LVMH Moët Hennessy - Louis Vuitton, Société Européenne (MC) Earnings Call Transcript & Summary

Good morning all. We're delighted to welcome you all this AGM meeting for the first time in 3 years in presence. Generally, we've done it by video, which was actually easier for participants, but more not so agreeable for you who could only see the screen. I'd like to open this general meeting, and thank you for being present. Let me remind you that we've given the possibility, in addition to the legally framed scheme of written questions, to send in your questions by e-mail. I'd like to introduce the scrutineers, who for Christian Dior, Mr. Sidney Toledano and for Financière Agache, Mr. Nicolas Bazire that we appoint as Meeting Secretary, Ms. Belloeil-Melkin. The agenda, I won't go back over it. You are familiar with it. It's in the documents that we sent out to you. Let me just remind you that this AGM is part of a communication policy with shareholders that led to organizing of a consultation prior to the AGM to identify your questions and expectations and achieving notice developed to the unsighted in the broadcast live and deferred mode of all our proceedings at this meeting. Before handing over to Jean-Jacques Guiony, just a brief word because we are gathered together to approve and review the results that are already well known of the year 2021. Just to remind you that in terms of the results, and I'll come back in greater details in due course to the various results of the group. In '21, an excellent year record level in terms of revenue, EUR 64 billion. And operating cash flow in excess of EUR 13 billion profit from recurring operations, EUR 17 billion. Net income, EUR 12 billion. Over to Mr. Guiony to go into the figures in greater detail.

