Hermes hikes dividend as 2011 profit jumps

France's Hermes affirmed its confidence in the global luxury goods market by hiking its dividend after tourist spending in Europe and buoyant demand in Asia and the Americas helped it post a forecast-beating jump in full-year profit.


Hermès in Paris. Photo : AFP.

The family-controlled group plans to pay shareholders 2 euros per share on 2011 earnings, up from 1.50 euros a year ago, plus a one-time sum of 5 euros a share, it said in a financial notice on the website of Les Echos newspaper on Wednesday.

The 175-year-old company lifted its operating margin to 31.2 percent from 27.8 percent in 2010 as operating income rose by a third to 885 million euros ($1.2 billion), beating the average analyst estimate of 857 million in a Thomson Reuters I/B/E/S poll.

Net income rose 41 percent to 594 million euros, Hermes said, also beating the poll average of 560 million, helped by the sale of its stake in fashion house Jean-Paul Gaultier.

The maker of 10,000-euro leather bags and 1 million-euro crocodile leather jackets said last month that its 2011 margin had exceeded 30 percent as it reported an 18.3 percent rise in 2011 sales to 2.84 billion euros.

The group said then that it was confident about its business prospects for this year, underscoring the company's resilience to the economic downturn in Europe, hit by the euro zone debt crisis.

In the United States, luxury jeweller Tiffany & Co said this week that it expected sales and profits to rise this year, helped by a rebound in the U.S. stock market and an easing of the European crisis.

Hermes did not give any specific forecasts for this year.

The company is majority-owned by family shareholders, who recently set up a holding to shield the group from the threat of a takeover after the world's biggest luxury goods group, LVMH , built up a 22.3 percent stake.

LVMH has said its shareholding is friendly, suggesting it does not plan a takeover attempt, while Hermes family shareholders view the move as hostile. Hermes bought back 286 million euros of its own shares last year.

Hermes stock closed at 244.25 euros on Wednesday, up some 6 percent so far this year, after gaining 47 percent last year driven by takeover speculation, and giving Hermes a market value of around 26 billion euros.

Reporting by James Regan; Editing by Phil Berlowitz

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