Hermès International Société en commandite par actions (RMS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. We're very pleased to meet with you once again here at the Salle Pleyel for this for this new General Meeting of Hermès International. To illustrate Hermès' year, we asked Tobias Gutmann, who is a very talented Swiss artist, to give us some of our news and show us some of the recent creations. In this video, you'll see the beginnings of the sketches, the lines and 4 drawings, evoking the main activities of our house. Some of the major events, such as the Saut Hermès, collections with the Soleil d'Hermès table setting, the stores with the opening of our new and marvelous store on Madison Avenue in New York. And lastly, you'll see the men and women from Hermès. As you know, this general meeting will be voting on financial 2022, which was an exceptional year for Hermès.-- exceptional year after exceptional year. And this is why we are so -- very pleased to be here. The Supervisory Board is here in the room. Let us now establish the bureau to appoint scrutineers. The 2 shareholders that have the largest number of votes. Ms. Julie Guerrand representing the H51 Company; and Mr. Jean-Christophe Dumas, representing the H2 company. Both of them accept this office. Ms. Nathalie Besombes, Chief of Corporate and Stock Exchange Law and Secretary of the Board, will be acting as Secretary of this meeting. We will tally up the shareholder votes and the attendance sheet. This is being done by the centralizing agency, the company's name is Uptevia. The provisional number of people in attendance shows us that the quorum required by law, both for the ordinary session and the extraordinary session of the General Meeting are present. We can, therefore, say that we have readily established the meeting, and we can lawfully deliberate. The final number on the attendance sheet will be tallied at 10:00, and we will give you that number just before voting on the resolutions. Our statutory auditors as well as the representatives from the Economic and Social Committee are present as well. Lastly, Mrs. Stéphanie Schambourg,, Officer of the Court, will observe and ensure that all the proceedings are carried out smoothly. As in previous years, this general meeting is being filmed, recorded and broadcast on the company's website. Lastly, a very warm thank you to the shareholders for taking part in this meeting either physically in the room or from a remote location. The folder in front of me has all of the documents provided for under the law, which have made available to members of the General Meeting. The documents and information provided for under legal and statutory provisions were sent out to the statutory auditors and/or made available to them as per -- and during the timelines laid down by these provisions. Mr. Henri-Louis Bauer, Chairman of the Management Board of the Émile Hermès SAS company is going to say a few words now.

Good morning to shareholders, welcome. We're very pleased to be meeting with you for this General Meeting of Hermès International. You know 2022 was a tremendously successful year. The financial results of the year demonstrate that fact the reflection that our customers have for -- the enthusiasm our customers have for the creations of ours, our products and also enthusiasm of all of our employees. The success was unremarkable considering that our world is becoming ever more complex every day. 2022 saw peoples changes in certain geopolitical context, some economic instabilities, monetary instabilities, major environmental challenges. With that as a context, we can be very proud of the achievements of the year. Together, let's really savor the success here. What we've achieved together with you is truly exceptional. 2022, first and foremost, was a year of quality, ethics and people. First of all, I talk about quality. Thanks to our designers, they were able to reinvent our creations coming up with new ways of wearing things. Think of some of our new leather goods. They've been highly creative. Abundant creativity we've seen in all of our métiers, the longer-standing ones as well as the newest ones. It's especially true in beauty, where we saw the arrival of makeup, new materials, new colors that are captivating our customers. Quality. We've also seen through the recognized mastery of our know-how for generations now we've been cultivating this value of excellence. We carefully select the right materials, use the most appropriate gestures and pay precise attention to each detail. Each creation of our artisans is a unique achievement of full-fledged creation. It seems simple, it never is. Quality means being very exacting every single moment. I'd like to pay a tribute to our 7,000 artisans, who are the guarantors of this quality, and who every single day uphold Hermès' reputation. 2022, as I said was also a successful year from an ethics point of view. As you know, our intention is to grow this company with never compromising on our values. We take the time it takes. We ensure stability that's all part of the process. Our products are designed or imagined to support and be with our customers throughout their lives, and they're also designed to be repaired. For several years now, we've also paid ever-going attention to our surrounding environment. Reducing our footprint is a priority of ours. In 2022, we boosted our actions to recycle our materials, cut our emissions, move into developing new territories and recreate communities around production sites. New production sites currently have a neutral energy balance. They're designed to foster maintenance and development of biodiversity. Lastly, 2022 is a year when we further focused on demand and women that contributes to Hermès image. From the very beginning, Hermès has always attached great value to people and human values, excellence, creativity, respect, solidarity, transmission of know-how. That's really part of our genetic makeup. We cultivate everybody's integrity, recognition of a job well done. We much believe in ongoing training. We commit to support our employees throughout their employment with us. Lastly, there were several wonderful projects in 2022. For instance, I'm thinking of the launching of the [ artisans of selling school ] which was a follow-on from the creation of the Hermès des savoir-faire school, where you can prepare a state-recognized vocational diploma. Excellence isn't something you can dictate from on-high, it's built over time. Its -- thanks to a family ambition, which has been continued generation after generation. So as you can see, 2022 is a success that -- first and foremost is thanks to the commitment of all of our employees. Every one of them is an essential link in this chain. They are also conveyors of know-how, knowledge. This is why I'd like to wrap up by thanking each and every one of the people that ensures Hermès success. I thank the tanners, our leather workers, the printers, our watchmakers, the master glass blowers, all of them hold unique know-how in the knowledge of each gesture paying exacting attention to detail. I just like to thank our creatives, our designers, our color artists, our artistic directors who cultivate the elegance of our style. I think all the HR managers as I said earlier, ensure the wealth of training projects for our employees. I think our communication teams who work so hard on making sure that image -- our image is known all over the world. I thank our sales associates who convey to our customers, the pride we all feel. I can't speak to everyone, but we know the commitment of all of our employees is a tremendous source of pride for us at Hermès. Thanks to all these values, this house, thanks to our strategic vision, thanks to Axel Dumas, his Executive Committee. 2022 was an amazing success. And of course, I very much want to thank the entire management team for having brought us so far forward. Those were my words, I wanted to say today, very simply. Thank you. Congratulations for this exceptional year. Thank you. [Presentation]

