Hermès International: First half year results

World News: . []

Paris, 11 September 2019

The Group's consolidated revenue amounted to €3,284 million in the first half of 2019, up +15% at current exchange rates and +12% at constant exchange rates. Recurring operating income increased +15%, at the same pace as revenue, to reach €1,144 million (34.8% of sales). Net profit reached €754 million (23% of sales).

Axel Dumas, Executive Chairman of Hermès, said:

In the first half of 2019, revenue increased in all geographical areas worldwide:

                          

The momentum in the first half was driven by solid growth across all business lines, with a remarkable performance of the Ready-to-Wear and Accessories division.

Growth in Leather Goods and Saddlery (+12%) was particularly sustained over the first half of the year, based on collections blending style, know-how and diversity of materials. The division's annual growth target remains unchanged. Demand remains very high, both for the 's classics and other models, such as the and bags The increase in production capacities continued, with the ground breaking of the Maroquinerie de Guyenne workshop in June, scheduled for completion in 2020, and the announcement of a new workshop in Louviers by 2021. Hermès continues to strengthen its local integration in France with the opening of a training centre in Fitilieu (Isère), and the announced extension of the Ganterie-Maroquinerie de Saint-Junien workshop (Limousin region).

The Ready-to-Wear and Accessories division (+15%) pursued its strong growth, thanks to the success of the men's and women's ready-to-wear collections and of fashion accessories and shoes.

The Silk and Textiles business line (+4%) confirmed it positive momentum, benefitting from sustained demand and the diversity of materials, outstanding creativity and know-how. The Pierre-Bénite site (Rhône) will be extended to support development and will accommodate two new printing lines.

Driven by the success of and the new creation, , Perfumes (+3%) posted an increase, despite a high comparison basis at the beginning of last year following the launches of and .

The Watches business line (+14%) performed very well, reflecting the creativity of the collections. The model, inspired by the harness collections, received a very warm welcome.

Other Hermès business lines (+19%) recorded a positive increase over the period, both in Jewellery and in the Home universe.

Recurring operating income increased +15%, at the same pace as revenue, to reach €1,144 million compared to €996 million in the first half 2018. Thanks to the leverage effect generated by strong sales growth, the recurring operating margin (34.8%) is close to the all-time high posted in the first half 2018 (34.9%), despite the negative impact of foreign exchange hedges.

Consolidated net profit (Group share) is €754 million, compared to €706 million at the end of June 2018, +7%. Restated for the non-recurring gain from the sale of the former Galleria store premises in Hong Kong in 2018, the increase in net profit is +15%.

Capital expenditure amounted to €170 million and adjusted free cash flow reached €618 million.

After payment of the ordinary dividend (€474 million), the restated net cash position is up €125 million to €3,740 million, compared to €3,615 million as at 31 December 2018.

During the first six months, Hermès International redeemed 56,030 shares for €34 million, excluding transactions completed within the framework of the liquidity contract.

The Hermès group is pursuing its recruitment process and increased its workforce by almost 500 people over the first six months. At the end of June 2019, the Group employed 14,751 people, including 9,096 in France.

In the medium term, despite growing economic, geopolitical and monetary uncertainties around the world, the Group confirms an ambitious goal for revenue growth at constant exchange rates.

Thanks to its unique business model, Hermès is pursuing its long-term development strategy based on creativity, maintaining control over know-how and singular communication.

 

 

* 2018 restatements relate to the application of the IFRS 16 - standard on a retrospective basis

(1) Growth at constant exchange rates is calculated by applying the average exchange rates of the previous period to the current period's revenue, for each currency

(2) Recurring operating income is one of the main performance indicators monitored by the group's General Management. It excludes non-recurring items having a significant impact likely to affect the understanding of the group's economic performance

(3) Adjusted free cash flow corresponds to the sum ofoperating cash flows and change in working capital requirement, lessoperating investments and repayment of lease liabilities, as per IFRS cash flow statement

(4) The restated net cash position includes short-term investments that do not meet IFRS cash equivalents criteria mainly because their original maturity exceeds three months

 

(1) Sales by destination.

 

 

(1) The “Leather Goods-Saddlery” business line includes bags, riding, diaries and small leather goods.(2) The “Ready-to-wear and Accessories” division includes Hermès Ready-to-wear for men and women, belts, fashion accessories, gloves, hats and shoes.(3) The “Other Hermès business lines” include Jewellery and Hermès home products (Art of Living and Hermès Tableware).(4) The “Other products” include the production activities carried out on behalf of non-group brands (textile printing, tanning…), as well as the John Lobb, Saint-Louis, Puiforcat and Shang Xia products.

 

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Globe Newswire: 07:00 GMT Wednesday 11th September 2019

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