Hermes International Sca · EURONEXT:RMS
Hermes International Sca — Hermès International — Investor Day (December 2021)
81 slides from Hermes International Sca's investor day presentation, Dec 8, 2021
Slide 1: 8 December 2021
8 December 2021
Slide 2: Hermès: the dynamics of the business model
Hermès: the dynamics of the business model Éric du Halgouët, Executive Vice-President Finance
Slide 3: Summary
Summary 1. Uniqueness and performance of the craftmanship business model 2. An exclusive and geographically balanced distribution network 3. A singular communication 4. Agility and entrepreneurial spirit at the heart of the métiers
Slide 4: Uniqueness and performance of the craftsmanship business model
Uniqueness and performance of the craftmanship business model
Slide 5: A long-term strategy based on strong pillars (1/2)
A long-term strategy based on strong pillars (1/2) • Hermès women and men at the heart of the model • An authentic artisanal model ▪ Best quality and excellence of our objects ▪ Control and transmission of unique know-how ▪ Vertical integration and strong regional anchors ▪ “Made in France” • The po
Slide 6: A long-term strategy based on strong pillars (2/2)
A long-term strategy based on strong pillars (2/2) • A multi local dynamic ▪ The diversity of regions ▪ The proximity and loyalty of our customers ▪ The freedom of purchase • Reinforced resilience ▪ Financial independence and robustness ▪ Sound and rigorous financial management ▪ A strategic vision
Slide 7: A strong and resilient growth path
A strong and resilient growth path In €m First half revenue and net income In €m Revenue: +12.5% CAGR over 10 years Net income: +15.0% CAGR over 10 years Analyst Day – 8 December 2021 / 7
Slide 8: A solid operating performance
A solid operating performance Annual operating profitability First half operating profitability 40.7* In % of revenue In % of revenue 34.3 34.9* 34.8* 34.6 34.8 * 34.0* 33.1 32.6 32.5 33.9 32.1 32.1 32.5 32.6 31.2 31.5 31.8 31.0* * 21.5 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 201
Slide 9: Continued operating investments
Continued operating investments in €M H1 2021 FY 2020 FY 2019 Stores and distribution 97 195 263 Production and divisions 56 124 107 Real estate and Group projects 61 129 108 Operating investments 214 448 478 Analyst Day – 8 December 2021 / 9
Slide 10: Strong generation of cash
Strong generation of cash Annual adjusted free cash flow In €m €1.2 bn adjusted free cash flow H1 2021 1,447 1,406 1,340 1,212 995 2016 2017 2018 2019 2020 Analyst Day – 8 December 2021 / 10
Slide 11: Strong net cash and financial structure
Strong net cash and financial structure Equity and net cash In millions € 1.21x 8,024 7,380 6,568 5,521 4,904 4,562 FY 2019 FY 2020 H1 2021 Equity attributable to owners of parent Restated net cash Analyst Day – 8 December 2021 / 11
Slide 12: An exclusive and geographically balanced distribution network
An exclusive and geographically balanced distribution network
Slide 13: A balanced, exclusive and controlled omnichannel network
A balanced, exclusive and controlled omnichannel network • A balanced and diversified network, with a strong adaptation capacity: ▪ 306 exclusive stores in 45 countries ▪ E-commerce in 28 countries ▪ Around 6,000 people involved in retail activities • Singularity of our stores: ▪ Best locations ▪ De
Slide 14: Online strategy, central to an omnichannel approach
Online strategy, central to an omnichannel approach • Towards €1 billion of sales • 28 countries covered and new launches in 2021 • Most of the products are available online • More than 75% of the e.com customers are new clients • Recruiting segments: jewellery accessories, silk, perfumes • Continui
Slide 15: An exclusive and geographically balanced distribution network
An exclusive and geographically balanced distribution network IN MILLION € VAR. VAR. / CHANGE AT CONSTANT EXCHANGE RATES Q3 2021 2021 / 2019 9M 2021 2021 / 2019 France 246 + 13% 587 - 6% Europe (excl. France) 383 + 23% 904 + 7% Japan 241 + 16% 710 + 20% Asia-Pacific (excl. Japan) 1,073 + 67% 3,226 +
Slide 16: Revenue by geographical areas (9 months 2021/2019)
Revenue by geographical areas (9 months 2021 /2019) Other France 2% / 2% 9% / 12% Americas 16% / 17% Europe (excl. France) 13% / 17% Japan 11% / 13% Asia-Pacific (excl. Japan) 49% / 39% Analyst Day – 8 December 2021 / 16
Slide 17: A singular communication
A singular communication wi» 6 nines Analyst 7 Day
Slide 18: A coherent and singular communication strategy responding to multiple needs
A coherent and singular communication strategy responding to multiple needs • One house • Three levels of communication: ▪ Corporate ▪ Products ▪ Events • Sixteen métiers Analyst Day – 8 December 2021 / 18