We too have our own group. Ladies and gentlemen, dear shareholders, I'm delighted to see you all again for the 2023 general meeting, and I'd like to thank you for your loyalty. You will see -- in this meeting we will show you lots of films on know-how that make our customers dream in the four corners of the world. And you will understand why our objects are so desired and sometimes difficult to make. Let us together come to 2022. After an exceptional 2021, I'm happy and proud to review with you a fantastic 2022, for which I would like to thank all the employees and teams in France and worldwide for their enthusiasm, their creativity, their know-how and their spirit of enterprise. A very strong performance in progression of revenue and results reflects the desirability of our creations in all the materials. They testify to the solidity of our corporate model responsible and durable, strongly integrated and anchored in the territories and of the geographical balance of our omnichannel distribution network. We have doubled our head count in 10 years, mainly in France where, may I remind you, we manufacture more than 80% of our objects in our 54 production sites. On the whole, over 3 years, Hermès has strengthened its investments -- operational investment by EUR 1.5 billion, of which 60% in France. After 2 successive increases of EUR 100 per month for the French employees in January and in July and the payment of a bonus of EUR 3,000 to all the employees all over the world for the good results of 2021, we have paid a new bonus of EUR 4,000 on good results of 2022 in February of 2023. It is with confidence that we're moving forward into this year despite uncertainties by reasserting our commitments in the field of social and environmental responsibility. We are happy to have been able to continue to invest in our production capacity to have pursued our commitment in the field of training and transmission. 2022 will remain the year of the first promotion of the Hermès School of Know-How, certified by the National Education with a training delivering a national state diploma called the CAP [indiscernible] on which I suggest, we have a look at through images. [Presentation]

Thank you. 2022 was a year of abundant creativity, thanks to the talent of the teams under the artistic direction of Pierre-Alexis Dumas. Let us mention a few examples. In the leather goods collection, the success of the R.M.S. suit case and the models Kelly en désordre, Haut à Courroies rock and Getta, but also our collections of men and women's Ready-to-Wear. Then in 2022, we've also celebrated the success of the 4 charter of Beauty with Hermès Plein Air. We are also delighted of the wonderful momentum of our watchmaking and jewelry business with, respectively, the Arceau Watch, Le temps voyageur which received 2 awards at the Grand Prix d’Horlogerie de Genève and Haute bijouterie collection, Les Jeux de l’ombre, which has already met with a great commercial success. Loyal to its artisanal values the house creates objects designed to last times to the uncompromising quality. And this with over [ 80 ] exceptional materials. In 2022, over 200,000 repairs were made by artisans all over the world, reflecting the durability of Hermès objects. 100% of the orange boxes and bags are made from recycled and recyclable materials. Attached to the excellence of know-how and their transmission, we pursue investment in our production capacity following the logic of regional centers of excellence for leather goods as well as for other materials which are true levers of growth. In 2022, we laid the first stone of the Riom leather workshop in Puy-de-Dôme and the work of the leather workshop Louviers in Eure, la Sormonne in the Ardennes were pursued for an inauguration in 2023. That of Louviers took place a few days ago, and that of la Sormonne will take us in 1 month. The capacity investments and additional capacity will strengthen in all the métiers to accommodate a strong growth of the group. And I would here like to mention the completion of the work on the Lyon Textile Pierre-Bénite and that of 3 -- J3L, the manufacturer of the metal parts that joined the group in 2020. Our model is based on strong vertical integration, 55% of the objects manufactured in internal exclusive workshop with strong local anchorage with 76% of the objects manufactured in France. Beyond this figure, 97% of our purchases are made in Europe. Hermès is present in 11 French regions. The 54 production and training sites of Hermès that you see on this map are organized by regional centers of excellence. On an average, a leather workshop is opened every 12 to 18 months, a human size with the highest environmental criteria, which continues to revitalizing the territories in France. During the opening of new production sites, we attach ourselves to 3 criteria, respect of local expertise, the permanence of know-how and job creation. Hermès maintains long-term relations with its suppliers and its partners in all the materials with great loyalty. The average duration of relations with our 50 biggest suppliers is more than 19 years. Proud to contribute to the expansion of sectors of excellence. We pursue also accompanying our trusted partners, trained over time with great quality to maintain the unique quality of Hermès objects, Hermès materials training to know-how and dedicated workshops. That is planned at the heart of a maturing unit where the workshop managers play a key role, managing teams, sustaining the team. These managers are in exceptional link importantly in the organization of our product sites. [Presentation]

