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ReturnItaly:Hermes First-Half Profit Rises 9% on Perfumes, Silk Scarves
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PublishDate：
2007-09-03 16:35:00
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Hermes International SCA, the maker of Kelly and Birkin handbags, said first-half profit climbed 9 percent, fueled by a gain on the sale of Leica Camera AG bonds.
Net income rose to 128.1 million euros ($175 million) from 117.5 million euros a year earlier, the Paris-based company said today in a statement. That beat the 126 million-euro median estimate of six analysts. Profit included a one-time gain of 7.2 million euros from the sale of Leica convertible bonds.
Sales increased 2.9 percent after the company introduced a men's Terre d'Hermes scent in March and opened a store in the Japanese city of Osaka. Hermes is spending 65 million euros this year building or renovating more than 20 outlets, mostly in the U.S. and China. It's also boosting leather-goods production to meet demand for the new 3,200-euro Lindy handbag.
Performance wasn't extraordinary,'' said Alessandra Coppola, an equity analyst with Standard & Poors in London. ``The outlook is for growth that will underperform the sector.''
PPR SA today reported a 55 percent increase in first-half net income, led by growth at its Gucci Group luxury unit and the acquisition of sportswear maker Puma AG.
Hermes shares fell 84 cents, or 1.1 percent, to 78.46 euros at 12:47 p.m. in Paris. They have dropped 17 percent this year, second-worst in the 14-member Bloomberg European Fashion Index, as takeover speculation dissipated and Japanese demand waned.
Japanese Demand
Growth was weakest in Japan in the half, where revenue rose 1.7 percent at constant exchange rates. Hermes gets about a quarter of sales from the Asian country, above the industry average of around 18 percent, according to analyst John Guy of MF Global Securities in London.
Chief Executive Officer Patrick Thomas has said performance this year hinges on Japan, where spending is shifting toward home and leisure products. The yen has fallen for eight consecutive quarters against the euro, eroding the value of Japanese sales on conversion to euros, and declined 3.4 percent last week alone.
The yen's slide forced Hermes to say in July that profit would stagnate this year and sales growth would be at the low end of its forecast range. The company expects revenue to gain between 8 percent and 8.5 percent, less than its prior forecast of 8 percent to 10 percent.
The share valuation ``looks demanding in the light of the group's slower top line growth momentum and lack of operating leverage,'' said Antoine Belge, an analyst with HSBC, in an e- mailed note. ``The stock is trading on a premium of about 60 percent to peers,'' said Belge, who has an ``underweight'' rating.
First-half revenue climbed to 721 million euros, the company said last month. Sales of leather goods, which generate almost half of total revenue, rose 4 percent as revenue from handbags advanced 11 percent. Perfume sales climbed 12 percent, while revenue from silks and textiles rose 14 percent.
Revenue increased 12 percent in Europe outside of France, 9 percent in the Americas and 13 percent in Asia excluding Japan, led by China.
Source:Industry Website
Net income rose to 128.1 million euros ($175 million) from 117.5 million euros a year earlier, the Paris-based company said today in a statement. That beat the 126 million-euro median estimate of six analysts. Profit included a one-time gain of 7.2 million euros from the sale of Leica convertible bonds.
Sales increased 2.9 percent after the company introduced a men's Terre d'Hermes scent in March and opened a store in the Japanese city of Osaka. Hermes is spending 65 million euros this year building or renovating more than 20 outlets, mostly in the U.S. and China. It's also boosting leather-goods production to meet demand for the new 3,200-euro Lindy handbag.
Performance wasn't extraordinary,'' said Alessandra Coppola, an equity analyst with Standard & Poors in London. ``The outlook is for growth that will underperform the sector.''
PPR SA today reported a 55 percent increase in first-half net income, led by growth at its Gucci Group luxury unit and the acquisition of sportswear maker Puma AG.
Hermes shares fell 84 cents, or 1.1 percent, to 78.46 euros at 12:47 p.m. in Paris. They have dropped 17 percent this year, second-worst in the 14-member Bloomberg European Fashion Index, as takeover speculation dissipated and Japanese demand waned.
Japanese Demand
Growth was weakest in Japan in the half, where revenue rose 1.7 percent at constant exchange rates. Hermes gets about a quarter of sales from the Asian country, above the industry average of around 18 percent, according to analyst John Guy of MF Global Securities in London.
Chief Executive Officer Patrick Thomas has said performance this year hinges on Japan, where spending is shifting toward home and leisure products. The yen has fallen for eight consecutive quarters against the euro, eroding the value of Japanese sales on conversion to euros, and declined 3.4 percent last week alone.
The yen's slide forced Hermes to say in July that profit would stagnate this year and sales growth would be at the low end of its forecast range. The company expects revenue to gain between 8 percent and 8.5 percent, less than its prior forecast of 8 percent to 10 percent.
The share valuation ``looks demanding in the light of the group's slower top line growth momentum and lack of operating leverage,'' said Antoine Belge, an analyst with HSBC, in an e- mailed note. ``The stock is trading on a premium of about 60 percent to peers,'' said Belge, who has an ``underweight'' rating.
First-half revenue climbed to 721 million euros, the company said last month. Sales of leather goods, which generate almost half of total revenue, rose 4 percent as revenue from handbags advanced 11 percent. Perfume sales climbed 12 percent, while revenue from silks and textiles rose 14 percent.
Revenue increased 12 percent in Europe outside of France, 9 percent in the Americas and 13 percent in Asia excluding Japan, led by China.
Source:Industry Website
