Slide 1: Grupo Technos
ee GRUPOTECHNOS
Slide 2: Summary
1) Summary 2) Market Information 3) Company Highlights 4) Financial Data 2
Slide 3: Leadership, Cash Generation and Growth Potential
Leadership, Cash Generation and Growth Potential Leadership in Brazil • Leader in Brazil with estimated 36% market share • Best and most recognized watch brands focused on A, B and C classes • 2018 sales of approximately 2,4 million watches Significant competitive advantages • Top brands and outstan
Slide 4: Corporate Structure and Executive Board
Corporate Structure and Executive Board Key Shareholders Management Team Joaquim Ribeiro Miguel Cafruni • Chief Executive Officer • Chief Financial Officer River and Morgan Mercantile • BA Economics • Accounting Management Others Stanley Asset • Harvard University • FAPA University Management • Prev
Slide 5: Market Information
1) Summary 2) Market Information 3) Company Highlights 4) Financial Data 5
Slide 6: Why Do People Buy Watches?
Why Do People Buy Watches? Global consumption drivers Status symbol Fashion accessory Technological equipment Purchase drivers changed from functional commodity to aspirational consumption, regardless of price, geography or brand Global growth trends Emergence of smartwatches as a key product catego
Slide 7: New Product Trends: Smartwatches
New Product Trends: Smartwatches • Smartwatch sales grew significantly in the last two years in Brazil, with 64 thousands of units sold in 2017 and 130 thousands in 2018. • Smartwatch sales expected to grow at, approximately,109% until 2020 • Our smartwatches released reached the Top 20 best-selling
Slide 8: New Distribution Trends: Direct Retailing
New Distribution Trends: Direct Retailing • In the last ten years, a typical watch wholesale model of distribution has given place to increased investments in direct retailing, both in luxury and affordable brand categories. • As an example, both Swatch Group and Fossil invested heavily on the build
Slide 9: Competitive Landscape In The Brazilian Market
Competitive Landscape In The Brazilian Market Total watches sale in Brazil – Wholesale (R$ million) Local Producers 1.208 1.254 1.231 1.179 1.065 1.119 1.087 1.051 879 577 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Preço médio Participação 2018 de Concorrente Principais marcas Estrutura acion
Slide 10: Macroeconomic Conditions in Brazil
Macroeconomic Conditions in Brazil • The decline of the Brazilian watch sector in the last three years has been driven by the longest and most severe economic recession cycle in the history of the country. • Brazil showed a long cycle of macroeconomic growth and stability until the end of 2013, when
Slide 11: Watch Market Growth Opportunity
Watch Market Growth Opportunity • Challenging macroeconomic conditions aside, Brazil´s watch market has significant opportunities to grow. • Watch consumption per capita in Brazil is still well below developed markets. • Also, market is still overwhelmingly composed of mass market watches, but shoul
Slide 12: Company Highlights
1) Summary 2) Market Information 3) Company Highlights 4) Financial Data 12
Slide 13: Company History
Company History 1900: Technos 1980s: Technos 2002: Technos 2009: Euro added to the brand founded in launches Mariner licenses both Mormaii portfolio. 2013: Grupo Dumont 2017: Lauch Switzerland by and Seiko Saab acquisition of the first full Technos establishes its 2010: Mariner relaunched the Gunzin
Slide 14: Operational Business Model
Operational Business Model Brand and product development • Best known brands in the category Sales and • Healthy mix of owned and licensed brands distribution • Well balanced mix of • More than 8 thousand retailers bestsellers and new products and 10 thousand points of sale • New SKUs launched month
Slide 15: Brands Portfolio
Brands Portfolio HIGH MID HIG (>R$399) LOW (<R$200) LOW 15
Slide 16: Distribution Network
Distribution Network Top distribution network Direct relationship with more than 8 thousand active retailers representing more than 10 thousand points of sale Diversified and well balanced distribution network with no client representing more than 5.0% of sales Vast majority of sales done through sp
Slide 17: Supply Chain
Supply Chain 1 Suppliers in China and Japan • Supply chain of approximately 27 partners • Long term direct relationships, often exceeding 20 years, without distributors or middle men • Key advantage is flexibility and agility to bring Inovation (2017x2018) new products to market Implantation of the
Slide 18: Strong Growth Opportunities
Strong Growth Opportunities New products New channel development 3 Development or Core Business acquisition of new products leveraging 2 existing brands (Sunglasses, jewerly and smartwatches) Development of direct retail channel including 1 online, franchising and outlet stores Growth and developmen
Slide 19: Core Business: Smartwatches
Core Business: Smartwatches • Grupo Technos is the pioneer in Brazil in terms of the launch of smartwatches and fitness bands. • Promising initial sales results indicating strong consumer demand for the connected watch category. • Company benefits both from the sales of proprietary brands and from n
Slide 20: New Channel Development: Direct Retailing
New Channel Development: Direct Retailing 1 Outlets • Fourteen multibrand outlets with a pipeline of additional stores to be opened in 2018 • Direct sales channel for low turnover products. Important role in terms of the company´s inventory management strategy. 2 E-Commerce • Five direct-to-consumer
Slide 21: New Products: Eyewear and Jewelry
New Products: Eyewear and Jewelry • Expansion opportunities in adjacent fashion accessory segments • Leverage brand portfolio, management expertise and existing infrastructure • Large markets to tap: initial focus on eyewear and fashion jewelry • Supply chain in China, expertise in importing product
Slide 22: Financial Data
1) Summary 2) Market Information 3) Company Highlights 4) Financial Data 22
Slide 23: Operational Results
Operational Results • Recent decline in revenues and profits mainly driven by economic recession • Healthy cash generation and margins despite macroeconomic scenario Results Evolution (R$ MM) Margin Evolution (%) 433,7 58.4% 413,4 57.8% 55.6% 397,3 360,9 52.1% 340,1 47.0% 48.0% 321,7 45.6% 305,7 24.
Slide 24: Working Capital
Working Capital • We have gradually reduced our working capital since 2013 • Our net revenue decreased from 90.8% in 2015 to 71.9% in 2018 • Accounts payable increased due to our continuously work with postponement of term with suppliers • In inventories we reduced our coverage from 14 months to 7 m
Slide 25: Evolution of Net Debt
Evolutin of Net Debt • In March / 13 we acquired a debt of R $ 200M in the purchase of the former Dumont Group • Since then we have consistently reduced our exposure • In 2015 we made the decision to pay our investors extraordinary dividends of more than R$ 20M, being the only year we had no net deb
Slide 26: Federal Tax Incentives at the Manaus Free-Trade Zone
Tax Incentives at the Manaus Free-Trade Zone • The Manaus Free-Trade Zone (MFTZ) is an economic Local Assembly development model implemented by the Brazilian government to Purchase price : 100.0 create an economic centre in the Western Amazon (+) Freight and insurance : 5.00% 5.0 (+) II 2.40% 2.5 •
Slide 27: Disclaimer
Disclaimer • The material that follows is a presentation of general background information about Technos S.A. and its subsidiaries (the “Company”) as of the date of the presentation, solely for meetings held with potential investors in connection with the proposed offering outside of Brazil of commo