Kering Sa · EURONEXT:KER
Kering Sa — Kering Sa Ord — H1 2023 Earnings Presentation
42 slides from Kering Sa's earnings presentation, Jul 27, 2023
Slide 1: 2023 First-Half Results
2023 FIRST-HALF RESULTS JULY 27, 2023
Slide 2: Disclaimer
DISCLAIMER This presentation does not constitute an offer of securities for sale in the United States of America or any other jurisdiction. Certain information contained in this presentation may include projections and forecasts or other forward-looking statements. They are not historical facts and
Slide 3: Introduction
INTRODUCTION F RANÇO I S - HENRI P I NA ULT C H A I R MA N A N D C E O
Slide 4: A New Organization: Rationale
A NEW ORGANIZATION: RATIONALE • PERFORMANCES SHORT OF OUR AM BITIONS AND POTENTIAL, NOTABLY AT GUCCI • LEGACY ORGANIZATION NOT ADAPTED TO THE CURRENT SCALE AND STATURE OF THE GROUP AND ITS HOUSES • ELEVATE OPERATIONAL EXPERTISE AT GROUP LEVEL AND ENHANCE OUR STEWARDSHIP OF OUR HOUSES • NEED TO ACT F
Slide 5: A New Organization: Setup
A NEW ORGANIZATION: SETUP • FRANCESCA BELLETTINI, DEPUTY CEO IN CHARGE OF BRAND DEVELOPMENT • JEAN -M ARC DUPLAIX, DEPUTY CEO IN CHARGE OF OPERATIONS AND FINANCE • DEPUTY CEOS WORKING WITH CHAIRM AN & CEO ON DEVELOPMENT, EXECUTION AND M ONITORING OF OUR STRATEGY • JEAN -FRANÇOIS PALUS TO ENSURE TRAN
Slide 6: H1 Highlights
H1 HIGHLIGHTS FASHION SHOWS & VISIBILITY PRODUCT OFFER DISTRIBUTION & CLIENT EXPERIENCE INVESTING TO NURTURE OUR HOUSES DESIRABILITY & EXCLUSIVITY SAINT LAURENT S/S 24 MEN GUCCI ALLEGORIA SLOANE STREET BERLIN HIGH JEWELRY COLLECTION LONDON SUPPLY CHAIN KERING BEAUTÉ SUSTAINABILITY C R AF T I N G C R
Slide 7: Valentino, an Iconic Italian Maison de Couture
VALENTINO, AN ICONIC ITALIAN MAISON DE COUTURE HIGH-END LUXURY LEADING PRESENC E IN CONTROLLED POSITIONING ROOTED IN CORE SEGMENTS OF RTW, DISTRIBUTION WITH 211 H AU T E C O U T U R E D N A, F O O T W E AR AN D L EAT H E R D I R EC T L Y O PER AT E D W I T H AM B I T I O U S B R AN D GOODS STORES IN
Slide 8: Valentino: Transaction Details
VALENTINO: TRANSACTION DETAILS ▪ UPFRONT ACQUISITION OF A 30% STAKE IN VALENTINO FROM ITS SHAREHOLDER MAYHOOLA FOR €1.7BN IN CASH ▪ BOARD REPRESENTATION IN VALENTINO AND SUPPORT BY KERING OF ONGOING ELEVATION STRATEGY ▪ AGREEMENT ENTAILING THE OPTION FOR KERING TO ACQUIRE THE REMAINING 70% OF VALENT
Slide 9: Analysis of Results
ANALYSIS OF RESULTS J EA N- MARC DUPLAI X DEPUTY CEO, OPERATIONS & FINANCE
Slide 10: H1 Group Revenue
H1 23 GROUP REVENUE H1 REVENUE GROWTH H1 REVENUE BREAKDOWN BY REGION (as a % of H1 revenue and YoY reported change) +2% reported +2% 10,135 +2% RoW -2% Western Europe 9,930 7% (=) 27% (+1pt) Asia Pacific 37% (+3pt) North America Japan 22% (-5pt) 7% (+1pt) H1 22 Comparable Scope FX H1 23 +2% Of which
Slide 11: Q2 and H1 Group Revenue
Q2 AND H1 23 GROUP REVENUE REVENUE BREAKDOWN BY SEGMENT % YoY change €M Q2 Change (%) H1 Change (%) Q1 23 Q2 23 Reported Comp. H1 23 Reported Comp. Gucci 2,616 2,512 -3% +1% 5,128 -1% +1% Saint Laurent 806 770 +4% +7% 1,576 +6% +7% Bottega Veneta 395 438 +0% +3% 833 -0% +2% Other Houses 890 966 -2%
Slide 12: Q2 Group Revenue by Channel and Region
Q2 23 GROUP REVENUE BY CHANNEL AND REGION R E T AI L I N C L . E - C O M M + 4 % Y o Y C O M P AR AB L E D I R E C T L Y O P E R AT E D S T O R E S 1,694 +35 NET IN H1 23 77% WESTERN NORTH JAPAN ASIA ROW EUROPE AMERICA VS. YE 22 PACIFIC +4% -23% +26% +22% +5% WHOLESALE WHOLESALE ROYALTIES 23% LUXURY
