HERMES_REGISTRATION_DOCUMENT_2017

4

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

2017

2016

In millions of euros

Revenue

5,549.2 (1,659.3) 3,889.9 (1,656.3) (311.6) 1,922.0

5,202.2 (1,681.9) 3,520.3 (1,545.3) (278.5) 1,696.5

Cost of sales Gross margin

Selling, marketing and administrative expenses

Other income and expenses Recurring operating income

Other non-recurring income and expenses

-

-

Operating income Net financial income Net income before tax

1,922.0

1,696.5

(32.2)

(47.8)

1,889.8 (669.3)

1,648.8 (555.5)

Income tax

Net income from associates CONSOLIDATED NET INCOME

5.3

10.9

1,225.8

1,104.2

Net income attributable to non-controlling interests

(4.3)

(3.9)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

1,221.5

1,100.3

Operating income increased by 13.3% to €1,922 million versus €1,697 million in 2016. Operational profitability represented 34.6% of sales, up by 2 percentage points compared to 2016 (32.6%). Net financial income was an expense of €32 million versus €48 million in 2016. Net income attributable to non-controlling interests totalled €4million. The tax expense stoodat €669millionand includes theexcep- tional contributions due in France in 2017. After taking into account the results of associates (income of €5 million), the Group’s consolidated net result grew by 11.0% to €1,221 million.

In 2017, the Hermès Group reported revenue of €5,549million, up 6.7% at current exchange rates (8.6% at constant exchange rates). The gross margin was 70.1%, up by 2.4 points, due to the good productivity of the production sites, the success of the collections and the positive impact of foreign exchange hedges. Sales, marketing and administrative expenses, which represented €1,656 million versus €1,545 million in 2016, include €275 million of communication expenditure. Other income and expenses came to €312 million. This figure includes €167 million of depreciation and amortisation charges, which reflects the rapid pace of investment in the development and renovation of the distribution network, as well as the cost of free share allocation plans.

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2017 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL