• Hermès International: 2022 Full Year Results

    Source: Nasdaq GlobeNewswire / 17 Feb 2023 02:00:00   America/New_York

    HERMES
    2022 Full Year Results

    Sales momentum and particularly robust results in 2022

    Revenue amounted to €11.6 billion
    (+29% at current exchange rates and +23% at constant exchange rates)
    Recurring operating income reached €4.7 billion (+33%)
    Net profit amounted to €3.4 billion (+38%)

    Paris, 17th February 2023

    The group’s consolidated revenue amounted to €11,602 million in 2022, up 29% at current exchange rates and 23% at constant exchange rates compared to 2021. Recurring operating income amounted to €4,697 million, i.e. 40.5% of sales. Net profit (group share) reached €3,367 million, representing net profitability of 29%.

    In the fourth quarter 2022, the great sales momentum recorded at the end of September continued, with sales reaching €2,991 million, an increase of 26% at current exchanges rates and 23% at constant exchange rates.

    Axel Dumas, Executive Chairman of Hermès, said: “In 2022, Hermès had an exceptional year thanks notably to the good performance of its international markets. This success reinforces our approach as an artisanal and highly integrated company, mainly in France: a design house that offers objects conceived to be functional, with an assertive style and uncompromising quality. The year underpins the relevance of our responsible and sustainable model.”

    Over the last three years, Hermès created 4,300 jobs, including 2,900 in France, and reinforced its operating investments by €1.5 billion, including c. 60% in France.

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

    At the end of December, sales growth was remarkable across geographical areas. Sales increased considerably both in group stores (+23% at constant exchange rates) and in wholesale activities (+26%), which benefited from the recovery in travel retail. Hermès continued to develop its exclusive distribution network, while online sales pursued their upward trend worldwide.

    • Asia excluding Japan (+22%) remained very dynamic throughout the geographical area. Sales performance in Greater China was sustained. In October, a fourth store opened in the Qiantan district in Shanghai, Mainland China, and Hermès inaugurated a store in Pangyo, in South Korea. Several stores reopened after renovation and extension work, such as the Hyundai Coex store in Seoul in December and the Hong Kong international airport store in November.

    • Japan (+20%) recorded a steady, sustained increase in sales. In November, the Takashimaya store in Nagoya reopened after renovation and extension in a new location, and the Hermès in the Making exhibition showcased the house’s know-how in Kyoto.

    • The Americas (+32%) saw an exceptional year in 2022. After the April opening of a new store in Austin, a new maison was inaugurated at 706 Madison Avenue in New York in September. This store offers clients an unprecedented experience of the creativity of Hermès and confirms the house’s attachment to the sustainability of objects with a whole floor dedicated to repairs. In Mexico, the store in Guadalajara reopened in October after renovation.

    • Europe excluding France (+18%) recorded sustained growth, thanks to the loyalty of local clients and the resumption of tourist traffic. The Paseo de Gracia store in Barcelona was inaugurated in November, after being renovated and extended.

    • France (+27%) improved strongly, with an acceleration at year-end thanks to high demand from both national and international clients. The store in Strasbourg reopened in November, after renovation and extension, in a new location in the city’s historical centre.

    Sales by business line at the end of December
    (at constant exchange rates unless otherwise indicated)

    At the end of December 2022, all the business lines confirmed their high levels of sales, with Ready-to-Wear and Accessories, Watches and Other Hermès business lines posting a remarkable increase, reflecting the huge desirability of the house.

    The Leather Goods and Saddlery business line (+16%) performed particularly well, benefitting from very sustained demand and a favourable comparison basis in the 4th quarter. The growth in production capacities continued with five site projects. These new capacities will reinforce the nine centres of expertise located across the national territory, with their production units, workshops and training centres. In 2023, Hermès will open two new leather goods workshops: one in Louviers (Normandie) and the other one in la Sormonne (Ardennes). The projects for new workshops sites in Riom (Puy-de-Dôme), L’Isle-d’Espagnac (Charente) and Loupes (Gironde) are ongoing. Hermès continues to reinforce its local anchoring in France in regions with strong manufacturing know-how, while also developing employment and training.

    The Ready-to-Wear and Accessories division (+36%) pursued its strong growth, thanks to the success of the ready-to-wear, fashion accessories and footwear collections. The men’s and women’s spring-summer 2023 collections, mixing casual, sophisticated, bold and light spirits, were respectively presented in June and October. Demand was also strong for fashion accessories and footwear, with models that express the abundance of the house’s know-how.

    The Silk and Textiles business line (+20%) achieved a splendid performance, supported by the growth in production capacities and the success of the collections, especially through the exploration of exceptional materials and artisanal know-how, such as hand-weaving and leather work.

    Perfume and Beauty business line (+15%) gained from the successful launches of new creations, such as Terre d’Hermès Eau Givrée, the Eau de parfum H24, and the Colognes with Eau de basilic pourpre. Two years after its creation, the Hermès Beauty business line continues its strong growth, thanks to the limited editions of Rouge Hermès and the launch of Hermès Plein Air, the new chapter for complexion.

    The Watches business line (+46%) confirmed its outstanding performance, displaying singular creativity and unique style nurtured by all the other métiers of the house, as well as exceptional watch-making know-how. In November 2022, the Arceau Le temps voyageur watch won two awards at the Grand Prix d’Horlogerie de Genève (Geneva Watchmaking Grand Prix). The new Hermès H08 men’s watch confirmed its success, alongside the house’s classic models.

    The Other Hermès business lines (+30%), which include Jewellery and Homeware, continued on their upward trend, highlighting the full creative strength and singularity of the house. The seventh haute bijouterie collection, called Les jeux de l’ombre, was presented in Paris this summer and in New York this autumn.

    Particularly robust results

    Recurring operating income increased by 33% to €4,697 million compared to €3,530 million in 2021. Thanks to the leverage effect generated by the strong sales growth and the exceptional performance of the collections, annual recurring operating profitability reached its highest level ever at 40.5%, up from 39.3% in 2021.

    Consolidated net profit (group share) amounted to €3,367 million (29% of sales), an increase of 38% from €2,445 million in 2021.

    Operational investments represented €518 million and adjusted free cash flow reached €3,405 million.

    After distribution of the ordinary dividend (€837 million) and inclusion of share redemptions (€116 million for 104,269 shares outside the liquidity contract), the restated net cash position increased by €2,672 million to €9,742 million compared to €7,070 million as at 31 December 2021.

    A responsible, sustainable model

    The group pursued its dynamic recruitment, adding some 2,100 new hires to the workforce this year. At the end of December 2022, the group employed 19,700 people, including 12,400 in France. True to its commitment as a responsible employer and in recognition of the employees’ contribution to the performance and success of the group, Hermès will pay an exceptional bonus of €4,000 in 2023, to all the employees worldwide.

    Hermès strengthened its commitments in the fields of education and knowledge transmission with the launch of the École des artisans de la vente in April and the rollout of the École Hermès des savoir-faire, opening a new Apprentice Training Centre at the Ardennes regional hub of expertise. The group has made another five-year commitment in an amount of €61 million for the actions of the Fondation d’Entreprise Hermès.

    In line with the house’s commitments for the fight against climate change, Hermès pursued its actions in line with the emissions reduction targets validated by the Science Based Target initiative (SBTi). Hermès aims to reduce emissions by 50.4% on scope 1 and 2 in absolute value and by 58.1% in intensity on scope 3, over the 2018-2030 period. The house already offsets 100% of scope 1&2 emissions, and most of transport-related emissions, thanks to high environmental and societal value programmes. Regarding the protection of biodiversity and resources, the house also introduced a demanding responsible construction standard that integrates sustainability issues across the life cycle of real-estate projects. It was certified in November 2022 by an independent third party, as being more demanding that the main global standards.