Let us now come to our integrated omnichannel and exclusive regional network. The operational investments were pursued allowing our collections to be showcased at the heart of the cities, closest to local customers and an offer of service more and more larger. We will remember that, for example, in 2022, we opened a new Maison at 706 Madison Avenue, New York with great success. We also extended our network with Zhengzhou and Shanghai Qiantan in China and Pangyo in Korea. I will also mention the many renovations and extensions at Strasbourg or again Barcelona and Dubai. 2022 was marked by the resumption of travel retail and the reopening of our Hong Kong airport store, which is renovated and bigger today. With an environment which has been particularly unstable, our teams have shown great dynamism and creativity just like adapting to the health situation and our e-commerce network pursues its strong development. The latter allows us to welcome new customers in an omnichannel logic and flags a solid performance everywhere in the world. The success of collections and our products has led us to strengthen our logistics chain to serve all the stores, including the e-commerce. At the end of December 2022, the group has 300 stores, of which 3/4 are operated by Hermès. It is at the 706 Madison Avenue in New York that the new Maison Hermès opened its stores last October. Bob Chavez, the CEO of Hermès of Paris; and Florian Craen, Executive Vice President, Sales and Distribution, proposes that we discover the spaces of this store. [Presentation]

Hello, everybody. We're standing in the new Maison Madison 706. It's really an exceptional project. It's been 8.5 years in the making, and it's really a labor of love and the dream come true. There will be 150 family members working in this beautiful new maison.

We always say when we open a store, it's the end of a long journey. There's been hundreds of people working on the development of that store. But it's also the beginning of a new era for the group, for [ HOP ], for New York for each and everyone of us. This is a very special, very important moment. And I hope the years to come will be years of admiration and fascination for our line. [Presentation]

There you are. Beautiful success as of the first day of its opening. The creativity of Hermès expresses itself also via the 17th métier of Hermès that of communication. In 2022, with events all over the world, we wish to tell about the spirit, creativity and know-how and the universe of Hermès. We encountered with artisans with the event called Hermès in the Making closest to our 16 métiers. Also like that of Silk with Kite Festival of which you see a photograph on the screen, or again petit h in Dubai and Bangkok. Le Kiosque du Monde d’Hermès was set up in several capitals of the world to distribute our famous magazine. And I propose we look at the these kiosks with pictures. [Presentation]

I say this to the shareholders, small budget. But after COVID, we really wanted to come back to the street, see the passes by and participate in the life of the city centers. It is important for us. Let us now come to the CSR policy of Hermès. The group has maintained and renewed its commitments as you see here, in favor of employment, transformation of artisanal gestures, R&D of sustainable materials within the responsible sectors. In particular, our objective of reduction of greenhouse gases for all of the scopes 1, 2 and 3 were validated by the science-based targets initiative in line with the Paris Accords. Our social commitments clearly show our ambition in the field of training as well as the diversity, for example, maintaining of the rate of employment of disabled persons above 6%. The ambition of Hermès is to maintain a virtuous circle for its employees and its partners and more widely in favor of all of the communities and ecosystems with a strong momentum and clear objectives for all of the 16 métiers of Hermès. The CSR strategy naturally sits at the heart of the artisanal [ humans ] and durable model of Hermès. Let us now come to the achievements of this year. Concerning our climate strategy, the artisanal model of Hermès is structurally low emitter of CO2. In a certain way, we could say as a result of our artisanal model, we are a preindustrial society created in 1837. Hermès is committed on the reduction of the pace of carbon emissions validated by SBTi. In line with this commitment, we confirm in 2022, the reduction of CO2 emissions with a drop in 28% on Scopes 1 and 2 and a reduction of 46% on Scope 3 in intensity. Hermès pursues the putting in place of compatible actions with energy transition. In particular, the supply of electricity, which is 100% renewable in France since 2021. The group offsets all of its emissions of its own activities and henceforth that of all those linked to transport. Responsible construction standards, which are demanding, have been certified by an independent third party. It will allow for the reduction significantly of the greenhouse gas emissions generated by new constructions. The Louviers workshop in Normandie that we inaugurated on the 7th of April is built with positive energy. It has obtained the certification called, E4C2, a label which certifies the environmental performance according to energy and carbon. This is the first French industrial building to achieve this level of excellence, and you can indeed be proud of this. Our commitment for the preservation of biodiversity continues, namely with all the leather workshops that benefit from action -- dedicated action plans in 2023. Hermès pursues its commitment as a responsible employer, with the strong acceleration in job creation and sharing of values. In 2022, Hermès strengthened its employees by 2,100 people. At the end of 2022, Hermès employed 19,700 people, of which 12,400 in France. During 2023, the group paid a new bonus of EUR 4,000 to all of its employees worldwide, as I mentioned already, and we'll be paying EUR 170 million as profit sharing. To accompany growth and to train the employees to our exceptional know-how, the training -- internal training systems to continue. 2022 was thus the year for the launch of [ school of sales of our designs ] and the opening of a new training center of apprentices of École Hermès of know-how within the regional center of Ardennes. The house continues as action in the field of inclusion and diversity and to go further in sharing this ambition, a contact point network internationally was put in place to cover 100% of the head count of the group. We have doubled our head count in 10 years and more than 60% of job creations took place in France, where may I remind you, we make more than 76% of our objects. It is, for us, it's also a pleasure and great pride. The group conserves a balance in its growth by maintaining a stable balance in different sectors. Our artisans largely represent -- the production head count represent more than half of our head count totally, which is specific to our industry. The breakdown represents the fact that 60% of production is in France. The subsidiaries represent exclusively commercial functions. Women are strongly represented in the group. They represent 60% of the executives, 54% of management, 40% of Executive Committee and 50% of the members of the Supervisory Board. Our corporate model is integrated and anchored in the territories. Hermès maintains long-term relations with its partners and namely with its suppliers. We accompany them to reach a level of requirement that group needs in terms of social environmental impact, namely through CSR brief and sector briefs that have been enriched this year. The house is committed closer to the communities in the field action and transmission. The group has taken a 5-year commitment of EUR 61 million to the benefit of the sponsorship actions of the Fondation d'’entreprise Hermès. The exceptional progression of Hermès in the extra financial ratings is pursued this year and reflects our CSR commitments as well as strength and transparency. I would like to here mention the rating AA rating of MSCI, ranking #1 in the Sustainalytics rankings, the textile and clothing industry, and luxury, integration in the list of CDP, of which placing Hermès one of the 330 enterprise [indiscernible] high performance worldwide on environmental questions. Now I'll let you discover through the eye of [ Frederic Lafont ] the Euphoria worker, in the city of Zurich, which is treating people through the horse, people with handicaps -- disabilities. [Presentation]

