Safilo Group S.p.a. · MIL:SFL
Safilo — FY2022 Earnings Presentation
93 slides from Safilo's earnings presentation, Mar 10, 2023
Slide 1: Capital Market Day
C A P I TA L M A R K E T DAY MARCH 10, 2023
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 f
Slide 3: Today's Agenda
// 3 AG E NDA today’s 2022 RESULTS SAFILO TODAY: OUR ACHIEVEMENTS THE EYEWEAR SECTOR SAFILO VISION STRATEGY FOR A BALANCED PORTFOLIO MEDIUM-TERM TARGETS
Slide 4: 2022 Results
2022 RESULTS
Slide 5: Another Year of Net Sales Growth
// 5 ANOTHER YEAR OF NET SALES GROWTH 2022 1,076.7 €M 2022 RESULTS Q 4 NE T SALES +11.1% 245.4 €M +4.2% @cFX +5.7% -0.6% @cFX +7.7% organic 1 +0.7% organic 1 Smith, Carrera & Polaroid up double-digits Positive quarter for Smith and Blenders Leading and new licenses delivered solid growth Europe very
Slide 6: Strong Gross Margin Improvement
// 6 STRONG GROSS MARGIN IMPROVEMENT 2022 2022 RESULTS 597.4 €M GROSS MARGIN 55.5% Q 4 GROSS PROFIT 139.1 €M +19.1% GROSS MARGIN 56.7 % +380 bps +15.1% +470 bps Early completion of the cost of Richer sales mix by distribution goods sold saving plan channel Positive price/mix dynamics Receding inflati
Slide 7: Further Recovery of Adj. EBITDA
// 7 FURTHER RECOVERY OF ADJ. 2 EBITDA 2022 101.2 €M 2022 RESULTS ADJ. 2 EBITDA MARGIN 9.4 % Q4 ADJ. 2 EBITDA 15.9 €M 2 ADJ. EBITDA 6.5 % +24.2% +100 bps +25.3% +100 bps Higher marketing investments to Continued investments in support the growth of home brands brands and digitalization Increase in i
Slide 8: Adj. Net Result
// 8 ADJ. 2 NET RESULT 2022 2022 RESULTS 58.3 €M ADJ. 2 NE T MARGIN 5.4 % +112.6% +260 bps Significant reduction of financial charges mainly thanks to improved capital structure Gain on liabilities for options on non-controlling interests broadly in line with 2021
Slide 9: Financial Performance
// 9 FINANCIAL PERFORMANCE 2021 2022 2022 RESULTS GROUP NET DEBT 94.0 113.4 Group net debt pre IFRS-16 52.8 69.6 Financial leverage also pre IFRIC SaaS 0.7x 0.7x FREE CASH FLOW (2.7) (16.5) Cash Flow from operating activities 17.3 9.2 Cash Flow for organic investments (9.8) (15.7) Strong Cash Flow f
Slide 10: Safilo Today: Our Achievements
Safilo Today: OUR ACHIEVEMENTS
Slide 11: 2022 Concludes Years of Effective Turnaround
// 11 SAFILO TODAY: OUR ACHIEVEMENTS 2022 CONCLUDES 4 YEARS OF EFFECTIVE TURNAROUND OUR ACHIEVEMENTS Home brands acceleration Expotential growth Growth drivers shaping & diversified set of licenses of Online business Product and Geographic mix Structural Profit and Financial Solidity Margin Expansion
Slide 12: Net Sales Turnaround
// 12 NET SALES TURNAROUND In €M and % change @cFX OUR ACHIEVEMENTS +13% 2022 VS 2018 +3 % In 2022 Net Sales exceeded CAGR 1,077 the goal of the previous Plan 970 911* 939 * to return the Group to around 780 €1bn sales by 2024 2018 2019 2020 2021 2022 *Continuing operations, excluding retail
Slide 13: Home Brands Acceleration
// 13 HOME BRANDS ACCELERATION % of HOME BRANDS on sales3 OUR ACHIEVEMENTS ̴+9% CAGR 4 42 % Home brands today at 42% 32% from 32% in 2018 Diverse set of licenses, with no concentrated exposure & broad consumer reach 2018 2022
Slide 14: Exponential Growth of Online Channels
// 14 EXPONENTIAL GROWTH OF ONLINE CHANNELS % of ONLINE BUSINESS on sales3 OUR ACHIEVEMENTS ̴ 4 .5x 15 % Online channels today at 15% 4% from 4% in 2018 Continued strong focus on customers playing in core distribution channel 2018 2022
Slide 15: Growth Drivers Shaping Product Mix
// 15 GROWTH DRIVERS SHAPING PRODUCT MIX % of SPORT BUSINESS on sales3 OUR ACHIEVEMENTS ̴ + 15 % CAGR 12 % Sport business today at 12% 8% from 8% in 2018 Resilient prescription frames business holding up at 40% Sunglasses at 48% 2018 2022
Slide 16: Growth Drivers Shaping Geographical Mix
// 16 GROWTH DRIVERS SHAPING GEOGRAPHICAL MIX % of NORTH AMERICA on sales OUR ACHIEVEMENTS ̴+9% CAGR 46 % North America today at 46% 35 % from 35% in 2018 Europe growing organically, but more impacted by portfolio changes Emerging markets still an opportunity 2018 2022
Slide 17: Profit & Margin Expansion
// 17 PROFIT & MARGIN EXPANSION in €M and % on sales +570 BPS 55.5% OUR ACHIEVEMENTS 49.8% Gross profit 50.8% 51.8% 46.5% 597 453 477 362 502 Favourable price/mix dynamics 2018 2019 2020 2021 2022 Cost saving programs fully +310 BPS 9.4% achieved ahead of plan Adjusted2 EBITDA 6.3% 8.4% 6.9% Higher i
Slide 18: Financial Solidity
// 18 FINANCIAL SOLIDIT Y in €M Group net debt pre IFRS-16 OUR ACHIEVEMENTS 179 Healthy Balance Sheet 70 33 28 53 Capital increase to finance M&A 2018 2019 2020 2021 2022 New debt structure enabling growth investments
Slide 19: The Eyewear Sector
The EYEWEAR SECTOR
Slide 20: The Attractive Eyewear Sector
// 20 THE ATTRACTIVE EYEWEAR SECTOR WHAT WILL NOT CHANGE GOING FORWARD THE EYEWEAR SECTOR Strong industry growth outlook for the medium to long-term, underpinned by fundamental human drivers Resilience of the category in downturns and crises WHAT WILL EVOLVE GOING FORWARD Consumers are more engaged,
Slide 21: Where We Play
// 21 WHERE WE PLAY R e t a i l v a l u e o f e y e w e a r m a r k e t , 2 0 21, € B THE EYEWEAR SECTOR 49 SAFILO ’S MARKETPLACE CAGR 30 PRE COVID ~ +4 % ( 16 -19) 16 3 POST COVID ~ +3 % ( 23- 27E) TOTAL Spectacles Sunglasses Readymade Safilo’s Market frames Reading glasses
Slide 22: Eyewear Market Size in the Long-Term
// 22 WHERE WE PLAY Eyewear market size in the long-term DEMOGRAPHICS THE EYEWEAR SECTOR 1.3 -1.5 x Ageing population Increasing incidence of myopia LIFESTYLE CHANGES Use of digital devices increasing risk of blue light damage Higher awareness of importance of sun protection against UV light PREMIUM
Slide 23: Online to Continue to Grow Faster
// 23 WHERE WE PLAY DIGITAL THE EYEWEAR SECTOR ONLINE TO CONTINUE TO GROW FASTER OVER COMING YEARS 16 % CAGR 12 % Low ONLINE double digits Low OFFLINE single digits 2021 2027E Online Offline
Slide 24: A New Consumer
// 24 WHERE WE PLAY A NEW CONSUMER THE EYEWEAR SECTOR BY 2030, GEN Z WILL MAKE UP THE LARGEST CONSUMER SEGMENT WORLDWIDE Young,wealthy consumers value: Something crafted Unique Sustainable Experiential
Slide 25: Sustainability
// 25 WHERE WE PLAY SUSTAINABILITY THE EYEWEAR SECTOR POSITIVE SOCIAL IMPACT No longer a nice-to-have but a must-have Consumers are keen to make the switch to a trend that’s here to stay
Slide 26: Our Vision & Manifesto
Our VISION & MANIFESTO
Slide 27: Our Vision & Manifesto
// 27 OUR VISION & MANIFESTO Have you ever wondered who’s behind a pair of glasses? It’s us, from Safilo. Looking ahead since 1878. Allowing millions of people to see the world at its best. Looking for innovative and responsible solutions, so that sustainability, inclusivity and innovation are not ju
Slide 28: Our Strategy for a Balanced Portfolio
Our strategy FOR A BALANCED PORTFOLIO
Slide 29: Our Strategy for a Balanced Portfolio
// 29 OUR STRATEGY FOR A BALANCED PORTFOLIO OUR STRATEGY FOR A BAL ANCED P ORTFOLIO DIGITAL TRANSFORMATION & SUSTAINABILITY
Slide 30: Strong Omni-Channel Business Model
// 30 STRONG OMNI-CHANNEL BUSINESS MODEL ONGOING FOCUS ON OUR MAIN CHANNELS, WHILE ACCELERATING ON: OUR STRATEGY FOR A BALANCED PORTFOLIO Online channel ~20% B2B digital channel ~12% DIGITAL TRANSFORMATION Sport channel ~12% & SUSTAINABILITY OUR AMBITIONS as a % of 2027E sales3
Slide 31: Dynamic Geographical Mix
// 31 DYNAMIC GEOGRAPHICAL MIX ONGOING FOCUS ON OUR STRONG PRESENCE IN NORTH AMERICA AND EUROPE, WHILE ACCELERATING ON: OUR STRATEGY FOR A BAL ANCED P ORTFOLIO Emerging markets ~20% DIGITAL TRANSFORMATION & SUSTAINABILITY OUR AMBITIONS as a % of 2027E sales3
Slide 32: Strong Brand Portfolio
// 32 STRONG BRAND PORTFOLIO ONGOING FOCUS ON A DIVERSE SET OF LICENSES, WHILE ACCELERATING ON: OUR STRATEGY FOR A BALANCED PORTFOLIO Home brands >50% M&A DIGITAL TRANSFORMATION & SUSTAINABILITY O U R A M B I T I O N S a s a % o f 2 0 27 E s a l e s 3
Slide 33: Strong Brand Portfolio: Reaching Target Consumers
// 33 STRONG BRAND PORTFOLIO TO REACH A BROAD AUDIENCE OF TARGET CONSUMERS STRONG BRAND P ORTFOLIO • 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 &
Slide 34: Strong Core Home Brands
// 34 STRONG CORE HOME BRANDS STRONG HOME BRAND PORFOLIO SPECIALIST LIFE ST YLE OUTDOOR MAINSTREAM
Slide 35: Core Home Brand Growth Drivers
// 35 CORE HOME BRAND GROWTH DRIVERS STRONG HOME BRAND PORFOLIO POLAROID CONSUMER FIRST Consumers at the core of Brand Development with top Partners DIGITAL MEDIA CENTRIC A new model for media effectiveness thanks to full funnel integration PEOPLE ENGAGEMENT & CULTURE From Global Strategy to Local D
Slide 36: Smith
SMITH
Slide 37: Smith Mission
// 37 SMITH MISSION To equip all Seekers for a lifetime of adventure SMITH Advantage Seekers Adventure Seekers Culture Seekers
Slide 38: A Snow Market Leader
// 38 A SNOW MARKET LEADER #1 SNOW GOGGLE & HELMET BRAND IN NORTH AMERICA SMITH
Slide 39: Smith Is More Than Snow
// 39 SMITH IS MORE THAN SNOW SMITH Our aim is to ”own the head” We are technology / innovation We are goggles, helmets, protection
Slide 40: Smith Product Portfolio
// 40 SMITH PRODUCT PORTFOLIO BIKE HELMETS & EYEWEAR SMITH PRESCRIPTION EYEWEAR PERFORMANCE SUNGLASSES SNOW GOGGLES & HELMETS
Slide 41: Smith Strategy Into Action
// 41 SMITH STRATEGY INTO ACTION SMITH 1 GEOGRAPHIC & CHANNEL EXPANSION 2 EYEWEAR ACCELERATION 3 BIKE GROWTH
Slide 42: Carrera
CAl2RRESZA Enya Ee Wee AtReees 2 aN Cee aa 192:52i6
Slide 43: Carrera Strategy Into Action
// 43 CARRERA STRATEGY INTO ACTION CARRERA 1 BRAND POSITIONING & VALUES 2 PRODUCT ARCHITECTURE 3 IN MARKET ACTIVATION
Slide 44: Carrera Positioning & Values
// 44 1 CARRERA 1 POSITIONING & VALUES CARRERA AUTHENTIC RELEVANT TALKABLE LEGACY OF BOLDNESSI TECH & STYLE I DARING ATTITUDE I DRIVE YOUR STORY
Slide 45: Designed for Customers & Consumers
// 45 2 DESIGNED FOR CUSTOMERS & CONSUMERS CARRERA
Slide 46: Designed for Customers & Consumers
// 46 DESIGNED FOR CUSTOMERS & CONSUMERS CARRERA
Slide 47: In Market Activation
// 47 3 IN MARKET ACTIVATION 3 CARRERA CAMPAIGN IDEA #DRIVEYOURSTORY We tell true stories of real people who have found their own self following their passion. Each own of them tells a unique story, and together they create the Carrera world, exclusive and unique.
Slide 48: Real People with a Passion
// 48 REAL PEOPLE WITH A PASSION CARRERA
Slide 49: Real People with a Passion
// 49 REAL PEOPLE WITH A PASSION CARRERA
Slide 50: In Shop Desirability
// 50 IN SHOP DESIRABILITY CARRERA
Slide 51: Creating a Global Phenomenon
// 51 CREATING A GLOBAL PHENOMENON CARRERA
Slide 52: Through the Power of Collaboration
// 52 THROUGH THE POWER OF COLLABORATION CARRERA CARRERA
Slide 53: Polaroid
Polaroid The Original Polarized since 1937
Slide 54: Brand Strategy Into Action
// 54 BRAND STRATEGY INTO ACTION P OL AROID 1 BRAND POSITIONING & VALUES 2 PRODUCT ARCHITECTURE 3 IN MARKET ACTIVATION
Slide 55: Polaroid Positioning & Values
// 55 1 POLAROID POSITIONING & VALUES POLAROID Functional benefit Roots Emotional benefit A SMART THE ORIGINAL A WORLD CHOICE POLARIZED OF COLORS SINCE 1937
Slide 56: Designed for Customers & Consumers
// 56 2 DESIGNED FOR CUSTOMERS & CONSUMERS P OL AROID
Slide 57: Enabling Millions to See Better and Live Better
// 57 ENABLING MILLIONS TO SEE BETTER AND LIVE BETTER P OL AROID
Slide 58: In Market Activation
// 58 3 IN MARKET ACTIVATION POLAROID DRIVEN BY IMPULSE. VIRAL AT THE HEART.
Slide 59: In Market Activation
// 59 3 IN MARKET ACTIVATION P OL AROID
Slide 60: Enjoy a World of Colors
// 60 ENJOY A WORLD OF COLORS P OL AROID THE POLAROID RIVIERA. Polaroid has created a world of colours, fun and inclusiveness. Where people are happy together, and can enjoy a great time in the sun. Where anyone can be at his/her best simply being him/her self.
Slide 61: Enjoy a World of Colors
// 61 ENJOY A WORLD OF COLORS P OL AROID
Slide 62: In Shop Desirability
// 62 IN SHOP DESIRABILITY P OL AROID
Slide 63: People Engagement
// 63 PEOPLE ENGAGEMENT P OL AROID
Slide 64: People Engagement
// 64 PEOPLE ENGAGEMENT POLAROID
Slide 65: Blenders
[felenders
Slide 66: Blenders Strategy Into Action
// 66 BLENDERS STRATEGY INTO ACTION 1 DOMESTIC & INTERNATIONAL ONLINE 2 RETAIL 3 WHOLESALE
Slide 67: Digital Transformation
Our enablers DIGITAL TRANSFORMATION
Slide 68: Digital Transformation Along the Value Chain
// 68 DIGITAL TRANSFORMATION A LO N G T H E VA L U E C H A I N Our goals DIGITAL TR ANSFORMATION Engage Consumers & Customers CONSUMERS Empower Employees & Optimise Operations CUSTOMERS
Slide 69: Digital Transformation Along the Value Chain
// 69 DIGITAL TRANSFORMATION ALONG THE VALUE CHAIN DIGITAL TR ANSFORMATION CONSUMERS & CUSTOMERS
Slide 70: Digital Transformation Along the Value Chain
// 70 DIGITAL TRANSFORMATION A LO N G T H E VA L U E C H A I N DIGITAL TR ANSFORMATION CONSUMERS & CUSTOMERS
Slide 71: Digital Transformation Along the Value Chain
// 71 DIGITAL TRANSFORMATION ALONG THE VALUE CHAIN DIGITAL TR ANSFORMATION CONSUMERS & CUSTOMERS
Slide 72: Digital Transformation Along the Value Chain
// 72 DIGITAL TRANSFORMATION A LO N G T H E VA L U E C H A I N DIGITAL TR ANSFORMATION CONSUMERS & CUSTOMERS
Slide 73: Digital Hubs
// 73 2 DIGITAL HUBS DIGITAL TR ANSFORMATION PORTLAND & SAN DIEGO PADUA FOCUS ON CONSUMERS FOCUS ON CUSTOMERS Consumer Facing Digital Academy Omnichannel B2B through Digital Strategic Communication Data Analytics
Slide 74: Digital Transformation Along the Value Chain
// 74 DIGITAL TRANSFORMATION A LO N G T H E VA L U E C H A I N DIGITAL TRANSFORMATION CONSUMERS & CUSTOMERS
Slide 75: Customers Experience & Sales: Our B2B Digital Channel
// 75 CUSTOMERS EXPERIENCE & SALES OUR B2B DIGITAL CHANNEL DESIGNED WITH OPTICIANS FOR OPTICIANS DIGITAL TR ANSFORMATION INNOVATIVE INTERFACE FULLY DIGITALIZED EASY SHOPPING ONLINE AFTER-SALES CUSTOMER CARE ACCESS TO ALL BRAND SUPPORT DIGITAL ASSETS MORE THAN AN ECOMMERCE PLATFORM
Slide 76: Customers Experience & Sales: Our B2B Digital Channel
// 76 CUSTOMERS EXPERIENCE & SALES OUR B2B DIGITAL CHANNEL DESIGNED WITH OPTICIANS FOR OPTICIANS DIGITAL TR ANSFORMATION Go beyond sales Further customer adoption in Europe Hybrid sales model Roll out You&Safilo in North America
Slide 77: Customers' Perception
// 77 CUSTOMERS’PERCEPTION DIGITAL TR ANSFORMATION How likely is it that a Customer would recommend Safilo as a Business Partner NPS: 66.6% (EMEA 81.1%) How satisfied are Customers with Safilo overall with a scale from 1 to 5 OVERALL SATISFACTION: 4.4 (EMEA 4.5) Source: Amplitude Research for NA; Unic
Slide 78: Sustainability
Our enablers SUSTAINABILITY
Slide 79: Our Sustainability Journey
// 80 OUR SUSTAINABILITY JOURNEY PRODUCT PEOPLE SUSTAINABILIT Y Sustainable New Collections Employee Survey 2023 >25% by 2025 Innovative Empowering Engagement Focus Areas Certified sustainable materials in our Meaningful Community Outreach PRODUCT PEOPLE UN SDGs: UN SDGs: OUR PURPOSE See the World P
Slide 80: Our Medium-Term Targets
Our MEDIUM-TERM: TARGETS
Slide 81: 2027E Key Drivers: Net Sales
// 81 83 2027E KEY DRIVERS NET SALES in € a n d @cFX 2022 MEDIUM-TERM TARGETS Home brands mid to high single digit ~ 1,3 bn M&A ̴4% 1% of growth 5Y CAGR New channels (Online, B2B, Sport) double digit
