Hermès International (RMS) Q2 2024 earnings summary

Executive summary

• H1 2024 revenue reached €7.5 billion, up 15% at constant and 12% at current exchange rates year-over-year, with all regions and divisions posting double-digit growth and robust momentum despite a complex global environment.

• Recurring operating income was €3.1 billion (42% of sales), and net income attributable to owners was just under €2.4 billion (32% of sales), up 6% year-over-year.

• The group maintained a solid financial structure with a €10 billion restated net cash position at June 2024 and equity of €15 billion, representing 75% of liabilities.

• Workforce expanded by over 1,200, with a strong focus on diversity, inclusion, and responsible employment.

• Continued investments in production, supply chain, store openings, and sustainability initiatives.

Financial highlights

• Gross margin rate was 70.6% (down from 72.2% in H1 2023), mainly due to currency effects and lower sell-through rates.

• Recurring operating income reached €3.1 billion, up 7% year-over-year, with operational profitability at 42% of sales.

• Net income margin was 31.6% (down from 33.2% in H1 2023).

• Operating cash flow grew 8% year-over-year to €2.8 billion; adjusted available/free cash flow was €1.8 billion.

• Restated net cash position was €10 billion at June 2024.

Outlook and guidance

• Ambitious medium-term revenue growth target at constant exchange rates is confirmed, with continued investment in production, store expansion, and job creation.

• H2 2024 expected to remain uncertain due to economic and geopolitical challenges, but CapEx for 2024 is expected to exceed €1 billion, with acceleration in H2.

• Tax rate guidance for 2024 is 28%.

• Price increases will continue to be driven by inflation and currency effects, with a conservative approach.

• Focus remains on creativity, vertical integration, and balanced distribution.