Hermes posts huge profit spike as China demand pushes it to new heights
Hermes delivered a record operating margin for the first half of 2018 today, as well as posting a 17 per cent jump in profit to reach €708m (£631m).
The French luxury handbag maker saw group revenue rise by five per cent year on year to €2.9bn for the six months ending 30 June, with its recurring operating income up six per cent to hit €985m, or 34.5 per cent of sales.
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Operating cash flow grew to €849m, enabling the firm to finance €120m of capital expenditure, while net cash stood at €2.7bn, down slightly on its €2.9bn treasure chest at the end of 2017 after paying a €521m dividend.
It also paid €51m to redeem 88,000 shares.
Why it’s important
Revenue increased in all regions for the firm, which sells handbags in the region of £8,000, pushing shares up two per cent in early morning trading.
Demand in China pushed its performance in Asia up 15 per cent, where consumers are considered key drivers of the luxury handbag business, accounting for a third of industry sales.
Meanwhile Japan rose seven per cent. America also scored 12 per cent growth, with Hermes opening its 34th US store in Silicon Valley.
Closer to home, France achieved an eight per cent increase with the rest of Europe not far behind, at seven per cent growth.
It continues to grow its workforce, adding 280 employees over the first half of the year to count 13,764 in total.
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What Hermes said
Axel Dumas, executive chairman of Hermes, said: “Hermes achieved an exceptional performance in the first half of the year.
“Our commitment to the quality of know-how, the spirit of innovation as well as the creativity, always renewed, and the dedication of the women and men of Hermès, base the singularity and the integrity of our economic model; a strong model in a worldwide context that remains uncertain and unstable.”