Kering Sa · EURONEXT:KER
Kering Sa — Investor Presentation (December 2018)
54 slides from Kering Sa's investor presentation, December 2018
Slide 1: Investor Presentation November-December 2018
Commencer pagination à 1 !!! Investor Presentation November-December 2018
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: Group Overview and Strategy
GROUP OVERVIEW AND STRATEGY
Slide 4: Our journey to pure-player status is now completed
OUR JOURNEY TO PURE -PLAYER STATUS IS NOW COMPLETED A STREAMLINED ENSEMBLE OF 1 A PURE LUXURY PLAYER 2 BRANDS ▪ Distribution in kind of 70% of PUMA shares to Kering ▪ Agreement between Kering and Ms. Stella McCartney shareholders effective May 16 at a share price of €429 regarding the sale and purch
Slide 5: Substantial value creation for shareholders
SUBSTANTIAL VALUE CREATION FOR SHAREHOLDERS Revenue Operating income Market Cap €20.2bn €1.7bn €5.9bn Others France Distribution YE 2008 37% 39% Luxury & SL 41% 59% CAC 40 3 218 Europe 24% Revenue Operating income Market Cap cut by c.1/2 multiplied by 1.6x multiplied by 8.4x €10.8bn €2.7bn €49.6bn Y
Slide 6: Empowering premium brands
EMPOWERING PREMIUM BRANDS AN ENSEMBLE OF HOUSES IN FASHION, LEATHERGOODS, JEWELLERY AND WATCHES 6
Slide 7: Empowering imagination: vision, business model, strategy
EMPOWERING IMAGINATION VISION BUSINESS MODEL STRATEGY PROMOTE CREATION MULTIBRAND organic growth at the heart of modern, model based on agility, audacious Luxury balance and sustainability STRENGTHEN synergies and integration 7
Slide 8: Gucci, excellence nurtured by creativity
GUCCI, EXCELLENCE NURTURED BY CREATIVITY PRODUCTS & MERCHANDISING STORE NETWORK • Unique aesthetic expression & storytelling • 196 units on new concept • Creative collaborations • Sharp increase in sales per sqm • All categories growing • Strengthening store teams • Well balanced between permanent •
Slide 9: Major organic growth levers: Bottega Veneta, Yves Saint Laurent
MAJOR ORGANIC GROWTH LEVERS BOTTEGA VENETA YVES SAINT LAURENT Brand transition in progress Straightforward strategy and drivers • Strong assets: distinctive identity, clear positioning, loyal base • Remarkable growth trajectory since 2013, hand in hand of consumers with rapid profitability gains • A
Slide 10: Major organic growth levers: Balenciaga, McQueen, Boucheron
MAJOR ORGANIC GROWTH LEVERS BALENCIAGA Successful creative renewal • High growth driven by Ready-to-wear and Shoes • Considerable potential from Leather Goods • Targeted openings: new flagships • €1bn sales potential in medium term ALEXANDER McQUEEN Multiple strengths, promising momentum • Powerful
Slide 11: Performance accelerators: integrated model and synergies
PERFORMANCE ACCELERATORS INTEGRATED MODEL Cross-brand expertise, innovation and digital SYNERGIES SYNERGIES AT THE HEART OF BRAND STRATEGY Sharing of Audacity, creativity Supply chain resources Operational execution Communications Talent excellence and best practices INTEGRATED MODEL 11
Slide 12: Q3 2018 Revenue Highlights and Performance
Q3 2018 REVENUE HIGHLIGHTS AND PERFORMANCE
Slide 13: Q3 2018 revenue: sustained outperformance, up 27.5% comparable
Q3 2018 REVENUE: SUSTAINED OUTPERFORMANCE, UP 27.5% COMPARABLE KERING LUXURY HOUSES CORPORATE & OTHER C O N T I N U I N G O P E R AT I O N S * Q3 18: €3,402m Q3 18: €3,318m Q3 18: €84m Q3 17 restated: €2,665m Q3 17 restated: €2,609m Q3 17 restated: €56m +27.6% reported +27.2% reported +48.8% reporte
Slide 14: Luxury Houses Q3 2018 revenue