    In 2022, Hermès again saw an improvement in non-financial ratings reflecting the strength of the CSR commitments and the reinforced transparency. MSCI published a greatly improved “AA” rating (versus BBB in 2020 and then A in 2021). Sustainalytics ranked the house as the best company in Textiles and Clothing (number 1 out of 191 companies) and in the Luxury Goods sector (number 1 out of 102 companies), with the highest “Negligible Risk” classification. Moody’s ESG Solutions ranked Hermès in 5th position in the Luxury Goods and Cosmetics sector, thus consolidating the group’s position in the CAC40 ESG index. Finally, Hermès joined the CDP’s A-list, making the house one the world’s 330 top-performing companies in environmental matters.

    Proposed dividend

    At the General Meeting to be held on 20th April 2023, a dividend proposal of €13.00 per share will be made. The €3.50 interim dividend, paid on 22nd February 2023, will be deducted from the dividend approved by the General Meeting.

    Outlook

    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.

    The group has moved into 2023 with confidence, thanks to the highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients.

    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.

    Inspiration of the creation at Hermès, Astonishment is the theme of the year. The ability to be surprised is a constant source of innovation and dynamism for the house, which will continue to accompany clients with enthusiasm and creativity across 2023.

    The press release and the presentation of the 2022 results are available on the group’s website: https://finance.hermes.com

    At the Supervisory Board meeting on 16th February 2023, Executive Management presented the audited financial statements for 2022. The audit procedures have been completed and the audit report is under preparation.
    The complete consolidated financial statements will be available by 31st March 2023 at the following address https://finance.hermes.com and on the AMF website: www.amf-france.org

    Upcoming events:

    • 14th April 2023: Q1 2023 revenue publication
    • 20th April 2023: General Meeting of shareholders
    • 28th July 2023: Publication of H1 2023 results

    2022 KEY FIGURES

    In millions of euros20222021
       
    Revenue11,6028,982
    Growth at current exchange rates vs. n-129.2%40.6%
    Growth at constant exchange rates vs. n-1 (1)23.4%41.8%
       
    Recurring operating income (2)4,6973,530
    As a % of revenue40.5%39.3%
       
    Operating income4,6973,530
    As a % of revenue40.5%39.3%
       
    Net profit – Group share3,3672,445
    As a % of revenue29.0%27.2%
       
    Operating cash flows4,1113,060
       
    Investments (excluding financial investments)518532
       
    Adjusted free cash flow (3)3,4052,661
       
    Equity – Group share12,4409,400
       
    Net cash position (4)9,2236,695
       
    Restated net cash position (5)9,7427,070
       
    Workforce (number of employees)19,68617,595

    (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 corresponds to the operating income excluding 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 net cash position includes cash and cash equivalents on the asset side of the balance sheet, less bank overdrafts presented within the short-term borrowings and financial liabilities on the liability side of the balance sheet. It does not include lease liabilities recognised in accordance with IFRS 16.

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

    INFORMATION BY GEOGRAPHICAL ZONE (a)

      As of Dec. 31stEvolution /2021
    In millions of Euros 20222021PublishedAt constant exchange rates
    France 1,06483826.9 %26.9 %
    Europe (excl. France) 1,5361,30317.9 %18.4 %
    Total Europe 2,6002,14121.5 %21.8 %
    Japan 1,10197712.7 %19.7 %
    Asia-Pacific (excl. Japan) 5,5564,25130.7 %21.9 %
    Total Asia 6,6575,22727.4 %21.5 %
    Americas 2,1381,45846.6 %31.6 %
    Other 20715632.5 %31.5 %
    TOTAL 11,6028,98229.2 %23.4 %


      4th quarterEvolution /2021
    In millions of Euros 20222021PublishedAt constant exchange rates
    France 31125123.9 %23.9 %
    Europe (excl. France) 4133983.8 %4.8 %
    Total Europe 72464911.6 %12.2 %
    Japan 2792674.6 %15.7 %
    Asia-Pacific (excl. Japan) 1,3141,02528.3 %24.7 %
    Total Asia 1,5931,29223.4 %22.8 %
    Americas 62039756.0 %40.8 %
    Other 544228.8 %27.7 %
    TOTAL 2,9912,38025.7 %22.9 %

    (a) Sales by destination.

    INFORMATION BY SECTOR

      As of Dec. 31stEvolution /2021
    In millions of Euros 20222021PublishedAt constant exchange rates
    Leather Goods and Saddlery (1) 4,9634,09121.3 %15.6 %
    Ready-to-wear and Accessories (2) 3,1522,21942.0 %35.8 %
    Silk and Textiles 84266925.8 %20.3 %
    Other Hermès sectors (3) 1,3711,00137.0 %29.6 %
    Perfume and Beauty 44838516.4 %15.0 %
    Watches 51933754.2 %45.9 %
    Other products (4) 3062799.6 %7.6 %
    TOTAL 11,6028,98229.2 %23.4 %


      4th quarterEvolution /2021
    In millions of Euros 20222021PublishedAt constant exchange rates
    Leather Goods and Saddlery (1) 1,3001,01528.1 %25.3 %
    Ready-to-wear and Accessories (2) 77558532.5 %29.7 %
    Silk and Textiles 26323711.2 %8.7 %
    Other Hermès sectors (3) 34826531.0 %27.4 %
    Perfume and Beauty 105977.8 %7.4 %
    Watches 1189524.3 %21.4 %
    Other products (4) 8286(4.3) %(5.5) %
    TOTAL 2,9912,38025.7 %22.9 %

    (1) The “Leather Goods and Saddlery” business line includes bags, riding, memory holders and small leather goods.
    (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.

    2022 quarterly revenue

      Q1Q2Q3Q42022
    Revenue (in €M) 2,7652,7103,1362,99111,602
    Growth at current exchange rates 32.7%26.0%32.5%25.7%29.2%
    Growth at constant exchange rates 27.1%19.5%24.3%22.9%23.4%

    --------------------------------------------------------------------------------

    Extra-financial performances

    RESPONSIBLE EMPLOYER
    2,100
    Jobs created

         		DIVERSITY AND INCLUSION
    6.4%
    Direct disability employment rate

         		GENDER EQUALITY
    60%
    Women managers group

     
     

    LONG-TERM RELATIONSHIPS 
    20 years
    Average age of supplier relationships
    (Top50)

         		 

    PARTNERS
    SUPPORT
    24 days
    Average payment terms for suppliers in France

         		 

    LOCAL
    SUPPLIERS
    66%
    Of purchases come from France (Top50)

     
     

    CLIMATE
    1.5°C
    Carbon trajectory commitment validated by SBTi

         		 

    ENERGY TRANSITION
    100%
    Green electricity in France

         		 

    DURABILITY
    202,000
    Repairs in workshops

     
     

    TRANSPARENCY AWARDS
    #1
    SBF 120, all categories

         		 

    SOCIAL RESPONSIBILITY
    €61m
    Budget allocated to the Fondation d’entreprise Hermès

         		 

    PARTNERSHIPS
    €5.2m
    Purchases from socially supported organisations

    APPENDIX – EXTRACT FROM CONSOLIDATED ACCOUNTS

    Financial statements of the year, including notes to the consolidated accounts, will be available at the end of March 2023 on the website https://finance.hermes.com, together with the other chapters of the Annual Financial Report.