Good morning, everyone. It is my pleasure to introduce the remarkable figures for the year 2021. And -- this first chart is a bit complicated. It shows the variation in sales between 2020 and 2021. Of course, the base -- the comparison with 2020 is a bit complicated because of the pandemic. But we did try to compare the numbers with 2020, well, that's easy enough to do, but we also want to compare them with 2019. If you look at the third bar from the left, organic growth outstanding, of course, compared to 2020, 36%, but also very good compared to 2019, up 14%, that is organic, without scope or exchange of currency effect, which means that in 2021, we were able to close the gap of 2021 -- of 2020, rather and indeed, go back to the numbers of 2019. And this is scope effect, 10%, which is essentially the consolidation of Tiffany for the first year. I'll get back to that in a minute. And the slightly negative currency effect, which didn't make much difference in terms of numbers but slightly on sales. So all in all, with 20% above 2019 and 44% above 2020 regarding organic growth in 2021. It has continued over the first 3 months of this year. What you have up on the screen is a simple chart, we are up 23% compared to last year in organic terms. Last year, which was relatively normal year, even though some of the shops were closed in Europe. So we're up 23% and the growth rate is very promising indeed. And indeed, the currency effect, the ForEx effect is positive last year, especially on the dollar, we were looking at [ 1.22%, 1.21% ], now we're looking at [ 1.08% to 1.09% ]. So this is favorable exchange rate development on that last year. So that generated EUR 18 billion in sales for the first quarter. Now then, usually, I'd like to show the sort of geographical distribution of sales and gives you an idea. The first country is the United States, 26% of the global sales are very buoyant indeed. And as you can see, it's written slightly smaller underneath. Sales in the U.S. were up as a percentage of the total. The first region is Asia, 35%, also growing significantly because part of the Asian business was -- which used to be conducted through tourists here, were now in a way being done back home in Asia. We have 15% for Europe and 6% for France, so 21% altogether. So that's slightly down, but that's, as I said, because some of the Asian sales would take -- were back in Asia and Japan, remains stable. Now then looking at businesses. Half of the business is Fashion & Leather Goods. As you know, all the brands and the balance is distributed between Wines & Spirits, Selective Retailing, Watches & Jewelry, and that, of course, grew significantly because of Tiffany and then Perfumes & Cosmetics. That gives you an idea of the distribution of our businesses, but also the balance in our portfolio. We are the only group which is fully invested in all areas of the luxury industry. Back to the numbers for 2021, then and how they have changed over time. You have the numbers for 2019, 2020 and 2021. On the right-hand side, you have organic growth per business line. What you see there is that all these businesses did better in 2021 compared to 2019. With the exception of Selective Retailing. In fact, with the exception of travel retail because within Selective Retailing, well, there's travel retail, the duty-free business and also Sephora, which you are all familiar with. Sephora is up compared to 2019. So for the other businesses, all lines are doing well. Wines & Spirits up 10%; Fashion & Leather Goods 42%, above its 2019 level, which is pretty unique, not just in our portfolio, but also in a very competitive universe of fashion and leather goods. Perfumes & Cosmetics are back to the levels of 2019. Watches & Jewelry up 37%. That's mostly because of Bulgari because Tiffany does -- is not organic. It's a scope effect, but Tiffany, of course, enjoyed a very good year in 2021 and indeed had a double-digit improvement compared to 2020 -- 2019. So Tiffany is in line with this general picture of strong growth in 2021 compared to 2019. Going back to the income statement and consolidated. So EUR 64 billion in sales, gross margin growing faster than sales, 68.4% of sales. So that's 4 additional percentage points compared to 2020 and 2 points more than 2019, which is huge for that kind of indicator, which tends to be pretty stable over time. Expenses grew significantly compared to 2020, but also compared to 2019. Here, they're listed in euros. So there's a currency -- the ForEx effect here in these expenses. If you remove the 6 or 7 points of exchange, you go back, compared to 2019, a growth of 6% or 7% compared to 2019, which is quite reasonable over the 2 years shows that we've been controlling costs over a very challenging period. Profit is from recurring operations where sales are up 14% organically compared to 2019, and that means that expenses grew less fast than sales. There's a ForEx positive effect in the consolidation of Tiffany. So qualitatively and quantitatively, you have a summary of what happened in 2021. The result is -- the profit is EUR 17 billion, 50% above 2019 and almost 100% compared to 2020. So this is a very positive development and that is, of course, our key indicator. On the other items, I'll go over these quickly. There are no additional expenses. Financial income is slightly positive because we had negative interest rates, well, so that means that you have a positive -- well, it does lead to positive financial income. Taxes, 26% of pretax profit, more or less stable compared to '20 -- with the exception of 2020 when it went up, but it's been stable for several years. So not much here. We wait and see improved its contribution. So the net income attributable to the group is up 49% compared to 2019. So regarding Wines & Spirits, they were up 10% in profit from recurring operations. This is true for sales, but it's also true for wine -- for Fashion & Leather. I mean, up 75% compared to 2019, which is an ordinary year. Perfumes & Cosmetics, same level as 2019. Watches & Jewelry up significantly, thanks to Tiffany, but also thanks to Bulgari mostly, so up 50% compared to 2019, as I said. On the next slide, you can see that this improvement in profit is mostly organic, even though there's a scope effect due to Tiffany, which brought in EUR 800 million in profit, but no currency effect and everything else is due to organic growth in our businesses. On the financial structure, Well, it has changed a little bit because of the consolidation of Tiffany to about EUR 10 billion in intangible assets. Debt has grown a little bit, but equity account for 40% of the balance sheet and what you do not see here, but we want to have lots of liquidity, lots of cash should there be any need. On the debt, you have the 2 extremes, which show the debt at end 2020 and end 2021 from EUR 4.2 billion to EUR 9.6 billion. So it is a significant increase in debt, but do realize that through the acquisition of Tiffany, there were EUR 13 billion in acquisitions. So the debt is up EUR 5 billion, but there were EUR 13 billion in acquisitions. So why is that? Well, you can see it on the picture there is a free cash flow -- operating free cash flow, EUR 13.5 billion, which is more or less the same as acquisitions. So you could say simplistically that in 1 year, we paid for the acquisition of Tiffany, it's not quite true because there were other expenses, dividends were about EUR 4 billion. So it's something -- it's not quite right, but it does give you an order of magnitude, the equivalence between cash flow and acquisitions. Dividends is up significantly, up to EUR 10. Of course, that reflects the improvement in cash flow, net profit and operating profit. We do try to have a cash out -- a payout rate of about just below 50%, about 45%. Here, we stand there because we're looking at roughly EUR 5 billion. An interim dividend was paid EUR 3 per share at the beginning of December. So the balance on 28 April will be EUR 7 per share. And 1 final chart, which I always show, which is the share price. These are challenging times, but even in challenging times, our share price since the beginning of 2021 has been up 25%, faster than the index. Thank you.

