China bolsters Hermes performance

French luxury goods maker Hermes said Wednesday a "strong level of activity" in its China business bolstered its overall first half performance, helping offset US trade war tensions and Hong Kong unrest.

Hermes, best known for its handbags and scarves, said its first half net profit rose seven percent to 754 million euros ($830 million), compared with analyst forecasts for 745-775 million euros.

The operating profit margin was 34.8 percent, just below the record 34.9 percent achieved in the first quarter of 2018, it said.

Hermes announced in July that its first half sales jumped 15 percent from a year earlier to 3.28 billion euros.

The company said Asia continued to be its largest market accounting for 52 percent of sales, compared with 17 percent for the Americas and 17 percent for Europe excluding France.

France alone chalked up 12 percent.

The Asia-Pacific region excluding Japan saw sales jump 18 percent in the first half, it said.

Hermes said massive pro-democracy protests and unrest in Hong Kong had hit its six stores, situated in town and at the airport.

"Nonetheless, the impact in Hong Kong will be offset by the strong level of activity in mainland China where the business remained the same over the first two quarters," Hermes finance director Eric du Halgouet told a conference call.

Du Halgouet also said the company was not "directly impacted" by US-China trade tensions.

The core handbag business which accounts for 50 percent of group sales reported revenues up 16 percent to 1.6 billion euros for the first half.

Hermes does not make specific forecasts but reaffirmed its guidance that over the medium term it would maintain an "ambitious" sales growth target "despite increased economic, geopolitical and monetary uncertainties around the world."