Amplifon Spa · MIL:AMP
Amplifon Spa — Investor Day (March 2018)
63 slides from Amplifon Spa's investor day presentation, Mar 26, 2018
Slide 1: 2018 Capital Markets Day
2018 Capital Markets Day Reshaping the hearing care retail around the customer Milan | March 26th, 2018
Slide 2: Disclaimer
Disclaimer This presentation contains management preliminary estimates and forward-looking statements, including estimates on Amplifon’s future financial performance and the expected development of the hearing aids industry. These information and statements are based on estimates and assumptions mad
Slide 3: Today's agenda
Today’s agenda Enrico Vita 11:00 – 11:30 Reshaping the hearing care retail around the customer Chief Executive Officer Giulio Pizzini 11:30 – 12:00 An attractive industry with long-term growth ahead Chief Strategic Development Officer Alessandro Bonacina 12:00 – 13:00 Fast forward in the age of cost
Slide 4: Reshaping the hearing care retail around the customer
Reshaping the hearing care retail around the customer Enrico Vita Chief Executive Officer
Slide 5: Today's objectives
2018 Capital Markets Day Today’s objectives Introduce Share our vision Provide guidance our new of reshaping the on our increasing Leadership hearing care retail financial targets Team Capital Markets Day | March 26th, 2018 5
Slide 6: Our new Leadership Team
Our new Leadership Team Corporate EVP Officers Regions Alessandro Bonacina Gabriele Chiesa Marc Lundeberg Chief Marketing Officer Chief Information Officer EVP AMERICAS Cristian Finotti Gabriele Galli Iacopo Pazzi Chief Procurement Officer Chief Financial Officer EVP EMEA Francesca Morichini Giulio
Slide 7: Amplifon today
Amplifon today ~10% global market share €1.27bn revenues in 2017 #1 GLOBAL LEADER 22 countries, 5 continents IN HEARING CARE RETAIL #1 or #2 in most markets ~10,000 points of sale ~14,000 people Capital Markets Day | March 26th, 2018 7
Slide 8: Delivery on our 2016 promises
Delivery on our 2016 promises Strategic pillars ▪ Delivered total growth > 2x vs. market STRENGTHEN ▪ Significantly expanded network coverage in Germany, France, Spain and Portugal (~430 LEADERSHIP IN shops)1 CORE MARKETS ▪ Strongly invested in the US to accelerate organic growth ▪ Rolled out the gl
Slide 9: Delivery on our 2016 promises: key targets
Delivery on our 2016 promises Key targets 2016 Plan targets 2016 actual 2017 actual vs. 2015 vs. 2016 Mid-to-high SALES GROWTH single digit +10.4% +12.5% in local currencies CAGR 2015-2018 PROFITABILITY >150bps INCREASE EBITDA margin +50bps +50bps recurring 2018 vs.2015 +600 Stores NETWORK EXPANSION
Slide 10: Creating value for Shareholders
Creating value for Shareholders Outperformed all indexes Total Shareholder Returns from January 2016 – to date1 100% 80% +82% 60% 40% +27% 20% EURO STOXX SMALL 0% +18% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17
Slide 11: Growth drivers supporting our proven business model
Growth drivers supporting our proven business model New mega-trends supporting secular drivers SECULAR TRENDS EMERGING TRENDS Demographic Consumer behaviors Population growth of over 65 years Active ageing is a strong mega- old is >3% globally and >2% in trend, consumers are living way developed wor
Slide 12: Strategic pillars to 2020
Strategic pillars to 2020 Evolution to reshape the hearing care retail around the customer STRENGTHEN LEADERSHIP IN CORE MARKETS INNOVATIVE AND DISTINCTIVE CUSTOMER EXPERIENCE EFFECTIVE EXECUTION CAPABILITIES Capital Markets Day | March 26th, 2018 12
Slide 13: Fast forward in the age of the customer
Fast forward in the age of the customer Solid strengths and plans to deliver 2018-20 ambition and step-change in innovation to drive the next wave of growth D ATA BRAND CUSTOMER Superior customer Effective branding Long lasting knowledge & advertising customer loyalty Leverage unmatched ‘Top of mind
Slide 14: 2020 Key financial targets
