H & M Hennes & Mauritz AB

PRESS CONFERENCE 28 JANUARY 2016 FULL-YEAR REPORT 2015

• KARL-JOHAN PERSSON CEO

• NILS VINGE INVESTOR RELATIONS

• ANN-SOFIE JOHANSSON CREATIVE ADVISOR

• Sales SEK 210 billion including VAT

– increase of 19% in SEK; +11% in local currencies

• Well-received collections for all brands and strong expansion contributed to higher market shares

• More than 16,000 new jobs in the H&M Group 2015

– 148,000 employees in total

• SEK 75 m to employee incentive programme HIP

• Substantial long-term investments within IT, online; and broadening of the product range

• Good cost control maintained

• Profit for the year SEK 20.9 billion; +4.6%

2015 IN BRIEF

FINANCIAL DATA

SALES

49,656

176,620

56,477

209,921

+ 14%

+ 19%

0

50,000

100,000

150,000

200,000

250,000

Q4 Full year

SEK m incl VAT

2014

2015

SALES PER MARKET TEN LARGEST MARKETS, FULL YEAR 2015

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

Switzerland

Netherlands

Spain

Italy

Sweden

China

France

United Kingdom

USA

Germany

96

139

165

150

176

353

222

264

415

449

Number of stores

SEK m

STORE EXPANSION

IPO 1974 6

13 68

2 77

1

84

4

94

5

1,0

68

1,19

3

1,3

45

1,5

22

1,7

38

1,9

88

2,2

06

2,4

72 2,7

76 3

,13

2 3,5

11 3,9

24

0

400

800

1,200

1,600

2,000

2,400

2,800

3,200

3,600

4,000

197

4

197

5

197

6

197

7

197

8

197

9

198

0

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Markets 3 4 5 6 7 9 10 11 128 20 22 2414 18 29 34 36 39 44 49 54 56 61

Stores

GROSS PROFIT AND GROSS MARGIN

2014

2015

25,774 27,997

89,052

103,167

60.4%57.5%

58.8%

57.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

Gross profit SEK m

Q4 Full year

SELLING AND ADMINISTRATION EXPENSES

18,043

63,469

20,913

76,225

+ 16%

+ 20%

0

20,000

40,000

60,000

80,000

100,000

Q4 Full year

SEK m

2014

2015

PROFIT AFTER FINANCIAL ITEMS

7,799

25,895

7,148

27,242

- 8%

+ 5%

0

5,000

10,000

15,000

20,000

25,000

30,000

Q4 Full year

SEK m

2014

2015

SALES AND PROFITS FOURTH QUARTER

SEK m 2015 2014

Net sales 48,694 42,644

Gross profit 27,997 25,774

gross margin, % 57.5 60.4

Operating profit 7,084 7,731

operating margin, % 14.5 18.1

Net financial items 64 68

Profit after financial items 7,148 7,799

Tax -1,622 -1,577

Profit for the period 5,526 6,222

Earnings per share, SEK 3.34 3.76

SALES AND PROFITS FULL YEAR

SEK m 2015 2014

Net sales 180,861 151,419

Gross profit 103,167 89,052

gross margin, % 57.0 58.8

Operating profit 26,942 25,583

operating margin, % 14.9 16.9

Net financial items 300 312

Profit after financial items 27,242 25,895

Tax -6,344 -5,919

Profit for the period 20,898 19,976

Earnings per share, SEK 12.63 12.07

KEY DATA

SEK m 30 Nov 2015 30 Nov 2014

Stock-in-trade 24,833 19,403

Cash flow from current operations 24,067 24,156

Investments 12,059 9,391

Dividend (SEK) 9.75* 9.75

Cash and cash equivalents and short-

term investments12,950 16,693

Return on shareholders' equity, % 38.1 41.3

Average number of employees** 104,634 93,351

* proposed dividend

** converted to full-time positions

STOCK-IN-TRADE

19,403

24,833

+ 28%

0

5,000

10,000

15,000

20,000

25,000

30,000

30 November

SEK m

2014

2015

EXPANSION

• Total of 3,924 stores in 61 markets 2015, all brands included

– 413 new stores net 2015, of which 249 in Q4

– China and the US largest expansion markets

• Five new H&M markets 2015

– Taiwan, Peru, Macau, India and South Africa

– very good reception in all markets

STORE EXPANSION 2015

• Approx. 425 new stores net planned for 2016

– largest expansion in existing markets

– China and the US largest expansion markets

• Three new H&M markets in 2016

– New Zealand, Cyprus and Puerto Rico

STORE EXPANSION 2016

• Continued expansion for H&M’s other brands

– COS, & Other Stories, Monki, Weekday and Cheap Monday

• COS has total of 153 stores in 30 markets (Nov 2015)

– 39 new stores net in 2015

– several new markets in 2015 and 2016

OUR FASHION BRANDS

• Rapid expansion of H&M’s online store, hm.com

• Ten new online markets in 2015

– Portugal, Poland, the Czech Republic, Romania, Slovakia, Hungary, Bulgaria, Belgium, Switzerland and Russia

• H&M online in 23 markets in total (Nov 2015)

• Online in nine further H&M markets 2016

– Ireland, Japan, Greece, Croatia, Slovenia, Estonia, Latvia, Lithuania and Luxembourg

H&M ONLINE

• New broad concept for makeup, body care and hair styling

• High quality at the best price in beautiful design

– wide selection of colours and trends

• Very well received in 900 stores in 41 markets and online in 2015

– gradual launch since July 2015

• H&M Beauty to launch in further 300 stores in 2016

H&M BEAUTY

• 100% renewable energy in 2015 in all H&M markets where this is possible

– approx. 80% for the Group globally in 2015 (27% 2014)

• Cotton from sustainable sources

– organic; recycled; and cotton grown under the Better Cotton Initiative

• Target of 100% cotton from sustainable sources in 2020 in all product ranges

– 31% cotton from sustainable sources in 2015 (21% 2014)

SUSTAINABLE DEVELOPMENT

• H&M wants to speed up the development towards a more circular fashion industry

• H&M Garment Collecting offered in stores globally since 2013

– approximately 24,000 tonnes of used clothing collected for re-use and recycling

• Global Change Award

– established by H&M Conscious Foundation

– five winners to share EUR 1 million

– encourage and support innovation to close the loop for textiles

SUSTAINABLE DEVELOPMENT

• H&M Conscious Exclusive collection 2016

– in collaboration with Musée des Arts Décoratifs in the Palais du Louvre in Paris

• Global launch on 7 April

– in connection with the exhibition “Fashion forward - Three centuries of fashion”

– approx. 180 H&M stores and online at hm.com

• Innovative and recycled materials

H&M CONSCIOUS EXCLUSIVE

H&M DESIGN AWARD

H & M Hennes & Mauritz AB