HERMÈS - 2018 Registration document

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

2018

2017

In millions of euros

Revenue

5,966.1 (1,791.0) 4,175.1 (1,771.2) (358.9) 2,045.0

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

Cost of sales Gross margin

Selling, marketing and administrative expenses

Other income and expenses Recurring operating income

Other non-recurring income and expenses

52.7

-

Operating income Net financial income Net income before tax

2,097.7

1,922.0

(34.6)

(32.2)

2,063.1 (670.0)

1,889.8 (669.3)

Income tax

Net income from associates CONSOLIDATED NET INCOME

16.6

5.3

1,409.6

1,225.8

Net income attributable to non-controlling interests

(5.0)

(4.3)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

1,404.6

1,221.5

In 2018, the Hermès Group reported revenue of €5,966million, up 7.5% at current exchange rates (10.4%at constant exchange rates). The gross margin was 70.0%, compared with 70.1% last year. Sales, marketing and administrative expenses, which represented €1,771 million versus €1,656 million in 2017, include €298 million of communication expenditure. Other income and expenses came to €359 million. This figure includes €182 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. Recurring operating income increased by 6.4% to €2,045 million versus €1,922 million in 2017. Thanks to particularly strong growth and tight cost control. Recurring operational profitability amounted to 34.3% of sales, close to the exceptional level reached in 2017 (34.6%).

After taking into account non-recurring income of €53 million resulting from the sale of the former Galleria store premises in Hong Kong, ope- rating income grew by 9.1% and reached €2,098 million, i.e. 35.2% of sales. Net financial income was an expense of €35 million versus €32 million in 2017. The effective tax rate is down almost 3 percentage points due to the reduction on the tax rate in the US in 2018 and the exceptional contribution paid by the group in France in2017. Net income attributable to non-controlling interests totalled €5 million. The tax expense stood at €670 million. After taking into account the results of associates (income of €17 million), the Group’s consolidated net result grew by 15.0% to €1,405 million.

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL