Safilo Group S.p.a. · MIL:SFL
Safilo — FY 2023 Earnings Presentation
29 slides from Safilo's earnings presentation, Mar 14, 2024
Slide 1: FY 2023 Results
FY 2023 Results March 14, 2024
Slide 2: Disclaimer
// 2 DISCLAIMER This presentation may contain forward looking statements based on current expectations and projects of the Group in relation to future events. Due to their specific nature, these statements are subject to inherent risks and uncertainties, as they depend on certain circumstances and fa
Slide 3: CEO statement on 2023
// 3 “In a complex year like 2023, in which a tense and unstable geopolitical and macroeconomic environment added to our direct challenges, it was particularly important for us to achieve a level of revenues and adjusted operating margins very close to the strong performance recorded in 2022. The pa
Slide 4: Countering our headwinds
// 4 COUNTERING OUR HEADWINDS… FY 2023 RESULTS • Challenging market conditions in North America • Significant business drop in former GV chains • Forex and inflationary pressures
Slide 5: ...while working on our priorities
// 5 …WHILE WORKING ON OUR PRIORITIES FY 2023 RESULTS • Reviewing our industrial footprint: - Disposal of the Longarone plant, full employment of all its workers and preservation of the sector’s know-how
Slide 6: Solidifying our brand portfolio for the long-term
// 6 SOLIDIFYING OUR BRAND PORTFOLIO FOR THE LONG-TERM FY 2023 RESULTS • Early renewal of core partnerships: - Unprecedented visibility on the license portfolio (around six years) NEW:
Slide 7: Progress on mid-term business plan pillars
// 7 SOLIDIFYING OUR BRAND PORTFOLIO FOR THE LONG-TERM FY 2023 RESULTS • Progress on the pillars of our mid-term business plan: - home brands at ̴ 44%2 of sales from 42% - online channels at ̴ 16%2 of sales from 15% thanks to Blenders and Smith’s DTC business
Slide 8: Economic & financial highlights
// 8 ECONOMIC & FINANCIAL HIGHLIGHTS FY 2023 RESULTS • 2023 organic1sales approach 2022 level and grow net of the business in the former GV chains • Q4 sales growth @cFX marks the best performance of the year • Strong improvement in gross margin reinvested in the strategic projects to support the Gr
Slide 9: Sales performance: total
// 9 SALES PERFORMANCE FY 2023 RESULTS FY 2023 TOTAL 1,024.7 €M -4.8%/-2.3% @cfx +1.7% organic1,ex GV Q4 2023 239. 6 €M -2.4%/+2.0% @cfx, +3.6% ex GV • Positive FY organic1 and ex GV performance driven by home brands, in particular Carrera, Polaroid and Blenders • Boss, Tommy Hilfiger, Carolina Herre
Slide 10: Sales performance: North America
// 10 SALES PERFORMANCE FY 2023 RESULTS FY 2023 NORTH AMERICA 452.9 €M -9.0%/-6.4% @cfx -3.7% organic1 Q4 2023 111.9 €M -2.2%/+3.0% @cfx • Prudent order behaviour of customers and poor sun season affecting contemporary eyewear segment in traditional channels • Smith’s sport business penalized by cus
Slide 11: Sales performance: Europe
// 11 SALES PERFORMANCE FY 2023 RESULTS FY 2023 EUROPE 411.8 €M -3.1%/-0.6% @cfx +7% organic1, ex GV Q4 2023 90.7 €M -1.7%/+2.5% @cfx,+6% ex GV • Q4 back to growth in Europe proves market resilence and Safilo’s competitive proposition • FY substantially in line @cfx with the strong-growth sales reco
Slide 12: Sales performance: Asia & Pacific
// 12 SALES PERFORMANCE FY 2023 RESULTS FY 2023 ASIA & PACIFIC 59.9 €M +3.9%/+9.1% @cfx Q4 2023 16.2 €M -0.9%/+4.5% @cfx • Growth in Asia driven in particular by positive development of BOSS, Ports and Polaroid in China and Hong Kong • Smith continuing to grow in both Australia and Japan
Slide 13: Sales performance: Rest of World
// 13 SALES PERFORMANCE FY 2023 RESULTS FY 2023 REST of WORLD 100.1 €M +3.8%/+3.9% @cfx Q4 2023 20.8 €M -7.5%/-6.6% @cfx • Carrera and Tommy Hilfiger driving double-digit growth of India and Middle-Eastern markets • Flattish year for Latin America, mainly due to tough Q4 comps in Brazil
Slide 14: Economic performance: adjusted gross margin
// 14 ECONOMIC PERFORMANCE FY 2023 RESULTS FY 2023 ADJ.3 GROSS MARGIN 58.7 % +320 bps vs 55.5% Q4 2023 5 9 .5% +280 bps vs 56.7% CLOSE TO S A F I L O ’ S A L L T I M E H I G H S : • Effective pricing policy and positive channel mix • Efficiences in procurement activities • Lower inbound transportati
Slide 15: Economic performance: adjusted EBITDA margin
