Hermès International: 2024 Half-year Results

Half-year information report as at the end of June 2024

Robust sales and results in the first half
Revenue amounted to €7.5 billion
(Revenue increased by 15% at constant rates and by 12% at current rates)
Recurring operating income reached €3.1 billion (i.e. 42% of sales)

Paris, 25 July 2024

The group’s consolidated revenue in the first half of 2024 amounted to €7.5 billion, up 15% at constant exchange rates and 12% at current exchange rates compared to the same period in 2023. All the geographical areas recorded double-digit growth. Recurring operating income was €3.1 billion (42% of sales) and net profit (group share) reached €2.4 billion (32% of sales).

In the second quarter, sales reached €3.7 billion, up 13% at constant exchange rates. In a more challenging context, all the regions continued to show remarkable momentum, with the exception of Asia due to an inflection in traffic in Greater China. This growth relies on the loyalty of our customers all over the world.

Axel Dumas, Executive Chairman of Hermès, said: "The solid first-half results, in a more complex economic and geopolitical context, reflect the strength of Hermès’ model. The group is confident in the future and is continuing to invest, to pursue its vertical integration projects and to create new jobs, while remaining true to its values.”

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

At the end of June 2024, all the geographical areas posted solid growth, despite a particularly high comparison basis in the second quarter in Asia. The exclusive distribution network continued to develop, with store openings and expansions.

• Asia excluding Japan (+10%) posted growth in all the countries of the region. As a reminder, performance in the second quarter of 2023 was exceptional, following the lifting of health measures in China. The house’s value strategy supported activity, despite a downturn in traffic in Greater China observed after the Chinese New Year in the first quarter. In June, the Lee Gardens store in Hong Kong reopened after expansion, after the reopening in May of the renovated Beijing SKP store in China. In April, the Mumbai Jio World Plaza store opened its doors, the house’s third address in India.
  
  
• Japan (+22%) continued its strong growth, thanks to its local clients. A new store was inaugurated in the Ginza district of Tokyo in June, following the Azabudai Hills store in February.
  
  

• The Americas (+13%) confirmed their sustained growth, thanks to the continued solid momentum in the United States. A new store was inaugurated in Princeton, New Jersey, in April. The second chapter of the women’s fall-winter 2024 collection was unveiled in June in New York with the Manhattan Rocabar event.
  
  
• Sales in Europe excluding France (+18%) and France (+15%) were particularly robust, thanks to the loyalty of local customers and dynamic tourist flows. In France, the Nantes store reopened in June after being renovated and expanded.
  
  

Sales by sector at the end of June
(at constant exchange rates, unless otherwise indicated)

At the end of June 2024, the métiers showed solid growth, despite a more complex context.

The Leather Goods and Saddlery métier (+19%) posted a remarkable performance, thanks to the increase in production capacities and particularly sustained demand. The collections have been enriched with new formats, including the Della Cavalleria Élan and the Kelly Mini clouté models in particular. The travel universe unfolds around an R.M.S. Cargo suitcase and weekend bags. The increase in production capacities continues with the opening of the Riom (Puy-de-Dôme) leather goods production site in September 2024 and the laying of the first stone for two new leather goods production sites: Isle-d'Espagnac (Charente) in April and Loupes (Gironde) in May, which will open in 2025 and 2026 respectively. They will reinforce the nine centres of expertise located across the national territory. Hermès is developing employment and training and continues to strengthen its anchoring in France.

The Ready-to-wear and Accessories sector (+15%) pursued its strong momentum. The men’s spring-summer 2025 fashion show held at Palais d’Iéna in June was very well received. The shoes and fashion accessories displayed designs combining the house’s extensive expertise with boundless creativity.

The Silk and Textiles sector (+1%) posted growth despite a high comparison basis in the second quarter, thanks to the diversity of creations, materials and formats in both the women’s and men’s collections.

The Perfume and Beauty sector (+5%) continued its development. The new creation Oud Alezan joined the Hermessence collection in February, and the H24 men’s line was enriched with Herbes Vives in April, two refillable creations. In June, the Bain Hermès celebrated 10 years with the renewal of the whole collection, Cologne and Parfum-Jardin, around a sustainable range now made of glass.

The Watches métier was stable and successfully unveiled at the Geneva Watches & Wonders exhibition held in mid-April Hermès Cut, a new line with a sporty spirit featuring a manufacture movement.

The Other Hermès sectors (+19%) which include Jewellery and the Home universe, pursued their strong growth, illustrating the singularity and creativity of the house, in particular with the launch of the eighth Haute Bijouterie collection Les formes de la couleur in June, at the Musée des Arts Décoratifs in Paris. The Home universe collections, presented at the Milan Design Week, were very well received, highlighting the singularity of the exceptional savoir-faire of the house.

Robust results in the first half of 2024

Recurring operating income increased by 7% to €3.1 billion compared to €2.9 billion in the first half of 2023. Despite the negative impact of currency hedging, recurring operating profitability reached 42% compared to 44% at the end of June 2023, an exceptionally high level.

Consolidated net profit group share amounted to €2.4 billion compared to €2.2 billion in the first half of 2023, representing a net profitability of 32% compared to 33% last year.