Slide 19: « Le pas de côté » or cultivating the sidestep
« Le pas de côté » or cultivating the sidestep • 2/3 of communication investments in events, press and public relations and 1/3 in paid media • Nourishing an authentic relationship with press and influence (no paid or under-contract influencers and ambassadors) • A multi-local communication approach
Slide 20: Highest quality requirements at every stage of the communication strategy
Highest quality requirements at every stage of the communication strategy • Maintaining an active and international network of creative partners • Remaining loyal to long-term, high quality, trusted partners • Continuously integrating solid, innovating and new expertises, ranging from creation to me
Slide 21: Agility and entrepreneurial spirit at the heart of the métiers
Agility and entrepreneurial spirit at the heart of the métiers
Slide 22: Leather goods 1/2
Leather goods 1/2 • The fundamentals: ▪ The mastery of manual gestures and the approach of one man, one bag ▪ The craftsman signs the bag with his mark ▪ Excellence without compromising on materials and know-how quality ▪ Reinforcement of capacities around the strategic regional centres ▪ Preservati
Slide 23: Leather goods 2/2
Leather goods 2/2 • Creation and Durability: ▪ The iconic women’s bags: Kelly, Birkin, Constance and the other successes: Picotin, Évelyne, Lindy, Herbag, Bolide, 24/24, Verrou ▪ Small leather goods ▪ Launch of rolling luggage ▪ Innovation - R&D ▪ Sustainable development (reparability of objects, op
Slide 24: Perfume and Beauty
Perfume and Beauty • Perfume ▪ Men’s universe: continued desirability of Terre d’Hermès and setting up of H24 ▪ Women’s universe: continue to build Twilly d’Hermès line and visibility on Eau des Merveilles offer ▪ Art of living: keep growing our Garden-perfume & Colognes collections ▪ Exclusive: Her
Slide 25: Watches
Watches • Hermès’ watches exhibiting know-how, emotion and value • A distinctive style and products carrying unconventional complications such as Arceau Le temps suspendu, or more recently Arceau L’heure de la lune • The feminine offer ▪ 3 “pillars” (Cape Cod, Heure H, Arceau) ▪ 3 “icons” (Galop d’H
Slide 26: Home universe
Home universe • House textile: variety and wealth of materials and hues • Furniture and lighting: precision of the lines, strength of the designs • Tableware: richness of the patterns, drawings and colours • Decorative objects: diversity of the materials and of the associated know-how • Children uni
Slide 27: Silk and Textiles
Silk and Textiles • The Hermès identity: design, colour and material • Key distinctive know-how • Innovation with novelties on design (double face scarf) and new easy-to- wear formats (triangle, rectangle): ▪ Women’s silk: twilly, gavroche, carré 70, carré 90, maxi sizes and success of cashmere ▪ Me
Slide 28: Jewellery
Jewellery • 3 territories with unique identities: ▪ Gold jewellery ▪ Silver jewellery ▪ High jewellery (image and know-how) • Strengthening of our identity and development of our visibility: ▪ Power of icons (anchor chain, Kelly) ▪ Training of sales associate ▪ Consolidation of production capacities
Slide 29: Ready-to-wear and Accessories
Ready-to-wear and Accessories • Women’s ready-to-wear: collections by Nadège Vanhée-Cybulski • Men’s ready-to-wear: collections by Véronique Nichanian • Fashion accessories: shoes, jewellery accessories, belts, etc. • Events: ▪ HermèsFit with fashion accessories turning into offbeat companions for s
Slide 30: All métiers up double-digit vs 2019
All métiers up double-digit vs 2019 VAR. IN MILLION € 2021 / VAR. / CHANGE AT CONSTANT EXCHANGE RATES Q3 2021 2019 9M 2021 2021 / 2019 Leather Goods & Saddlery 1,077 + 32% 3,076 + 27% Ready-to-wear & Accessories 610 + 49% 1,635 + 43% Silk & Textiles 159 + 19% 433 + 10% Other Hermès sectors 273 + 110
Slide 31: A stable balance of métiers (9 months 2021/2019)
A stable balance of métiers (9 months 2021 /2019) Analyst Day – 8 December 2021 / 31
Slide 32: Outlook
Outlook • Our highly integrated craftsmanship model and balanced distribution network, as well as the creativity of our collections and our customers' loyalty, give us confidence in the future • In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the G
Slide 33: Hermès Leather & Saddlery, A unique and constantly reinvented expertise
Hermès Leather & Saddlery, A unique and constantly reinvented expertise Guillaume de Seynes, Executive Vice-President Manufacturing Division and Equity Investments
Slide 34: Summary
Summary 1. An artisanal and integrated production model 2. Leather & Saddlery: modern manufacturing 3. A métier supporting durability 4. A singular and plural creation
