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Global | Kering Group's First-half Operating Profit Increased by 53.1% to a Record High

Aug 10, 2018.Xueqing DingParis, FR
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Photo:Thierry Depagne

The Kering Group that manages brands like GUCCI, announced its financial situation in the first half of 2018, in which the main business income alone reached 1.772 billion euros ($2.35 trillion USD*) (ー an increase of 53.1%, breaking the group's highest record in history. Comprehensive sales reached 6.432 billion euros ($7.37 trillion USD*), up 26.8% on a year-on-year basis, excluding exchange rates that impacts the growth of 33.9%. Geographically, North America increased by 45.4%, Western Europe increased by 25.1%, Asia-Pacific (excluding Japan) increased by 37.6%, and growth in Japan by 30.7%. In the first half of 2018, the gross profit increased by 30% year-on-year to 47.76 billion euros ($5.47 trillion USD*) , with a net income increased by 185.7% year-on-year to 2.36 billion euros ($2.7 million USD*) , and EBITDA (profit before interest, taxes, depreciation and amortization) rose by 47.6% to 2,021.6 million euros ($231 million USD*) in the first half of 2018. The EBITDA margin increased by 31.4%.
According to Kering Group’s CEO François-Henri Pinault, “The Group achieved amazing revenue and profitability in the first half of the year. Our development is based on the brand's originality and high market demand, and the financial growth performance is very healthy.” He also stated, “The development model of each brand will be based on creating value, profit potential, and in a sustainable organic environment. In the increasingly competitive and uncertain global environment, we will continue to improve our financial operating performance in 2018.”

From the performance of each brand:

  • GUCCI's recurring operating margin reached a record high of 38.2%, thanks to the growth of excellent and healthy sales; (sales increased by 44.1% year-on-year)
  • Yves Saint Laurent excluding the exchange rate impacted the sales increase by 19.7% year-on-year
  • Bottega Veneta’s exclusion of exchange rate impact sales fell by 0.9% year-on-year. On July 1st 2018, new creative director Daniel Lee took office

Sales of other brands increased significantly year-on-year, excluding exchange rate impact growth of 36.5%. This growth is driven by the sales of Balenciaga and Alexander McQueen.
Major initiatives of the Kering Group in the first half of 2018 included the termination of operations with Stella McCartney and Christopher Kane, selling the shares to the designers themselves. The sale of non-luxury brand PUMAVolcom also terminated its business this year and the special dividend of the shares has been allocated to the shareholders to date as an equity company. These actions show that Kering Group has gradually simplified its brand composition in order to clarify its positioning of “pure luxury goods group”. Although the overall performance in the first half of the year was outstanding, it feels as if other brands had performed negatively compared to the main brands like GUCCI.

* All financial data are calculated on a comparable basis that excludes the impact of currency fluctuations
* 1 Euro = 1.1493 US Dollars conversion (as of August 10)