Slide 1: Amplifon FY 2013 Investor Day
Amplifon FY 2013 Investor Day Milan – March 5th 2014
Slide 2: Disclaimer
Disclaimer The information contained herein and other material discussed during the analysts’ presentation, particularly the ones regarding any possible or assumed future performance of the Amplifon Group, are or may be forward looking statements and in this respect they involve some risks and uncer
Slide 3: FY-2013 Financial Results
FY--2013 Financial Results FY
Slide 4: Short-term challenges in 2013 but fundamentals remain intact
Short--term challenges in 2013 but fundamentals remain intact Short MANAGING LEVERAGING SHORT-TERM CHALLENGES ON-GOING STRUCTURAL GROWTH DRIVERS Regulatory change in The Netherlands Solid & intact industry fundamentals Weak European macroeconomic environment Resilient business in a weak economic env
Slide 5: 2013 revenue: geographic diversification offset the Dutch impact
2013 revenue: geographic diversification offset the Dutch impact FY 2013 Group revenue: € 828,6 million, in line with PY at constant forex (+0,1%) Strong growth rates in North America and APAC counterbalancing the negative Dutch performance; Resilient sales trend in the rest of Europe despite the ge
Slide 6: 2013 profitability penalized by The Netherlands, FX & restructuring
2013 profitability penalized by The Netherlands, FX & restructuring FY-2013 Ebitda: € 117,4 million was 15,1% below PY on recurring basis (-19,1% as reported) Strongly negative impact of The Netherlands (€ 13,3 million of lower contribution Y-o-Y) and weaker performance in Europe, only partially cou
Slide 7: FY-2013 Financial Results
FY- FY-2013 Financial Results FY-2013 FY-2012 € millions Recurring % on Non- Total % on Recurring % on Non- Total % on ∆ % on Recurring Recurring Total Recurring Recurring Total Recurring REVENUE 828,6 100,0% - 828,6 100,0% 846,6 100,0% - 846,6 100,0% -2,1% EBITDA 123,2 14,9% (5,8) 117,4 14,2% 145,2
Slide 8: Global player outperforming the market growth
Global player outperforming the market growth Europe ex. NL: Revenue -0,1% YoY EUROPE (+0,5% at constant FX) EU NL: Revenue -25,6% YoY USA NA A Revenue Revenue P +8,7% +9,9% in Emerging Market A in AUD USD YoY (ET, IN, TK) C APAC YoY Revenue organic growth +45% YoY - representing less than 1% of Tot
Slide 9: Revenue Breakdown: resilient business with increased volatility Q-o-Q
Revenue Breakdown: resilient business with increased volatility Q- Q- o - Q FY 2013 Q4 2013 FY 2013 Q4 2013 % of FY 2013 vs vs vs vs Group sales FY 2012 Q4 2012 FY 2012 Q4 2012 The business remained resilient despite the slowdown of the economic Italy 0,4% -0,3% environment; Q4 sales were almost in
Slide 10: Revenue Breakdown: resilient business with increased volatility Q-o-Q
Revenue Breakdown: resilient business with increased volatility Q- Q- o - Q FY 2013 Q4 2013 FY 2013 Q4 2013 % of FY 2013 vs vs vs vs Group sales FY 2012 Q4 2012 FY 2012 Q4 2012 NORTH A year of remarkable and profitable growth jeopardized by negative FX 6,3% 1,3% Usa & Canada 6,3% 1,3% impact (OG: +1
Slide 11: Europe: resilient business & signs of recovery but challenging Dutch market
Europe: resilient business & signs of recovery but challenging Dutch market € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 559,6 100,0% 582,9 100,0% -4,0% 175,2 100,0% 184,6 100,0% -5,1% EBITDA 57,9 10,3% 83,9 14,4% -31,0% 32,0 18,3% 42,1 22,8% -23,9% EBIT 25,8 4,6% 53,5 9,2% -51,8% 23,4 1
Slide 12: North America: sound & profitable growth outperforming the market
North America: sound & profitable growth outperforming the market € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 138,7 100,0% 130,4 100,0% 6,3% 33,3 100,0% 32,9 100,0% 1,3% EBITDA 25,6 18,5% 24,7 18,9% 3,7% 4,8 14,4% 7,2 21,9% -33,4% EBIT 21,1 15,2% 19,1 14,6% 10,8% 3,3 9,9% 5,3 16,2% -38,
