Hermes boosts dividend as luxury industry thrives

A couple walk with Hermes shopping bags as they leave a store in Paris. The luxury goods maker has reported a bumper year, buoyed by demand from China. (REUTERS)
Updated 22 March 2018

Hermes boosts dividend as luxury industry thrives

PARIS: French luxury goods maker Hermes, known for $10,000-plus leather handbags such as the Birkin, rewarded shareholders on Wednesday with a higher dividend and a one-off payout after a bumper year for sales and profits.
The company, originally a saddle and harness maker founded in 1837, joined luxury rivals such as Louis Vuitton-owner LVMH and Gucci-parent Kering in benefiting from a rebound in demand from Asian shoppers in 2017.
Hermes shares rose 3.2 percent in early trade after the firm proposed a dividend of €4.10 ($5.03) per share, up 9 percent on a year earlier, and said it also planned a special dividend of €5 per share.
It last made a one-off payout in 2015.
Hermes also reported a record operating margin for last year, reaching 34.6 percent of sales and helped by high productivity at its workshops and the positive impact of currency hedges in the first half of 2017.
“We had an exceptional year in 2017,” CEO Axel Dumas told a briefing with analysts.
Dumas said that hedging against foreign exchange swings would have a slightly negative effect on margins this year, adding these would likely “normalize.” European-based luxury goods firms are grappling with the effects of a stronger euro.
Stocks of Hermes products ran very low at the end of 2017 as items sold out, a situation that was also atypical and which boosted margins, the company said, without detailing a forecast for 2018.
Hermes’ operating margin was 32.6 percent in 2016.
Sales trends in early 2018 had continued the positive momentum of last year, Dumas added.
Hermes, which has long waiting lists for some of its most coveted handbags, is expanding production to keep up with demand, and plans two more leather goods workshops by 2020 in France.
Like peers, it is looking to boost online sales, though it declined to detail how much revenue came from the web. Hermes is rolling out a revamped version of its website, due shortly in Europe after launching in the US and Canada.
By the end of the year, it also plans to set up its first e-commerce site in China, the biggest market for luxury players. Italy’s Gucci and France’s Louis Vuitton launched web sales platforms in China last year.
Hermes’ 2017 operating income was €1.92 billion ($2.36 billion), up 13 percent from a year earlier and in line with analyst forecasts, while net profit rose 11 percent to €1.22 billion.

Libya’s NOC declares force majeure on El Sharara oilfield

Updated 18 December 2018

Libya’s NOC declares force majeure on El Sharara oilfield

  • El Sharara — a 315,000 barrels a day field was taken over on Dec. 8 by groups of tribesmen, armed protesters and state guards demanding salary payments
  • Some government officials favor offering quick cash to the occupiers to make them leave, but NOC officials have warned that would set a precedent

TRIPOLI: Libya’s state oil firm NOC has declared force majeure on operations at the country’s largest oilfield, El Sharara, a week after it announced a contractual waiver on exports from the field following its seizure by protesters.

The 315,000 barrels a day field, located in the south of the North African OPEC member country, was taken over on Dec. 8 by groups of tribesmen, armed protesters and state guards demanding salary payments and development funds.

Officials have been unable to persuade the groups, who have been camping on the field, to leave the vast, partly unsecured site amid disagreements how best to proceed, workers on the field said.

Some government officials favor offering quick cash to the occupiers to make them leave, but NOC officials have warned that would set a precedent and encourage more blockades, workers at the oilfield say.

NOC has described the occupiers as militia trying to get on the payroll of field guards, a recurring theme in Libya where many see seizing NOC facilities as an easy way to get heard by the weak state authorities.

Production will only restart after “alternative security arrangements are put in place,” NOC said in a statement.

Operations at the smaller El Feel oilfield continued as normal, engineers said.

“Production at Sharara was forcibly shut down by an armed group — Battalion 30 and its civilian support company — that claimed to be providing security at the field, but which threatened violence against NOC employees,” NOC Chairman Mustafa Sanallah said in the statement.

His comments came after the chief of staff of the Tripoli-based government, Abdulrahman Attweel, criticized some of Sanalla’s previous comments about the protesters as “irresponsible.”

“These people (guards) were there to protect the field without salaries and without any attention to them and their daily needs, not in terms of accommodation, supply, transportation and communication,” Attweel told Al-Ahrar channel late on Monday.

Their demands were legitimate, he said, echoing comments by some southern lawmakers and mayors demanding more jobs and development for the neglected region.
The blockade has been complicated by the presence of tribesmen, who have argued against quick cash payments saying they want funds to improve hospitals and other services, which might take time to deliver.

The shutdown of the El Sharara has not affected the El Feel oilfield, also located in the south. It continued to pump around 70,000 barrels a day, field engineers said.
Its exports were being routed via the Melittah oil and gas port, which like El Feel belongs to a joint venture NOC has with Italian energy company Eni, another engineer said.

A spokesman for NOC did not respond to a request for comment.
El Sharara crude is normally transported to the Zawiya port, also home to a refinery. NOC runs the field with Spain’s Repsol , France’s Total, Austria’s OMV and Norway’s Equinor, formerly known as Statoil.