Slide 35: An artisanal and integrated production model
An artisanal and integrated production model
Slide 36: Hermès, modern manufacturing
Hermès, modern manufacturing • An artisanal and sustainable business model 6,300 • Exceptional expertise artisans at the end of 2020 > 60% • Vertical integration of manufacturing of objects made in our internal and exclusive workshops • Manufacturing and savoir-faire evolving with agility and 80% in
Slide 37: Sustained development of production sites
Sustained development of production sites • 64 production sites, including 51 in France in 9 regions, 5,600 organised into centres of expertise artisans in France at the end of 2020 • Between 2010 and 2020, 10 leather goods workshops 51 manufactures and production sites in launched in France, i.e. o
Slide 38: Strong local integration
Strong local integration • Engagement in regions with strong manufacturing expertise working towards centres of expertise • Regional centres of expertise contributing to local vitality and economic growth • An employer committed and responsible to its stakeholders Analyst Day – 8 December 2021 / 38
Slide 39: Integrated production, from supply to the distribution network
Integrated production, from supply to the distribution network • Secure supplies • Rigorous traceability of raw materials and strict control of supply chain 20 years average relationship for the Top 50 • Quality demanded from suppliers: ▪ Good practices shared with a view to industry advancement ▪ S
Slide 40: Leather & Saddlery: modern manufacturing
Leather & Saddlery: modern manufacturing
Slide 41: Ambition to continue developing a unique artisanal model
Ambition to continue developing a unique artisanal model • Exceptional and uncompromising quality c. 50 % of revenue in 2020 • Prolific creativity • Capturing the spirit of craftsmanship – handcrafted c. 300 people on human-sized sites handbags – the artisan signs the bag with his/her mark • Creatin
Slide 42: Continued investments in response to strong demand
Continued investments in response to strong demand • Investments in production capacities: €124 M invested in production in 2020, primarily in Leather Goods 22 leather goods workshops by • Leather goods workshop opened in 2021: 2024 ▪ June 2021: Montereau + 6/7% ▪ September 2021: Guyenne average ann
Slide 43: Development of production capacities continuing the principle of community engagement
Development of production capacities continuing the principle of community engagement Montbron Guyenne Les Abrets Héricourt Val de Reuil Allan Fitilieu Montereau Louviers Sormonne Riom 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Tanneries Du Puy J3L Mégisserie Jullien Analyst Day – 8 December
Slide 44: Expert artisans with exceptional savoir-faire
Expert artisans with exceptional savoir-faire 9 • c. 4,300 leather workers by the end of 2021 years: average length of service • A very proactive training policy, aiming for the highest quality 39 years: average age • Proficiency in skills and techniques: 18 months of initial training, c. 1,800 tuto
Slide 45: Transfer of unique savoir-faire
Transfer of unique savoir-faire • Increasing innovative knowledge transfer via our 90 trainers and 200 tutors c. 90 trainers in the Leather Goods division • Transfer in the workshops and schools: ▪ École du Cuir 6,100 staff trained at Ecole du ▪ Collaboration with vocational training centres Cuir si
Slide 46: Excellence of the savoir-faire
Excellence of the savoir-faire • A unique area opening up to customers and the public: ▪ Bagstage with Hermès (Paris, São Paulo, Singapore, Dubai) ▪ Hermès in the making (Copenhagen) ▪ Please check-in (Hong Kong) • The Tandem and Tilbury programmes, which enables artisans and sales assistants, and s
Slide 47: A métier supporting durability
A métier supporting durability
Slide 48: Responsible development policy
Responsible development policy • Rigorous traceability of materials and strict control of supply and production channels: 100% ▪ Quality standards and pursuit of the finest materials of leather goods articles made in France ▪ Longstanding, trusted partnerships with a select number of suppliers • Sus
Slide 49: Certification of the sectors and materials
Certification of the sectors and materials • Internal and external audits consolidated across all sectors 2024 Target: • Certifications by independent third parties: 100% of certified leather and ▪ Member of the ICFA (International Crocodilian Farmers’ Association) textile sectors since 2016 ▪ Certi
Slide 50: Creating beauty from beauty, a sustainable approach