Beautiful association. Let us now come to the activity in 2022. The revenue reached EUR 11.6 billion and progressed by 29% at constant exchange rates. The business activity was particularly sustained in the stores of the group. In 2022, growth of sales is remarkable in all of the geographical areas which registered strong growth, double-digit growth. France, plus 27% in Europe, excluding France, plus 18%, pursued their solid growth with strong demand from the local as well as international customers. Japan, plus 20% registered a progression of sales, which was sustained and regular; Asia, plus 22% was carried forward by a strong momentum in all of the region, namely in Australia, Korea and Singapore. Sales in Greater China had a sustained performance over the year, namely in Q4. The Americas, finally, plus 32%, had an exceptional year, sustained namely by the opening of the stores of Austin in the spring and Madison 706 in September. The geographical breakdown remains balanced. Now let us look at the business activity by métiers. In 2022, all the métiers confirmed a strong momentum with remarkable progression of Watches, Ready-to-Wear and accessories and Other Hermès métiers, Jewelry and the Home Department. The growth of leather goods plus 16% is exceptional. It is based on sustained growth and the increase in production capacity. The métier Ready-to-Wear and accessories, plus 36% pursued its strong growth -- dynamic growth, thanks to the success of the Ready-to-Wear collections, fashion accessories and shoes. New creations made with strong success alongside the iconic products of Hermès. Silk and textile métier, plus 20% had a beautiful performance on women's and men's silk, mainly thanks to the success of exceptional materials. Hermès Perfume and Beauty, plus 15% benefited from the success of the launches of the new chapter of Beauty and new creations for perfumes such as Eau de Basilic Pourpre and Eau de Basilic Pourpre. Watches, plus 46% at a remarkable performance, thanks to the development of pieces with the exceptional know-how such as Arceau, Le temps voyageur and also the success of the Hermès watch H08 and its pillars such as [indiscernible] and Cape Cod. Finally, the other métiers of Hermès, plus 30% pursued the strong momentum shedding light on the uniqueness and the greater force of Hermès. I'd like here to mention Soleil d'Hermes for the Hermès tableware. And we've already mentioned the seventh collection of Haute bijouterie high-end jewelry, Les Jeux de l’ombre. The evolution of the breakdown of the métiers reflect the strong progression of Ready-to-Wear and Other métiers of Hermès. Leather continues its growth in line with its objectives. Eric du Halgouët, CFO will now present the results to you after a film on the Saint-Junien glove factory -- workshop, showing you the exceptional know-how of these artisans. [Presentation]