The cash flow from operating activities amounted to €2.2 billion and increased by 7%, at the same rate as the operating income. After operational investments (€0.3 billion) and repayment of lease liabilities, the adjusted free cash flow reached €1.8 billion.

After distribution of the ordinary and extraordinary dividend of €2.6 billion, the restated net cash position amounted to €10 billion at the end of June 2024 compared to €11.2 billion at the end of December 2023.

A sustainable and responsible model

In line with its commitments as a responsible employer, the Hermès group continued its creation of jobs and increased its workforce by 1,205 people in the first half, including close to 600 in France. At the end of June 2024, the Group employed 23,242 people, including 14,320 in France. The House paid in February a bonus of €4,000 to all its employees worldwide in respect of 2023, consistent with its policy of sharing the fruits of growth with all those who contribute to it on a daily basis.

In line with its ambitions to promote diversity, Hermès is pursuing its commitment to the inclusion of people with disabilities: the direct employment rate reached 7.12% in France since 2023, doubling in five years.

In July 2024, employees acquired the remaining 12 shares under the July 2019 free share plan. As a reminder, a new free share plan for all employees was announced in June 2023.

Hermès continued to take concrete actions and initiatives in response to climate change and is pursuing its work to preserve natural resources. After identifying its priorities on its direct operations and across the value chain, the group has launched the third step of the Science Based Targets for Nature (SBTN) process, to set scientific targets for nature, in particular for biodiversity, fresh water, forests and soils.

The sustainable and responsible dimension of the house’s artisanal model was rewarded in July with the "Grand Prix toutes categories” Transparency Award, and by a 5-point improvement in Moody’s ESG rating. These results bear witness to the commitments and values of the house.

Other highlights

At the end of June 2024, currency fluctuations represented a negative impact of €207 million on revenue.

Hermès International did not redeem any shares, excluding transactions completed within the framework of the liquidity contract.

As announced during the annual results, Hermès became a majority shareholder in January alongside its partner in the Middle East in the retail activities located in the United Arab Emirates. As a reminder, the impact resulting from this acquisition of a majority stake will not be significant on the 2024 consolidated financial statements.

Outlook

In a more complex economic and geopolitical context, the group continues its development with confidence, thanks to the highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients.

In the medium-term, despite the 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 Spirit of the Faubourg is the theme of the year. This place, the fruit of Émile Hermès’ dream, is the beating heart of the house. It accompanies Hermès everywhere and inspires the effervescence and joyful spirit so dear to the house.

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 2024 half-year results are available on the group's website: https://finance.hermes.com

Upcoming events:

• 24 October 2024: Q3 2024 revenue publication
• 14 February 2025: 2024 full-year results publication
• 17 April 2025: Q1 2025 revenue publication
• 30 April 2025: General Meeting of shareholders

FIRST HALF 2024 KEY FIGURES

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

⁽²⁾   Recurring operating income is one of the main performance indicators monitored by Group Management. It corresponds to operating income excluding non-recurring items having a significant impact that may affect understanding of the Group’s economic performance.

⁽³⁾   Adjusted free cash flows are the sum of cash flows related to operating activities, less operating investments and the repayment of lease liabilities recognised in accordance with IFRS 16 (aggregates in the consolidated statement of cash flows).

⁽⁴⁾           Net cash position includes cash and cash equivalents presented under balance sheet assets, less bank overdrafts which appear under short-term borrowings and financial liabilities on the liabilities side. Net cash position does not include lease liabilities recognised in accordance with IFRS 16.

⁽⁵⁾           The restated net cash position corresponds to net cash plus cash investments that do not meet the IFRS criteria for cash equivalents due in particular to their original maturity of more than three months, less borrowings and financial liabilities.

⁽⁶⁾   The headcount relates to employees on permanent contracts and those on fixed-term contracts lasting more than 9 months.

REVENUE BY GEOGRAPHICAL AREA ^(a)

^(a) Sales by destination.

REVENUE BY SECTOR

⁽¹⁾ The "Leather Goods and Saddlery” business line includes women's and men's bags, travel items, small leather goods and accessories, saddles, bridles and all equestrian objects and clothing.
⁽²⁾ The "Ready-to-wear and Accessories” business line includes Hermès Ready-to-wear for men and women, belts, costume jewellery, 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 John Lobb, Saint-Louis and Puiforcat.

REMINDER – 1^ST QUARTER 2024

REVENUE BY GEOGRAPHICAL ZONE ^(a)

^(a) Sales by destination.

REVENUE BY SECTOR

⁽¹⁾ The "Leather Goods and Saddlery” business line includes women's and men's bags, travel items, small leather goods and accessories, saddles, bridles and all equestrian objects and clothing.
⁽²⁾ The "Ready-to-wear and Accessories” business line includes Hermès Ready-to-wear for men and women, belts, costume jewellery, 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 John Lobb, Saint-Louis and Puiforcat.

APPENDIX – EXTRACT FROM FIRST HALF CONSOLIDATED ACCOUNTS

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEET

ASSETS

LIABILITIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASH FLOWS

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