Hermes International SCA

Hermes said first-half 2026 revenue was EUR 8.2 billion, up 6% at constant exchange rates and up 2% at current exchange rates. Q2 revenue was up 7% at constant exchange rates. Operating income was EUR 3.4 billion and operating margin was 41%; gross margin was 71.1%, up 0.4 points versus H1 2025. Available cash flow was EUR 2.2 billion, up 18%, and cash flow was EUR 2.7 billion, up 16%. The company cited a EUR 360 million negative FX effect that reduced growth by 4.5 points, and said net cash was EUR 12.9 billion at June 30. Management left the outlook unchanged, reaffirming medium-term revenue growth at constant exchange rates and saying operating investments should reach EUR 1 billion for the full year.

Axel Dumas emphasized that Hermes is still growing with a balanced model, strong client demand, and a continued focus on quality over volume. He highlighted investment in production capacity, store renovations and openings, and job creation, including 600 new hires in the quarter and a plan to keep opening about one leather workshop per year through 2030. His tone was confident but disciplined, repeatedly stressing craftsmanship, exclusivity, and the need to remain selective rather than chase volume.

Eric du Halgouët said H1 operating income was EUR 3.4 billion and gross margin improved to 71.1% thanks to good inventory management and record sell-through. He noted a EUR 360 million FX drag on revenue, nearly EUR 100 million of hedging costs, and said the conversion effect should be close to zero for the full year at current rates. He also detailed EUR 344 million of operating investments in H1, full-year capex expected at EUR 1 billion, and net cash of EUR 12.9 billion, underscoring a very strong balance sheet and ample financial flexibility.

Analysts focused on China, the Middle East, leather goods volume growth, and whether second-half margin and sales assumptions were realistic. Management said China remains stable but not improved, with no sign of a rebound yet, while the Middle East remained resilient but was still a drag, with Q2 impact said to be 1.5 percentage points. On leather, Hermes argued it is constrained by craftsmanship and leather quality rather than demand, and said it is continuing its workshop expansion plan while refusing to compromise on quality.