Thank you for that. Now before we move to some explanations and answers to questions that you'll, no doubt, wish to ask us later on. I'll ask that we have shown the questions that you have put through the e-mails that were sent out to you concerning the business and all its activities during 2021. In 2021, the world gradually emerged for the crisis. You hailed the strong rebound capability of LVMH marked by the share price performance and financial results that you characterized as outstanding. You feel that 2021 confirmed the strategic course of the group with the integration of Tiffany and the opening of La Samaritaine. You feel that LVMH is maintaining its growth dynamic, both internationally in France, when new workshops were open. As LVMH shareholders, you naturally have questions about the consequences of the crisis in Ukraine. How will they impact the '22 results long term? How can we better anticipate rising geopolitical risks and the turn to the future? Many of you are expressing interest to better understand how digital tech will allow the company to reach out to younger customers with -- more innovative customer, metaverse areas that the group must invest. LVMH is very committed in favor of social, environmental responsibility. You continue to encourage the group to engage a continuous improvement with its stakeholders. Well, to begin with a few thoughts and considerations on the trend that mark 2021. You've seen that the results are characterized as remarkable outstanding, but as they're really and truly excellent. I'd like to begin by thanking our teams, the Executive Committee that is present today, the heads of a number of our companies, quite a few group employees. And to say that it's thanks to them that these results were achieved to acknowledge them, please applaud them. It's true that the year 2021 follows and weathered a period of crisis, starting with COVID that arrived early in '21 -- '20 and the group has improved its performance still further in the luxury segment. The results are shown here, clearly demonstrate that as compared to our peers, our operating profit is, generally speaking, as compared to most of our peers, either on a par or above their revenue. It shows you the difference and the fact that LVMH has weathered this crisis, like most of the crises that we've weathered for many years now by improving still further its relative performance on the luxury market as a whole. I said on another occasion that it's in these challenging times like during a cycle race when you are climbing the steepest slopes that we realized, the relative performance, it's not with a flat crossing in the sunshine. So the group has -- through all these times has delivered a particularly outstanding year 2021, starting with Wines & Spirits. Well, the results are excellent, and we weathered this period by facing supply constraints that we're still experiencing early '22 on Cognac in particular. But in spite of that, the growth was good. Our financial results and sales are up worldwide, notably in the United States quite strongly. And we have improved significantly creativity, the new products and the quality of our best vintages. Now the most buoyant, the most promising sector in 2021 as is the case in '22 for that matter, is Fashion & Leather Goods. I'd like to hail the result in the performance of Louis Vuitton is really our flagship that has managed through this challenging year to deliver a quite significant performance with many events in 2021. We celebrated the 200 years of the birth of Louis Vuitton, a whole set of events were organized in our flagships throughout the world. I'd like to mention 2 that were opened in the 2 previous years in Japan, 1 in Tokyo, another in Osaka that are remarkable and whose results are very significant indeed. Now of course, last year, Louis Vuitton was marked by a tragic event. The passing of Virgil Abloh, this outstanding designer who designed all the men's collections of Louis Vuitton and who sadly passed away at the age of 41 in November. We plan to open an exhibition at the Louis Vuitton Foundation of all his creative works in all areas. He was creative in fashion, many other areas, and that will open as of April this year, and I hope many of you will be able to visit that exhibition. The last fashion show took place at the beginning of the year in Paris and met with remarkable success. And I think the products that will emerge from this fashion show will indeed be very successful. I'd like to pay tribute to his genius and his immense contribution to Louis Vuitton. Our other spearhead of our group in terms of Fashion & Leather Goods is Christian Dior, of course. Now Christian Dior has expanded strongly last year, thanks to its teams, thanks to its design [indiscernible] and Kim Jones, and through its leadership, Triomphe in particular. And following that, we -- quite recently, about a month ago, we opened the Christian Dior house on Avenue Montaigne, I urge you to go and visit it. It's quite innovative and impressive in the world of design, the couture luxury with a great many innovations. And I think it really does mark a turning point in the growth of such a prestigious House of Dior because it's the fashion house that is the most widely known in the world. I mean, Christian Dior is one of the most widely known names after Napoleon worldwide. So we're very pleased to invite you to visit the Maison Christian Dior at Avenue Montaigne. It took 3 years to renovate the building. So it's really quite impressive. And we also have a museum, the Galleria where we can see all the creations since the outset, 1947 Christian Dior launched his house for the other brands that are growing quite remarkably. I'd like to cite Celine [indiscernible] with Hedi Slimane going from strength to strength, very good profitability, whose products are selling very well. Stores are expanding. Of course, the network is smaller