-
tion stood at 297 million euros.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

number of shares EUR millions

Common Treasury Common Additional Retained Cumulative Stockholders'

stock shares stock paid-in capital earnings translation equity
adjustment

AS OF JUNE 30, 2003 489,937,410 – 147 1,736 5,419 (373) 6,929

Interim dividend paid on 2003 income (103) (103)
Translation adjustment (250) (250)
Net income 458 458
AS OF DECEMBER 31, 2003 489,937,410 – 147 1,736 5,774 (623) 7,034
Final dividend paid on 2003 income (295) (295)
Translation adjustment 89 89
Net income 396 396
AS OF JUNE 30, 2004 489,937,410 – 147 1,736 5,875 (534) 7,224

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 17

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

■ ACCOUNTING PRINCIPLES

The interim financial statements at June 30, accounting principles and methods as those seasonal nature of some of the Group busi-
2003 and 2004 have been prepared in accor- employed for the annual financial statements. nesses, which enjoy a considerably higher
dance with French regulations, using the same Comparisons between the interim and annual sales volume in the second half of the year
financial statements may be affected by the than in the first half.

■ CHANGES IN THE COMPOSITION OF THE GROUP

The main changes in the consolidation scope – Perfumes & Cosmetics: in April, increase of
in the first half years of 2003 and 2004 are as interest in Make Up For Ever from 73 to 100 %
follows: – Watches & Jewelry: sale of Ebel at the end
of February.
● In 2004 :
– Wines & Spirits: full consolidation of Mille- ● In 2003 :
nium, as of January 1st, previously accounted – Wines & Spirits: sale of Thomas Hine in June
for using the equity method. and of Canard-Duchêne in September.
– Fashion & Leather goods: increase of inter- – Fashion & Leather goods: sale in February of
est in Donna Karan (from 89 to 98%) in March, the 35% interest in Michael Kors, increase of
and in May in Fendi from 84 to 94 %. interest in Fendi (from 67% to 84%) during the
first quarter.
– Perfumes & Cosmetics: sale of licensees Ken-
neth Cole, Marc Jacobs and Michael Kors; sale
of Bliss in December; full consolidation of Acqua
di Parma as of July 1st; increase of interests in
La Brosse et Dupont (from 57% to 99%) in March.
– Other activities: sale of Etude Tajan in
December.
Accordingly, proforma net sales and income from
operations are presented below for the first half
years 2003 and 2004.They are established on the
basis of a comparable group structure and
months of activities.

June 30, 2004 June 30, 2003

(EUR millions) proforma

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,678 5,202

of which: - Wines & Spirits . . . . . . . . . . . . . . . . . . . 911 806
- Fashion & Leather Goods . . . . . . . . . . . 2,023 1,896
- Perfumes & Cosmetics . . . . . . . . . . . . 973 954
- Watches & Jewelry . . . . . . . . . . . . . . . . 234 194
- Selective Retailing . . . . . . . . . . . . . . . . 1,542 1,353
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 996 892

■ CHANGES IN THE NET VALUE OF TANGIBLE AND INTANGIBLE ASSETS

Brands and other Goodwill Tangible The increase of tangible assets resulted pri-
(EUR millions) intangible assets assets marily from the investments in the Louis
Vuitton and Sephora distribution networks.
BALANCE AT DECEMBER 31, 2003 . . . . . . . . . . . . . . 3,902 3,410 3,668 The effects of changes in the consolidation
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 – 211 scope on goodwill resulted from the acquisi-
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) – (40) tions of interests in Fendi and Millenium.
Changes in depreciation and amortization . . . . (30) (143) (187) The effects of exchange rates fluctuations
Effects of changes in consolidation scope . . . . . (10) 175 (3) were mainly attributable to the slight increase
Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 25 35 of the US dollar versus euro in the first half-
year.
BALANCE AT JUNE 30, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . 3,923 3,467 3,684

■ UNCONSOLIDATED INVESTMENTS

(EUR millions) June 30, 2004 December 31, 2003

Investment in Bouygues SA (France) 819 819

Other investments 468 464
Depreciation allowance (436) (435)
Total 851 848

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 18

■ TREASURY SHARES
June 30, 2004 December 31, 2003
(EUR millions) Number EUR Number EUR

MORE THAN ONE YEAR

– stock option plans:
gross amount 3,200,225 234 7,604 662 455
provision for loss in value – (46) – (51)
3,200,225 188 7,604,662 404
other provisions (69) (71)
LESS THAN ONE YEAR
– stock option plans:
gross amount 14,312,607 599 11,828,630 419
provision for loss in value – – – –
– stock price equalization or short-term investments:
gross amount 3,210,616 193 145,000 8
provision for loss in value – (5) – –
17,523,223 787 11,973,630 427
other provisions (8) (4)
TOTAL NET VALUE 20,723,448 898 19,578,292 756

