2023-09-03 17:08:16
The luxury giant, LVMH, lost its title of first European market capitalization on Friday September 1st. It was overtaken by the Danish pharmaceutical company Novo Nordisk, whose total shares were worth 393.7 billion euros at the close of the markets, against 389.5 billion euros for the group of Bernard Arnault.
But in the world ranking, Novo Nordisk only reaches 17th place for the largest market capitalizations, just behind the bank JPMorgan Chase and very far from Apple, the world number one in this area, with its 3,050 billion dollars (2,830 billion euros) of market value.
Nearly 30% of LVMH sales are made in China
LVMH had held this position since February 2021, then dislodging the Swiss Nestlé. In five years, the LVMH share has climbed 159%, showing its resilience in the face of all crises. Last year, the group generated 14.7 billion euros in profits for a volume of activities of 80 billion euros.
But today the group is penalized on the stock market by uncertainties about the outlook for the Chinese economy, which is struggling to rebound, despite the optimistic speeches of its leaders. However, LVMH achieves 29% of its turnover in China, which has been one of its main growth areas in recent years. There, Vuitton bags and bottles of Hennessy cognac continue to be a hit. Over the first six months of the year, its sales in the country thus climbed by 23%.
But investors fear that these good figures are only linked to a catch-up effect for Chinese consumers after the repeated confinements they suffered during the Covid period. There are also tensions between China and the United States. In general, the markets are also worried about LVMH’s growing dependence on China.
Still more diabetics and obese people
Conversely, there is not the slightest cloud on the horizon for the products of Novo Nordisk, which belongs to a foundation. The Danish laboratory manufactures drugs for diabetes and obesity, where demand continues to climb. There are more and more people affected by these diseases and a growing number of people who can seek treatment, with the rise in living standards.
The world’s number one insulin also impresses with its performance. In the first half of the year, sales of its obesity treatments grew by 157% on an annual basis.
And it’s not over. In the United States, where a third of the population is obese, the outlook is very promising. Especially since clinical studies have shown that Novo Nordisk’s star antidiabetic, Wegovy, reduces the heart risks of obese people, and that as such it could be covered by the Medicare social insurance system, thus having with even greater growth potential. This is what explains the surge in its share price in recent weeks.
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