Kering Sa · EURONEXT:KER
Kering Sa — Debt Investor Presentation (November 2023)
35 slides from Kering Sa's debt investor presentation, November 2023
Slide 1: Inaugural GBP Bond Issuance Investor Presentation
INAUGURAL GBP BOND ISSUANCE INVESTOR PRESENTATION NOVEMBER 2023
Slide 2: Disclaimer
DISCLAIMER IMPORTANT NOTICE – PLEASE READ This document (the “Presentation”) is strictly confidential to the recipient and has been prepared by Kering (the “Company” and, together with its consolidated subsidiaries taken as a whole, the “Group”) for information purposes as a basis for discussion onl
Slide 3: Today's Speaker
TODAY’S SPEAKER ARMELLE POULOU Group CFO A graduate of HEC Business School in 1993, Armelle Poulou successively held a range of positions in France and worldwide, several financial functions at Procter & Gamble, Hewlett-Packard and EDF, before joining Kering in 2019 where she first managed the Corpo
Slide 4: Agenda
AGENDA COMPANY PRESENTATION PART 1: KERING AT A GLANCE PART 2: H1 AND Q3 FINANCIAL PERFORMANCE PART 3: TRANSACTION OVERVIEW PART 4: ESG UPDATE PART 5: APPENDIX Credit Investor Presentation – November 2023 4
Slide 5: Kering at a Glance
XG “4 KERING AT A GLANCE ee eee
Slide 6: Key Figures
KEY FIGURES GROUP RECURRING N E T I N C O M E AT T R I B U T AB L E GROUP REVENUE O P E R AT I N G I N C O M E TO THE GROUP €20,351m €5,589m €3,614m +15% reported vs. 2021 +11% vs. 2021 +14% reported vs. 2021 +9% comparable * vs. 2021 27.5% recurring operating margin F R E E C AS H F L O W NET DEBT
Slide 7: Kering as a Listed Company with a Strong Entrepreneurial Spirit
KERING AS A LISTED COMPANY WITH A STRONG ENTREPRENEURIAL SPIRIT Employee Institutional Individual shareholders Artémis investors shareholders Treasury shares 42.0% of capital 58.7% of voting rights 4.2% 52.1% 1.7% STABLE FAMILY SHAREHOLDING WITH LONG-TERM STRATEGY STRONG INSTITUTIONAL INVESTOR BASE
Slide 8: A Transformation Journey into a Leading Pure Luxury Player
A TRANSFORMATION JOURNEY INTO A LEADING PURE LUXURY PLAYER From a diversified conglomerate into a pure L u x u r y p l a ye r Pure Luxury player Steering our Houses in t h e i r n e xt s t a g e s o f growth to unleash their Investing in full potential our Houses Kering has become a leading pure Lux
Slide 9: Kering Has Become a Pure Luxury Player
KERING HAS BECOME A PURE LUXURY PLAYER TRANSFORMATION TIMELINE OVERVIEW Kering has become a pure Luxury player with a well-balanced geographical exposure, which has translated into superior growth and margin expansion. Launch of Kering PPR acquires PPR becomes Beauté, acquisition 42% in Gucci Kering
Slide 10: Developing a Complementary Ensemble of Iconic Luxury Houses
DEVELOPING A COMPLEMENTARY ENSEMBLE OF ICONIC LUXURY HOUSES OUR HOUSES DIFFERENT SCALES AND MATURITY (FY22 Revenue and Recurring Operating income in €m ) Soft Luxury Hard Luxury Adjacent businesses 27.5% 35.6% 14.4% 30.9% 21.0% 18.2% Other * Houses 2021 Revenue Rec. Op. income XX% Rec. Op. margin *
Slide 11: Steering Our Houses to Unleash Their Full Potential
STEERING OUR HOUSES TO UNLEASH THEIR FULL POTENTIAL FROM VISIBILITY / DESIRABILITY / SCALABILITY TO… ...VISIBILITY / DESIRABILITY / EXCLUSIVITY Increase Increase Reinforcing Scaling up Houses Houses exclusivity our Houses visibility visibility High High desirability desirability Revenue (€bn): Eleva
