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UPDATE 2-Hermes raises dividend as 2011 profit jumps
* Hermes raises dividend to 2 euros from 1.50 euros
* Sees 2012 margin btw 31.2 pct in 2011 and 27.8 pct in 2010
* Net income up 41 percent at 594 million euros
* Shares up 2.5 pct
By James Regan
PARIS, March 22 (Reuters) - Hermes showed its confidence in the global luxury goods market with a 33 percent dividend increase after tourist spending in Europe and buoyant demand in Asia and the Americas fuelled forecast-beating full-year profit.
The family-controlled group plans to pay shareholders 2 euros per share on 2011 earnings, up from 1.50 euros a year ago, plus a one-time sum of 5 euros a share, it said in a financial notice on the website of Les Echos newspaper on Wednesday.
Last year's operating margin widened to 31.2 percent from 27.8 percent in 2010 as operating income rose by a third to 885 million euros ($1.2 billion), beating the average analyst estimate of 857 million in a Thomson Reuters I/B/E/S poll.
Net income rose 41 percent to 594 million euros, Hermes said, also beating the poll average of 560 million, helped by the sale of its stake in fashion house Jean-Paul Gaultier.
Hermes said net cash flow rose by 210 million euros to 1.04 billion last year, adding it planned no big share buybacks this year after last year's 286 million euro buyback, while attention would focus on organic growth rather than acquisitions.
Speaking about the full year payout, much of which will flow to the Hermes family, CEO Patrick Thomas told reporters: "It should be seen as exceptional."
The 175-year-old French company, maker of 10,000-euro leather bags and 1 million-euro crocodile leather jackets, said last month that its 2011 margin had exceeded 30 percent as sales rose 18.3 percent to 2.84 billion euros in 2011.
Underscoring its resilience to the economic downturn in Europe, Hermes confirmed its 10 percent sales growth target at constant exchange rates for this year with its leather goods business seen climbing by some 10 percent. It predicted margins to be between the levels seen in 2010 and 2011.
In the United States, luxury jeweller Tiffany & Co forecast this week a rise in sales and profits this year, helped by a rebound in the U.S. stock market and an easing of the European debt crisis.
Hermes shares were up 3.3 percent at 252.25 euros by 1104 GMT, up by some 9 percent this year, after gaining 47 percent last year driven by takeover speculation.
"Hermes has published very solid results, above forecasts," said a trader.
The firm plans to expand its store network by opening or renovating around 15 shops this year. It is building a Maison Hermes outlet in Shanghai, aiming to open it at the end of 2013. It also plans to increase production capacity this year, with the creation of two new manufacturing sites in France.
The company is 72 percent owned by family shareholders, who recently set up a holding to shield the group from the threat of a takeover after the world's biggest luxury goods group, LVMH , built up a 22.3 percent stake. The remaining shares are in free float.
LVMH has said its shareholding is friendly, suggesting it does not plan a takeover attempt, while Hermes family shareholders view the move as hostile.
Thomas said the entry of LVMH in its capital had had no impact on Hermes' strategy.
= 0.7582 euros)
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