LUXURY HOUSES Q3 2018 revenue: €3,318m +27.2% reported; +27.1% comparable REVENUE CHANGE BY REGION AND CHANNEL REVENUE BREAKDOWN BY REGION ( i n € m , a n d c o m p a r a b l e g r o w t h i n %) ( o n t o t a l Q 3 r e v e n u e , i n %) RoW +27% +11% 3,318 6% +28% Western Europe 2,609 0% 35% Asia
Slide 15: Gucci Q3 2018 revenue
GUCCI Q3 2018 revenue: €2,096m +34.9% reported; +35.1% comparable REVENUE CHANGE BY REGION AND CHANNEL REVENUE BREAKDOWN BY REGION ( i n € m , a n d c o m p a r a b l e g r o w t h i n %) ( o n t o t a l Q 3 r e v e n u e , i n %) RoW Retail (83% of sales): +35% 5% +36% +17% 2,096 +42% +27% Western
Slide 16: Saint Laurent Q3 2018 revenue
SAINT LAURENT Q3 2018 revenue: €447m +16.5% reported; +16.1% comparable REVENUE CHANGE BY REGION AND CHANNEL REVENUE BREAKDOWN BY REGION ( i n € m , a n d c o m p a r a b l e g r o w t h i n %) ( o n t o t a l Q 3 r e v e n u e , i n %) RoW 5% Retail (63% of sales): +18% +14% +10% 447 +18% +21% Asia
Slide 17: Bottega Veneta Q3 2018 revenue
BOTTEGA VENETA Q3 2018 revenue: €259m -7.8% reported; -8.4% comparable REVENUE CHANGE BY REGION AND CHANNEL REVENUE BREAKDOWN BY REGION ( i n € m , a n d c o m p a r a b l e g r o w t h i n %) ( o n t o t a l Q 3 r e v e n u e , i n %) RoW 6% Retail (83% of sales): -10% 281 Western Europe 31% -13% -
Slide 18: Other Houses Q3 2018 revenue
OTHER HOUSES Q3 2018 revenue: €516m +32.2% reported; +32.2% comparable REVENUE CHANGE BY REGION AND CHANNEL REVENUE BREAKDOWN BY REGION ( i n € m , a n d c o m p a r a b l e g r o w t h i n %) ( o n t o t a l Q 3 r e v e n u e , i n %) RoW 7% +29% +4% 516 +38% 391 Asia Pacific 21% Western Europe 47%
Slide 19: Corporate & Other
CORPORATE & OTHER R e v e n ue i n € m 99 8 84 76 -23 56 Q3 18 KEYE Royalties and KEYE Other revenue Q3 18 Total Q3 17 Total external sales intragroup consolidated sales Corporate & Other Corporate & Other eliminations KERI NG EYEWEAR UPDATE : Q3 total external sales of €99m, net consolidated revenu
Slide 20: H1 2018 Results
H1 2018 RESULTS
Slide 21: 2018 first-half results
2018 FIRST-HALF RESULTS NEW PROFILE DELIVERS SUPERIOR PERFORM ANCES % comparable growth* +33.9% RoW Western Europe GROUP REVENUE 7% (+34%) 32% (+25%) continuing operations +36.6% +31.5% Asia Pacific 33% (+38%) €6,432m H1 revenue €5,073m Japan North America +26.8% reported, +€1.4bn €3,106m €3,326m 9%
Slide 22: Luxury Houses
LUXURY HOUSES CONTINUED OUTPERFORM ANCE DELIVERS HIGH M ARGIN EXPANSION H1 18 revenue: +26.9% reported; +33.9% comparable Revenue change in €m, and comparable growth in % +28% +6% 6,209 +37% Reported In €m H1 18 change 4,893 0% Revenue 6,209 +26.9% -5% Recurring operating income 1,886 +51.3% Recurri
Slide 23: Gucci
GUCCI HEALTHY TOP-LINE GROWTH FUELS RECORD M ARGIN H1 18 revenue: +36.0% reported; +44.1% comparable Revenue change in €m, and comparable growth in % Retail (86% of sales): +47% Reported +49% +33% 3,853 +48% In €m H1 18 change +57% +44% +1% +37% Revenue 3,853 +36.0% 2,833 Recurring operating income
Slide 24: Saint Laurent
SAINT LAURENT PROFITABLE GROWTH ON TRACK WITH PLAN H1 18 revenue: +13.7% reported; +19.7% comparable Revenue change in €m, and comparable growth in % Retail (68% of sales): +17% +7% 808 +29% Reported In €m H1 18 change +22% +25% +11% Revenue 808 +13.7% +30% 711 +4% Recurring operating income 198 +21
Slide 25: Bottega Veneta
BOTTEGA VENETA BRAND- REJ UVE NATIO N JOURNEY CONTINUES H1 18 revenue: -6.5% reported; -0.9% comparable Revenue change in €m, and comparable growth in % Retail (82% of sales): -2% 590 Reported In €m H1 18 change -14% +7% 552 Revenue 552 -6.5% +2% +1% +7% +3% -2% Recurring operating income 133 -10.2%