than that of Christian Dior. But gradually, over time, I think that this company will reach the goal set for it initially that is rapidly top the EUR 2 billion mark in sales and why not even higher. Subsequently, Loewe with J.W. Anderson also great expansion, very highly creative products, meeting with considerable success. Fendi. Well, Fendi is growing well, both in Europe and in the U.S., also present in China. But since Kim Jones came on board for the women's collections, we're seeing a strong growth in that brand. So that's briefly a review of Fashion & Leather Goods. Moving to perfumes. Now perfumes performed very well. What we're very proud of in the perfumes is the performance of Christian Dior and notably of the Sauvage fragrance, say, the Sauvage Parfum that and historic Dior fragrance. It is #1 in the world, not just for men's fragrances, but we sell more than all the competing women's perfumes, and that's the goal that we've set to the Dior perfume lines is to continue. With Miss Dior and J’adore, Guerlain met with considerable success. The creams, Abeille Royale, and we can also cite Fenty with the support and the design because she's very involved with Rihanna, that's growing strongly, notably in the U.S. Now we had a few questions about Tiffany because Tiffany joined the group last year. And to say that the integration is going very well, that the management team that we put in place is very efficient, performing well. The results have lapped forward sales, growing a lot better than what we anticipated at the time of the acquisition. We're currently renovating the building on Fifth Avenue that should be ready by the end of this year, at least I hope because it's considerable renovation work. It's a very big space. It's going to be magnificent. If it's not at the end of this year will be early next year. And the sale of jewelry and high jewelry products are developing extremely well. And of course, the advertising campaign, you probably saw it with Beyoncé and Jay-Z, her husband, met with a considerable global acclaim. Big success also for Bulgari, that is also growing strongly and has just launched its ultra-flat watch Octo Finissimo Ultra of only 1.8 millimeters thick. It's a unique feat, and it was chosen as winner of the watches in Geneva. And Watches & Jewelry business is growing strongly. TAG Heuer watches, that very successful tie-up with Porsche, I'm wearing one here, very fine watch that was very difficult to find. There's a lot of demand for these timepieces, and we have many more technological with mechanical and connected watches, the latest watch that is particularly well adapted and suited to golf that I've tried and tested. It's very interesting that when you're -- I'm sure many of you play golf from time to time, and when you hit the ball to see the distance covered that -- so if you miss your shot, you can start again and ensure that the result is a better one, singularity that's actually quite unique. Hublot who highly creative with Big Bang watch they launched. Another watch that I also acquired, very difficult with [indiscernible] this great Japanese design, a wonderful watch that was sold out in a week. And Zenith, which in terms of historic watches has brought out a whole series of models and these models are really selling well. I omitted to mention in discussing Vuitton watches, for that matter, Vuitton produces great watches. I visited the other day, the workshop that manufactures Vuitton watches in Geneva. It's really quite extraordinary. I urge you, if you're interested in watches to -- we can organize a visit and go and see what we're achieving over there. It is truly fascinating. And lastly, it still Watches & Jewelry, I would like to mention the success of Chaumet, that's progressing very well. Fred also that has acquired a yellow diamond that's quite remarkable of some 100-carat and was sold also by Mr. Fred Samuel that we acquired for the collection. It remains for me to say a word about Selective Retailing. Well, firstly, Sephora has rebounded very well with management of Chris, very disciplined and focused on that in the U.S. We have a great Chief Executive that managed to weather a difficult period and really boosted the figures of Sephora worldwide. However, DFS slightly more challenging, but still weakened by the lack of travelers in airports. And it's difficult to address that. We limited the damage. The impact on the group is quite low. And also the reopening in 2021 because we're discussing 2021 of the La Samaritaine. I'm sure some of you are able to visit it in Paris. It's a wonderful building, dating back to the early 20th century, Art Deco/Nouveau with the Cheval Blanc Hotel, this complex. It took us over 10 years to reconstruct. But today, it's one of the iconic landmarks in Paris representing wonderfully France for all foreign visitors. So before moving to the second part of the presentation on the strategy, I really wanted just to say a word for our shareholders to say that you can be proud to be LVMH shareholders, not just through the results, the dividend. I'm not going to dwell on that, but also through the economic footprint of the group in France, the economic footprint that's to say everything the group contributes to France in terms of jobs, both direct and indirect and also in terms of contribution serving the general interest. So I've asked renowned economist, Nicolas Bouzou give us more presentation to -- he'll explain that to you in a moment where we see that the economic footprint in France of LVMH, that's to say LVMH employees plus the employees of all our suppliers. That's over 140,000 people. And the economic footprint for public authority, for the taxation generated by all that from what LVMH produced tops the EUR 5 billion mark. You see it's the kind of the budget for old age benefits, I think we can now show you the clip of Mr. Nicolas Bouzou, if I'm not mistaken.

