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Hermès International, the maker of Kelly handbags and signature silk scarves, is to pay an exceptional dividend after reporting a 41 per cent increase in net profits, which exceeded expectations.
The family-controlled group, which last year set up a holding company to reinforce its defences against stakebuilding by larger rival LVMH, reported net profit in 2011 of €594.3m on sales 18.3 per cent higher at €2.8bn.
The rise was helped by the sale of the group’s 35 per cent stake in the fashion house of Jean-Paul Gaultier.
Operating profit was up 32 per cent at €885m and the operating profit margin also increased by 3.4 percentage points to 31.2 per cent.
The growth was across the board, with all divisions reporting double-digit sales increases, driven by Asia, excluding Japan. Demand for luxury goods has been resilient, though performance in the sector has been mixed.
Patrick Thomas, chief executive, said the exceptional dividend of €5 a share, payable in addition to a €2 ordinary dividend, was “to reflect exceptional performance”.
It was also a response to criticism that the group’s payout was low in relation to its share price but he made clear that the exceptional dividend was a one-off.
Hermès’ share price to earnings valuation is the highest among luxury goods groups, at more than 40 times 2012 earnings, almost double the sector average.
The tiny free-float of 4-5 per cent is driven mainly by speculation, given the advances of LVMH which has built up a stake of 22.4 per cent since first entering the group’s capital in October 2010.
Mr Thomas said sales had been “quite good” since the start of the year and that the 175-year-old company would open three new stores this year after a rush of 17 openings last year.