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2016 REGISTRATION DOCUMENT
HERMÈS INTERNATIONAL
152
COMMENTS ON THE FINANCIAL YEAR AND OUTLOOK
4
COMMENTS ON THE CONSOLIDATED RESULTS
4.2
COMMENTS ON THE CONSOLIDATED RESULTS
4.2.1
CONSOLIDATED RESULTS
In 2016, the Hermès Group reported revenue of €5,202 million, up
7.5% at current exchange rates (7.4% at constant exchange rates). The
gross margin rate was 67.7%, an increase of 1.6 percentage points
attributable chiefly to the favourable impact of foreign exchange hedges
contracted in 2015.
Sales, marketing and administrative expenses, which represented
€1,545 million versus €1,419 million in 2015, include €242 million
of communication expenditure. Other income and expenses came to
€279 million. This figure includes €168 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.
Operating income increased by 10.1% to €1,697 million versus
€1,541 million in 2015. The operating margin represented 32.6% of
sales, an increase on 2015 (31.8%).
Net financial income represented an expense of €48 million versus
€46million in 2015. Net income attributable to non-controlling interests
totalled €4 million versus €5 million the previous year. After taking into
account a tax expense of €556 million which includes the tax of 3% on
dividends paid, and the results of associates (€11million in income), the
Group’s net income increased by 13.1% to €1,100 million.
4.2.2
INVESTMENTS
In 2016, Hermès pursued the qualitative development of its distribution
network and the strengthening of its production capacity, with €285 mil-
lion in investments (excluding financial investments). TheGroup opened,
refurbished or extended approximately 20 branches.
In addition, the Leather Goods and Saddlery division continued to invest
in new capacities, including the construction of three new leather goods
workshops in Franche-Comté, Normandy and Limousin.
In millions of euros
2016
2015
Operating investments
262.1
252.4
Investments in financial assets
23.3
14.2
Subtotal - Investments (excluding financial investments)
285.4
266.6
Financial investments
1
13.0
0.2
TOTAL INVESTMENTS
298.4
266.7
(1) Financial investments correspond to the investments for which the sensitivity and maturity require that they be classified as financial assets in accordance with
IFRS.
4.2.3
FINANCIAL POSITION
Operating cash flows totalled €1,439 million, up by 18.1%. It enabled
the Group to finance all investments (€298 million), as well as the distri-
bution of the ordinary dividend (€350 million). The decrease in working
capital requirements (€46million) was attributable chiefly to the decline
in net inventories. Net cash position amounted to €2,320 million as at
31December 2016 versus €1,571million as at 31December 2015, an
increase of nearly €750 million.
Restated net cash (after taking into account non-liquid financial invest-
ments andborrowings) totalled€2,345millionas at 31December 2016,
versus €1,614million as at 31December 2015. Strong earnings growth
drove up shareholders’ equity attributable to owners of the parent to
€4,383 million as at 31 December 2016 versus €3,742 million as at
31 December 2015.