Slide 13: APAC: solid organic growth and strong finish to the year
APAC: solid organic growth and strong finish to the year € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 128,0 100,0% 130,8 100,0% -2,1% 32,3 100,0% 32,2 100,0% 0,4% EBITDA 33,5 26,2% 36,2 27,7% -7,6% 10,0 30,9% 7,5 23,3% 32,9% EBIT 21,2 16,6% 25,0 19,1% -15,2% 6,7 20,8% 4,6 14,4% 44,2% EBI
Slide 14: Steady Cash Generation also in FY 2013
Steady Cash Generation also in FY 2013 € thousands FY 2013 FY 2012 1. Heavy impact from EBIT 68.518 97.886 taxes payment due to D&A 48.896 47.286 Country mix. Other non cash adjustments and gains/losses on sale 16.348 15.339 2. Careful management of Net financials -21.874 -22.072 working capital. Ta
Slide 15: Strengthened capital structure to sustain expansion plans
Strengthened capital structure to sustain expansion plans Net Debt to Equity Net Debt Two transactions € millions € millions successfully 435,4 negotiated on the 275,3 275,3 debt capital market: Net Debt a $ 130 mln USPP 10,3 (€100,9 mln at Total Equity 382,6 hedged rate) – 7, Long-term Short-term C
Slide 16: Expected Evolution for 2014
Expected Evolution for 2014 Gradual recovery and profitability improvement in Europe (ex. NL); Slow but steady volumes improvement in the Netherlands - further ASP pressure expected also in 2014; Continuing sales growth momentum in US with further margin expansion; Stable growth in APAC and focus on
Slide 17: FY-2013 Amplifon Revenue Breakdown
FY- FY-2013 Amplifon Revenue Breakdown € millions FY-2013 FY-2012 ∆% ∆ FX OG% Q4-2013 Q4-2012 ∆% ∆ FX OG% Italy 225,5 27,2% 224,5 26,5% 0,4% 0,4% 75,2 75,4 -0,3% -0,3% France 98,3 11,9% 98,3 11,6% 0,0% -1,6% 29,2 27,6 5,7% 4,6% The Netherlands 66,8 8,1% 89,8 10,6% -25,6% -25,6% 23,8 36,1 -34,2% -34,
Slide 18: FY-2013 Income Statement
FY- FY-2013 Income Statement FY- 2013 FY-2012 € thousands Recurring Non- Total % on Recurring Non- Total % on ∆ % on 1.Higher contribution of Recurring Recurring Recurring Recurring Recurring US B2B business and Revenue 828.632 - 828.632 100,0% 846.611 - 846.611 100,0% -2,1% ASP pressure in NL COGS
Slide 19: Q4-2013 Income Statement
Q4 Q4--2013 Income Statement Q4- 2013 Q4-2012 € thousands Recurring Non- Total % on Recurring Non- Total % on ∆ % on Recurring Recurring Recurring Recurring Recurring 1. Higher contribution of Revenue 241.386 - 241.386 100,0% 250.250 - 250.250 100,0% -3,5% US B2B business COGS (55.937) - (55.937) -2
Slide 20: FY-2013 Performance by Region
FY- FY-2013 Performance by Region € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 559,6 100,0% 582,9 100,0% -4,0% 175,2 100,0% 184,6 100,0% -5,1% EUROPE EBITDA 57,9 10,3% 83,9 14,4% -31,0% 32,0 18,3% 42,1 22,8% -23,9% EBIT 25,8 4,6% 53,5 9,2% -51,8% 23,4 13,3% 34,1 18,5% -31,4% EBITDA adj *
Slide 21: Balance Sheet: heavy currency impact
Balance Sheet: heavy currency impact € thousands 31/12/2013 31/12/2012 € thousands 31/12/2013 31/12/2012 Goodwill 500.680 551.853 Trade payables -96.297 -98.016 Other payables -115.690 -113.515 Cust. lists, non-compet. agreem., 92.875 119.096 Provisions for contingency and trademarks and location ri
Slide 22: Equity Story
Equity Story
Slide 23: A global leading presence
A global leading presence Worldwide leader in distribution and fitting of hearing solutions Only global player with 9% of global market share 20 Countries 2,000 Corporate POS 2,500 Amplifon points 3,000 Franchisee & EHN affiliates in US 5,200 professionals worldwide on payroll 5,200 franchisee & age
Slide 24: European Leadership
European Leadership Undisputed European leader in Fairly mature Still low penetration rate: a highly fragmented market market around 20% 24
Slide 25: Multi-continental Leadership
