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Hermès posts 13 percent rise in H1 profit

By Prachi Singh

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Business

The Hermès Group's consolidated revenues amounted to 2,440 million euros (2,739 million dollars) in the first half of 2016, up 7 percent at constant exchange rates. After adjustment for the negative currency effect, growth was 6 percent. Operating income, up 11 percent, amounted to 827 million euros (928 million dollars) and net income reached 545 million euros (611 million dollars), up 13 percent.

All regions saw rise in revenues in H1

Sales by region at the end of June rose in all the regions worldwide. Japan posted 10 percent rise, despite the strengthening of the Yen and a particularly high comparison basis. Asia excluding Japan witnessed 5 percent increase and saw re-opening of the Liat Towers store in Singapore in May after extension and renovation, which pursued its growth. In continental China, sales continued to rise even though the context remains challenging in Hong Kong and Macao.

America with 8 percent increase benefited from last year's extensions and renovations. Europe with 8 percent rise posted growth, performing well in the Group's stores, despite the impact of recent events, particularly in France.

Sales by sector at the end of June, growth in leather goods and saddlery was of 16 percent. The ready-to-wear and accessories division reported a 2 percent decline, in contrast with the success of the latest women's ready-to-wear and shoe collections. The silk and textiles business line declined 7 percent was penalized in the first semester by events in Europe, and by slowing sales in Greater China and America. The perfumes division’s 4 percent rise was driven by the success of Terre d'Hermès and by the latest creations with the launch of colognes, Eau de néroli doré and Eau de rhubarbe écarlate.

Watches with 1 percent increase remained stable, penalized by a still challenging market, particularly in Asia excluding Japan. Other Hermès business lines witnessed a 2 percent decrease, which encompass jewellery, Art of Living and Hermès table arts.

Recurring operating income increases 11 percent

Operating margin in H1 reached 33.9 percent of sales and recurring operating income rose 11 percent to reach 827 million euros (928 million dollars) compared to 748 million euros (840 million dollars) in H1 2015. Operating margin (33.9 percent of sales) grew by 1.4 point compared to H1 2015, mainly due to the favourable impact of foreign exchange hedges taken out last year.

Group consolidated net income, up by 13 percent, reached 545 million euros (611 million dollars), representing 22.3 percent of sales.

For the full year 2016, Hermès confirms its outlook of sales growth at constant exchange rates. Operating margin is expected to be slightly higher than in 2015 given the favourable impact of foreign exchange hedges taken out last year.

Picture:Facebook/Hermès

Hermès