LONDON (ShareCast) - (ShareCast News) - Posh handbag maker Hermes said net full year profits rose 13% to €1.1bn, with "remarkable" growth in its leather goods and saddlery division.
Revenue passed the €5bn mark, up 7.5% at constant exchange rates, while operating income rose 10% to €1.7bn. A dividend of €3.75 per share was declared.

The group achieved a record operating margin of 32.6% due to favourable foreign exchange hedges.

Hermes said the leather goods success was driven by the diversity of models, particularly the Constance, Halzan and Lindy bags alongside the Birkin and Kelly.

"Development was supported by the sustained pace of deliveries and production, gaining from the capacities of the three new sites in Charente, Isère and Franche-Comté. Investments for a third site in this latter region continued," the company said.

The ready-to-wear and accessories units were stable over the year and posted a 4% increase in the fourth quarter revenues, driven by the success of the latest women's ready-to-wear and fashion accessories collections, particularly shoes.

Silk and textiles were down 1% but performed well in the 4th quarter, after being "penalised by events in Europe and by slowing sales in Greater China during the first half of the year", Hermes said.

Perfumes posted a 9% rise in revenues, driven by the success of Terre d'Hermès, the launch of Galop d'Hermès, and the latest creations such as the Colognes, Eau de néroli doré and Eau de rhubarbe écarlate.

Watches fell 3% against a "still challenging market and a high comparison basis at year end".

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

Analysts at RBC said Hermes remained the closest brand to the "perfect luxury paradox", simultaneously balancing characteristics such as timelessness,modernity, growth and high profitability.

"These strengths seem to be now properly reflected in its premium valuation at 26x 2017 earnings (and) price/earnings, on our current numbers. Hermes' growth differential vs. peers tends to widen in difficult times but narrow at times of improving demand, which is our base case scenario for 2017," RBC said.

Hermes shares were down €0.20 to €428.25 at 1333 GMT.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE