Hermes says results may weaken after profit beat

By BLOOMBERG

Hermes International said second-half results may weaken after the French luxury handbag maker reported profit for the first six months of the year that exceeded analysts’ estimates, boosted by strong demand in China and increasing appetite for leather bags.

Operating profit rose 13 percent to 931.3 million euros ($1.1 billion), Paris-based Hermes said in a statement Thursday. Analysts had predicted 919.5 million euros. The operating margin widened to a record 34.3 percent.

The first-half results benefited from the non-recurring impact of foreign exchange hedging from 2016, which won’t extend into the full year, Hermes said. The company maintained what it called an “ambitious” goal for medium-term revenue growth as it expects to keep weathering “growing economic, geopolitical and monetary uncertainties around the world.”

In July, Hermes reported first-half sales rose 10 percent, excluding currency shifts, as new production sites boosted supply of its signature Birkin and Kelly handbags.