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Hermès H1'19 net profit up 7% YOY driven by strong revenue growth

Hermès International SCA on Sept. 11 reported strong earnings growth for the first half of 2019 as the company recorded sales increases across all business segments and geographies.

Consolidated net profit for the six-month period to June 30 came in at €754 million, up 7% from €706 million in the year-ago period.

Revenue rose 15% year over year to €3.28 billion from €2.85 billion, beating the S&P Global Market Intelligence mean consensus estimate of €3.26 billion, with three analysts reporting. At constant currency, consolidated revenue increased by 12%.

Executive Chairman Axel Dumas attributed the performance to "customers' loyalty in all markets and the creative excellence that drives all business lines."

At comparable exchange rates, Hermès reported that sales in Asia, excluding Japan, rose 18% due to positive momentum in continental China and double-digit growth in other countries within the region. Meanwhile, sales in Japan and America both grew 10% year over year. Europe, excluding France, saw sales increase 9%, and sales in France rose 4% year over year.

There was a 12% sales growth in the company's leather goods and saddlery segment and a 15% rise in its ready-to-wear and accessories segment. Its silk and textiles division posted a 4% increase, while sales of its perfume segment climbed 3%. Sales also jumped 14% for watches and 19% for its other business lines, including jewelry and home products.

Recurring operating income climbed 15% to €1.14 billion from €996 million in the year-ago period, with a recurring operating margin of 34.8%. The company's strong sales performance offset the negative impact of foreign exchange during the half-year period.

"In the medium term, despite growing economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates," Hermès said.

In midmorning trading in Paris, shares of Hermès were down 0.5% at €637 apiece.