Slide 13: A Year of Investment
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 28.4% 27.0% H1 22 H1 23 H1 22 H1 23 excl. real YE 22 HYE 23 estate acquisition and disposal • INVESTING IN OUR HOUSES • FCF +4% YOY AT €2.1BN* • USUAL
Slide 14: Gucci: Investing in the Brand
GUCCI INVESTING IN THE BRAND
Slide 15: Gucci H1 Revenue
H1 23 REVENUE: -1% REPORTED, +1% COMPARABLE (€M, and YoY comparable growth in %) 5,173 +11% 5,128 +1% -3% 91% of H1 sales H1 22 Retail Wholesale Royalties H1 23 and others Of which Q2 23 +1% +2% +8% +1% comp growth • A FIRST HALF IN TRANSITION • Q2 REVENUE UP 1% COMPARABLE – Retail driven by higher
Slide 16: Gucci Key Figures
KEY FIGURES €M H1 2023 H1 2022 Change Revenue 5,128 5,173 -1% Recurring operating income 1,810 1,886 -4% Margin (%) 35.3% 36.5% -1.2pt Gross CAPEX 232 154 +50% As % of revenue 4.5% 3.0% +1.5pt • EBIT MARGIN DILUTION ON BRAND INVESTMENT – Negative operating leverage on soft topline m omentum – Contin
Slide 17: Saint Laurent: High Desirability
SAINT LAURENT HIGH DESIRABILITY
Slide 18: Saint Laurent H1 Revenue
H1 23 REVENUE: +6% REPORTED, +7% COMPARABLE (€M, and YoY comparable growth in %) +11% +19% 1,576 -10% 1,481 80% of H1 sales H1 22 Retail Wholesale Royalties H1 23 and others Of which Q2 23 +8% -7% +23% +7% comp growth • CONSISTENT EXECUTION OF STRATEGY • Q2 UP 7% DRIVEN BY RETAIL – Sustained growth
Slide 19: Saint Laurent Key Figures
KEY FIGURES €M H1 2023 H1 2022 Change Revenue 1,576 1,481 +6% Recurring operating income 481 438 +10% Margin (%) 30.5% 29.6% +0.9pt Gross CAPEX 81 25 +226% As % of revenue 5.1% 1.7% +3.4pt • H1 EBIT MARGIN ABOVE 30% – Favorable channel m ix and pricing lifting gross m argin – Positive operating leve
Slide 20: Bottega Veneta: Reinforcing Position in Ultra-High-End Universe
REINFORCING POSITION I N U LT R A - H I G H - E N D UNIVERSE
Slide 21: Bottega Veneta H1 Revenue
H1 23 REVENUE: -0% REPORTED, +2% COMPARABLE (€M, and YoY comparable growth in %) +6% 834 833 -13% -25% 80% of H1 sales H1 22 Retail Wholesale Royalties H1 23 and others Of which Q2 23 +7% -11% -26% +3% comp growth • H1: ICONIZATION AND VALUE STRATEGY UNFOLDING • Q2 FUELED BY HEALTHY RETAIL GROWTH –
Slide 22: Bottega Veneta Key Figures
KEY FIGURES €M H1 2023 H1 2022 Change Revenue 833 834 -0% Recurring operating income 169 168 +1% Margin (%) 20.3% 20.1% +0.2pt Gross CAPEX 44 35 +24% As % of revenue 5.2% 4.2% +1.0pt • EBIT MARGIN ABOVE 20% CONFIRMED – Gross profit m argin expansion thanks to supportive product and channel m ix, com
Slide 23: Other Houses
OTHER HOUSES G R O W T H I N R E TA I L A N D JEWELRY
Slide 24: Other Houses H1 Revenue
OTHER HOUSES H1 23 REVENUE: -5% REPORTED, -5% COMPARABLE (€M, and YoY comparable growth in %) +8% 1,955 +14% 1,856 -27% 68% of H1 sales H1 22 Retail Wholesale Royalties H1 23 and others Of which Q2 23 +9% -21% +11% -1% comp growth • SEQUENTIAL IMPROVEMENT THROUGHOUT H1 • LIMITED DECLINE IN Q2 – Reta
Slide 25: Other Houses Key Figures
OTHER HOUSES KEY FIGURES €M H1 2023 H1 2022 Change Revenue 1,856 1,955 -5% Recurring operating income 224 337 -34% Margin (%) 12.1% 17.3% -5.2pt Gross CAPEX 82 63 +30% As % of revenue 4.4% 3.2% +1.2pt • RECURRING OPERATING PROFIT DOWN – From a high base in H1 22 – Negative leverage at Balenciaga and