Slide 26: Other Luxury Houses
OTHER LUXURY HOUSES HIGHER GROWTH AND M ARGIN PROFILE H1 18 revenue: +31.1% reported; +36.5% comparable Revenue change in €m, and comparable growth in % +27% +10% 996 Reported +50% In €m H1 18 change 760 Revenue 996 +31.1% Recurring operating income 85 +202.5% Recurring operating income margin 8.5%
Slide 27: Corporate & Other
CORPORATE & OTHER R e v e n ue i n € m 262 15 223 In €m H1 18 H1 17 208 -54 Total Recurring operating result (114) (89) Underlying result (75) (72) Corporate Long-term incentive plan (39) (17) Gross CAPEX 89 50 H1 18 KEYE Royalties and KEYE Other revenue H1 18 Total external sales intragroup consoli
Slide 28: Financial performance
FINANCIAL PERFORMANCE In €m H1 18 H1 17 RESTATED Revenue 6,432 5,073 Gross margin 4,776 3,674 Gross profit margin 74.3% 72.4% Recurring operating income 1,772 1,158 Recurring operating income margin 27.5% 22.8% Other non-recurring operating income and expenses (40) (44) Finance costs, net (97) (108)
Slide 29: Change in net financial debt
CHANGE IN NET FINANCIAL DEBT H1 18 NET FINANCIAL DEBT BRIDGE In €m 251 3,300 3,049 776 23 2,793 95 -1,401 Net debt at Discontinued Net debt from Free cash flow Net interest paid and Dividend paid Net financial Net debt at December 31, 2017 operations IFRS 5 continuing from dividend received investme
Slide 30: FY 2017 Results
FY 2017 RESULTS
Slide 31: Record operating performances in 2017
RECORD OPERATING PERFORMANCES IN 2017 +27.2% RoW Western Europe 11% (+23%) 33% (+32%) GROUP REVENUE €15,478m Asia Pacific 27% (+33%) +8.1% €15,478m +4.6% Japan €12,385m 8% (+11%) +25.0% reported North America +27.2% comparable 2015 2016 2017 21% (+23%) % comparable growth* As a % of revenue and (% c
Slide 32: Luxury activities 2017: revenue passes the €10bn mark
LUXURY ACTIVITIES RECORD GROWTH IN REVENUE AND OPERATING INCOME 2017 REVENUE: +27.5% REPORTED, +29.9% COMPARABLE X%: comparable change Figures in €m 10,796 Reported +35% +17% +8% In €m 2017 change 8,469 Revenue 10,796 +27.5% -2% Recurring operating come 2,911 +50.4% Recurring operating income margin
Slide 33: Gucci 2017: revenue exceeds €6bn
GUCCI AN OUTSTANDING YEAR ACROSS THE BOARD 2017 REVENUE: +41.9% REPORTED, +44.6% COMPARABLE X%: comparable change Figures in €m Retail (85% of sales): +47% Reported In €m 2017 change +48% +52% +35% +15% 6,211 +58% +44% +21% Revenue 6,211 +41.9% 4,378 Recurring operating income 2,124 +69.1% Recurring
Slide 34: Bottega Veneta: a year of stabilization
BOTTEGA VENETA A YEAR OF STABILIZATION 2017 REVENUE: +0.2% REPORTED, +2.4% COMPARABLE X%: comparable change Figures in €m Retail (83% of sales): +4% Reported In €m 2017 change +7% +19% +3% 1,173 1,176 Revenue 1,176 +0.2% -2% +4% -4% -8% Recurring operating income 294 -1.1% Recurring operating income
Slide 35: Saint Laurent revenue hits €1.5bn mark, margin at 25%
SAINT LAURENT REVENUE HITS €1.5BN MARK, MARGIN AT 25% 2017 REVENUE: +23.0% REPORTED, +25.3% COMPARABLE X%: comparable change Figures in €m Reported Retail (69% of sales): +27% In €m 2017 change +20% +27% 1,502 +39% +21% Revenue 1,502 +23.0% +27% +19% +16% 1,220 Recurring operating income 377 +40.4%
Slide 36: Other luxury brands
OTHER LUXURY BRANDS A YEAR OF ACCELERATION AND INVESTMENT IN FUTURE 2017 REVENUE: +12.3% REPORTED, +14.1% COMPARABLE X%: comparable change Figures in €m Reported +26% +7% 1,907 In €m 2017 change -11% 1,698 Revenue 1,907 +12.3% Recurring operating income 116 +1.9% Recurring operating income margin 6.
