combined general meeting as of 2 june 2009...• bugatti veyron fbg ......

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Combined general meeting

as of 2nd June 2009

Combined general meeting

as of 2nd June 2009

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general assessment of the year 2008

• A contrasted year

� 1st half : strong growth in sales and results

� 2nd half : slowdown

8.4 %+ 4.0 %+ 14.1 %Current operating profit

8.6 %+ 5.2 %+ 12.8 %Sales

Total2nd half1st halfGrowth rate

Sales growth despite the crisis

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• From strong to average growth

• From weak to strong dollar and yen

• Currencies which have modified travel flows

• Currency effect which have brought sometimes dissuassive price

increases

2008 : a contrasted year

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• Confirmation of a consistent style permanently reinvented

• A seducing creation and a permanent offer renewal

• Vision of a Hermès craftsman

Long term strategy has been maintained :

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Our most legitimate product lineshave well progressed

- 2 %Distribution via specialised outlets

+ 11 %Distribution via the Hermès exclusive network

- 5 %Other Hermès Sectors

+ 10 %Ready-to-wear & Fashion accessories

+ 11 %Silk & Textiles

+ 14 %Leathergoods & Saddlery

- 9 %Watches

- 4 %Tableware

+ 6 %Perfumes

Proforma changes at constant rates 2008/2007

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• Our difference expressed though our stores and our rich offer

• China, USA, Europe, France

• Extension of our network has been pursued

• Geographical balance strategy

Success

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• As at end of 2008 : ▪ 11 branches

▪ 3 concessionaries

• 2008 turnover : 47 M€

i.e. 3 % of the group total, and 1/7e of Japan

• Strong growth : + 80 % in 2008 / 2007

after + 90 % in 2007/2006

Target to maintain a strong growth, with a yearly pace of 2 stores

openings

Strong developpment of our presence in Mainland

China

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• Service improvement has been maintained

� Luxury Institute : Hermès n° 1

• All staff stick to the corporate project, and possibility for all to

participate

• Reactivity being renforced through an increased delegation and

decentralization

Success

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• Japan : slight decrease, due to the crisis, recession, demography

and currencies

• Watches : rescheduling of our network in Japan

• Growth relays making a break, after several successful years

Further improvements

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Information by Sectors 2008 / 2007Ready-to-wear & Fashion

accessories

19 % 19 %

Perfumes7 % 7 %

Watches5 % 7 %

Tableware3 % 3 %

Other Hermès sectors5 % 5 %6 % 5 %

Leathergoods &Saddlery43 % 42 %

Silk & Textiles12 % 12 %

Other Products

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• Developpment of new activities

� Hermès Intérieur & Design

� joint-venture with Wally

� acquisition of 10 % in Jean Paul Gaultier bringing our

participation to 45 %

Achievements

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• Creation of the Hermès corporate Foundation

Achievements

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• Support to the creation of young European designers

Achievements

1st edition : « la légèreté au quotidien »

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• Improvement of the supply chain being pursued :

start in August 2009

• Launching of the web site « Les ailes d’Hermès » :

more than 250 000 visitors per month

Achievements

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2008 : environment

• To minimize the use of natural resources

• To adequate utilization of raw materials

• Control of quantitative and qualitative material rejections

Reminder of our targets related to the environment :

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2008 : environment

• Since 2002, water consumption has decreased by 40% at constant

perimeter (*), as the increase of our industrial activity has been similar to

that of the group.

(*) excluding consumption of the 3 Soficuir tanneries since 2007

0

100 000

200 000

300 000

400 000

500 000

600 000

2002 2003 2004 2005 2006 2007 2008

Evolution of water consumption

Achievement :

In m3

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Currentrates


• Growth in sales and steadiness of the current operating

margin at 25.5% of sales

Constant rates

Turnover

Current operating income

Net result

+ 10.2 %

+ 17.0 %

+ 9.0 %

+ 8.6 %

+ 8.4 %

+ 0.8 %

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• Evolution of the current operating profit

Operatingimprovement

Operatingimprovement

+ 70+ 70

Currencyeffect

Currencyeffect

- 36- 36Current operatingprofit 2007

Current operatingprofit 2007

415 M€415 M€

449 M€449 M€



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• Financial strength

25.5 %Operating margin

450 M€Net cash

1 605 M€Equity

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2008 : creation

Research

Inspiration

Ideas

Skills

Passion

Industry Craftsmanship

Innovation

Know-how

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2008 : innovation

• Hermès Editor : Josef Albers scarf

• Bugatti Veyron Fbg

• Cape Cod Great Hours

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2008 : meetings & talents

• 20 years of Men ready-to-wear

• Storytellers on Silk

• Un Jardin après la Mousson

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2008 : growth in all regions except Japan

Activity by geographical areas

+ 12 %Europe (excl. France)

+ 15 %Americas

+ 22 %Asia-Pacific (excl. Japan)

+ 10 %France

- 3 %Japan

Changes at constant rates

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2008 : balanced sales by geographical zones

breakdown of sales 2008 / 2007

15 %

(1) Including sales to airline companies

Others (1)

3 %

21 %

20 %

Europe(excl France)

22 %

18 %

Americas

Japan

24 %

17 %

3 %

22 %

20 %

Asia-Pacific(excl Japan)

15 %

France

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2008 : the pace of new stores remains sustained

• 12 new branches

• 10 new concessionaries

• 13 refurbishments and enlargements of branches

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2008 : the pace of stores creations remains sustained

Concessionaries

136 145 156

110 107

133

104111

2004 2005 2006 2007

Branches

121

165

2008

286286

237237 246246 252252267267

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Human Resources

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2008 : human resources

• 439 new employees in 2008

• Headcount amounted to 7 894 as at end of 2008

Many job creations :