    CONSOLIDATED INCOME STATEMENT

    In millions of euros20222021
    Revenue11 6028 982
    Cost of sales(3 389)(2 580)
    Gross margin8 2136 402
    Sales and administrative expenses(2 680)(2 137)
    Other income and expenses(836)(734)
    Recurring operating income4 6973 530
    Other non-recurring income and expenses--
    Operating income4 6973 530
    Net financial income(62)(96)
    Net income before tax4 6353 435
    Income tax(1 305)(1 015)
    Net income from associates5034
    CONSOLIDATED NET INCOME3 3802 454
    Non-controlling interests(13)(8)
    NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT3 3672 445
    Basic earnings per share (in euros)32,2023,37
    Diluted earnings per share (in euros)32,0923,30

    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

    In millions of euros20222021
    Consolidated net income3 3802 454
    Changes in foreign currency adjustments 1126141
    Hedges of future cash flows in foreign currencies 1 2129(110)
    • change in fair value
    		23(87)
    • recycling through profit or loss
    		106(23)
    Assets at fair value 233387
    Employee benefit obligations: change in value linked to actuarial gains and losses 2419
    Net comprehensive income4 0092 582
    • attributable to owners of the parent
    		3 9962 573
    • attributable to non-controlling interests
    		149

    (1) Transferable through profit or loss.
    (2) Net of tax.

    CONSOLIDATED BALANCE SHEET

    ASSETS

    In millions of euros31/12/202231/12/2021
    Goodwill-42
    Intangible assets213258
    Right-of-use assets1 5821 517
    Property, plant and equipment2 0071 881
    Investment property89
    Financial assets1 109617
    Investments in associates5451
    Loans and deposits6559
    Deferred tax assets555546
    Other non-current assets3922
    Non-current assets5 6305 002
    Inventories and work-in-progress1 7791 449
    Trade and other receivables383333
    Current tax receivables1958
    Other current assets263257
    Financial derivatives16053
    Cash and cash equivalents9 2256 696
    Current assets11 8288 845
    TOTAL ASSETS17 45913 847

    LIABILITIES

    In millions of euros31/12/202231/12/2021
    Share capital5454
    Share premium5050
    Treasury shares(674)(551)
    Reserves8 7957 142
    Foreign currency adjustments303178
    Revaluation adjustments54683
    Net income attributable to owners of the parent3 3672 445
    Equity attributable to owners of the parent12 4409 400
    Non-controlling interests1612
    Equity12 4579 412
    Borrowings and financial liabilities due in more than one year3524
    Lease liabilities due in more than one year1 6291 529
    Non-current provisions3026
    Post-employment and other employee benefit obligations due in more than one year181220
    Deferred tax liabilities2015
    Other non-current liabilities10345
    Non-current liabilities1 9981 860
    Borrowings and financial liabilities due in less than one year21
    Lease liabilities due in less than one year268248
    Current provisions133115
    Post-employment and other employee benefit obligations due in less than one year1540
    Trade and other payables777535
    Financial derivatives74122
    Current tax liabilities496347
    Other current liabilities1 2391 168
    Current liabilities3 0042 575
    TOTAL EQUITY AND LIABILITIES17 45913 847

    CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

    In millions of euros

         		Number of shares

         		Share capital

         		Share premium

         		Treasury shares

         		Consolidated reserves and net income attributable to owners of the parent

         		Actuarial gains and losses

         		Foreign currency adjustments

         		Revaluation adjustments   
    Financial investmentsHedges of future cash flows in foreign currenciesEquity attributable to owners of the parentNon-controlling interestsEquity
    As at 1 January 2021105 569 4125450(464)7 732(135)3810057 380117 391
    Net income----2 445---- 2 44582 454
    Other comprehensive income-----914187(110)1270128
    Comprehensive income----2 445914187(110)2 57392 582
    Change in share capital and share premiums------------
    Purchase or sale of treasury shares---(88)(69)----(157)-(157)
    Share-based payments----59----59-59
    Dividends paid----(485)----(485)(5)(490)
    Other---- 30----30(2)28
    As at 31 December 2021105 569 4125450(551)9 712(125)178188(105)9 400129 412
    Net income ----3 367---- 3 367133 380
    Other comprehensive income-----411253331296281630
    Comprehensive income----3 367411253331293 996144 009
    Change in share capital and share premiums------------
    Purchase or sale of treasury shares---(123)2----(121)-(121)
    Share-based payments----55----55-55
    Dividends paid----(845)----(845)(8)(852)
    Other---- (44)----(44)(2)(46)
    AS AT 31 DECEMBER 2022105 569 4125450(674)12 247(85)3035212512 4401612 457