Good morning, ladies and gentlemen. It's my pleasure to present to you the excellent results from 2022. Growth in sales and profits are exceptional growth rates. Revenue, up 29%. Recurring operating income, up 33%. Net operating income, up 38%. Growth in sales at constant currencies, 23%. As in 2021, it's particularly virtuous growth in sales. The price effect is approximately 4%. After taking into account the currency impacts and the conversion effects representing 6 points over EUR 500 million, growth in revenue is 29%. Growth in the value of sales between 2021 and 2022 is EUR 2.6 billion. The slight drop in the gross margin, 0.5 point, is mainly due to the conversion effect due to currency fluctuations, because our cost prices were slightly above budget hypotheses, but that was offset by leverage effects on fixed fashion cost as well as exceptional sell-through rate of collections, both in fashion métiers as well as other métiers. Communications spending reached EUR 525 million after stepping up the number of events in the second half of the year. Other sales and administrative expenses, including, among other things, wages of sales associates as well as support function wages and variable rent, reached EUR 2.2 billion. Expressed as a percentage of sales, this generates a leverage effect on operating profitability of 0.5 point compared to 2021. Other income and expenses, reaching EUR 836 million. This mainly means amortization of both tangible and intangible assets, firstly; and secondly, utilization rates. The expense of EUR 61 million booked in 2022, by virtue of a new 5-year agreement with the Hermès Corporate Foundation is offset by the reduction in the cost of free share plans. Recurring operating income, therefore, reaches EUR 4.7 billion, which is up 33% compared to 2021. Recurring operating profitability reaches a record level, 40.5% of sales. This is an exceptional level, up 1 point compared to 2021. Financial income or expenses was an expense of EUR 62 million versus EUR 96 million expense in 2021. This includes cost of currency hedges, lease liabilities, interest on cash on hand, EUR 75 million, and this explains the positive trend in financial results. Tax expense, EUR 1.3 billion. This is an effective tax rate of 28.2%. Net income from associates reached EUR 50 million. This is a reflection of the dynamic business activities in the Middle East. Net income reached EUR 3.4 billion, which is up 38% compared to 2021. The improvement in recurring operating income and interest on cash on hand enables us to reach a record level of net profitability, 29%. This is up 2 points compared to 2021. On this chart, we can see the very strong rebound in revenue and net income in 2022 and 2021. Over a 10-year period, our compound annual growth rate in revenue and net income is, respectively, 13% and 16%. Since January 1, 2022, the group has applied the IFRIC decision pertaining to a recognition of IT spend using the SaaS technique. So EUR 50 million that previously we have been capitalized has now been booked as an expense during the period. The group boosted its capital investments in the second half of the year, EUR 518 million invested in 2022. This amount is EUR 568 million if we have a like-for-like or use the same accounting standards. EUR 214 million spend on refurbishments and extensions of our retail network, specifically the construction of our flagship store in New York, Madison 706, which was opened last September. The main projects are to be found in China and the United States. EUR 192 million spent on boosting our production capacity, particularly I'm thinking of projects for some new leather production sites. But in addition to this, projects in several sectors such as silk, perfumes and watchmaking. Lastly, EUR 113 million invested in digital projects, information system projects as well as real estate to support the development of this group. Over a 3-year period, this means Hermès has increased its operational expenditure by EUR 1.5 billion, approximately 60% of which is in France. Operating cash flow, EUR 4.1 billion, up 34% year-on-year, the same pace as increase in operating income. The change in working capital requirements is a net resource of EUR 73 million in 2022. The controlled increase in inventory was offset by an increase in operating liabilities. After taking into account operational expenditure we mentioned previously as well as paying rent liabilities, adjusted cash flow reaches EUR 3.4 billion. Net restated cash flow, therefore, up EUR 2.7 billion, reaching EUR 9.7 billion as of the end of December 2022. Our net cash position is over 50% of our total assets and shareholders' equity reached approximately EUR 12 billion. This represents 70% of our liabilities. Therefore, the group has consolidated a very sound, strong financial structure, enabling it to preserve its independence and continue its long-term strategy. Thank you for your attention. I will give the floor back to Axel to talk to us about Q1 revenue figures as well as our outlook.

Thank you very much, Eric. Let us now come to business activity at the beginning of the year. Sales of Q1 up to EUR 3.4 billion, plus 23% at constant exchange rate and are in strong progression. Q1 is, therefore, the continuity of Q4 -- of whole of the year 2022. Business activity was sustained in the stores of the group. Wholesale benefited from the rebound of travel retail. At the end of March 2023, all geographical areas are -- which is a double-digit growth, and all the métiers confirmed a good momentum. I come now to the prospects, the outlook of the group, which remains unchanged. For 2023, the group deals with the year with confidence with its unique corporate model, which is particularly solid, which rolls out around our values of independence, spirit of enterprise, craftsmanship and creativity. We pursue our momentum carried forward by the enthusiasm of all the teams worldwide. It is, therefore, with pride and gratitude that we closed 2022. Astonishment is the theme of the year chosen by Pierre-Alexis Dumas. Inspiration of creation in Hermès, the capacity to astonish a source of innovation and dynamism. We pursue the job creation multi local and multi métiers as well as our investments in production capacity with the opening of the leather workshops of Louviers and la Sormonne. Yesterday, we announced the creation of a new leather workshop in the Ardennes. We continue accompany suppliers and our partners. We will also invest in our omnichannel retail network with openings and enlargements of stores, such as that of Chengdu and Beijing peninsula in China, Naples and Chicago in the U.S.A. and Bordeaux in France. We will continue in 2023 to surprise our customers with our creations. By way of example, this is the fifth chapter of Hermès Beauty around the eyes, which will be unveiled in the fall. Finally, a fourth 5-year term is opening 2023 for the Hermès Fondation d’entreprise, which pursue the commitment in the field of education and awareness raising of the youngest in the métiers of craftsmanship, preservation of biodiversity, support to performing arts and the actions of solidarity. To conclude, let us finish with a touch of nature with the program [ Matthieu Dumas ], created and imagined by the Foundation Hermès, which creates awareness amongst young generations to the living world. Thank you very much, very warmly for your attention. [Presentation]

We can see Hermès is very interested in transmission in all areas and some amazing examples. It's really wonderful to see how youngsters are always included in our various processes and policies. Before presenting to you the main resolutions, I'd like to express a very heartful thank you to Axel Dumas and Eric du Halgouët for the wonderful quality of the presentation this morning. And even more so, and especially very much on your behalf as well, I'd like to thank all the Hermès Group employees who together have been able to achieve the results of this exceptional year. As we've seen all the divisions, all the métiers, all the geographies, all the production sites, all the workshops, all the designers have been able to contribute to this wonderful growth that's gone well beyond targets we've set our sights on. Everyone is showing their commitment, which shows their great attachment to the company's model, responsible, respectful corporate model that we have at the house of Hermès. I'd like to thank the executive management as well as the entire executive committee. They're continuing to be very talent, actually bring this company forward, although carefully respecting its deep values and its unique identity. Lastly, I would like to express our unwavering recognition to all of you. Thank you to all your shareholders for your loyalty and unwavering support. We know that is a very strong relationship we have with you all. Thank you very much for your continued support. It's now time to present to you the main resolutions, which will be opened up for your vote later. I'd like to inform you that the final quorum for our general meeting is 86.68%, both for the ordinary general meeting as well as the extraordinary general meeting. Resolution 4. Here, we're submitting for the approval, allocation of the net income for the financial period. As you know, it's EUR 2,528,515,836. The Supervisory Board is proposing to fix the dividend at EUR 13, the ordinary dividend per share, which is a balanced payout. An interim dividend, EUR 3.50, was already paid on February 22nd. The balance of the ordinary dividend, which is EUR 9.50 per share will be detached from the share on April 25th, paid in cash on April 27th, based on positions closed 26 April. Resolutions 7 to 10. We're proposing that you approve compensation of -- and benefits in kind paid for by virtue of excesses in the fiscal period that closed 31 December 2022. This pertains to the corporate offices as per the invitation to this meeting. Compensation elements for your vote are all in full compliance with the compensation policy approved by the general meeting. Annual variable compensation paid in 2022 for 2021 as well as contribution -- compensation granted in 2023 for 2022 has moved forward in compliance with increase in pretax consolidated net income. CSR makes up 10% of variable compensation. There was harvest entertainment. You have full information on this and the work done by the compensation CSR Committee at its meeting on 6 January. All of this is contained in the universal registration document as well as the invitation to this meeting. I'd remind you furthermore that the Executive Chairman did not receive any several year variable compensation nor deferred variable compensation. The Executive Chairman have given up over 75% of an increase in their fixed compensation for 2022. The Supervisory Board Chairman's compensation is a fixed annual compensation. The gross amount has not changed in 2022. Resolution 11. Here, we're proposing that you proposed the compensation policy for the Executive Chairman as described in the invitation to this meeting. The policy remains unchanged using the various principles for determining this compensation that have been in force for several years to which fixed compensation indexed to the increase in consolidated revenue during the previous financial period using the same exchange rates and constant scope. Also fixed variable compensation having to do with the increase in pretax income compared to the previous period. As you've seen, 10% of the criteria here is CSR criteria, containing 3 separate indexes. Resolution 12, here we're proposing to revise the compensation policy for the Supervisory Board members, which remained unchanged since 2017. An increase, therefore, the overall annual amount envelope would change, we would change the way the amounts are allocated between Supervisory Board members and committee members. The proposals iterated earlier are designed to maintain the attractiveness of being a member of the Board and provide the Supervisory Board members with a requisite flexibility so that they're able to be forward-looking and anticipate changes in the possible composition of the Supervisory Board. Also designed to take into account the development of activities, the variety of subjects dealt with by the Supervisory Board and its committees. The proposals were approved by the Management Board of Hermès as well as the Supervisory Board who met together on 16 February 2023. That's described in detail in the invitation to this meeting. Resolutions 13 to 16. Here, we propose that you reelect the members of the Supervisory Board. Ms. Dorothée Altmayer, Ms. Monique Cohen and Mr. Renaud Momméja. All 3 of them actively contribute to their respective experience to the work by the Supervisory Board. They provide their knowledge in many different areas, and they're highly involved in all of the Board's work. Also, they help add to complementarity and diversity at the Board in terms of age, knowledge, professional background and so forth. Furthermore, it's proposed to reelect me in my term. These 4 terms would end after the AGM in 2026, that will vote on the financial period ending 31 December 2025. There are 2 new Board members representing employees that were appointed by the Group Works Council last November. Here I'm talking about Ms. Anne-Lise Muhlmeyer, who is an artisan at the -- adding new [ small ] workshops. And Mr. Prescience Assoh, who's a sales associate in our Parisian stores. Resolution 17 and 18. Here, we're demanding -- asking for you, sorry, to renew the terms in office of the statutory auditors, PricewaterhouseCoopers audit in Grant Thornton Audit for 6 financial periods. I'd like to indicate to you that the Audit and Risk Committee gave a favorable recommendation to renew these terms in office. Resolutions 6 and 19. We're asking you to renew the authorizations given to the executive management every year to buy back treasury shares, capped at 10% of share capital with the possibility of canceling them. The maximum purchase amount, excluding expenses, would be EUR 2,200 per share. I inform you, buybacks conducted by the company are used almost exclusively to cover free share plans granted to employees, as in the case for many years now. Resolutions 20 to 25. Here, we're asking you to renew, as we propose this every 2 years, the financial authorizations, which are customary. As you will have observed, these authorizations were not used since their previous renewal. We're submitting these to you, nonetheless, once again, for your vote. So that executive management has the necessary flexibility to act in the best interest of the company all the while under the control of the Supervisory Board and the Management Board of Hermès. Resolution 26 and 27. We're asking for you to authorize executive management to conduct 1 or several merger deals, absorptions, spin-offs or contributions of assets under spin-off regimes. Here again, we're talking about authorizing as active management so that they have the requisite agility to act in the event there were some sort of operation of internal organization. Resolution 28. We're proposing to you to renew authorization given to executive management to carry out grants of free shares. This would be existing ordinary shares. In compliance with the compensation policy, the executive managers received no compensation in shares. Mr. Axel Dumas, the only eligible Executive Chairman, has never received a performance share since he was appointed Chairman. Pertaining to employees, Hermès has set up employee shareholding plans for several years. Now I mentioned this previously, making it possible for us to recognize the contribution employees are making to the development of Hermès regardless of their position or their location. These employee share plans are designed to share the benefits of growth amongst employees to have them more closely involved in the decisions to develop Hermès in the long term. You'll find in the universal registration document, which is also available on the Hermès Finance website the Supervisory Board's report on corporate governance. You'll also find in the invitation to this meeting, the report by the Supervisory Board to the AGM. Now it's time to give the floor to our statutory auditors so that they can share with you the content of the various reports.