Creating beauty from beauty, a sustainable approach • Constructions to the highest standards: ▪ Real estate CSR standard ▪ Construction to E4C2 standards, with Louviers the first energy-plus leather goods workshop in 2022 ▪ Locations sought in urban areas with public transport • Decarbonation and en
Slide 51: Repairability driving durability
Repairability driving durability "A luxury product is one that can be repaired", Robert Dumas 88 craftspeople dedicated to repairs by the end of 2020, of which 34 • Reparability central to our design and manufacturing artisans overseas techniques • 88 craftspeople dedicated to repairs: ▪ 54 in Franc
Slide 52: A singular and plural creation
A singular and plural creation
Slide 53: Prolific creation constantly reinvented
Prolific creation constantly reinvented • Hermès leather goods articles, with their style and quality, are designed to last, be passed down and repaired • The result of an alchemy between an essential style, excellence of materials and unrivalled expertise • A constant dialogue between design and ma
Slide 54: petit h: a workshop where materials, artists and artisans combine
petit h: a workshop where materials, artists and artisans combine in a thousand and one different ways Analyst Day – 8 December 2021 / 54
Slide 55: Hermès horizons: bespoke and exploration of new territories
Hermès horizons: bespoke and exploration of new territories Analyst Day – 8 December 2021 / 55
Slide 56: Hermès saddlery, serving its primary customer
Hermès saddlery, serving its primary customer • Saddles combining expertise, athleticism and technicality at the highest levels • Increased internal development (Louviers), in addition to 24 Faubourg • Saddle experts as close as possible to their customers, horse and rider • A family of partner ride
Slide 57: An artisanal, responsible and sustainable business model
An artisanal, responsible and sustainable business model Olivier Fournier, Executive Vice-President Corporate Development and Social Affairs
Slide 58: Summary
Summary 1. The quality at the heart of Hermès craftsmanship model 2. Hermès women and men at the heart of the house’s project 3. An artisanal production model respectful of the planet 4. Maintaining a sustainable model through strong vertical integration and local anchoring
Slide 59: The quality at the heart of Hermès craftsmanship model
The quality at the heart of Hermès craftsmanship model
Slide 60: Uniqueness and performance of the craftsmanship model
Uniqueness and performance of the craftsmanship model • Values of the artisanal model, inspired by the craftsman: ▪ Responsibility Creative Savoir-faire, ▪ Authenticity heritage heritage ▪ Acting with urgency while taking the time to do things well • Creativity and innovation at the core of the craf
Slide 61: CSR governance
CSR governance SUSTAINABLE 10% of the variable EXECUTIVE COMMITTEE DEVELOPMENT COMMITTEE compensation of the • Shares key challenges with • Validates the strategy Executive Chairmen Sustainable Development • Conducts CSR governance is conditioned on a Committee • Oversees CSR activities CSR criterio
Slide 62: Hermès women and men at the heart of the house's project
Hermès women and men at the heart of the house’s project
Slide 63: The unique transmission of know-how, at the heart of excellence and quality
The unique transmission of know-how, at the heart of excellence and quality • Strong agility and adaptation 6,300 artisans, with 90% in France • Preserve, transmit and enrich six generations of exceptional know-how • The mastery and transmission of know-how: 107 in-house trainers (production, France
Slide 64: Hermès women and men at the heart of the sustainability model
Hermès women and men at the heart of the sustainability model • More than 17,000 employees at the end of June 2021, acceleration in recruitment: ▪ The workforce doubled in the last 10 years 75% of employees have ▪ Maintaining jobs and salaries worldwide during the sanitary crisis completed a wellbei
Slide 65: Professional equality, diversity and inclusion at the core
Professional equality, diversity and inclusion at the core • Commitment to workplace gender equality between women and men: ▪ Gender pay index: 92/100 in 2020 ▪ 69% women on the Operations Committee 92/100 gender pay index ▪ 60% female managers in the group in 2020 • Introduction of training on dive
Slide 66: An artisanal production model respectful of the planet
An artisanal production model respectful of the planet
Slide 67: Addressing climate change, with a low-emission artisanal production model
Addressing climate change, with a low-emission artisanal production model • One of the lowest greenhouse gas emitters amongst France’s CAC 40 companies: >100% ▪ Artisanal model, 80% French production of group’s activities • In 2020, group strategy validated with ambitious targets: carbon emissions a