Slide 12: Expanding into Newer Luxury Segments
EXPANDING INTO NEWER LUXURY SEGMENTS KERING EYEWEAR KERING BEAUTÉ Launch of Kering Beauté to further develop an expertise in the Beauty category Feb. 2023 Oct. 2023 Creed acquisition 1 Internalization and organic growth 2 Portfolio expansion with the Richemont partnership 3 M&A • Successful dev elop
Slide 13: Investing in Growth Platforms with Innovation at Our Core
INVESTING IN GROWTH PLATFORMS WITH INNOVATION AT OUR CORE PRODUCTION & MANUFACTURING A DEMAND-DRIVEN SUPPLY CHAIN DIGITAL CAPABILITIES • Strategic parts of the production • AI p o we r e d m o d els t o i mp ro ve s h o rt - • Real-time access to a single source of such as prototyping, sampling and
Slide 14: H1 and Q3 Financial Performance
H1 AND Q3 FINANCIAL PERFORMANCE
Slide 15: Group Revenue for the First Nine Months of 2023
GROUP REVENUE FOR THE FIRST NINE MONTHS OF 2023 REVENUE BREAKDOWN BY SEGMENT % YoY change €M First 9M Change (%) Q3 Change (%) H1 Change (%) First 9M 23 Reported Comp. Q3 23 Comp. H1 23 Comp. Gucci 7,345 -5% -2% 2,217 -7% 5,128 +1% Saint Laurent 2,344 -2% +0% 768 -12% 1,576 +7% Bottega Veneta 1,214
Slide 16: Focus on Q3 Group Revenue
FOCUS ON Q3 23 GROUP REVENUE KEY HIGHLIGHTS REVENUE CHANGE (in €m and comparable change YoY) • REVENUE -13% REPORTED, -9% COMPARABLE – ADVERSE MACRO BACKDROP – RETAIL TRENDS IMPACTED BY W EAKER TRAFFIC AND -13% LOW ER CONTRIBUTION FROM ONLINE reported – W HOLESALE DOW N SHARPLY ON CONTINUING 5,137 R
Slide 17: Focus on Q3 Group Revenue by Segment and Region
FOCUS ON Q3 23 GROUP REVENUE REVENUE BREAKDOWN BY SEGMENT REVENUE BREAKDOWN BY REGION (as a % of Q3 total revenue and YoY reported change) In €m Change (%) Q3 23 Q3 22 RoW Western Europe Revenue Revenue Reported Comp. 7% (+0pt) 30% (+1pt) Gucci 2,217 2,581 -14% -7% Saint Laurent 768 916 -16% -12% Bo
Slide 18: Focus on Q3 Group Revenue by Channel and Region
FOCUS ON Q3 23 GROUP REVENUE BY CHANNEL AND REGION -6% R E T AI L I N C L . E - C O M M Y o Y D I R E C T L Y O P E R AT E D S T O R E S 1,722 +28 NET IN Q3 23 78% WESTERN NORTH JAPAN ASIA ROW EUROPE AMERICA VS. JUNE 23 PACIFIC -10% -21% +28% +1% -4% WHOLESALE WHOLESALE ROYALTIES 22% LUXURY BRANDS K
Slide 19: Focus on H1 Key Figures: A Year of Investment
FOCUS ON H1 23 KEY FIGURES: A YEAR OF INVESTMENT GROUP RECURRING OPERATING INCOME & MARGIN (€M & %) FCF FROM OPERATIONS (€M) NET DEBT (€M)*** 3,854 2,820 2,739 2,049 2,138 2,306 0.5x 28.4% 27.0% 0.3x H1 22 H1 23 H1 22 H1 23 excl. real YE 22 HYE 23 estate acquisition and disposal • INVESTING IN OUR H
Slide 20: Transaction Overview
TRANSACTION OVERVIEW
Slide 21: Key Credit Highlights
KEY CREDIT HIGHLIGHTS 1 KERING, A PROMINENT PURE LUXURY PLAYER 2 SOLID MEDIUM- AND LONG-TERM INDUSTRY GROWTH DRIVERS 3 NURTURING A COMPLEMENTARY ENSEMBLE OF ICONIC LUXURY HOUSES WITH STRONG DESIRABILITY SOPHISTICATION OF THE OFFER (DESIGN, MATERIALS AND CATEGORIES) AND SEGMENTATION THROUGH 4 PRODUCT
Slide 22: A Secured Liquidity with a Well-Balanced Bonds Distribution
A SECURED LIQUIDITY WITH A WELL -BALANCED BONDS DISTRIBUTION LIQUIDITY KERING BONDS DISTRIBUTION AS OF SEPT. 23 (IN €M) As of September 30, the outstanding bond debt of the Group was €8.9bn Average debt maturity: 5.8 years, average coupon: 2.79%. In €m End of June 23 1 600 Outstanding bonds 5,080 1