Slide 82: 2027E Key Drivers: Adj. EBITDA Margin
// 82 84 2027E KEY DRIVERS ADJ. 2 EBITDA MARGIN % on net sales MEDIUM-TERM TARGETS Higher Gross margin driven by portfolio mix and cost 12-13% optimization Marketing investments Operating leverage
Slide 83: 2027E Key Drivers: Free Cash Flow
// 83 85 2027E KEY DRIVERS FREE CASH FLOW MEDIUM-TERM TARGETS Higher Cash conversion due to Positive FCF improved economics and more moderate WC absorption over the plan period Capex in an annual range of €15-20M + M&A
Slide 84: Appendices
Appendices
Slide 85: Notes to the Presentation
// 85 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 In 2022, the ad
Slide 86: 2022 Net Sales by Geographical Area
// 86 2022 NET SALES BY GEOGRAPHICAL AREA Change at Change at current forex constant forex (Euro million) FY 2022 % FY 2021 % Reported Reported Organic1 North America 497.7 46.2 466.2 48.1 +6.8% -4.7% -0.3% Europe 424.9 39.5 378.5 39.0 +12.3% +12.0% +16.1% Asia Pacific 57.7 5.4 52.6 5.4 +9.8% +3.4%
Slide 87: 2022 Net Sales by Product
// 87 2022 NET SALES BY PRODUCT SUNGLASSES PRESCRIPTION FRAMES SPORT & OTHER FY 2022 FY 2022 FY 2022 +7.5% +9.4% 47.2% +1.1% @cFX 39.8% +3.2% @cFX 13.0% +33.4% +22.0% @cFX +9.0%1 +2.0%1 +22.2%1
Slide 88: 2022 Income Statement
// 88 2022 INCOME STATEMENT % on % on % Change Key Economic highlights - in Euro million 2022 net sales 2021 net sales 2022 vs 2021 Net sales 1,076.7 969.6 +11.1% Reported at cFX +4.2% Organic1 at cFX +7.7% Gross profit 597.4 55.5% 501.8 51.7% +19.1% EBITDA 96.8 9.0% 79.3 8.2% +22.1% 2 Adjusted EBIT
Slide 89: Q4 2022 Trading Update
// 89 Q4 2022 TRADING UPDATE % on % on Key Economic highlights - in Euro million Q4 2022 net sales Q4 2021 net sales % Change Net sales 245.4 232.2 +5.7% Reported at cFX -0.6% Organic1 at cFX +0.7% Gross profit 139.1 56.7% 120.9 52.0% +15.1% EBITDA 13.3 5.4% 10.9 4.7% +21.9% Adjusted 2 EBITDA 15.9 6
Slide 90: Balance Sheet as of December 31, 2022
// 90 B A L A N C E S H E E T A S O F D E C E M B E R 31 , 2 0 2 2 in Euro million December 31, 2022 December 31, 2021 Change Net working capital 292.3 214.9 77.4 Tangible, Right of Use, and Intangible fixed assets 281.1 294.2 (13.1) Goodwill 34.9 32.9 2.0 Non-current assets held for sale 2.3 2.3 0.
Slide 91: Working Capital as of December 31, 2022
// 91 W O R K I N G C A P I T A L A S O F D E C E M B E R 31 , 2 0 2 2 in Euro million December 31, 2022 December 31, 2021 Change Trade receivables 214.0 173.5 40.5 Inventories 259.0 234.4 24.6 Trade payables (180.7) (193.1) 12.4 Net working capital 292.3 214.9 77.4 % on net sales 27.1% 22.2%
Slide 92: 2022 Free Cash Flow
// 92 2022 FREE CASH FLOW 2022 2021 in Euro million Cash flow from operating activities before changes in working capital 71.5 38.1 Changes in working capital (62.4) (20.8) Cash flow operating activities 9.2 17.3 Cash flow investing activities (15.7) (9.8) Cash flow from repayment principal portion
Slide 93: Exchange Rates
// 93 EXCHANGE RATES (Appreciation)/ (Appreciation)/ As of Average for Depreciation Depreciation December 31, December 31, Currency Code % 2022 2021 % 2022 2021 US Dollar USD 1.0666 1.1326 -5.8% 1.0531 1.1827 -11.0% Hong-Kong Dollar HKD 8.3163 8.8333 -5.9% 8.2451 9.1932 -10.3% Swiss Franc CHF 0.9847