Thank you, Mr. Chairman. Ladies and gentlemen, shareholders, on behalf of the group of statutory auditors, Pricewaterhouse audit and Grant Thornton audit, I'd like to report to you on our assignment for the period ended 31 December 2022. In compliance with what's customary at this general meeting, I'll just summarize the report. You can find these in the universal registration document. Our reports on the consolidated financial statements and the annual financial statements are to be found on Pages 442 to 446 and Pages 471 to 474 in the Universal Registration Document. The objective of our assignment is to obtain reasonable assurance that the financial statements have no material misstatements. To this end, we do the requisite due diligence, take into account the organization of the group in various business lines, both in France and abroad. We're active, therefore, in 43 subsidiaries located in 22 countries. We were able to carry out all of our assignments in a satisfactory way in all of these countries. And our audit approach and our conclusions were discussed with the group's financial department during regular discussions. Furthermore, we reported on our work to the Audit and Risk Committee as well as to the Supervisory Board. The key audit points pertaining to risks of significant misstatement, which we identified due to the relative proportion of the financial sale with the complexity of assessing them or the significance of judgment used for consolidated reports, has to do with evaluation of inventory and work in progress as well as recognition of currency hedge operations. Pertaining to annual statements, we're talking about valuation of equity stakes. You will find a description of these as well as our assignments which we conducted in our reports. After our work, we expressed an opinion without reservation nor observation on either financial statements or the annual financial report of your company. Now to talk to you about our related party -- our related party agreement report, which is found on Pages 448 and 449 Universal Registration Document. In these reports, we give you the terms and conditions of the third-party agreements which we were apprised of without speaking to their relevance or substance. In this situation, we inform you we were told of no new related party agreement during the period, which would be necessary for your approval. Our report also includes the description of all of the related party agreements entered into and approved by previous AGMs. Lastly, we issued 4 reports for the extraordinary portion of your meeting. These reports contained on Pages 550 to 554 of the Universal Registration document has to do with various authorizations, impacting your company's share capital. We have no observation pertaining to information provided in a report from the management committee and the authorizations envisaged. The reports do not give the terms to determine the issue prices of the issue to be -- the capital to be issued under Resolutions 21 and 25. So we cannot give our view on the ways and means of calculating issue prices. Final terms for issuing shares under securities haven't yet been set. Therefore, we do not express any opinion on the consequences of those or the proposal to suppress a professional subscription right. We will establish a supplementary report if need be, if these authorizations are used by your executive management. Ladies and gentlemen, shareholders, Mr. Chairman, thank you for your attention.

We'd like to wrap up our Q&A session, which means now we can begin voting on the resolutions, which are now up for your approval. Now let me just quickly remind you of how the voting boxes operate. They've been given to you, and they're each identified 1 per shareholder. You have 15 seconds to vote. Once I say, please vote now, to vote, just press on one of the buttons, 1 in favor, 2 against and 3 to abstain. Confirmation of reception of your vote will appear on your screen. If you make any mistake or if you have a doubt, you can press again on one of those 3 keys. Only the last press, the last vote, will actually be tallied. We only take account in calculating the quorum, the votes cast by shareholders that are in attendance or represented. Is everyone ready? Was that clear? Silence means concerned. Are we ready? Let's now look at the first resolution, approval of the financial statements. Please vote now. [Voting]

No further voting. Resolution is adopted. Resolution 2, approval of the consolidated financial statements. Please vote now. [Voting]

No further voting. The resolution is adopted. Third resolution, executive management discharge. Please vote now. [Voting]

No further voting. The resolution is adopted. Fourth resolution, allocation of net income and distribution of an ordinary dividend. Please vote now. [Voting]

No further voting. The resolution is adopted. Fifth resolution, approval of related party agreements. Please vote now. [Voting]

No further voting. The resolution is adopted. Sixth resolution, authorization granted to the executive management to trade in the company's shares. Please vote now. [Voting]

