Kering Sa · EURONEXT:KER
Kering Sa — H1 2014 Earnings Presentation
44 slides from Kering Sa's earnings presentation, September 2014
Slide 1: Investor Presentation September 2014
I n v e s t o r P r e s e n t a t i o n September 2014
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 document may include projections and forecasts. They express objectives based on current assessments and estimates of the
Slide 3: A value creating transformation
A value creating transformation 3 44
Slide 4: Empowering premium brands
A value creating transformation Empowering premium brands ∞ A world leader in apparel and accessories, developing an ensemble of powerful brands Kering Luxury * Kering Sport & Lifestyle * Acquisition to be finalised in Q4 2014 4 44
Slide 5: In 2013, Kering has completed its transformation
A value creating transformation In 2013, Kering has completed its transformation ∞ Further key milestones reached in the Group’s transformation – Luxury activities: • Integration of new brands and strengthening of organic growth – Sport & Lifestyle activities: • New management teams, brand positioni
Slide 6: A long-term strategy
A value creating transformation A long-term strategy ∞ In 2013 the Group has completed its in-depth transformation ∞ A long-term strategy creating value – Net recurring income per share growth 2005-2013: +10% CAGR – Sharp improvement in return on capital employed from Luxury activities – Deleveragin
Slide 7: An ensemble of high-potential brands
A value creating transformation An ensemble of high-potential brands ∞ Coherent consumption universe, apparel and accessories ∞ Two complementary market segments, Luxury and Sport & Lifestyle ∞ Expertise sharing and “group effect”: strategic marketing, talent management, real estate, media buying, l
Slide 8: 2013 revenue by product category
A value creating transformation 2013 revenue by product category Leather Goods Ready to Wear Footwear Other categories* 58% 11% 14% 17% Luxury activities 86% 6% 6% 2% 44% 24% 22% 10% Other brands 22% 34% 12% 32% activities Lifestyle 35% 46% 19% Sport & Other brands 78% 4% 18% * Watches, Jewellery an
Slide 9: 2014 first-half results
2014 first-half results Operating performances further validating Group multi-brand model 9 44
Slide 10: Key H1 highlights
2014 first-half results Key H1 14 highlights ∞ H1 operating performances further validating Group multi-brand model – Comparable revenue up +4% – Gross Margin improvement +110 bps – Group EBIT maintained at a high level, and improving at constant currency – Operating cash flow up Luxury : – First-ha
Slide 11: Operating performances by activity
2014 first-half results Operating performances by activity In €m Change (%) Recurring Recurring Operating Reported Operating Revenue Reported Comparable (*) Income change (%) margin (%) Luxury 3,230 +4.9% +5.7% 799 +1.2% 24.7% Sport & Lifestyle 1,499 -5.6% +0.4% 71 -35.4% 4.7% Corporate & others 18
Slide 12: Luxury activities: solid retail trends driving sales and EBIT growth
Luxury activities H1 14 revenue: +5.7% comparable Solid retail trends driving sales and EBIT growth X%: comparable growth Reported +28% € 3,230m In €m H1 14 change +20% +7% (3%) +12% Revenue 3,230 +4.9% +6% € 3,078m Recurring operating income 799 +1.2% Retail: +10% Recurring operating income margin
Slide 13: Gucci: satisfactory retail performances in the first half
H1 14 revenue: -1.1% comparable Satisfactory retail performances in the first half X%: comparable growth Reported € 1,755m +7% +17% +18% In €m H1 14 change (1%) (2%) € 1,676m Revenue 1,676 -4.5% (16%) Retail: +3% Recurring operating income 528 -5.1% Recurring operating income margin 31.5% -0.2pt EBI
Slide 14: Focus on brand elevation – Handbags case study
Focus on brand elevation – Handbags case study Q2 2009 : handbags sales mix by price range Q2 2014 : handbags sales mix by price range 2% 2% 2% 18% Worldwide Worldwide 32% 42% 54% 48% Regions Regions AuR price and retail revenue increase Handbags category architecture – as of F/W 2014 FY09 FY13 526
Slide 15: c c
c c 15 44
Slide 16: c c
c c 16 44
Slide 17: Bottega Veneta: sustained growth across the board
H1 14 revenue: +17.5% comparable Sustained growth across the board X%: comparable growth Reported +22% € 525m In €m H1 14 change +17% +3% Revenue 525 +12.9% +25% +11% +13% Recurring operating income 163 +11.3% € 466m Recurring operating income margin 31.0% -0.5pt Retail: +17% EBITDA 178 +13.0% EBITD
Slide 18: Saint Laurent: significant investments are paying off
H1 14 revenue: +28.2% comparable Significant investments are paying off X%: comparable growth Reported € 321m In €m H1 14 change +66% X2.6 (1%) Revenue 321 +25.6% +57% +57% +35% Recurring operating income 41 +50.4% € 255m Recurring operating income margin 12.7% +2.0pts Retail: +56% EBITDA 52 +54.3%
Slide 19: Other Luxury brands: soft luxury brands driving growth
Other Luxury brands H1 14 revenue: +6.7% comparable Soft luxury brands driving growth X%: comparable growth Reported € 708m In €m H1 14 change +3% +32% +7% Revenue 708 +17.5% +4% +14% +13% € 603m Recurring operating income 67 +12.2% Retail: +12% Recurring operating income margin 9.5% -0.4pt EBITDA 9
Slide 20: Sport & Lifestyle: a promising first half
Sport & Lifestyle activities H1 14 revenue: +0.4% comparable A promising first half X%: comparable growth Reported € 1,587m +3% In €m H1 14 change +3% +2% Other -1% -8% € 1,499m €113m Revenue 1,499 -5.6% Other €113m Recurring operating income 71 -35.4% Y-o-Y Change (%) Recurring operating income mar
Slide 21: Financial performance
Financial performance In €m H1 14 H1 13 Recurring operating income 810 843 Other non-recurring operating income and expenses (8) (25) Net financial charges (105) (97) Corporate income tax (143) (138) Share in earnings of associates (2) (1) Net loss from discontinued operations (348) (388) Consolidat
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Slide 23: Strategy and outlook
Strategy and outlook 23 44
Slide 24: Conclusion & outlook
2014 First-half results Conclusion & outlook ∞ Priorities and action plans – Luxury • Organic growth and operating cash flow generation still main priorities for 2014, with dedicated actions plan in place • Positive outcome in H1, albeit in a tougher market environment with diverging macro trends •
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Slide 26: Sustainable investing
Sustainable investing 26 44
Slide 27: Sustainable business is smart business
Group Sustainability Strategy Sustainable business is smart business ∞ Creating value through sustainability – Sustainability is quintessential to the quality of our products. It creates value and represents: – Long-term differentiation – New business development – A spur for innovation – Efficiency
Slide 28: Recognition in indices and reporting framework
Group Sustainability Strategy Recognition in indices and reporting framework For its very first year of participation in the review, Kering was added to the Dow DJSI Jones Sustainability Indices (DJSI) World and Europe. Only the top 10% of leading performers in terms of sustainability assessed again
Slide 29: Appendices
Appendices 29 44
Slide 30: H1 14 Operating performance
H1 14 Operating performance Reported figures In €m H1 14 H1 13 CONTINUING OPERATIONS Change Revenue 4,747 4,678 +1.5% Gross profit 3,020 2,925 +3.2% Gross profit margin 63.6% 62.5% Recurring operating income 810 843 -3.9% Recurring operating income margin 17.1% 18.0% EBITDA 967 983 -1.7% EBITDA marg
Slide 31: H1 14 revenue
H1 14 revenue Reported figures Change In €m H1 14 H1 13 €m % Gucci 1,676.3 1,754.8 (78.5) -4.5% Bottega Veneta 525.5 465.6 59.9 +12.9% Saint Laurent 320.6 255.3 65.3 +25.6% Other brands 708.0 602.7 105.3 +17.5% Luxury division 3,230.4 3,078.4 152.0 +4.9% Puma 1,386.1 1,473.9 (87.8) -6.0% Other brand
Slide 32: Luxury activities H1 2014 revenue
Luxury activities H1 2014 revenue: 3,230M€ +5.7% comparable; +4.9% reported Other Countries Western 8% Europe Revenue Y-o-y Change 32% In €m EURm % comparable % reported Q1 14 1,601 +6.3% +5.1% Asia Pacific Q2 14 1,630 +5.2% +4.8% 32% Japan 10% North America 18% Number of directly operated stores 39
