RMS Hermes International

2022 FIRST HALF RESULTS

HERMES

Half-year information report as at the end of June 2022

Very strong growth and exceptional results in the first half

Revenue increased 29% at current exchange rates and 23% at constant exchange ratesRecurring operating margin reached 42% of salesNet profit reached €1,641 million, up 40%

Paris, 29 July 2022

The group's consolidated revenue amounted to €5,475 million in the first half of 2022, up 29% at current exchange rates and 23% at constant exchange rates compared to the same period in 2021. Recurring operating income amounted to €2,304 million (42% of sales). Net profit (group share) reached €1,641 million (30% of sales).

Sales in the second quarter reached €2,710 million (+26% at current exchanges rates, and +20% at constant exchange rates), with a high level of activity in all the business lines.

Axel Dumas, Executive Chairman of Hermès, said: “The very dynamic results over the first six months of the year testify to the growth across our 16 métiers and the strong desirability of our objects, designed by craftsmen with a sustainable approach, without compromising on quality. In a still unstable context, we are moving forward with confidence, faithful to our role as a responsible and committed company to our employees and our partners.”

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

Over the first half of 2022, all the geographical areas posted strong growth, with strong resilience from Asia despite the sanitary context in China. Sales in the group's stores (+23%) benefitted from the strengthening of the exclusive omnichannel network and online sales. Wholesale activities growth (+25%), resulted notably from the resumption of travel retail.

• Asia excluding Japan (+15%) was driven by a high level of activity across the region and by sustained sales in Singapore, Australia and Korea. Greater China strongly bounced back in June after being penalised by sanitary restrictions and store closures in April and May, especially in Shanghai and Beijing. After the reopening of the renovated Pacific Place store in Hong Kong and One Central store in Macao at the beginning of the year, a new store was successfully launched in Zhengzhou at the end of March, in the Henan province in China.
• Japan (+20%) posted a remarkable performance, thanks to the loyalty of local clients. In June, the first edition of the exhibition La Fabrique de la légèreté, based on the year’s theme, was held in Tokyo.
• America (+34%) continued its strong momentum at the end of June. In the United States, a new store opened in Austin in April, the third store of the house in Texas. The Hermès in the Making exhibition, presenting the house’s artisanal know-how, was held in Detroit in June.
• Europe excluding France (+34%) and France (+41%) recorded sustained growth, thanks to the loyalty of local clients and the return of tourists, particularly in France, the United Kingdom and Italy.

Sales by business line at the end of June(at comparable exchange rates, unless otherwise indicated)

At the end of June 2022, all the business lines confirmed their high levels of sales, with a remarkable increase in Silk, Ready-to-wear and Accessories, Watches and Other Hermès Business Lines (Jewellery and Homeware) underlying the huge desirability of the house Hermès.

The growth of the Leather Goods and Saddlery division (+12%) is driven by sustained demand and the increase in production capacities, in line with the annual objective. The Rolling Mobility Suitcase (R.M.S), customisable and the result of exceptional know-how and multiple innovations, received a warm welcome. Five new workshops are in project for the next five years, with the Louviers (Eure) and Sormonne (Ardennes) sites in 2023 and the Riom (Puy-de-Dôme) site in 2024. The sites in L’Isle-d’Espagnac (Charente) and Loupes (Gironde) have been announced for 2025 and 2026. Hermès thus continues to strengthen its local presence in France and to create jobs.

The Ready-to-Wear and Accessories division (+36%) pursued its dynamic growth, thanks to the success of the ready-to-wear, fashion accessories and footwear collections. The women’s autumn-winter 2022 fashion show held in March at the Garde républicaine in Paris met with great success, as did the men's spring-summer 2023 collection revealed at the manufacture des Gobelins in June. New creations such as the Rivale micro bracelet, the single earing Olympe or the Enid sandal were very successful, alongside the house’s iconic creations with the Hapi, clic H bracelets and the Kelly belt.