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Job creations have continued in 2008

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

4 1504 150 4 2724 2724 6424 642

4 9434 9435 3615 361 5 5945 594

5 8715 8716 1506 150

6 8256 8257 4557 455

7 8947 894

2008

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Balance production / sales workforce

Support

17 %

Sales

38 %

Production

45 %

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Hermès Manufactures

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France(primarily production 42 %)


Two third of workforce in France

Japan

9 %

Asia-Pacific(excl Japan)

11 %

Europe (excl France)

10 %

63 %

Americas

7 %

Women : 67 %

Men : 33 %

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Presentation of consolidated statements

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2008 : consolidated statements

1625

1055

- 570

- 70

Turnover

Gross profit

Administrative & commercial expenses

Other income & expenses

In millions of euros

1765

1140

- 612

- 79

2008 2007

449 415Current operating income

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35

+9

424

12

- 144

2

- 6

290Net income – group’s share

Non current other income & expenses

Operating income

Net financial income

Corporate income tax

Share of net income of associates

Minority interests


449

18

- 160

- 11

- 5

2008 2007


288

Current operating income 449 415

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Distribution

Production

Financial investments

Others

In millions of euros 2008

88

27

5

40

160Total investments*

*excluding financial placements


Investments

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Cash flow


1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

125

162

221242

273259

292306

322

357379

2008


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Cash flow from operations

Investments

Change in operating working capital

Dividends

Share buybacks

Others

In millions of euros 2008

379

- 160

- 81

- 111

- 51

- 6

Change in net cash position - 30

Cash flow statement


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Shareholders’equitybefore appropriation

Net cash


450

1 605

2008

1 475

2007

480

Shareholders’equity and net cash


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Assets

Non current assets

Inventories

Other current assets

Cash & cash equivalents

Total

As at 31st Decembre, in millions of euros

2008

998.0

523.6

320.5

485.8

2327.9

Simplified consolidated balance sheet


2007

844.5

432.1

258.6

529.9

2065.1

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Liabilities & Shareholders’equity

Shareholders’equity before appropriation

Provisions

Other liabilities

Total

2008

1604.8

69.7

653.4

2007

2065.1

1475.1

60.4

529.6

2327.9

Simplified consolidated balance sheet


As at 31st Decembre, in millions of euros

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Presentation of

main resolutions

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● Direction fees and remunerationof the Supervisory Board (6 e)

▬ Maximum total amount increased to 282 000 €

▬ Including remunerations to the committees members

▬ Including a variable portion based on presence

Presentation of main resolutions

Resolutions on ordinary business


Resolutions on ordinary business

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● Share buyback program (7 e)

▬ Authorisation up to 10 % of the capital

▬ Maximum amount of funds to be committed : 750 millions d’euros

▬ Purpose : ensuring the liquidity through a contract, cancelling, transfering, alloting to employees and stock options

▬ Maximum purchase price : 200 euros

▬ Term : 18 months

● Authorisation to cancel shares (9e )

▬ Authorisation up to 10 % of the capital



Resolutions on ordinary and extraordinary business


Resolutions on ordinary and extraordinary business

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● Delegations of authority to the Executive Management to carry out capital increase (10e à 12e)

▬ Common ceiling to 20 % of the capital


● Delegations of authority to the Executive Management to carry out capital increase reserved to employees (13e)

▬ Authorisation up to 1% of the capital



Resolutions on extraordinary business



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● Delegations of authority to the Executive Management to grant stock options (14e) and award bonus shares (15e)


▬ Common ceiling of 2 % of the number of existing shares for bonus shares and stock options

▬ Grant to the Executive Manager with performance conditions andobligation to keep the shares





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● Change in the Articles of Association (16e)

▬ Article 18.2 : to set up a renewal of the Supervisory Boardmembers by one third each year





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Dividend per share proposed by the Supervisory Board

2008 : dividend

Net dividendin euros

* After the 3 to 1 split carried out on 10th June 2006

2005

0.83

2006

0.95

2007

1.000.67

2004 2008

1.03

* *

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2009 Outlook

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2009 : outlook

• The environment remains more than uncertain

• Economic consequences of the crisis on purchasing power are

still to come

• Japan and USA remain very difficult markets

• The luxury goods sectors is affected by this mood

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2009 : outlook

To keep our way, Hermès being strong of :

• a steady vision : Hermès craftsman and designer, confirming

a strong style

• a high profitability, which could go down in 2009

• strong cash reserves, an essential asset

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2009 : outlook

Short term adjustments

• Pace of investments

� Manufactures : 2 projects delayed

� Stores : 2 projects delayed

• Hirings, except in our leather workshops and our new stores

• Overheads : savings program

• Tight control on inventories

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2009 : outlook

Development actions

• Collections creativity

• Merchandising and liveliness in stores

• Supply chain, which will allow a better service in thestores …

• … better product flows

• And a better service to the final customer

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2009 : outlook

Four exceptional store projects which will open in the coming

years :

• New York Madison Men space

• Hermès Maison in Shanghai

• Geneva store

• Large store on left bank in Paris

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1st quarter 2009

1st quarter sales : + 3.2 %

- 4.7% at constant exchange rates

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2009 : outlook

The environment remains more than uncertain

• An ambitious target for 2009

� Sales : ± steady

� Profitability : slight decrease

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« In its history, Hermès already went through

crisis and overcame them thanks to its vision, its

financial strength, its craftsmanship values, its

family shareholding …

and to its customers’dreams».

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combined general meeting as of 2 june 2009...• bugatti veyron fbg ......

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