Slide 23: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES SHAREHOLDER ORGANIC RETURN GROWTH – Dividend payout at c.50% in average* – Continued investm ent in our houses and platform s – Share buybacks: 2% com pleted end of 2022 A HEALTHY FINANCIAL SITUATION AND FCF DEVELOP AND NURTURE GENERATION HIGH POTENTIAL ADJACENT BUSINES
Slide 24: Termsheet
TERMSHEET Issuer Kering (Ticker: KERFP, Country: FR) Issuer Rating A (stable) by S&P Expected Issue Rating A by S&P Active Bookrunners HSBC, NatWest Markets, Santander Issue Type Fixed Rates Notes Format Senior Unsecured, Dematerialized Notes Maturity [3] years [9] years Issue Size Benchmark Benchma
Slide 25: ESG Update
ESG UPDATE
Slide 26: External Recognition of Our ESG Performance
EXTERNAL RECOGNITION OF OUR ESG PERFORMANCE Kering is the only Luxury company systematically included in all main ESG ratings and rankings 2022 2023 2022 84/100 / 3rd CDP Climate A Included in DJSI World & Europe CDP Water A- since 2013 CDP Forests B/B (Cattle/Timber) 2023 2023 2022 73/100 Constitue
Slide 27: Our Climate Targets, Based on Science
OUR CLIMATE TARGETS, BASED ON SCIENCE SBTi 1.5°C BY 2030 -40% GHG SCOPE 1, 2 & 3 BY 2035 NET-ZERO BY 2050 1 2 3 In 2021, the Group revised its 2016 The Group committed to reduce its The Group committed to minimize its Science-based Targets to align with absolute GHG emissions by 40% on emissions and
Slide 28: Appendix
APPENDIX
Slide 29: Financial Performance
FINANCIAL PERFORMANCE €M H1 2023 H1 2022 Revenue 10,135 9,930 Gross margin 7,730 7,378 Recurring operating income 2,739 2,820 Other non-recurring operating income and expenses 0 (13) Financial result (204) (19) Income tax expense (692) (747) Share in earnings of equity-accounted companies 3 2 Net in
Slide 30: Free Cash Flow from Operations
FREE CASH FLOW FROM OPERATIONS H1 2023 Excl. real estate €M acquisition and disposal H1 2023 H1 2022 Cash flow before taxes, dividends and interests 3,435 3,435 3,503 Change in working capital requirement (354) (419) (476) Income tax paid (411) (419) (617) Net cash flow from operating activities 2,6
Slide 31: Change in Net Financial Debt
CHANGE IN NET FINANCIAL DEBT H1 2023 NET DEBT* BRIDGE In €m and Net Debt / EBITDA** ratio +488 +65 3,854 +95 +1,724 2,306 0.3x 0.5x +1,314 -2,138 Net debt at FCF from Real estate Dividends paid Net interest paid Lease Net financial Net debt at Dec. 31, 2022 operations excl. acquisition and dividends
Slide 32: Balance Sheet
BALANCE SHEET €M June 30, 2023 Dec. 31, 2022 Goodwill, brands and intangible Assets 11,627 11,410 Lease right-of-use Assets 4,672 4,929 Property, plant and equipment 5,125 3,388 Net other Non-current Assets (Liabilities) 163 753 Non-current lease Liabilities (4,219) (4,420) Total Net Non-current Ass
Slide 33: Dividend Up 17% in 2022
DIVIDEND UP 17% IN 2022 DIVIDEND PER SHARE 14.00* 12.00 (In €) 10.50 8.00 8.00 2018 2019 2020 2021 2022 *€4.50 per share interim dividend paid on January 18, 2023 €9.50 per share balance paid on May 4, 2023 DIVIDEND PAYOUT 96.4% 82.1% 47.0% 47.8% 45.2% 50.7% 44.5% 50.0% 46.1% 31.3% 2018 2019 2020 20
Slide 34: Kering Houses and Brands
Gucci • Saint Laurent • Bottega Veneta • Balenciaga • Alexander McQueen • Brioni Boucheron • Pomellato • Dodo • Qeelin • Ginori 1735 Kering Eyewear • Kering Beauté
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