Hermès // 2022 UNIVERSAL REGISTRATION DOCUMENT

PRESENTATION OF THE GROUP AND ITS RESULTS COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

1.8 COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS AFR

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INCOME STATEMENT

1.8.1

2022

2021

In millions of euros

Revenue

11,602 (3,389)

8,982

Cost of sales Gross margin

(2,580)

8,213

6,402

Sales and administrative expenses

(2,680)

(2,137)

Other income and expenses Recurring operating income

(836) 4,697

(734) 3,530

Other non‑recurring income and expenses

-

-

Operating income Net financial income Net income before tax

4,697

3,530

(62)

(96)

4,635 (1,305)

3,435

Income tax

(1,015)

Net income from associates CONSOLIDATED NET INCOME

50

34

3,380

2,454

Non‑controlling interests

(13)

(8)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

3,367

2,445

to free share plans and €61 million related to the new five‑year commitment to the Fondation d’entreprise Hermès (2023‑2027). Recurring operating income amounted to €4.7 billion, up by 33% compared to 2021. Thanks to the leverage effect generated by the strong growth in sales and the exceptional performance of the collections, annual recurring operating profitability reached its highest level ever at 40.5%, compared with 39.3% in 2021. Net financial income, which includes, in particular, interest on lease liabilities, financial income from cash investments and the cost of foreign exchange hedges, represented a net expense of €62 million, compared with €96 million in 2021. The income tax expense amounted to €1.3 billion and represents an effective tax rate of 28.2%. The decrease of 1.3 points compared to the rate published for 2021 (29.5%) is mainly due to the decrease in the corporate tax rate in France. After taking into account the net income from associates (income of €50 million) and non‑controlling interests, the consolidated net income attributable to owners of the parent amounted to €3.4 billion compared with €2.4 billion in 2021, i.e. an increase of 38%. Net profitability also reached a record level of 29.0% and gained nearly 2points compared to 2021.

In 2022, the Group’s consolidated revenue amounted to €11.6 billion, up 23% at constant exchange rates and 29% at current exchange rates compared to 2021. The gross margin rate was 71%, down slightly by 0.5 points compared to 2021. This change is due to a dilutive conversion effect, partially offset by a leverage effect on fixed production costs and by exceptional collection flow rates. Sales and administrative expenses, which represented €2,680 million, compared with €2,137 million in 2021, notably included €525 million in communication expenses, compared with €421 million in 2021. Other sales and administrative expenses, which include mainly the salaries of sales and support staff as well as variable rents, amounted to €2,155 million compared to €1,715 million in 2021. Other income and expenses amounted to €836 million, compared with €734 million in 2021. They include depreciation and amortisation of €552 million (€512 million in 2021), half of which relates to property, plant and equipment and intangible assets and the other half to right‑of‑use assets. The steady increase in depreciation and amortisation reflects continued investments in the extension and renovation of the distribution network, digital technology and information systems. Other expenses also include €65 million related

2022 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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