2020 Key financial targets Further increasing our ambitions SALES GROWTH High-single digit in local currency CAGR1 2017-2020 EBITDA Margin ~18.5% recurring in 2020 CUMULATED OPERATING ~€600 million 2018 - 2020 CASH FLOW 1. Compound Annual Growth Rate Capital Markets Day | March 26th, 2018 14
Slide 15: An attractive industry with long-term growth ahead
An attractive industry with long-term growth ahead Giulio Pizzini Chief Strategic Development Officer
Slide 16: An attractive industry
An attractive industry Update on key trends Long-term sustained growth supported by secular trends MARKET (demographics, penetration) PRODUCTS Enhancing user experience beyond audiological features COMPETITION Fragmented retail market with few international chains CONSUMERS Low consumer awareness an
Slide 17: Long-term sustained growth driven by secular trends
Long-term sustained growth driven by secular MARKET trends Market size and growth EUR Billion Demographics ▪ Aging population ~4% especially in developed ~4% countries ~15.2 ▪ Increasing exposure to ~13.0 ~13.5 noise pollution Penetration ▪ Increasing awareness ▪ Improving technology ▪ Growing welln
Slide 18: Penetration will continue to improve
Penetration will continue to improve MARKET Penetration example in developed world – USA market ▪ In the developed world HA Median penetration is penetration age improving both for ~10% Hearing loss disabling losses and (more slowly) for mild Disabling loss losses (>40 db) ~30% ~70% ~72 ▪ In emergin
Slide 19: Global retail market concentrated in developed countries
Global retail market concentrated in developed MARKET countries Hearing aids global retail market Developed countries EUR Billion ▪ US alone represents ~40% of global retail market value 13.5 15.2 ▪ Following 5 countries (Germany, France, Japan, 12% 14% Canada, Italy) account for additional ~30% 88%
Slide 20: China is a sizeable opportunity for Amplifon
China is a sizeable opportunity for Amplifon MARKET Hearing aids emerging countries Chinese market key insights retail market ▪ >1M units by 2020E growing at >10% per year In value ▪ Very low penetration (~5%) ▪ ASP over 500€ for premium segment (~30% of units) 12% 14% ▪ Specialist retailers channel
Slide 21: Current innovation cycle focused on enhancing user experience
Current innovation cycle focused on enhancing PRODUCTS user experience beyond audiological features ▪ Rechargeable products launches in 2017 have been markedly successful RECHARGEABILITY ▪ Proof that innovation in delivering real benefit to customers can be very valuable ▪ Phone connectivity becomin
Slide 22: Fragmented global retail market
Fragmented global retail market COMPETITION Global retail share by segment Still very INDEPENDENTS ~50% ▪ Players with <10 PoS, under gradual consolidation relevant ▪ Very few international retail players (~25% of the global retail market, of which almost 10% is Few SPECIALTY represented by Amplifon
Slide 23: Fast forward in the age of the customer
Fast forward in the age of the customer Alessandro Bonacina Chief Marketing Officer
Slide 24: Reshaping the hearing care retail around the customer
Reshaping the hearing care retail around the customer Ready to deliver 2018-20 ambition and accelerating innovation to drive the next wave of growth D ATA BRAND CUSTOMER Superior customer Effective branding Long lasting knowledge & advertising customer loyalty Leverage unmatched ‘Top of mind’ Offer
Slide 25: Leveraging data to deliver customer-driven strategy
Leveraging data to deliver customer-driven strategy DATA Strengthen our leadership in data, to create a distinctive knowledge to tailor products, services and experiences around needs of customers Best-in class Big data infrastructure Amplifon collection and capabilities ‘Consumer Lab’ Collect and N
Slide 26: Amplifon 'Consumer lab' is building unique customer knowledge
Amplifon ‘Consumer lab’ is building a unique customer knowledge in the industry DATA New powerful insights, outcome of a data project involving thousands of consumers, across 2 continents, for one year Customer Research Hearing Living with journey & discovery assessment hearing aids & counseling Cus
Slide 27: "Top of mind" brand to drive penetration and share
“Top of mind” brand to drive penetration and share BRAND Amplifon Brand, leader in equity and consideration, is growing at high single digit p.a., with ambition to go further Scale-up Content Digital media strategy factory acceleration Leverage on scale, Step-change in Accelerate further optimizing
Slide 28: Global scale and strong partnerships to outperform market growth
Global scale and strong partnerships to outperform BRAND market growth Increase penetration at higher efficiency Media Digital Communication CX Service Design Step-up media performance Optimize costs through scale Country portfolio strategy Capital Markets Day | March 26th, 2018 28
Slide 29: First global hero campaign: The new generation
First global hero campaign: The new generation BRAND Reach a new untapped customer segment Capital Markets Day | March 26th, 2018 29
Slide 30: First strong results from "The new generation" campaign
First strong results from “The new generation” campaign BRAND The campaign in a nutshell Launched in 7 EMEA countries Multichannel advertising campaign (TV, Digital Media, In-store materials and Direct Marketing) First strong results 5 million +100% +20% Online Website In-store video views visits up
Slide 31: Become the undisputed leader in digital
Become the undisputed leader in digital BRAND Reach a new untapped customer segment Personalised Best-in-class Digital leader advertiser digital technology Best digital properties Digital top of mind Website platform SEO leadership player service design and Lead generation technology machine Data ma
Slide 32: Our digital transformation delivered exciting results in 2017
Our digital transformation delivered exciting results in 2017 and will accelerate further BRAND 2017 achievements 2018-2020 key initiatives Web-redesign in 15 countries Start leveraging global partnerships with Google and Facebook Advanced online booking in 5 markets Become number 1 in SEO Giant lea
Slide 33: Become "Partner of choice" for all customers through data and technology
Become “Partner of choice” for all customers through data and technology CUSTOMER Increase customer life-time value reducing repurchase cycle Advanced Unique lifecycle statistical Top notch management modeling technology Evolution of Big data in action New CRM platform customer lifecycle delivering
Slide 34: 2018: Launch year for our new innovation strategy
2018: Launch year for our new innovation strategy INNOVATION Key differentiator Our vision Solution for Long unmet customer lasting assets needs Capital Markets Day | March 26th, 2018 34
Slide 35: Introducing Amplifon product line
Introducing Amplifon product line A new ‘product-as-a-platform’ strategy to own product category and get INNOVATION long lasting competitive advantage Access and manage Differentiate from hearing aid competition usage data ‘Consumerize’ Optimize portfolio hearing aids and and supply chain own the he
Slide 36: Amplifon product line to reinvent the way hearing aids are perceived
Amplifon product line to reinvent the way hearing aids are perceived INNOVATION We have reimagined our world by placing customers first New sales experience Only the best and 4 product families built through enhanced New service packages most innovative around customer needs Amplifon 360 AMPLI-EASY
Slide 37: Amplifon product line to own hearing care innovation
Amplifon product line to own hearing care innovation and consumerize hearing aids INNOVATION Rule media Boost digital Serve customers Innovate retail Inspiring content New website Data and product New in-store brought to the market product experience enables CRM new experience including via an unmat
