Hermès: Oddo BHF still on hold after results

(CercleFinance.com) - Oddo BHF believes that growth was still remarkable in the 2nd quarter at nearly 13%, but EBIT margin was still down by nearly 200bp over H1.


Group sales came to E7,504m, while EBIT was E3,148m in H1, slighyly above Oddo BHF's estimates E7,383m and E3,067m respectively (a positive variance of almost 3%) and the FactSet pre-publication consensus of E7,488m and E3,189m (the EBIT variance is slightly negative).

Bags are driving growth, although more mass-market products are visibly slowing down, with Asia returning to growth of just 5% in Q2. Sequentially, cc growth is weakening due to Asia Pacific, which slowed significantly from +13.9% in Q1 to +5.5% in Q2, but the other geographies are showing a better picture, Oddo BHF says.

The Americas region accelerated to +13.3% after +11.8% in Q1, as did Europe and France (France at +15.1% after +14.3% in Q1, Europe at 20.5% after 14.6% in Q1), while Japan continued its momentum at 19.5% after 25.2% in Q1'.

In terms of divisions, Leather Goods continued to post particularly strong growth in Q2 at 17.9% after 20.3% in Q1, but there was a more visible slowdown in Silks and Textiles (-5.6% after +7.9% in Q1) and Watches (-4.9% after +4.3% in Q1). Ready-to-wear Shoes and Accessories came out at +15.1% after +15.9% in Q1, despite the slowdown observed in Accessories, the analyst adds.

The group is keeping its annual growth target for leather goods unchanged at c. +15%/+16%, which suggests a slowdown in group growth for H2 compared with H1.

These factors confirm our view that margins should continue to decline y/y in H2. For the year as a whole, we now expect organic sales growth of 13.1% versus 12.4% previously (H2 at 11.2%) and an EBIT margin of 40.2%, reflecting a H2 at 38.4% vs. 40.2% in H2 2023. For 2025, growth is raised slightly to 10.5% (10% prev.) to reflect a price increase that could exceed 3%, with the margin expected to remain unchanged at 40.3%'

Oddo BHF confirms its Neutral rating on the stock and target price of E2,195. It remains slightly less optimistic than the consensus for the future and believes that H1 results are beginning to reveal that part of the group's business is very sensitive to the cycle, and that its margin cannot be maintained well above 40% in this context.


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