The Silk and Textiles business line (+29%) achieved excellent growth, with collections combining diversity of materials, formats and new uses, and supported by the development of production capacities at the Pierre-Bénite site near Lyon.

Perfume and Beauty (+23%) gained from the successful launches of the new chapter of Beauty, Hermès Plein Air, dedicated to complexion, as well as of infused care oil for lips, Hermèsistibles. Perfume launched a fresh and powerful creation, Terre d’Hermès Eau Givrée and a new light and airy fragrance joined the colognes collection in June, Eau de Basilic Pourpre.

The Watches business line (+55%) achieved an outstanding performance thanks to the development of timepieces with exceptional know-how such as the watch Arceau Le temps voyageur, and the success of iconic models such as Heure H and Cape Cod.

The Other Hermès business lines (+33%) kept up their momentum, thanks to Homeware and Jewellery. Homeware was presented in June at the Milan Design Week, with textile new creations and the Soleil d’Hermès tableware collection. The seventh haute bijouterie collection called Les jeux de l’ombre, featuring innovative shapes and know-how pushed to the highest standard, was presented at the Faubourg Saint-Honoré store in Paris.

Outstanding results in the first half of 2022

Recurring operating income was up 34% and amounted to €2,304 million compared to €1,722 million in the first half of 2021. Thanks to the leverage effect generated by the strong sales increase and the collections exceptional sell-through rates, the recurring operating margin reached an historical high of 42% compared to 41% at the end of June 2021.

Consolidated net profit (group share) amounts to €1,641 million (30% of sales) compared to €1,174 million in the first half of 2021.

Operational investments represented €190 million and adjusted free cash flow reached €1,421 million.

After distribution of the ordinary dividend (€837 million) and inclusion of share buybacks (€115 million for 103,368 shares excluding the liquidity contract), the restated net cash position increased by €615 million to €7,685 million compared to €7,070 million as at 31 December 2021.

A responsible, sustainable model

The Hermès group continued to recruit and added more than 800 people to its workforce over the first six months. At the end of June 2022, the group employed 18,400 people, including 11,500 in France. True to its commitment as a responsible employer, Hermès paid an exceptional €3,000 bonus in February 2022, in respect of 2021, to all employees of the group to reward them for their engagement, as well as a rise of €100 gross per month in January in France, on top of the usual rises. In June, a second rise of €100 gross per month was announced for all European employees, starting in July.

Hermès is stepping up its commitments in the areas of education and knowledge transfer with the launch of the École des Artisans de la Vente in April. The group continues to roll out the École Hermès des savoir-faire with the opening of a new Apprentice Training Centre in Charleville-Mézières, in the Ardennes division.

The employment of people with disabilities reached 6.4%, which reflects the house's commitment to inclusion.

On 4 July, Hermès International received the Grand Prix de la Transparence 2022 for all categories, now renamed Transparency Awards, which recognise the quality of regulated information of SBF 120 companies.

Outlook

For 2022, the impacts of the health context are still difficult to assess. Our highly integrated craftsmanship model and balanced distribution network, as well as the creativity of the collections and clients' loyalty allow us to look to the future with confidence.

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.

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 2022 half-year results are available on the group's website: https://finance.hermes.com

Upcoming events:

• 20 October 2022: Q3 2022 revenue publication
• 17 February 2023: 2022 full-year results publication
• 14 April 2023: Q1 2023 revenue publication
• 20 April 2023: General Meeting of Shareholders

FIRST HALF 2022 KEY FIGURES

(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.

REVENUE BY GEOGRAPHICAL AREA (a)

(a) Sales by destination.

REVENUE BY SECTOR

(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.

REMINDER – 1ST QUARTER 2022

REVENUE BY GEOGRAPHICAL ZONE (a)

(a) Sales by destination.

REVENUE BY SECTOR

(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.

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

Attachment

• hermes_20220729_pr_firsthalfresults_va

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