Multi--continental Leadership Multi Highly Largest branded franchise Still low penetration rate: fragmented network around 25% market 25
Slide 26: Global Leadership
Global Leadership AUSTRALIA: NEW ZEALAND: INDIA: 25% market share Undisputed leader Presence to set leadership relatively young business over 50% market and develop the country’s with in-built growth share highly underpenetrated market 26
Slide 27: Balancing medical and retail core competencies
Balancing medical and retail core competencies Solid Consumer medical specialty retail background approach Medical Retail Business Market Resilience penetration MEDICAL APPROACH RETAIL APPROACH End users come to stores following End users come to stores driven by GP/ENT’s advice Advertisement /Marke
Slide 28: Specific solutions to all types of hearing loss & needs
Specific solutions to all types of hearing loss & needs Middle Ear implants Behind-The-Ear hearing instruments (BTE) Cochlear implants Standard/Custom Invisible in the canal In-The-Ear hearing instruments (CIC) (ITE) 28
Slide 29: Personalization is crucial
Personalization is crucial The sale of hearing aids is completely inseparable from the fitting process: The success of a product largely depends on accurate diagnosis, technical specification and personalized adaptation of device to customer’s needs; The personalized fitting procedure is carried out
Slide 30: A long-lasting relationship based on trust and dialogue
A long- long-lasting relationship based on trust and dialogue Audiologists provide specialized, high quality comprehensive audiological assessment, otoscopy & detailed patient history analysis. Audiologists propose the most suitable solution for each customer, also bearing in mind non-auditory aspec
Slide 31: Personalized pathways for each customer
Personalized pathways for each customer The average life-cycle of a solution is 5 years: Follow-up , maintenance, cleaning, Steps: Getting ready Information Education on Product Product use Planning next batteries, for the visit and transference hearing loss presentation demonstration steps and RE-B
Slide 32: Best positioned within the Hearing Aids Universe
Best positioned within the Hearing Aids Universe In a highly fragmented H.A. retail market, Amplifon is well positioned to lead consolidation and market growth due to: ENT Doctors G.P. Doctors Unrivalled leadership MANUFACTURERS position in terms of volumes, Six major players Governments / Ministry
Slide 33: Leader in the largest segment of the value chain
Leader in the largest segment of the value chain Amplifon operates in the retail and wholesale segments. Impossibile v isualizzare l'immagine. La memoria del computer potrebbe essere insufficiente per aprire l'immagine oppure l'immagine potrebbe essere danneggiata. Riav v iare il computer e aprire d
Slide 34: A sizeable, untapped and growing market
A sizeable, untapped and growing market profound 5% 90% A sizeable market 70% 30% Over 650 million people in the world suffer with severe 10% some degree of hearing impairment (source: WHO) 50% 50% 15% of population in industrialized countries moderately severe 15% Estimated global market size 11 ml
Slide 35: Facts and numbers underpin our potential
Facts and numbers underpin our potential Current average customer age is 72 years old BABY BOOMERS Demographic trends BB lower first buy age: 55 years old Population Growth BB new customers’ expectations: Longer life expectancy Technology savvy Increasing noise pollution (youngsters – iPods) Expert
Slide 36: Amplifon history & performance
Amplifon history & performance Sales CAGR (2003/2013): +6,5% Ebitda CAGR (2003/2013): +6.9% 900 846,6 20% 827,4 828,6 800 17,1% 17,1% 708,1 17,5% 17,1% 14,5% 667,9 700 13,6% 657,0 13,7% 641,4 15% 613,1 14,2% 600 13,8% 11,6% 13,7% 547,1 499,9 500 443,4 10% 400 300 5% 200 144,5 145,2 117,4 93,5 105,1
