Hermes Says Margin Beat Forecast on ‘Dynamic’ Sales GainsAndrew Roberts
Hermes International SCA said 2013 profitability beat its forecast after fourth-quarter revenue advanced 4.6 percent as the French maker of Birkin bags increased sales in Asia.
The current operating margin was probably “slightly above” the record 32.1 percent of revenue achieved in 2012, Hermes said today in a statement. In November, the company said the measure could be close to 2012’s level. Quarterly revenue advanced to 1.09 billion euros ($1.48 billion). Analysts predicted 1.11 billion euros, according to the median of 11 estimates compiled by Bloomberg.
“Solid figures as one would expect from a defensive play like Hermes,” Rogerio Fujimori, an analyst at Credit Suisse in London, said in a note to clients. He has an underperform recommendation on the shares.
Hermes is weathering a slowdown in luxury-goods consumption better than many of its peers as production constraints and controlled distribution reinforce its elitist appeal. The Paris-based company said today it will create two new leather goods premises in France to help meet demand that “remains very high,” while maintaining its long-term strategy.
Sales excluding currency moves rose 11 percent, led by gains in the Asia-Pacific region, excluding Japan. Hermes will publish earnings figures on March 20.
Hermes shares rose 0.6 percent to 242 euros at 9:06 a.m. in Paris trading.
Full-year sales climbed 13 percent at constant exchange rates to 3.75 billion euros. Hermes said in November that 2013 revenue growth might exceed 11 percent on that basis. Currency fluctuations had a negative 183 million-euro effect on 2013 revenue, mainly due to the yen’s weakness, Hermes said today.
Non-Japan Asia and America were “particularly dynamic,” while Europe saw sustained activity in all countries despite a difficult financial climate, Hermes said. Annual sales grew in all product categories, except watches, which were affected by the slowdown in the Chinese market, the company said.
Hermes will pay an interim dividend of 1.5 euros a share on Feb. 28, it said.
Hermes fell 0.8 percent to 240.65 euros at the close in Paris yesterday. The stock has declined 8.7 percent this year, valuing the saddle-maker part-owned by rival LVMH Moet Hennessy Louis Vuitton SA at 25.4 billion euros.