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PARIS (Reuters) - French luxury goods maker Hermes (PA:HRMS) said on Friday that foreign exchange rates hit profitability and would lead to a drop in its operating margin this year.
The company known for its Kelly leather bags and printed silk scarves posted a decline in operating margin in the first half to 32.6 percent from 33.1 percent a year ago and said its full-year margin would be below the 32.4 percent level in 2013.
Last month, Hermes reported a worse-than-expected sequential slowdown in second-quarter sales growth of 5.8 percent against 10.1 percent in the first quarter, hit by a slump in Japanese demand.
First-half operating profit was 621 million euros (493.19 million), up from 584 million in the year-earlier period.
Net cash, which has been rising steadily in recent years, amounted to 946 million euros as of June 30.
Hermes reiterated its mid-term objective of revenue growth at constant rates of around 10 percent.
(Reporting by Astrid Wendlandt; Editing by James Regan)