    CONSOLIDATED STATEMENT OF CASH FLOWS

    In millions of euros20222021
    CASH FLOWS RELATED TO OPERATING ACTIVITIES  
    Net income attributable to owners of the parent3 3672 445
    Depreciation and amortisation of fixed assets341312
    Depreciation of right-of-use assets266251
    Impairment losses12365
    Mark-to-Market financial instruments-(1)
    Foreign exchange gains/(losses) on fair value adjustments12(46)
    Change in provisions1228
    Net income from associates(50)(34)
    Net income attributable to non-controlling interests138
    Capital gains or losses on disposals and impact of changes in scope of consolidation(1)(4)
    Deferred tax expense(16)(15)
    Accrued expenses and income related to share-based payments5559
    Dividend income(11)(10)
    Other(0)(0)
    Operating cash flows4 1113 060
    Change in working capital requirements73346
    Change in net cash position related to operating activities (A)4 1843 405
    CASH FLOWS RELATED TO INVESTING ACTIVITIES  
    Operating investments(518)(532)
    Acquisitions of consolidated shares(1)-
    Acquisitions of other financial assets(165)(198)
    Disposals of operating assets13
    Disposals of consolidated shares and impact of losses of control0-
    Disposals of other financial assets56
    Change in payables and receivables related to investing activities326
    Dividends received6747
    Change in net cash position related to investing activities (B)(579)(669)
    CASH FLOWS RELATED TO FINANCING ACTIVITIES  
    Dividends paid(852)(490)
    Repayment of lease liabilities(261)(212)
    Treasury share buybacks net of disposals(123)(158)
    Borrowing subscriptions--
    Repayment of borrowings(0)(8)
    Change in net cash position related to financing activities (C)(1 237)(869)
    Foreign currency translation adjustment (D)159110
    CHANGE IN NET CASH POSITION (A) + (B) + (C) + (D)2 5281 978
    Net cash position at the beginning of the period6 6954 717
    Net cash position at the end of the period9 2236 695
    CHANGE IN NET CASH POSITION2 5281 978


    REMINDER

    2022 HALF YEAR KEY FIGURES

    In millions of eurosH1 2022H1 2021
       
    Revenue5,4754,235
    Growth at current exchange rates vs. n-129.3,%70.2 %
    Growth at constant exchange rates vs. n-1 (1)23.2,%76.7 %
       
    Recurring operating income (2)2,3041,722
    As a % of revenue42.1,%40.7 %
       
    Operating income2,3041,722
    As a % of revenue42.1,%40.7 %
       
    Net profit – Group share1,6411,174
    As a % of revenue30.0,%27.7 %
       
    Operating cash flows2,0011,487
       
    Investments (excluding financial investments)190214
       
    Adjusted free cash flow (3)1,4211,236
       
    Equity – Group share10,2598,024
       
    Net cash position (4)7,2805,326
       
    Restated net cash position (5)7,6855,521
       
    Workforce (number of employees)18,42816,966

    (6)   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.

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

    (8)   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.

    (9)           The net cash position includes cash and cash equivalents on the asset side of the balance sheet, less bank overdrafts presented within the short-term borrowings and financial liabilities on the liability side of the balance sheet. It does not include lease liabilities recognised in accordance with IFRS 16.

    (10)           The restated net cash position corresponds to the net cash position, plus cash investments that do not meet IFRS criteria for cash equivalents as a result of their original maturity of more than three months, minus borrowings and financial liabilities.

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