Slide 68: An artisanal production model that enables a rational use of energy resources
An artisanal production model that enables a rational use of energy resources • Reduction in energy consumption: ▪ Programme to defossilise the industrial sites ▪ Proactive programme of energy audits followed by action plans ▪ Energy efficiency: rollout of LED lighting since 2013 -41.5% decrease in
Slide 69: An artisanal production model that enables a rational use of water resources
An artisanal production model that enables a rational use of water resources • Reduction of industrial water consumption: ▪ Mainly used in tanneries and textile units ▪ Target: reduce industrial water use intensity by 5% per year • Textile: innovative solutions to increase recycling of water from -2
Slide 70: Sustainability criteria as a pillar of the house's real estate projects
Sustainability criteria as a pillar of the house’s real estate projects • Sustainable Real Estate Guidelines aim to improve environmental performance on 5 criteria: ▪ Carbon Footprint: improving the energy performance of our buildings and the carbon footprint from the design phase ▪ Biodiversity: pr
Slide 71: Constant improvement in the use of recyclable and sustainable packaging
Constant improvement in the use of recyclable and sustainable packaging • Circular economy: ▪ The orange box is FSC-certified, 100% recyclable, made of recycled French cardboard ▪ Upcycling of the orange box: esthetic and robust, an iconic object • Working group created in 2020, to reduce the use of
Slide 72: Respect for nature and biodiversity, sources of inspiration and creativity
Respect for nature and biodiversity, sources of inspiration and creativity • Biodiversity commitments: ▪ Act4Nature: pledge in 2018, renewed in 2020 ▪ Livelihoods: 130,000 million trees planted in 2020, 1 million project beneficiaries 96% ▪ Fashion Pact: member since 2019 of activities covered by th
Slide 73: Animal welfare, a requirement within the supply chain
Animal welfare, a requirement within the supply chain • Commitment to fundamental scientific principles of animal welfare: Five Freedoms 96% of hides from food • Animal Welfare Committee launched in 2019, co-led by an independent industry by-products expert • Hermès animal welfare policy in finalisa
Slide 74: The sustainability of the object in the service of circularity
The sustainability of the object in the service of circularity • Exceptional objects designed to last: ▪ Use of the finest quality materials 39,000 upcycled products ▪ Eco-design: reuse and circularity of materials and products marketed in 2020 • Production line losses: lean planning • petit h 123,0
Slide 75: Maintaining a sustainable model through strong vertical integration and local anchoring
Maintaining a sustainable model through strong vertical integration and local anchoring
Slide 76: Territorial anchoring and contribution to the development of the territories
Territorial anchoring and contribution to the economic, social and environmental development of the territories • Historical, local anchoring in a logic of respect for regional expertise: ▪ ▪ Production sites organised in centers of expertise Opening of new sites, contributing to the revitalisation
Slide 77: Strong vertical integration and local, sustainable sourcing
Strong vertical integration and local, sustainable sourcing • Strong vertical integration: ▪ Based on the mastery and excellence of savoir-faire > 60% of products manufactured ▪ Agility in a context of a health crisis in our internal and ▪ Sustainable development exclusive workshops • Longstanding s
Slide 78: Quality and sustainability by supporting all our suppliers
Quality and sustainability by supporting all our suppliers 92% purchasing categories where • Risks mapped at group level in 2020 risks were mapped in 2020 • The top fifty suppliers are all audited at least once in the following areas: 85% of direct suppliers are environment, health and safety, human
Slide 79: ESG rankings reflecting our sustainable strategy
ESG rankings reflecting our sustainable strategy • “Try harder approach”, continuous improvement • 2021 Rankings: ▪ MSCI: A ▪ Sustainalytics: #2nd best company in the clothing sector (72/100) ▪ Vigeo-Eiris: • “Advanced” category • Inclusion in the CAC 40 ESG index in September 2021 ▪ CDP: Climate ch
Slide 80: Fondation d'entreprise Hermès
Fondation d’entreprise Hermès « Our gestures define us and show who we are » • Created in 2008 by Pierre-Alexis Dumas, presided by Olivier Fournier since 2016 and directed by Laurent Pejoux since 2021 900 projects supported since its • The Fondation d'entreprise Hermès is currently in its third mand
Slide 81: Thank you
a a , Thank you (@ Oo a & QO a