No further voting. The resolution is adopted. Seventh resolution, approval of the information referred to in Article L 22-10-9 of the French Commercial Code with regard to compensation for the financial year ended 31 December 2022 for all corporate officers. Please vote now. [Voting]

No further voting. The resolution is adopted. Eighth resolution, approval of total compensation and benefits of all kinds paid during or awarded in respect of financial year ended 31 December 2022, to Mr. Axel Dumas, Executive Chairman. Please vote now. [Voting]

No further voting. The resolution is adopted. Ninth resolution, approval of the total compensation and benefits of all kinds paid during or awarded in respect of the financial year ended 31 December 2022, to the company, Émile Hermès SAS, as Executive Chairman. Please vote now. [Voting]

No further voting. The resolution is adopted. Tenth resolution, approval of total compensation and benefits of all kinds paid during or awarded in respect of the financial year ended 31 December 2022, to Éric de Seynes, Chairman of the Supervisory Board. Please vote now. [Voting]

No further voting. The resolution is adopted. 11th resolution, approval of the compensation policy for the Executive Chairman. Please vote now. [Voting]

No further voting. Resolution is adopted. 12th resolution, setting of the total annual amount of compensation attributable to the members of the Supervisory Board, approval of the compensation policy for the members of the Supervisory Board. Please vote now. [Voting]

No further votes. The resolution is adopted. 13th resolution, reelection of Ms. Dorothée Altmayer as a Supervisory Board member for a term of 3 years. Please vote now. [Voting]

No further voting. The resolution is adopted. 14th resolution, reelection of Ms. Monique Cohen, a Supervisory Board member, for a term of 3 years. Please vote now. [Voting]

No further voting. The resolution is adopted. 15th resolution, reelection of Mr. Renaud Momméja as Supervisory Board member for a term of 3 years. Please vote now. [Voting]

No further voting. The resolution is adopted. 16th resolution, reelection of Mr. Éric de Seynes, a Supervisory Board member, for a 3-year term in office. Please vote now. [Voting]

No further voting. The resolution is adopted. Thank you. 17th resolution, renewal of the term as principal statutory auditor of PricewaterhouseCoopers audit for a period of 6 financial years. Please vote now. [Voting]

No further voting. The resolution is adopted. Resolution 18, renewal of Grant Thornton a statutory auditor for 6 financial years. Please vote now. [Voting]

No further voting. The resolution is adopted. 19th resolution, authorization to be granted the executive management to reduce the share capital by cancellation of all or part of the treasury shares held by the company. General Cancellation program. Please vote now. [Voting]

No further voting. The resolution is adopted. 20th resolution, delegation of authority to the executive management to increase the share capital by incorporation of reserves, profits and/or premiums and free allocation of shares and/or increase in the par value of existing shares. Please vote now. [Voting]

No further voting. The resolution is adopted. 21st resolution, delegation of authority to be granted to the executive management to decide on the issue of shares and/or any other securities giving access to the share capital with preemptive subscription rights maintained. Please vote now. [Voting]

No further voting. Resolution is adopted. 22nd resolution, delegation of authority to be granted to the executive management to decide on the issue of shares and/or any other securities giving access to the share capital with preemptive subscription rights canceled. But with the -- but with the option to establish a priority period by offer to the public. Please vote now. [Voting]

No further voting. The resolution is adopted. 23rd resolution, delegation authority to be granted to the executive management to decide to increase the share capital by issuing shares into securities, giving access to the share capital reserved for members of a company or group savings plan with preemptive subscription rights canceled. Please vote now. [Voting]

No further voting. Resolution is adopted. 24th resolution, delegation authority to be granted to the executive management to decide on the issue of shares and/or any other securities giving access to the share capital with preemptive rights canceled by a public offering to a restricted circle of investors or qualified investors referred to in Article 4-11-2, first subparagraph of French Monetary and Financial Code. Please vote now. [Voting]

No further voting. Resolution is adopted. 25th resolution, delegation of authority to be granted to the Executive Committee to decide on the issue of shares and/or any other securities giving access to the share capital with preemptive subscription rights canceled in order to compensate contributions in kind granted to the company relating to equity securities or securities giving access to share capital. Please vote now. [Voting]

No further voting. The resolution is adopted. 26th resolution, delegation of authority to be granted to the Executive Management to decide on one or more operations involving a merger by absorption, spin-off or partial contribution of assets subject to the spin-off regime. Vote now, please. [Voting]

No further -- the resolution is adopted. 27th resolution, delegation of authority to be granted to executive management to decide on its capital increase by issuing shares in the event of use of the delegation authority to be granted to the executive management to decide on 1 more operations evolving a merger by absorption spin-off or a partial contribution of assets subject to spin-off regime. Please begin voting now. [Voting]

No further voting. The resolution is adopted. 28th resolution, authorization to be given to executive management to grant free existing shares. Please vote now. [Voting]

No further voting. The resolution is adopted. 29th resolution, delegation of authority to carry out the formalities related to the general meeting. Please vote now. [Voting]

No further voting. The resolution is adopted. That was the last vote. Now we've completed our general meeting. I would like to thank you once again for taking part in the meeting. Many of you have attended, either here in the room or remotely through the web. We hope we'll have the pleasure of meeting with you again in a year's time, April 30, 2024, in the same room to talk to you about and discover the results that we hope will be in line with our expectations. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]