■ MINORITY INTERESTS ■ NET DEBT

(EUR millions) (EUR millions) June 30, 2004 December 31, 2003

AS OF JUNE 30, 2003 1,747 Repackaged notes 125 158

– dividend paid to minority interests (60) Long-term debt 3,951 4,207
– minority interests in income 40 Debt maturing
– impact of changes in the scope of consolidation 23 in more than one year 4,076 4,365
– translation adjustment (15)
Current portion of long-term debt 303 871
AS OF DECEMBER 31, 2003 1,735
Short-term borrowings 2,719 1,245
– dividend paid to minority interests (100)
Debt due in less than one year 3,022 2,116
– minority interests in income 74
– impact of changes in the scope of consolidation:
acquisition of minority interests Short-term investments 238 231
in Fendi & Donna Karan (100) Cash and cash equivalents 742 823
other (8)
Net debt maturing
– translation adjustment 6
in less than one year 2,042 1,062
AS OF JUNE 30, 2004 1,607
Total net debt 6,118 5,427

■ LOSS AND CONTINGENCY PROVISIONS

● During the first 2004 half-year, changes in loss and contingencies provisions recorded in the balance sheet under captions “other long-term
liabilities” and “accrued expenses and other current liabilities” are as follows:

December 31, 2003 Provisions Amounts Amounts Changes in the Other June 30, 2004
used released scope of including
consolidation translation
adjustment

Provisions for reorganization 200 2 (54) (4) – (11) 133

Other loss and contingency provisions 773 80 (100) (18) (7) 22 750
Provisions for pensions,
medical costs and similar commitments 208 18 (8) – 1 2 221
Provisions for returned goods 81 31 (39) – (1) 2 74
Total 1,262 131 (201) (22) (7) 15 1,178
of which: income from operations – 83 NA (21) – – –
other – 48 NA (1) – – –

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 19

■ SEGMENT INFORMATION BY BUSINESS GROUP
(EUR millions) June 30, 2004 June 30, 2003 June 30, 2002 As e-Luxury.com was reclassified from
« Other activities » to « Fashion and Leather
Net sales Goods » in 2003, the data for 2002 was resta-
Wines and Spirits 911 797 916 ted in order to make it comparable.
Fashion and Leather Goods 2,023 1,896 2,023
Perfumes and Cosmetics 973 974 1,059
Watches and Jewelry 234 210 255
Selective Retailing 1,542 1,353 1,560
Other activities and eliminations (5) 6 5
Total 5,678 5,236 5,818
Income from operations
Wines and Spirits 335 321 277
Fashion and Leather Goods 634 634 646
Perfumes and Cosmetics 42 39 30
Watches and Jewelry 2 (38) (7)
Selective Retailing 76 (15) (39)
Other activities and eliminations (93) (67) (67)
Total 996 874 840

■ NET SALES BY GEOGRAPHIC REGION

(EUR millions) June 30, 2004 June 30, 2003 June 30, 2002

France 945 930 977

Europe (excluding France) 1,087 1,036 1,069
USA 1,513 1,369 1,600
Japan 858 868 860
Asia (excluding Japan) 895 709 936
Other markets 380 324 376
Total consolidé 5,678 5,236 5,818

■ FINANCIAL EXPENSE (NET)

(EUR millions) June 30, 2004 June 30, 2003

Interest expense (net of interest income) (80) (95)

Gains (losses) on sales of short-term investments 4 2
Allowance to provision for impairment of short-term investments – (2)
Exchange gains (losses) - net 3 2
Total financial expense (net) (73) (93)

■ OTHER INCOME AND EXPENSE

Other income and expense include for 22 mil-

lion euros the impairment of overseas com-
mercial fixed assets and for respectively 15
and 5 million euros the impairment of finan-
cial and intangible assets.

FIRST HALF 2004 INTERIM REPORT PA S S I O N AT E A B O U T CREATIVITY 20

 STATUTORY AUDITORS' REVIEW REPORT ON THE HALF YEAR
CONSOLIDATED FINANCIAL STATEMENTS

In our capacity as statutory auditors of LVMH Moët Hennessy Louis Vuitton, and in accordance with Article L.232-7 of French Company
Law (Code de Commerce), we have performed the following procedures:

– a review of the accompanying summary of operations and income statement as they appear in the interim consolidated financial
statements for the six-month period ended June 30, 2004,

– an examination of the information provided in the Company's half year management report.

These interim consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to issue a report on
these financial statements based on our review.

We conducted our review in accordance with French professional standards. These standards require that we plan and perform the
review to obtain moderate assurance, lesser than that which would result from an audit, as to whether the interim consolidated financial
statements are free from material misstatement. The review excluded certain audit procedures and was limited to performing analytical
procedures and to obtaining information from Company management and other appropriate sources.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial
statements, prepared in accordance with French accounting principles, do not present fairly, in all material respects, the financial position
of the Group and its operations for the period then ended.

We have also examined, in accordance with French professional standards, the information contained in the half year management report
on the interim consolidated financial statements that were the subject of our review.

We have nothing to report with respect to the fairness of such information and its consistency with the interim consolidated financial
statements.

Courbevoie and Neuilly-sur-Seine, September 14, 2004

The Statutory Auditors

ERNST & YOUNG Audit Deloitte Touche Tohmatsu-Audit

Jeanne BOILLET Gilles GALIPPE Thierry BENOIT Alain PONS

 For information, contact LVMH, 22 avenue Montaigne - 75008 Paris - France - Tel + 33 1 44 13 22 22 - Fax + 33 1 44 13 21 19
www.lvmh.com

Photographs
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