Hermès // CSR Extract 2023

1

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

1.8 COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS AFR

1.8.1 INCOME STATEMENT

2023

2022

In millions of euros

Revenue

13,427

11,602

Cost of sales

(3,720)

(3,389)

Gross margin

9,708

8,213

Sales and administrative expenses

(3,169)

(2,680)

Other income and expenses

(889)

(836)

Recurring operating income

5,650

4,697

Other non‑recurring income and expenses

-

-

Operating income

5,650

4,697

Net financial income

190

(62)

Net income before tax

5,840

4,635

Income tax

(1,623)

(1,305)

Net income from associates

105

50

CONSOLIDATED NET INCOME

4,322

3,380

Non‑controlling interests

(12)

(13)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

4,311

3,367

In 2023, the Group’s consolidated revenue amounted to €13.4 billion, up 21% at constant exchange rates and 16% at current exchange rates compared to 2022. The gross margin rate was 72%, up by 1.5 points compared to 2022. This change is due to the positive impact of foreign exchange hedges, an accretive translation effect, sustained activity at the production sites and particularly high collection turnover rates. Sales and administrative expenses, which represented €3,169 million, compared with €2,680 million in 2022, notably included €607 million in communication expenses, compared with €525 million in 2022. Other sales and administrative expenses, which include mainly the salaries of sales and support staff as well as variable rents, amounted to €2,561 million compared to €2,155 million in 2022. Other income and expenses amounted to €889 million, compared with €836 million in 2022. They include depreciation and amortisation of €604 million (€552 million in 2022), 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 €151 million related to free share plans in 2023.

Recurring operating income amounted to €5.7 billion, up by 20% compared to 2022. Current operating profitability reached a record level of 42.1% of sales, an improvement of 1.6 points compared to 2022. Net financial income was positive in the amount of €190 million compared to an expense of €62 million in 2022. It includes the cost of foreign exchange hedges, interest on lease liabilities and interest payments on cash which, in line with the rise in interest rates, amounted to €331 million in 2023. The income tax expense amounted to €1.6 billion and represents an effective tax rate of 27.8%. After taking into account the net income from associates (income of €105 million) and non‑controlling interests, the consolidated net income attributable to owners of the parent amounted to €4.3 billion compared with €3.4 billion in 2022, i.e. an increase of 28%. The improvement in recurring operating profitability and interest payments on cash led to a record level of net profitability of 32%, up 3 points year‑on‑year.

2023 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 39 EXTRACT FROM 2023 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 22