0 We worked out the indirect and chain effects. The indirect effects are -- well, the business of partners,induced effects, the consumption because of the LVMH employees and then the chain effects, everything connected to investment and businesses of partners and suppliers. So if you add it all up, -- this is EUR 37 billion. So it's a huge amount, a significant portion of the French economy. The total employment, we're looking at 145,000 jobs, full-time equivalent jobs and tax revenue generated by the group stands at EUR 5.5 billion. So we're looking at one hell of a lot of money, I mean that's like sending 400,000 children to school. The one half of the entire age group. But this is quantitative, but let's look at the qualitative aspect, not everybody knows this because everybody says that there's an adequate industrial production output in France, you consume more than you produce. Well, at LVMH, it's the other way around. LVMH produces a lot. There's a huge output on the French territory, and it exports and that is why the chain effects are so significant because with the spillover effects because you can produce, you can have a big output in France. And you don't -- we're not offshoring anything in France. And so you can generate not just job, but production plus. LVMH employees are among the 20% best paid employees in the world, and that generates -- in itself, generates indirect economic activity, all 3 indirect induced and chain effects and spillover effect. So LVMH is indispensable for the French economy because its economic clout is huge, but it also shows that to be successful in France in these economic conditions is possible.

I thought you'd find that interesting because we always see results that seem outstanding, but we don't really see what the point of it all is aside from paying dividends to our shareholders who are present, but it also serves our French economy. I'll now move to the more general section on strategy. I'll say a few words about that on the strategy. Once again, believe that this might be a bit deceptive. I mean if we're not going to change our strategy, we continue with the same strategy that has been successful for many years. What we seek is the long-term success. We can seek long-term success because you're all part of a family company, company that's controlled by my family that has a long-term perspective. I'm going to say something that you might not like. It's that I never look at the share price. In fact, never look at the share price, but I never sell shares either. So I advise you to do the same because I have colleagues, employees, people who hold shares. But I see from time to time that they sell them, but you you're making a mistake, wait and adopt a long-term perspective and not think short term. That's why in a company such as ours, we must think the long term, and that's how we can do outstanding things because the economic result can't be a target. We don't work the morning just to generate a profit. The profit really is a consequence of what we do. We work during the day and all those who are here agree with me because we're passionate, passionate about what we do, about the product, about the stores, passionate for the people, the interesting people that we want to hire, grow and the new adventures, but the economic result of profit, well, quite frankly, is just a consequence. Of course, we mustn't do anything, we have to manage it. But we can do that because it's a family-owned company. So if you're a shareholder, if you remain a shareholder over the long haul, and I hope you will, then you're involved, you're part of a family. That's what we say to our employees when they join LVMH that you're not in anonymous group, you're really in a family group, you're part of the family. Can't always keep all family members forever, but we try and do that, and they've been with us for a very long time, all those who are here in the front row. I mean, I'm not going to tell you how long they've been with us for because it wouldn't make me any younger, no, but there are a number of years. There are some further back and who've been with us for a long time and will continue to do so. On the strategy, you've asked various questions on digitalization. Well, great many digital activities. All our companies have e-commerce sites that are readily modernized they are very efficient. You ask us the metaverse. Well, it's really -- everybody is talking about the metaverse. We need to look at it. We're looking at it closely, but we think we need to be prudent. There's no point, I think, to be the first in any event. What we want is to sell real products. I mean, products that are purely artificial and digital, well, it's not really necessarily what forms part of our DNA, and our customers, I don't know if they want to buy sneakers on the net to dress their avatar. They really like to buy the real thing, and we've just sold through Louis Vuitton, the latest sneakers that Virgil Abloh designed and we sold them, not to make money, but to really funder raising for the Virgil Abloh Foundation, what's remarkable -- 200, Michael? 200 pairs of sneakers we managed and selling those speakers on Internet, auctioning them off with everything that we're doing, NFTs, et cetera, but these are -- we've raised for the foundation, EUR 25 million is incredible, but they're real products. They weren't digital products. So metaverse, yes, take a look, yes, maybe it will yield something interesting. I don't think it's useful to rush in to do everything and nothing. We need -- I mean, let me just take -- if you take Facebook, which a great business that was founded by someone who's great. They embarked on the metaverse. They changed their name. I had a few Facebook shares because I don't just have LVMH shares, but I was quite disappointed to see that they took a dive. I think they spent a huge amount of money there, but it's probably very good, maybe the next 5 years, they'll be a great success. But short term, we don't need that term or such an adventure. We need to be prudent, creative but prudent. And if we're as successful as we are, we remain faithful, loyal to our values. Let me remind you what they are. Firstly, creativity. We have the best team of designers in the world of creative people. We're constantly seeking young designers, thanks to Delphine and the LVMH Prize that meets with global success, we can find -- we've just launched the latest recruitment drive, 10,000 designers who registered and we're going to pick them -- about 10 for the final. It's quite surprising in the designers of the past because this prize has been in existence for over 10 years. The celebrities, in fact, there was Virgil Abloh, who was one of the finalists. He didn't win, but he was one of the finalists, et cetera, et cetera. So creativity, mentioned watches, creativity on perfumes. We're really in the midst of creativity, it's one of our values, next-value excellence, the quest for excellence at every level, be it the products, be it training. Later on, Chantal will tell you about the institute for trades of excellence. We try and transform the -- pass on the craftsmanship to young people to develop craftsman. I could talk to you a lot about heritage, creativity that was amplified through the work, the quest for quality in every detail. Another third value is spirit of enterprise. All colleagues here are entrepreneurs. We're all entrepreneurs. And that's why we're very successful. There are companies that are organized with matrix-based system, one at the top, one of the bottom. If we get totally lost, we don't know who's running what. Efficiency is pretty limited. And so when we get lost and we call upon a consultant, I mean, I don't want to talk about that now because I know that it's really the kind of topic that -- they call in McKinsey, it costs a lot. It's very expensive. I mean I'm not contesting that they're very smart people, but the entrepreneur doesn't call in McKinsey. I mean McKinsey knows what to do. He's got people with him who knows what to do. So I'm not saying that in any way in conjunction with any political event, whatever, it's a totally separate fact because I understand the various government departments, they were hired for IT. Maybe they're really good at IT. I don't, in any way, challenge that. Fourth value, but I'm not going to dwell on that because it's going to be expanded at length subsequently is the commitment for a positive impact both on our societal and environmental impacts. Societal, Chantal Gaemperle will tell you more about that in a moment. The environmental impact, it's Antoine, who will give us a detailed presentation on that. So I won't broach those matters. Final question you put to us concerns the consequences of the Ukrainian crisis. What I can say -- I mean, I'm not going to deliver any geopolitical considerations, and we'll be having a remarkable presentation by Hubert Védrine on this matter. Not now. No, no, not now, Hubert, later on during the Board meeting. He's far more competent than I am, so I'm not going to embark on that. I'd just like to say that at group level, we have a few activities in Russia. Now these activities for the time being, given the circumstances have been halted, but the economic impact on the group, that's what interests our shareholders, is really minimal. We're not like certain groups with a lot of activities in Russia. We have a few activities, essentially stores that sell our products. So nothing to fear from the economic standpoint. I'm not going to give you my viewpoint on the rest. No fears on the economic front with this Ukrainian crisis. I think I've done the rounds of what I wish to briefly set out. And now I understand there's a clip on social commitments, and we'll have Chantal speak to us. Thank you. [Presentation]