Slide 37: Consistent cash generation & proven deleveraging track record
Consistent cash generation & proven deleveraging track record Historic FCF Margin % Historic Net Debt/Ebitda: 2009 - 2013 10% 4,0 8,8% 9% 8,2% 7,9% 3,5 3,5 8% 3,0 3,0 6,1% * Net Debt / Ebitda 7% 5,9% * 2,4 6% 2,5 2,1 2,2 5% 2,0 1,7 4% 1,5 3% 1,0 2% 1% 0,5 0% 0,0 2009 2010 2011 2012 2013 2009 2010 20
Slide 38: Amplifon Group Strategy
Amplifon Group Strategy Emerging Markets < 1% of Group revenue Create long-lasting Rank Develop the Market/ competitive advantage Network expansion Consolidate global market leadership Leader Roll out distinctive positioning of “consumer specialty retailer” Cluster 1 leveraging on: ∼ 50% of Group re
Slide 39: Annexes
Annexes
Slide 40: Strong competitive position across Countries
Strong competitive position across Countries Country Brand Market Share Position Competitors Italy Amplifon 41% #1 Independents, Maico, Audionova, Audika, Audibel Global leading player in France Amplifon 11% #1 Audika, Audition Santè, Independents the highly fragmented hearing aid retail market; The
Slide 41: Unrivalled Distribution Network
Unrivalled Distribution Network DIRECT POS INDIRECT POS Country Brand Corporate Amplifon Franchisee/ Network POS points Service Centers Affiliates The Group operates Italy Amplifon 478 2.080 through two main France Amplifon 308 74 1 distribution channels: The Netherlands Beter Horen 192 65 Direct po
Slide 42: Brand simplification – praising local excellence
Brand simplification – praising local excellence Market Segment: medical and retail Model: corporate POS Flagship brand, founded in 1950 Countries: Italy, France, Germany, Spain, Portugal, Switzerland, Belgium, Luxembourg, Hungary, Poland, UK, Ireland, India, Egypt 1,502 owned stores, 2,356 Amplifon
Slide 43: Brand simplification – praising local excellence
Brand simplification – praising local excellence Elite Hearing Network is one of the largest independent networks in North America Market Segment: medical and retail Model: independent businesses Acquired in 2002 Countries: US Network of 1,649 independent stores National Hearing Care is a widely rec
Slide 44: Regulatory Environment 1/2
Regulatory Environment 1/2 % of Amplifon Country Sales Force Qualification Medical Prescription System of reimbursement and fiscal deduction Eligibility revenues from reimbursement Average reimbursement of € 600 per hearing aid which covers the basic device cost. Eligible individuals are entitled to
Slide 45: Regulatory Environment 2/2
Regulatory Environment 2/2 % of Amplifon COUNTRY Sales Force Qualification Medical Prescription System of reimbursement and fiscal deduction Eligibility revenues from reimbursement Audiologists / Mandatory only for public Partial reimbursement provided by public health service (150 € for each POLAND
Slide 46: US Value Proposition: Franchise & Wholesale
US Value Proposition Proposition:: Franchise & Wholesale Territory: Marketing: Exclusive territory Members marketing fund Minimum Performance Target Broad-reach media plan + TV Referrals: Physician Marketing: HearPO prioritizes Amplifon CRS model to implement stores Research/ Clinical partnership Pr
Slide 47: NHC: a young business with in-built growth
NHC: a young business with in- in-built growth Relatively young business with in-built growth through clients re-purchasing after 4 to 5 years as a greater number of NHC clinics starts to mature. Clinics > 4 years 47
Slide 48: Consumer Specialty Retailer, the Amplifon Experience
Consumer Specialty Retailer, the “A “Amplifon Experience” Amplifon, Worldwide Head Quarters Store, Milan, Italy: Opened 2009 48 48