Drinks lift LVMH profits as fashion stalls

LVMH, the world's biggest luxury goods company, on Tuesday reported higher profits for the six months to June, helped by a strong drinks division, while fashion failed to contribute to earnings growth.

LVMH's net profit rose eight percent in the first half to 1.71 billion euros ($1.87 billion) on turnover of 17.2 billion euros.

LVMH, which owns a wide range of star labels including Louis Vuitton, Fendi, Givenchy, Bulgari and TAG Heuer, said its diversified structure helped it weather challenging business conditions.

"LVMH's results for the first half of 2016 reflect, more than ever, the strength of our business model, which allows us to continue to grow even during an unstable geopolitical environment and economic and monetary uncertainties," chairman Bernard Arnault said in a statement.

"By remaining vigilant, we face the second half of the year with confidence," he said.

The US market showed "strong momentum" and Europe saw "continued growth" in the first half, LVMH said, although French sales were hurt by falling tourism following terror attacks.

The contribution of LVMH's wines and spirits division to recurring profits rose by 17 percent in the first half, and that of perfumes and cosmetics by 9 percent.

But the contribution of fashion and leather goods dropped by two percent, while that of watches and jewelry remained stable.