• The H&M group's net sales in SEK increased by 12 percent in the 2022 financial year to SEK 223,553 m (198,967). In local currencies the increase was 6 percent. Excluding Russia, Belarus and Ukraine the increase was 15 percent in SEK and 8 percent in local currencies.
• As communicated previously, results for the year were impacted by one-time costs of SEK 2,591 m for winding down the Russian operations and of a cost and efficiency programme.
• The gross margin was 50.7 percent (52.8). Adjusted for the one-time costs the gross margin was 50.8 percent (52.8).
• Operating profit was SEK 7,169 m (15,255), corresponding to an operating margin of 3.2 percent (7.7). Adjusted for the one-time costs, operating profit amounted to SEK 9,760 m (15,255) and the operating margin was 4,4 percent (7.7).
• The group's profit after tax was SEK 3,566 m (11,010), corresponding to SEK 2.16 (6.65) per share. Adjusted for the one-time costs, profit after tax amounted to SEK 5,634 m (11,010), corresponding to SEK 3.41 (6.65) per share.
• Cash flow from operating activities amounted to SEK 24,476 m (44,619).
• Financial net cash was SEK 10,929 m (17,857). Cash and cash equivalents plus undrawn credit facilities amounted to SEK 39,176 m (42,649).

• Net sales increased by 10 percent to SEK 62,433 m (56,813). In local currencies, net sales were flat. Excluding Russia, Belarus and Ukraine the increase was 11 percent in SEK and 2 percent in local currencies.
• As communicated previously, the results were impacted by a one-time cost of SEK 836 m for the cost and efficiency programme.
• Gross profit amounted to SEK 31,011 m (31,341). This corresponds to a gross margin of 49.7 percent (55.2). The external factors for purchases made for the fourth quarter were very negative compared with the corresponding period last year, with a historically strong US dollar.
• Operating profit was SEK 821 m (6,259), corresponding to an operating margin of 1.3 percent (11.0). The lower profit in the fourth quarter when compared with the same quarter in the previous year is mainly explained by the negative external factors, loss of the operating profit previously contributed by Russia and the one-time cost of the cost and efficiency programme.
• The group's result after tax was SEK -864 m (4,621), corresponding to SEK -0.53 (2.79) per share.
• Currency adjusted the stock-in-trade decreased by 3 percent compared to the previous year. Converted to SEK the stock-in-trade amounted to SEK 42,495 m (37,306). The composition is assessed to be good.

• The H&M group's sales increased by 5 percent in local currencies in the period 1 December 2022 - 25 January 2023 compared with the same period last year. Excluding Russia, Belarus and Ukraine sales increased by 9 percent in local currencies.
• Capex is planned to increase by around 50 percent to SEK 10 billion in 2023.
• The board of directors is proposing an ordinary dividend of SEK 6.50 per share to the annual general meeting to be paid in two instalments.
• The board of directors will also ask the 2023 annual general meeting for authorisation allowing it to buy back the group's own B shares in the period up to the 2024 annual general meeting for a maximum of SEK 3 billion. The board of directors will wait to see how the company develops during the year and the authorisation will only be used if certain conditions are met.

"Sales in the new financial year have started well. The external factors are still challenging, but are moving in the right direction. Combined with our investments and efficiency improvements, there are very good prerequisites for 2023 to be a year of increased sales, and improved profitability. Thus, our goal of achieving a double-digit operating margin for full-year 2024 remains in place," says Helena Helmersson, CEO.
  
 
Comments by Helena Helmersson, CEO
 
"Although 2022 was a turbulent year characterised by negative external factors such as geopolitical challenges and substantial cost inflation, our sales increased by 6 percent during the year. Having left the worst of the negative effects of the pandemic behind us, war broke out in Ukraine. We quickly decided to pause sales in the countries affected and later to wind down our business in Russia and Belarus. Our decision to wind down the business in Russia, which was an important and profitable market, has had a significant negative impact on our results. The hikes in raw materials and freight costs combined with a historically strong US dollar resulted in extensive cost increases for purchases of goods. Rather than passing on the full cost to our customers, we chose to strengthen our market position further. On top of this there were increased energy costs as well as a one-time charge for the cost and efficiency programme that was initiated at the end of the year. The combined effect of these factors amounted to a negative impact on profit in the fourth quarter totalling around SEK 5 billion compared with the same quarter last year.

