Hermès resists pressures to beat forecasts

Employees box luxury goods for a customer inside the Hermes International SCA department at the GUM department store on Red Square in Moscow, Russia, on Monday, Dec. 22, 2014. The ruble's rout, sparked by falling oil prices and sanctions imposed on businesses including OAO Sberbank, prompted Russians to begin buying luxury goods from Porsche sports cars to Tiffany rings to preserve the value of their savings. Photographer: Andrey Rudakov/Bloomberg©Bloomberg

Hermès said that all geographic regions grew last year

Hermès has revealed a 19 per cent rise in operating profit last year in full-year figures, helping the luxury group to narrowly beat analysts’ forecasts.

The Paris-based producer of silk scarves and leather bags reported that operating profit reached €1.54bn — slightly above consensus forecasts of €1.52bn.

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Operating margins, which the group had cautioned would be “close to” 2014 levels of 31.5 per cent, reached 31.8 per cent, reflecting Hermès’ resilience in the face of an increasingly challenging global market.

However, full-year net profit was €973m, 13.2 per cent higher than the previous year, but below average expectations of €998m. Hermès said that the figure was negatively affected by heavier taxes, particularly in France.

Shares reached €317.65 in the first minutes of trading on Wednesday, 2 per cent higher than the previous day’s close.

Hermès declined to give further guidance on trading conditions this year, reiterating instead its outlook given last month that revenue growth this year could be less than its annual goal of 8 per cent in constant currency terms because of “economic, geopolitical and monetary uncertainties”.

Annual sales growth has moderated for the luxury sector in recent years as the once-vibrant Chinese market cools to single-digit growth and the terrorist threat impacts on sales in Paris and other European capitals.

Last month, the company headed by Axel Dumas said that 2015 sales growth was 8.1 per cent at constant exchange rates, down from 11.1 per cent the previous year — and from 16.4 per cent in 2012.

Hermès said that all geographic regions grew last year with sales in Japan expanding at 18 per cent, boosted by the influx of Chinese tourists.

Sales in Asia, excluding Japan, grew just 5 per cent, reflecting difficulties in Hong Kong and also Macau. Revenues in America grew 7 per cent, while sales in Europe expanded 9 per cent.

Hermès said that sales in France grew 6 per cent over the year, a performance it described as “remarkable” given the impact of November’s terrorist attacks in and around Paris, which killed 130 people.

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