Luxury goods manufacturers to remain stable into 2013

Luxury goods manufacturers won't retain the immunity from

tough global economic conditions they've enjoyed for the past two years in 2013, but they'll still grow and hang on to their decent credit metrics, said Standard & Poor's Ratings Services in a recent report: "The Luxury Goods Industry's Lustre Will Fade But Not Disappear In 2013".

Key luxury goods manufacturers including LVMH and PPR should post high-single-digit revenue growth and see slightly falling margins next year, the report says.

"We believe luxury goods makers' profit margins are likely to be a bit lower this year, but they'll probably still be the highest in the consumer goods sector," said Standard & Poor's credit analyst Caroline Duron. We expect cash flow generation to remain fairly strong, and despite our expectations for sluggish economic conditions, all of the industry's groups have stable or positive outlooks, reflecting our view that credit quality should be preserved unless there is a severe economic downturn.

"Luxury goods makers have already proved their ability to manage in a crisis," said Ms. Duron. "They've protected their credit metrics by increasing prices, cutting capex, postponing external growth, reducing shareholder remuneration, and entering buoyant new economies. Their liquidity also protects them against deteriorating operations."