And I'll give the floor to Chantal Gaemperle.

Good morning, everyone. As Mr. Arnault pointed out, the financial performance you have before you is due to our talents that is the skills of our men and women working in the company, but first and foremost because of their commitment, we were able to see this during the pandemic. The first time we conducted a worldwide survey sent out to all our people, translated into 12 languages just to show them that we were standing by their sides, and we were concerned with their priorities. We received a lot of feedback, as many as 80,000 of verbatims and there are 3 themes that came to the fore. And that is of great interest because this is in line with the questions that you as shareholders have been putting forward. First, the need of a committed action on social and environmental responsibility, inclusiveness, the career of women and local engagement. Then develop and grow our know-how in all our trades. And then the career opportunities for our employees. And on that item, thanks to the work of our HR network, last year, we conducted a record number of internal mobility, more than 20,000, including 5,500 amongst our executives. And through internal promotion, we were able to have a turnaround in 75% of our key positions. And this happened at a time when there was a record external recruitment, 45,000 people were recruited across our businesses last year. We are convinced that the quality of our products from design to sale, through manufacturing is based on unique know-how that should be preserved, passed on and developed. The executive committee and indeed, all the houses of the group got together to sign the compact for trades of excellence, whose purpose it is to enhance this unique heritage in our program for professional educational training was created back in 2014. That has grown considerably since that time. It is now working in as many as 6 countries and had its largest class of apprentices last September, 340 new students, new trainees, and as many as 1,400 apprentices were trained to learn 27 trades. But we have to go down that line. We have to create new callings and advertise the 280 trades that have been created. And with the help of our artisans and experts and craftsman, we have presented these trades in several thousands -- several cities in France, concluding that tour last week, we met with a very diversified group of school students, indeed, people looking for jobs, and we had as many as 1,200 positions on offer. Now that initiative is a good reflection of our need to preserve these various branches, to preserve jobs, to train the younger generation, but also to be inclusive because here, we are reaching out to people who would never have thought of themselves able to work in one of LVMH's houses. I'll give you one anecdote that -- sorry, of Alexia, a young student who grew up far away from Paris in the South of France. In 2014 at age 19, she was in the first class in leather goods in the Institute of Trade of Excellence. And today, Alexia works in the Louis Vuitton workshop. She has become a trainer herself in leather goods, and she teaches a class of 22 apprentices. Now the trades in leather goods find it difficult to hire new hands. And so we have to attract the new generation towards these key positions to strengthen our action to have an inclusive work universe. Within the company, we created a department called Diversity and Inclusion. And we promote, of course, the career of women that I'm quite determined on that. In EllesVMH, which is our internal network created back in 2017 -- in 2007, 15 years ago, thanks to them, we went from 22% to 44% women in executive positions. We have 17 women running LVMH houses. I started off by paying tribute to the commitment of our people. And I would like to close by telling you about our commitment. Indeed, last June, we created the LVMH Heart Fund. This is, as it says, the Heart Fund. It's an emergency fund, reaching out to all employees of the company facing adverse situations, accidents or dramatic personal situations. It has EUR 30 million, accessible to any employee anywhere in the world needing emergency assistance, financial or otherwise. It was resorted to as many as 1,300 times in 2021. Ladies and gentlemen, the crisis reminded us of the need for solidarity, the need to be close to our employees and it is, for us, an absolute priority. Thank you.

Before we give on the floor to Antoine Arnault, in Louis Vuitton successes, I should also -- I forgot to mention the fundamental, it's Nicolas Ghesquière, who is a designer for women apparel, and he is quite remarkable.

