HERMÈS - 2019 Universal Registration Document

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COMMENTS ON THE FINANCIAL YEAR AND OUTLOOK COMMENTS ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

COMMENTS ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

4.1

2019

2018 restated*

In millions of euros

Revenue

6,883.4 (2,124.9) 4,758.5 (1,815.7) (604.0) 2,338.9

5,966.1 (1,791.8) 4,174.3 (1,562.3) (536.7) 2,075.3

Cost of sales Gross margin

Selling, marketing and administrative expenses

Other income and expenses Recurring operating income

Other non-recurring income and expenses

-

52.7

Operating income Net financial income Net income before tax

2,338.9

2,128.0

(68.6)

(61.8)

2,270.3 (751.0)

2,066.2 (672.2)

Income tax

Net income from associates CONSOLIDATED NET INCOME

15.9

16.6

1,535.3

1,410.6

Net income attributable to non-controlling interests

(7.0)

(5.1)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT 1,405.5 Including the impact of IFRS 16 on leases. In accordance with IAS 8, Hermès has applied the new standard on a full retrospective basis, and has restated the financial * statements for the period ended 31 December 2018. 1,528.2

2019 operating income does not include any non-recurring items, unlike that of 2018, which included a capital gain on a property disposal of €53 million. Net financial income, which includes interest on lease liabilities, financial income from cash management investments and foreign exchange gains and losses, represented an expense of €69 million, compared with an expense of €62 million in 2018. Net income attributable to non-controlling interests totalled €7 million. After taking into account a tax expense of €751 million and the results of associates (income of €16 million), the Group’s consolidated net income grew by 9% to €1,528 million. After restatement of the non-recurring capital gain resulting from the sale of the former Galleria store premises in Hong Kong in 2018, net income grew by +13%.

In 2019, the Hermès Group reported consolidated revenue of €6,883 million, up +15% at current exchange rates and +12% at constant exchange rates. The gross margin was 69.1%, down 0.9 points compared with 2018, mainly due to the unfavourable impact of foreign exchange hedges. Sales, marketing and administrative expenses, which represented €1,816 million versus €1,562 million in 2018, include in particular €357 million in communication expenditure (compared with €298 million in 2018). Other income and expenses came to €537 million. This figure includes €197 million in fixed asset depreciation and amortisation charges, which reflects the rapid pace of investment in the development and renovation of the distribution network, €209 million in depreciation and amortisation of right-of-use assets, as well as the cost of free share allocation plans. Recurring operating income from continuing operations increased 13% to €2,339 million compared to €2,075 million in 2018. Recurring operating profitability was close to record levels, at 34.0%, versus 34.8% in 2018, due to the unfavourable impact of foreign currency hedges.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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