Slide 38: Amplifon product line to access hearing aid usage data
Amplifon product line to access hearing aid usage data to offer personalized experiences INNOVATION In-store At home Experience Real time personalization, messages via via Amplifon 360 CRM Everywhere and every time Medical community Tailored services Proprietary studies for broader and support inter
Slide 39: Innovation to foster customer experience beyond product and store
Innovation to foster customer experience beyond product and store INNOVATION Macro journey from the Amplifon ‘Consumer lab’ Suggest the product Gathering opinions Test Amplifon 360 Buy the product Regular visit to a friend Awareness Consideration Use Loyalty Test Purchase Loyalty Advocacy Collecting
Slide 40: Introducing HIVE: the Amplifon multi-channel ecosystem
Introducing HIVE: the Amplifon multi-channel ecosystem INNOVATION HIVE Is the very first ecosystem in the hearing care industry A pervasive, pioneering environment able to complete and enhance Amplifon’s brand experience seamlessly for all stakeholders on all existing touchpoint, creating new ones t
Slide 41: HIVE: a future proof innovative proprietary platform
HIVE: a future proof innovative proprietary platform INNOVATION Our R&D engine going forward, leading to solid long-lasting competitive advantage Service & experience enabler Open & innovative Data driven Amplifon IP Capital Markets Day | March 26th, 2018 41
Slide 42: Introducing MyAmplifon APP
Introducing MyAmplifon APP: the very first HIVE touchpoint INNOVATION Capital Markets Day | March 26th, 2018 42
Slide 43: Our ecosystem is a platform for continuous innovative services
Our ecosystem is a platform to offer continuous innovative services along the full customer INNOVATION journey Macro journey Awareness Consideration Trial Use Loyalty Test Purchase Loyalty Advocacy New Services that will enhance the experience of the customer across touch points, enabled by the ecos
Slide 44: Introducing Amplifon Companion
Introducing Amplifon Companion INNOVATION Capital Markets Day | March 26th, 2018 44
Slide 45: Amplifon proprietary differentiator: the Companion
Amplifon proprietary differentiator: the Companion INNOVATION The Companion Companion proprietary algorithm First digital companion based A trigged event algorithm based on: on a triggered event algorithm ▪ Time that understands customer’s ▪ Hearing aid data needs and provides useful ▪ Appointments
Slide 46: Multi-channel ecosystem: short-term services agenda
Multi-channel ecosystem: short-term services agenda, only the starting point INNOVATION Macro journey Awareness Consideration Trial Use Loyalty Test Purchase Loyalty Advocacy New Services that will enhance the experience of the customer across touch points, enabled by the ecosystem Hearing test onli
Slide 47: Multi-channel ecosystem: our open innovation platform going forward
Multi-channel ecosystem: our open innovation platform going forward INNOVATION Conversational Remote Mobile health Brain training machines adjustment 24/7 Ask questions and Bringing our experts Personal customer Amplifon technology receive answers closer and 24/7 profile with clinical to re-train th
Slide 48: Life changing and growth driving innovation
Life changing and growth driving innovation INNOVATION Capital Markets Day | March 26th, 2018 48
Slide 49: Amplifon 2020: fast forward in the age of the customer
Amplifon 2020: fast forward in the age of the customer Own and Top of mind Long lasting leverage big data global brand customer loyalty Industry innovation leader Solid strengths and plans to deliver our 2018-20 ambition Step-change in innovation and R&D to support the next growth wave Capital Marke
Slide 50: Execution on a solid strategy: 2020 financial targets
Execution on a solid strategy: 2020 financial targets Gabriele Galli Chief Financial Officer
Slide 51: 2017: another set of record results
