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Hermè s International: First half year results Paris Stock Exchange:RMS




(MENAFN - GlobeNewsWire - Nasdaq) 2019 HALF-YEAR RESULTS

HERMÈS

Strong growth in sales and results over the first half of the year
Recurring operating income1 increased by 15%, at the same pace as sales
Recurring operating profitability reached 34.8%

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: "Hermès registered strong earnings growth over the first half of 2019, reflecting our customers' loyalty in all markets and the creative excellence that drives all business lines."

Sales by geographical area at the end of June
(at comparable exchange rates, unless otherwise indicated)

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

Asia excluding Japan (+18%) continued its outstanding performance, with positive momentum in continental China and double-digit growth in all other countries in the area. The Group benefitted from successful store openings and extensions in recent months, particularly Shanghai IFC in China and Marina Bay Sands in Singapore. A new store opened in March in Phuket Floresta in Thailand. Rollout of the new digital platform in Asia will continue at the end of the year in Singapore. Japan (+10%) confirmed its sound growth. The new platform hermes.jp was successfully deployed in June, offering editorial content and products which reflect the diversity of the Maison's creations. America (+10%) posted a strong performance at the end of June, despite a high comparison basis. Last April, the Group opened its 36th store in the USA at the heart of New York's Meatpacking district, and reopened the Waikiki store in Hawaii in June. Europe excluding France (+9%) and France (+4%) achieved a good performance. The store in Amsterdam has been moved and expanded in May, and the store on Stoleshnikov Lane in the historical centre of Moscow was renovated in June. In France, sales improved during the past months.



Sales by business line at the end of June
(at comparable exchange rates, unless otherwise indicated)

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 Maison's classics and other models, such as the Mosaïque and 24/24 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 Terre d'Hermès and the new creation, Un Jardin sur la Lagune, Perfumes (+3%) posted an increase, despite a high comparison basis at the beginning of last year following the launches of Twilly d'Hermès and Eau de Citron noir.

The Watches business line (+14%) performed very well, reflecting the creativity of the collections. The Galop d'Hermès 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.

Strong growth in results 2 in the first half


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.

Growth in workforce

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.

Outlook

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.

In the pursuit of dreams is the theme of the year 2019. Celebrating the dream of Hermès means asserting the need to dare to see even further, to open the field of the imagination that stimulates creation.

 


KEY FIGURES – 2019 FIRST HALF RESULTS

 

Main consolidated data
(In millions of euros) H1 2019 FY 2018 H1 2018
restated (*) restated (*)
Revenue 3,284 5,966 2,853
Growth at current exchange rates vs. n-1 15.1% 7.5% 5.2%
Growth at constant exchange rates vs. n-1 (1) 12.0% 10.4% 11.2%
Recurring operating income (2) 1,144 2,075 996
As a % of revenue 34.8% 34.8% 34.9%
Operating income 1,144 2,128 1,049
As a % of revenue 34.8% 35.7% 36.8%
Net profit – Group share 754 1,405 706
As a % of revenue 23.0% 23.6% 24.8%
Operating cash flows 971 1,863 926
Adjusted free cash flow (3) 618 1,447 681
Investments (excluding financial investments) 170 312 120
Equity – Group share 5,763 5,470 4,753
Net cash position 3,532 3,465 2,713
Restated net cash position (4) 3,740 3,615 2,798
Workforce (number of employees) 14,751 14,284 13,764

* 2018 restatements relate to the application of the IFRS 16 - Leases 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 of operating cash flows and change in working capital requirement, less operating 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

Limited review procedures have been carried out on the condensed interim consolidated financial statements by the Statutory Auditors in accordance with applicable regulations.

 

The half-year financial report, the press release and the presentation of the 2019 Half Year Results are available on the Group's website:https://finance.hermes.com .

Upcoming events:

Starting 1 January 2020, the Hermès group will communicate on the same day revenue and results for full-year and half-year publications.

24 October 2019: Q3 2019 revenue publication 26 February 2020: Q4 2019 revenue and 2019 Results publication


REMINDER OF PREVIOUS PUBLICATIONS

Information by Geographical area (1)

First Half Evolutions
In €M 2019 2018 Published At constant exchange rates
France 405.8 390.3 4.0% 4.0%
Europe (excl. France) 544.6 500.7 8.8% 8.8%
Total Europe 950.4 891.1 6.7% 6.7%
Japan 400.6 344.8 16.2% 9.8%
Asia-Pacific (excl. Japan) 1,299.3 1,072.8 21.1% 17.7%
Total Asia 1,700.0 1,417.6 19.9% 15.8%
Americas 569.2 489.9 16.2% 9.8%
Other 64.6 54.8 17.8% 17.7%
TOTAL 3,284.2 2,853.4 15.1% 12.0%


2nd Quarter Evolutions
In €M 2019 2018 Published At constant exchange rates
France 221.0 208.1 6.2% 6.2%
Europe (excl. France) 283.0 261.5 8.2% 8.3%
Total Europe 504.0 469.6 7.3% 7.3%
Japan 196.5 169.8 15.7% 9.9%
Asia-Pacific (excl. Japan) 643.4 533.1 20.7% 18.6%
Total Asia 839.9 702.9 19.5% 16.5%
Americas 299.6 259.7 15.4% 9.8%
Other 31.1 27.4 13.3% 13.2%
TOTAL 1,674.5 1,459.6 14.7% 12.3%

(1) Sales by destination.

 

Information by Sector

 

First Half Evolutions
In €M 2019 2018 Published At constant exchange rates
Leather Goods-Saddlery (1) 1,652.4 1,425.1 16.0% 12.4%
Ready-to-wear and
Fashion accessories (2)
754.6 637.3 18.4% 15.2%
Silk and Textiles 266.6 249.4 6.9% 4.0%
Other Hermès sectors (3) 247.6 201.7 22.8% 19.4%
Perfumes 158.7 153.2 3.6% 3.2%
Watches 90.5 77.0 17.6% 14.2%
Other products (4) 113.9 109.8 3.7% 2.4%
TOTAL 3,284.2 2,853.4 15.1% 12.0%


2nd Quarter Evolutions
In €M 2019 2018 Published At constant exchange rates
Leather Goods-Saddlery (1) 844.2 733.7 15.1% 12.2%
Ready-to-wear and
Fashion accessories (2)
394.4 330.7 19.3% 16.9%
Silk and Textiles 126.2 117.0 7.8% 5.8%
Other Hermès sectors (3) 130.9 106.1 23.4% 20.8%
Perfumes 74.1 71.3 3.9% 3.5%
Watches 47.1 42.7 10.1% 7.6%
Other products (4) 57.7 58.0 (0.5)% (1.5)%
TOTAL 1,674.5 1,459.6 14.7% 12.3%

(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.


 

1 Including the impact of the IFRS 16 Leases standard. In accordance with IAS 8, Hermès applied this new standard retrospectively in full and restated the financial statements as at 31 December and 30 June 2018.
.


 

2 Including the impact of the IFRS 16 Leases standard. In accordance with IAS 8, Hermès applied this new standard retrospectively in full and restated the financial statements as at 31 December and 30 June 2018.


 

 


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  • ANG-Communiqué 11092019

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    Herm&#232   s International: First half year results Paris Stock Exchange:RMS

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