// 15 ECONOMIC PERFORMANCE FY 2023 RESULTS FY 2023 ADJ.3 EBITDA MARGIN 9.0 % -40 bps vs 9.4% Q4 2023 6 .9% +40 bps vs 6.5% CLOSE TO 2 0 2 2 L E V E L , L A S T 7 - Y R H I G H : • Negative operating leverage • Higher personnel costs due to inflationary pressures and logistic expenses on strong DTC b
Slide 16: Economic performance: adjusted net result
// 16 ECONOMIC PERFORMANCE FY 2023 RESULTS FY 2023 ADJ.3 NET RESULT 14.0 €M vs 58.3 €M in 2022 DRIVEN BY OPTIONS ON MINORITIES: • ̴90% of the negative performance explained by the different dynamics on the put & call options on the minority-interests • Higher net financial charges due to the increase
Slide 17: Financial performance: free cash flow and net debt
// 17 FINANCIAL PERFORMANCE FY 2023 RESULTS FY 2023 FREE CASH FLOW* GROUP NET DEBT at Dec. 31, 2023 35.1 €M 82.7 €M vs 113.4 €M 43.7 €M pre -IFRS 16 FIRST POSITIVE FCF IN MANY YEARS: • Effective management of inventory improving working capital • Q4 positive Free Cash Flow of 13 €M supported by stro
Slide 18: Science Based Targets approved
SCIENCE BASED TARGETS DRIVING AMBITIOUS CORPORATE CLIMATE ACTION DATE OF APPROVAL 24 January 2024 APPROVED Sy NEAR-TERM SCIENCE-BASED TARGETS The Science Based Targets initiative has validated that the science-based greenhouse gas emissions reductions target(s) submitted by Safilo Group S.p.A. confo
Slide 19: Q&A
Q&A
Slide 20: Appendices
Appendices
Slide 21: Notes to the presentation
// 21 NOTES TO THE PRESENTATION 1 Organic sales performance is provided at constant exchange rates and includes only the home brands and not terminated licenses, present in both of the compared periods, excluding the business attributable to the supply contract with Kering Eyewear. 2 % of sales, exc
Slide 22: 2023 net sales by geographical area
// 22 2023 NET SALES BY GEOGRAPHICAL AREA Change at Change at current forex constant forex (Euro million) 2023 % 2022 % Reported Reported Organic2 North America 452,9 44,2 497,7 46,2 -9,0% -6,4% -3,7% Europe 411,8 40,2 424,9 39,5 -3,1% -0,6% -1,3% Asia Pacific 59,9 5,8 57,7 5,4 +3,9% +9,1% +9,6% Res
Slide 23: 2023 income statement
// 23 2023 INCOME STATEMENT % on % on Key Economic highlights - in Euro million 2023 net sales 2022 net sales % Change Net sales 1,024.7 1,076.7 -4.8% Performance at cFX -2.3% Organic1 performance at cFX -1.3% Gross profit 585.7 57.2% 597.4 55.5% -2.0% Adjusted 3 Gross profit 601.8 58.7% 597.6 55.5%
Slide 24: Q4 2023 trading update
// 24 Q4 2023 TRADING UPDATE % on % on Key Economic highlights - in Euro million Q4 2023 net sales Q4 2022 net sales % Change Net sales 239.6 245.4 -2.4% Performance at cFX +2.0% Gross profit 134.8 56.2% 139.1 56.7% -3.1% Adjusted 3 Gross profit 142.6 59.5% 139.2 56.7% +2.4% EBITDA 4.9 2.0% 13.3 5.4
Slide 25: Balance sheet as of December 31, 2023
// 25 BALANCE SHEET AS OF DECEMBER 31, 2023 December 31, 2023 December 31, 2022 Change Net working capital 260.0 292.3 (32.4) Tangible, Right of Use, and Intangible fixed assets 230.9 281.1 (50.2) Goodwill 33.7 34.9 (1.2) Non-current assets held for sale 0.0 2.3 (2.3) Other assets / (liabilities), n
Slide 26: Working capital as of December 31, 2023
// 26 WORKING CAPITAL AS OF DECEMBER 31, 2023 December 31, 2023 December 31, 2022 Change Trade receivables 203.1 214.0 (11.0) Inventories 229.0 259.0 (30.0) Trade payables (172.1) (180.7) 8.6 Net working capital 260.0 292.3 (32.4) % on net sales 25.4% 27.1%
Slide 27: 2023 free cash flow
// 27 2023 FREE CASH FLOW Free Cash Flow - in Euro million 2023 2022 Cash Flow from operating activities before change in working capital 26.2 71.5 Change in working capital 21.5 (62.4) Cash Flow from operating activities 47.7 9.2 Cash Flow from investment/disinvestment activities (2.7) (15.7) Cash
Slide 28: Exchange rates
// 28 EXCHANGE RATES (Appreciation)/ (Appreciation)/ As of Depreciation Average for Depreciation Currency Code December 31, 2023 December 31, 2022 % 2023 2022 % US Dollar USD 1.1050 1.0666 3.6% 1.0813 1.0531 2.7% Hong-Kong Dollar HKD 8.6314 8.3163 3.8% 8.4650 8.2451 2.7% Swiss Franc CHF 0.9260 0.984
Slide 29: Strong brand portfolio
// 29 STRONG BRAND PORTFOLIO TO REACH A BROAD AUDIENCE OF TARGET CONSUMERS • The right offer for all distribution channels, for all customer types • Centered on contemporary segment where the highest demand of eyewear is • Broad based offer across genders, ages, categories & price segments • Appeali