Slide 33: Gucci H1 2014 revenue
H1 2014 revenue: 1,676M€ -1.1% comparable; -4.5% reported Other Countries Western 8% Europe Revenue Y-o-y Change 26% In €m EURm % comparable % reported Q1 14 838 +0.3% (3.2%) Q2 14 838 (2.4%) (5.7%) Asia Pacific North America 37% 19% Japan 10% Number of directly operated stores 183 190 109 114 116 1
Slide 34: Bottega Veneta H1 2014 revenue
H1 2014 revenue: 525M€ +17.5% comparable; +12.9% reported Other Countries 4% Western Europe Revenue Y-o-y Change 26% In €m EURm % comparable % reported Q1 14 251 +14.6% +9.5% Q2 14 275 +20.2% +16.1% Asia Pacific North America 42% 13% Japan 15% Number of directly operated stores 90 92 58 58 46 50 27
Slide 35: Saint Laurent H1 2014 revenue
H1 2014 revenue: 321M€ +28.2% comparable; +25.6% reported Other Countries Revenue Y-o-y Change 9% In €m EURm % comparable % reported Western Asia Pacific Europe 22% Q1 14 158 +27.1% +24.2% 41% Q2 14 163 +29.4% +26.9% Japan 7% North America 21% Number of directly operated stores 46 47 31 33 19 21 17
Slide 36: Other Luxury brands H1 2014 revenue
Other Luxury brands H1 2014 revenue: 708M€ +6.7% comparable; +17.5% reported Other Countries Revenue Y-o-y Change 10% In €m EURm % comparable % reported Western Asia Pacific Europe 17% Q1 14 354 +7.9% +17.4% 47% Q2 14 354 +5.5% +17.5% Japan 8% North America 18% Number of directly operated stores 118
Slide 37: Sport & Lifestyle H1 2014 revenue
Sport & Lifestyle activities H1 2014 revenue: 1,499M€ +0.4% comparable; -5.6% reported Other Countries Revenue Y-o-y Change 21% In €m EURm % comparable % reported Western Europe Q1 14 790 (0.2%) (6.3%) 31% Asia Pacific Q2 14 709 +1.1% (4.7%) 13% Japan 8% North America 27% Recurring operating income
Slide 38: H1 14 recurring operating income
H1 14 recurring operating income Change In €m H1 14 H1 13 €m % Gucci 527.6 556.0 (28.4) -5.1% Bottega Veneta 163.1 146.5 16.6 +11.3% Saint Laurent 40.9 27.2 13.7 +50.4% Other brands 67.1 59.8 7.3 +12.2% Luxury division 798.7 789.5 9.2 +1.2% Puma 70.8 109.8 (39.0) -35.5% Other brands 0.1 - 0.1 n.a. S
Slide 39: H1 14 EBITDA
H1 14 EBITDA Change In €m H1 14 H1 13 €m % Gucci 596.4 625.6 (29.2) -4.7% Bottega Veneta 177.7 157.3 20.4 +13.0% Saint Laurent 52.3 33.9 18.4 +54.3% Other brands 93.7 79.9 13.8 +17.3% Luxury division 920.1 896.7 23.4 +2.6% Puma 95.0 137.3 (42.3) -30.8% Other brands 1.8 2.0 (0.2) -10.0% Sport & Lifes
Slide 40: Net financial costs and income tax H1 14
Net financial costs and income tax H1 14 In €m H1 14 H1 13 Cost of net debt (87) (88) Other financial income and expenses (18) (9) Financial costs (net) (105) (97) In €m H1 14 H1 13 Tax on recurring income (129) (140) Tax on non-recurring items (14) 2 Total tax charge (143) (138) Effective tax rate
Slide 41: H1 14 condensed consolidated balance sheet
H1 14 condensed consolidated balance sheet In €m H1 14 H1 13 Goodwill, brands & other intangible assets - Net 14,361 14,397 Other net non-current assets 4 (413) Net current assets 1,039 1,150 Provisions (391) (318) CAPITAL EMPLOYED 15,013 14,816 Net assets held for sale (66) (72) SHAREHOLDERS’ EQUIT
Slide 42: Dividend
Dividend Dividend per share (for the FY in reference) In € + 7.1% 3.75 3.75 3.50 3.50 + 6.1% 3.30 2009 2010 2011 2012 2013 Dividend payout 61.6% 64.0% 58.6% 59.8% 52.9% 48.3% 47.6% 41.8% 37.3% 38.5% 2009* 2010* 2011* 2012 2013 % of recurring net income, Group share, from continuing operations % of f
Slide 43: Solvency
Solvency In €m 4,367 3,781 3,396 3,443 2.4 2.0 2,492 1.8 1.7 1.2 2009* 2010* 2011* 2012 2013 Net financial debt Net financial debt/EBITDA * Published not restated 43 44
Slide 44: Liquidity (as of Dec 31, 2013)
Liquidity (as of Dec 31, 2013) In €m 4,126 Net financial debt: 3,443 M€ 1,392 815 505 310 360 61 Confirmed 2014* 2015** 2016** 2017** 2018** Beyond** undrawn credit lines * Gross debt minus cash & cash equivalents and financing of customer loans ** Gross debt 44 44