Slide 26: Kering Eyewear and Corporate
KERING EYEWEAR C O R P O R AT E
Slide 27: Kering Eyewear and Corporate
KERING EYEWEAR AND CORPORATE KERING EYEWEAR FOCUS KEY FIGURES (€M, and YoY growth in %) +51% €M H1 2023 H1 2022 +35% 869 Revenue 869 591 Kering Eyewear 869 576 +16% Other - 15 576 Recurring operating income 63 (7) Kering Eyewear 186 111 Corporate (123) (118) Gross CAPEX 1,452 84 Gross CAPEX excl. Re
Slide 28: 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 29: 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 30: 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 31: Conclusion
CONCLUSION
Slide 32: Q&A
Q&A
Slide 33: Appendix
APPENDIX
Slide 34: Gucci H1 2023 Revenue
H1 2023 REVENUE €5,128m -1% REPORTED, +1% COMPARABLE DIRECTLY OPERATED STORES REVENUE BREAKDOWN BY REGION As of June 30, 23 (net change vs. YE 22) RoW Western Europe RoW Western Europe 68 (+4 net) 104 (+1 net) 7% 22% Asia Pacific North America Asia Pacific North America 180 (-1 net) 536 42% 113 (+6
Slide 35: Saint Laurent H1 2023 Revenue
H1 2023 REVENUE €1,576m +6% REPORTED, +7% COMPARABLE DIRECTLY OPERATED STORES REVENUE BREAKDOWN BY REGION As of June 30, 23 (net change vs. YE 22) RoW RoW 25 (+2 net) Western Europe 8% Western Europe 61 (+4 net) 31% Asia Pacific Asia Pacific 110 (+1 net) 288 30% Japan Japan North America North Ameri
Slide 36: Bottega Veneta H1 2023 Revenue
H1 2023 REVENUE €833m -0% REPORTED, +2% COMPARABLE DIRECTLY OPERATED STORES REVENUE BREAKDOWN BY REGION As of June 30, 23 (net change vs. YE 22) RoW Western Europe RoW 21 (+1 net) 57 (+2 net) 8% Western Europe 28% Asia Pacific North America Asia Pacific 111 (+1 net) 279 35% 44 (+5 net) Japan Japan N
Slide 37: Other Houses H1 2023 Revenue
OTHER HOUSES H1 2023 REVENUE €1,856m -5% REPORTED, -5% COMPARABLE DIRECTLY OPERATED STORES REVENUE BREAKDOWN BY REGION As of June 30, 23 (net change vs. YE 22) RoW Western Europe RoW 28 (-2 net) 127 (-1 net) 7% Western Europe 33% Asia Pacific 591 North America Asia Pacific 271 (+9 net) 78 (+3 net) 3
Slide 38: Recurring Operating Income
RECURRING OPERATING INCOME €M H1 2023 H1 2022 Reported change % Gucci 1,810 1,886 -4% Saint Laurent 481 438 +10% Bottega Veneta 169 168 +1% Other Houses 224 337 -34% Kering Eyewear and Corporate 63 (7) n.a. Eliminations (8) (2) n.a. Kering 2,739 2,820 -3% 27.07.2023 38
Slide 39: EBITDA
EBITDA €M H1 2023 H1 2022 Reported change % Gucci 2,172 2,213 -2% Saint Laurent 600 545 +10% Bottega Veneta 259 251 +3% Other Houses 404 498 -19% Kering Eyewear and Corporate 190 112 +67% Eliminations (8) (2) n.a. Kering 3,617 3,617 -0% 27.07.2023 39
Slide 40: Net Financial Costs and Income Tax
NET FINANCIAL COSTS AND INCOME TAX €M H1 2023 H1 2022 Cost of net debt (40) (18) Other financial income and expenses (94) 57 Total financial result (excluding leases) (134) 39 Interest expense on lease liabilities (70) (58) Financial result (204) (19) H1 2023 H1 2022 Income tax expense on recurring
Slide 41: 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 42: Kering Brands
Gucci • Saint Laurent • Bottega Veneta • Balenciaga • Alexander McQueen • Brioni Boucheron • Pomellato • Dodo • Qeelin • Ginori 1735 Kering Eyewear • Kering Beauté