2017: another set of record results Successfully executing on a solid strategy ▪ €1.27bn; +12.5% in LC vs. 2016 ‒ Outpacing the global hearing care retail market RECORD REVENUES • +6.6% organic growth vs. 3.5% market (~2x market growth) • Increased contribution from M&A (+5.9%) ‒ Balanced growth acr
Slide 52: Clearly defined set of financial priorities
Clearly defined set of financial priorities Increasing ambitions on Sales & EBITDA, with additional strong focus on EPS and Cash Flow TOP-LINE GROWTH EBITDA EXPANSION OPERATING CASH FLOW EPS ACCELERATION CONTINUED IMPROVEMENT Deliver great shareholder returns Capital Markets Day | March 26th, 2018 5
Slide 53: Three key components fueling top-line growth
Three key components fueling top-line growth Consistent, reliable and diversified drivers GEOGRAPHIC ORGANIC GROWTH M&A EXPANSION ▪ Expected continued steady ▪ Piecemeal acquisition strategy ▪ China: a sizeable opportunity for market growth at ~+4% p.a. focused on selected core countries long-term g
Slide 54: Continued EBITDA expansion while investing for growth
Continued EBITDA expansion while investing to drive long-term sustainable growth Scale and optimization activities more than compensate high investments for growth PROFITABILITY DRIVERS INVESTMENTS TO SUSTAIN GROWTH SCALE Scale effect on fix-cost base ~8% of revenues in 2017 MARKETING Expected ~15%
Slide 55: Steady EPS growth also via financial expenses reduction
Steady EPS growth also via financial expenses reduction Building value through debt refinancing ▪ Net Financial Position containment and optimization – Reduction of available cash on Balance Sheet also via Revolving Credit Facilities ▪ Refinancing of Bond with Bank and Revolving Credit Facilities –
Slide 56: Tax rate reduction contributing to EPS acceleration
Tax rate reduction contributing as well to EPS acceleration ▪ Utilization of non-accrued tax assets following improved financial performance in selected markets EPS ACCELERATION ▪ 5 years (2015-2019) tax benefit related to Patent Box in Italy for Amplifon trademark ▪ Opportunity from 2018 Italian Bu
Slide 57: Strong Operating Cash Flow will support increasing Capex & M&A
Strong Operating Cash Flow will support increasing Capex & M&A to foster Company’s growth OPERATING CASH FLOW CAPEX CASH-OUT FOR M&A ▪ High Cash Flow Conversion1 ▪ Network expansion and upgrade ▪ Continued sustained pace of – ~80% in 2017 ‒ ~200 openings in 2018-2020 piecemeal acquisitions in select
Slide 58: IFRS 15 will have a marginal accounting impact
IFRS 15 will have a marginal accounting impact on revenues and profitability IFRS 151 - MAIN CHANGES IMPACT ON KEY METRICS ▪ IFRS 15 establishes more in detail when and how much ▪ For a growing business, revenues deferral higher than revenue to recognize revenues reversal ▪ Main changes: ‒ Marginal
Slide 59: 2020 Key financial targets
2020 Key financial targets Further increasing our ambitions SALES GROWTH High-single digit in local currency CAGR1 2017-2020 EBITDA Margin ~18.5% recurring2 in 2020 CUMULATED OPERATING ~€600 million 2018 - 2020 CASH FLOW 1. Compound Annual Growth Rate 2. Excludes IFRS 15 & 16 Capital Markets Day | M
Slide 60: Closing remarks
Closing remarks Enrico Vita Chief Executive Officer
Slide 61: A long way to grow
A long way to grow Closing remarks SUCCESSFUL TRACK RECORD OF STRONG PROFITABLE GROWTH EXCELLENT EXECUTION ON STRATEGIC PILLARS LEADING INNOVATION IN THE CUSTOMER EXPERIENCE AMBITIOUS FINANCIAL TARGETS TALENTED, MOTIVATED, AMBITIOUS TEAM Capital Markets Day | March 26th, 2018 61
Slide 62: Q&A session
amplifon Q&A session
Slide 63: Investor Relations Contacts
Investor Relations Contacts FRANCESCA RAMBAUDI PAOLA BEZZI ELISA GUIDOTTI OLGA LEPECHKINA Director Junior specialist Stagiaire Assistant Tel: +39 02 5747 2261 Tel: +39 02 5747 2310 Tel: +39 02 5747 2317 Tel: +39 02 5747 2542 francesca.rambaudi@amplifon.com paola.bezzi@amplifon.com elisa.guidotti@amp