Good morning, everyone. 1 year ago, I announced the launch of a new environmental program, LIFE 360. Well, 1 year ago, it was online. Now we are meeting in presence. This is based on 30 years' experience working for the environment. This opens a new chapter in your commitment. We have new objectives for the years 2023, 2026 and 2030. These objectives seem realistic. They seem reasonable because at LVMH, more than communication we want to act. We want to act to improve our environmental footprint, and we've been doing this in 2021. And indeed, our products are the best example of this. Here are the sneakers of the spring/summer collection. They are in line with the upcycling strategy that Virgil Abloh developed, where we can redevelop existing items, not the [ field ] line items, which -- where the logo is interwoven with that of the circular economy to make it more visible. These are examples right there. Here is the Loewe bag of the Surplus collection made up of discarded leather bits. This is one of the last copies that has just been made. And here, we're taking these discards from rolls from -- also from previous collections that can have a second life. 2021 is the year where Nona Source created by employees through the internal training program found its true speed by marketing fabrics and leather that were sleeping in our warehouses. Now not everything is eco-designed, but this is our objective for the year 2030. So the movement is underway, the up-cycled, biosourced materials are developing and the movement will go on, and we have the proof that environment can be -- well, environmental concern can still be desirable. We have another -- well, in our champagne and perfume houses, we have families who for centuries looked after their environmental heritage and we are continuing the tradition limiting our impact and regenerating nature. Regenerative agriculture is our new move in 2021. We're doing it in our field, in our vineyards. And we find that the landscape is now accepting new hedges and orchards as was the case in the 18th century. And so we are rehabilitating as many as 650,000 hectares around the world, thanks to this form of regenerative agriculture, but through strong partnerships with UNESCO or indeed, with a great association entitled Reforest'Action. And with UNESCO, we have a program in the Amazon forest, which is addressing deforestation and water pollution in the basin, and I was involved in the nature -- World Nature Congress in Marseille a few years ago when we discussed this. Biodiversity also includes the climate. We need to have good quality [ soil ] that can provide better carbon capture. That's what the -- what NC program is doing. So we may not be a very polluting industry, but we propose to make a difference in the climate effort. In 2020, we were above our objective. We decided to reduce our CO2 emissions since 2016. We are down to pre-2016 levels. And now we are seeing even further. We want to halve by 2026, emissions of Scopes 1 and 2. And on Scope 3, that it's transportation and raw materials, our objective is to have a 55% reduction by 2030 per value-added unit. Our carbon trajectory in line with the Paris Agreements is robust, and it was validated by the SBTi, the authority in the matter. Our climate performance in 2021 are going the right way. We are down 6% on Scopes 1 and 2 in spite of the growth that was presented today. Now this is a difficult balancing act, especially on those items where we don't have full control. But awareness amongst all our houses is working for swing. And this is a trust of confidence of the future. I was able to see this for myself when I met with all the heads of the houses, to see how LIFE 360 was progressing in their houses. We have many examples. Samaritaine opened in 2021 with reduced energy requirements. Louis Vuitton is testing new air fuel. 20 flights have been using -- used all instead of kerosene, reducing the emissions by 25%, and we have new actions that will be revealed next week. Plastic-free packaging or alternative materials, packaging materials. And as you can see in our report, in 2021, we had significant growth in the certification rates in all our supply chains. And that means having a very demanding criteria in terms of social and environmental standards. It means we need to audit our own suppliers way beyond rank 1 and in some cases, we now need to put in place corrective action in the left out regions with high deforestation risk for leather products, we cannot go on manufacturing unless we have transparency on certain key items, protection of nature, protection of the climate protection of environment. This is at the heart of our products. We want to have responsible growth at or your service, you, shareholders, but also the service of our customers, our employees that working for the planet as a whole. Thank you for the attention. I look forward to seeing you a year's time to take stock then. Thank you.

Thank you, and I'll give the floor to the auditors.

Thank you, sir. Ladies and gentlemen, dear shareholders, it is my pleasure to introduce on behalf of the auditors, the reports that were prepared for you. These reports were made available to you, and it is for me to give you a brief summary. There are as many as 5 reports. There's 1 on the parent company financial statements, 1 on consolidated financial statements. There's a special report on regulated related party agreements; and 2 special reports related to transactions on share capital. Let me start with the report on the parent company financial statements, which refers to the first set of resolutions. The accounts were prepared using French accounting standards. And we believed that the assessment of the redeemable shares and provisions for risks and expenses were key items of the audit. We certified the statements without reservations or observations. Regarding the consolidated final statements prepared according to IFRS standards, we believe that the 4 following items were the key audit matters: valuation of fixed assets, in particular, intangible assets; valuation of inventories and work in progress; provision for contingencies and losses and uncertain tax positions; and finally, the acquisition of Tiffany's. As a conclusion of our assessment, we do certify the consolidated financial statements without reservations or observations. Regarding resolution #4 of this AGM, we produced a report on related party agreements. There are, in fact, no new regulated party agreement that was entered into or authorized by your Board of Directors during the year. So the agreements and commitments authorized in previous years and which remained enforced in 2021 are presented in our special report. And finally, for the extraordinary part of the Annual General Meeting, we have 2 reports on resolutions that may have an effect on the share capital. There is the first, the authorization to reduce share capital, the authorizing to award bonus shares to employees and/or senior executive officers of the company and affiliated entities. We have no special observations on such operations, which are in line with the conditions provided by the French Commercial Code. Ladies and gentlemen, shareholders, Mr. President, Thank you for your attention.

