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Fashion house Hermès FY'18 net profit jumps 15% YOY on strong sales

Luxury-goods maker Hermès International Société en commandite par actions reported a 15.1% year-over-year increase in net profit for fiscal 2018, boosted by growth across all business lines and geographic areas.

Net profit for the year rose to €1.41 billion from €1.22 billion. The company was expected to report GAAP net income of €1.36 billion, according to analysts' consensus estimates compiled by S&P Global Market Intelligence. Hermès did not provide adjusted earnings per share or earnings for the fourth quarter.

The French maker of leather products, perfumes, jewelry and watches had previously reported that 2018 sales at current exchange rates increased 7.5% to €5.97 billion euros. The strong results, which belie fears about a slowdown in luxury goods spending in the key Chinese market, "confirms the strength of the group's growth model," said CEO Axel Dumas in a statement.

For the fourth quarter of 2018, Hermès posted sales of €1.65 billion, driven by growth across all destinations, led by the Asia-Pacific region, excluding Japan, which recorded a growth of 13.9% during the period, or 13.1% at constant exchange rates. The retailer's watches segment posted the sharpest incline during the quarter with an increase of 14.4%, or 13.9% constant rates, followed by its ready-to-wear and fashion accessories business, which rose 12.4%, or 11.7% at constant exchange rates.

Recurring operating income rose 6% to €2.05 billion, compared with €1.92 billion in 2017, while the company's net cash position swelled more than €500 million year over year to €3.47 billion.

The fashion house said it plans to propose a dividend of €4.55 per share at its general meeting June 4 and that the €1.50 interim dividend paid Feb. 22 will be deducted from the dividend approved by the general meeting. This is an increase from the full-year dividend of €4.10 in 2017.

The group maintained its "ambitious goal for revenue growth at constant exchange rates" for the medium term, despite global increasing economic, geopolitical and monetary uncertainties.

Hermes said it had increased its workforce by 800 people in 2018 and now has 14,284 employees.

The company's shares were up 1.25% to 597.60 in lunchtime trading in Paris.