The external factors that have had a negative effect on our purchasing costs are gradually reversing and are expected to become positive for our results in the second half of 2023. Purchasing costs are already lower for the orders being placed now compared with the same time last year. In addition, the second half will also see the positive effect of the cost and efficiency programme that is expected to provide annual savings of SEK 2 billion.

Our highest priority is the H&M brand, where we are continuing to work on improving the assortment and the customer experience both in store and online while at the same time integrating the two channels further. Development of all our brands continues in parallel, alongside initiatives in areas such as sport, beauty and home. Via our investment arm CO:LAB we are creating value through a range of exciting and innovative partnerships and business models. Sellpy is growing fast and is already one of the biggest players in second-hand fashion in Europe. To enable all this our investments in the supply chain, tech and AI are also continuing. In total we are increasing capex from SEK 7 billion to SEK 10 billion in 2023.

Despite the tough situation in the world around us the H&M group stands strong, with a robust financial position, healthy cash flow and a well-balanced inventory. Sales in the new financial year have started well. The external factors are still challenging, but are moving in the right direction. Combined with our investments and efficiency improvements, there are very good prerequisites for 2023 to be a year of increased sales, improved profitability and lower inventory. Thus, our goal of achieving a double-digit operating margin for full-year 2024 remains in place."

 
Communication in conjunction with the full-year report

The full-year report for the 2022 financial year, i.e., 1 December 2021 - 30 November 2022, will be published at 08:00 CET on 27 January 2023, followed by a press conference at 09:30 CET hosted by CEO Helena Helmersson, CFO Adam Karlsson and Head of IR Nils Vinge. The press conference for the financial market and media will be held in Swedish at H&M's head office in Stockholm, Ljusgården, Mäster Samuelsgatan 49, 3rd floor. The presentation material will be available at hmgroup.com/investors.

A live audio broadcast and telephone conference for the financial market and media will be held in English on 27 January 2023 at 14:00 CET, hosted by CEO Helena Helmersson, CFO Adam Karlsson and Head of IR Nils Vinge. For log in details, please register via this link: https://app.webinar.net/jREYXRkB8y3
To ask questions during the Q&A session, please see instructions in the confirmation email.

To book interviews in conjunction with the full-year report on 27 January 2023, please contact: Anna Frosch Nordin, Head of Media Relations, telephone +46 73 432 93 14, anna.froschnordin@hm.com.
 
Contact

Nils Vinge, Head of IR   +46 8 796 52 50
Helena Helmersson, CEO +46 8 796 55 00 (switchboard)
Adam Karlsson, CFO +46 8 796 55 00 (switchboard)

  
H & M Hennes & Mauritz AB (publ)
SE-106 38 Stockholm
Phone: +46-8-796 55 00, e-mail: info@hm.com
Registered office: Stockholm, Reg. No. 556042-7220

For more information about the H&M group visit hmgroup.com. 
  
Information in this interim report is that which H & M Hennes & Mauritz AB (publ) is required to disclose under the EU Market Abuse Regulation (EU) No 596/2014. The information was submitted for publication by the abovementioned persons at 08:00 (CET) on 27 January 2023. This interim report and other information about the H&M group, is available at hmgroup.com. 
  
  
H & M Hennes & Mauritz AB (publ) was founded in Sweden in 1947 and is quoted on Nasdaq Stockholm. H&M's business idea is to offer fashion and quality at the best price in a sustainable way. In addition to H&M, the group includes the brands COS, Monki, Weekday, & Other Stories, H&M HOME and ARKET as well as Afound. For further information, visit hmgroup.com.