Well, ladies and gentlemen, the time has come for us, if there are any, to take questions from shareholders. Unfortunately, this year, we were not in a position to organize refreshments because of the COVID restrictions, but you will be able to pick up a little gift. When you return your voting device, you can get a bottle in exchange. So if you do have a question, please introduce yourselves first. We have #4.

Thank you for this presentation. I'm an individual shareholder. I have a question for the CFO. He talked about negative financial interest rates. I would like to know whether the new loans that were used for Tiffany, did they enjoy the special conditions, i.e., negative interest rates?

That is true. For most of them, we had negative rates. There was a long-term and medium-term fund financing, 50-50 roughly. For the short term, interest rates were highly negative for the euro-denominated rates. And so that was good for the short term. For the medium and long term, 2 to 10 years, part of the rates were negative. But for the longer term, we had slightly interest -- positive interest rates.

Thank you. Are there any other questions at all? I see none. I see a hand being raised.

You said that you didn't monitor the share price, but I do have a question, do you propose to split the nominal share to make it more liquid that way?

Well, it's not in our plans. Well, look, if there are no further questions, as I said, unfortunately, I cannot invite you to join our refreshment, but I hope there will be one next year. We can share refreshments together next year, provided the COVID at long last is under control. Thank you. Hang on. Hang on. You still have to vote on the resolutions. I was getting carried away here. And so we have to move on to the votes on the resolutions. So resolution number one. So first resolution is the approval of last year's financial statements. Well, let me remind you, you have a device. Press green for vote in favor and a red vote against. [Voting]

Approved. Second resolution, approval of the consolidated financial statements. Please vote. [Voting]

Approved. Resolution #3, the dividend. Please vote. [Voting]

Approved. Fourth resolution, approval of related party agreements. Please vote now. [Voting]

So let's continue. Seems to be a hitch with the machine. We have to call in McKinsey. Well. Let's continue. Well, at that rate, now. So what's the next resolution? We're a bit lost here. Renewal of my term of office as Director. It's really -- it's a bad moment there. So we can maybe vote by a show of hands. That's all that's left for it to do. Okay. So the machine is working again. Next, the renewal of the term of office of Madame Sophie Chassat. Please vote. [Voting]

Congratulations. Renewal now the term of office of Madame Clara Gaymard. Please vote. [Voting]

Congratulations. See if one of our Board members reaches 100. The term of office as Director, Mr. Hubert Védrine. Please vote. [Voting]

Congratulations, Hubert. Renewal of the term of office as Advisory Board member, Yann Arthus-Bertrand. Please vote. [Voting]

Approved. Congratulations. Tenth resolution, determination of the maximum overall annual compensation payable to directors. Please vote now. [Voting]

Approved. 11th resolution. Renewel of the appointment of Mazars as Principal Statutory Auditor. Please vote. [Voting]

Approved. 12th resolution, appointment of Deloitte as Principal Statutory Auditor. [Voting]

Approved. 13th resolution, observation of the expiry of the terms of office, the alternate statutory auditors. Please vote. [Voting]

Approved. Resolution 14, approval of the information on compensation of executive officers. Please vote. [Voting]

Approved. 15th resolution, approval of the items of compensation awarded to the Chairman, that's to say, me. Please vote. [Voting]

Approved. 16th resolution, same question for the Group Managing Director, Mr. Antonio Belloni. Please vote. [Voting]

Approved. 17th resolution, approval of the compensation policy applicable to directors. Please vote. [Voting]

Approved. 18th resolution, approval of compensation policy in respect to the Chairman and CEO. [Voting]

Approved. Ditto for compensation policy in respect to the Group Managing Director. Please vote. [Voting]

Approved. 20th resolution, authorization granted to the Board to trade in the company's shares. Please vote. [Voting]

Approved. 21st resolution, authorization for the Board to reduce the share capital by canceling shares held by the company, part of the 20th resolution. Please vote. [Voting]

Approved. 22nd resolution, authorization to the Board to award bonus shares with removal of preferential subscription rights. Please vote. [Voting]

Approved. 23rd, final resolution, modification of articles 16 and 24 of the company bylaws. Please vote. [Voting]

Approved. But now, back to the fourth resolution where it didn't work. That's to say approval of related party agreements. Please vote. [Voting]

It worked. That's great. The machine is working again. Thank you all very much. And once again, sorry not to be able to share some refreshments with you. And I hope that next year, we'll be able to organize that. Thank you all very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]