Slide 37: Sport & Lifestyle activities
SPORT & LIFESTYLE ACTIVITIES SUSTAINED GROWTH, OPERATING LEVERAGE 2017 REVENUE: +12.8% REPORTED, +14.7% COMPARABLE X%: comparable change Figures in €m Reported +21% +11% +20% +13% 4,382 In €m 2017 3,884 change -4% Revenue 4,382 +12.8% Recurring operating income 244 +98.1% Recurring operating income
Slide 38: Financial performance
FINANCIAL PERFORMANCE In €m 2017 2016 Revenue 15,478 12,385 Gross margin 10,133 7,790 Recurring operating income 2,948 1,886 Other non-financial operating income and expenses (242) (506) Net financial charges (243) (202) Corporate income tax (591) (296) Share in earnings of associates (2) (2) Net re
Slide 39: Free cash flow from operations
FREE CASH FLOW FROM OPERATIONS In €m 2017 2016 Cash flow before taxes, dividends and interests 3,479 2,172 Change in working capital requirement (excluding taxes) (94) (84) Corporate income tax paid (365) (296) Net cash flow from operating activities 3,020 1,792 Acquisition of fixed operating assets
Slide 40: Net financial debt 2016-2017 change
NET FINANCIAL DEBT 2016-2017 CHANGE IN €M AND NET DEBT / EBITDA RATIO 4,371 184 3,049 616 196 1.9x -2,318 0.9x Net debt at Free cash flow Net interest paid and Dividends paid Purchase of Kering Net debt at December 31, 2016 from operations dividends received shares, financial December 31, 2017 inves
Slide 41: Dividend up 30%
DIVIDEND UP 30% DIVIDEND PER SHARE (excluding distribution in kind of Puma shares) (In €) +30% 6.00 4.60 4.00 4.00 3.75 3.75 2012 2013 2014 2015 2016 2017 DIVIDEND PAYOUT (In %) in % of recurring net income, Group share in % of available cash flow 102,2% 61,6% 64,0% 59,4% 57,1% 49,6% 45,3% 37,8% 38,
Slide 42: Value creation and financial ambitions
VALUE CREATION AND FINANCIAL AMBITIONS REVENUE • Focus on same-store organic growth IMPROVED RETURN ON OPERATIONS CAPITAL • Higher store productivity EMPLOYED RETURN • Ongoing adaptation of organizations WCR • Planning and inventory management SUSTAINED CAPITAL GENERATION EMPLOYED OF FCF FROM OPERAT
Slide 43: Governance and Sustainability
GOVERNANCE AND SUSTAINABILITY
Slide 44: Board focusing on independence and variety of expertise
BOARD FOCUSING ON INDEPENDANCE AND VARIETY OF EXPERTISE Independence 60% 2017 50% 2012 Mr. Baudouin Ms. Sophie 56% 2007 Prot L’Hélias Mr. Jean-Pierre Ms. Daniela Denis Riccardi Proportion of women 64% 2017 Ms. Patricia Ms. Claire Barbizet BOARD OF DIRECTORS 33% 2012 Lacaze 7 meetings in 2017 2007 11
Slide 45: Crafting tomorrow's luxury: we care
CRAFTING TOMORROW’S LUXURY WE CARE FOR OUR IMPACT ON THE PLANET, ON CLIMATE CHANGE, AND ON NATURAL RESOURCES BY: REDUCING OUR ENVIRONMENTAL FOOTPRINT – Reduce our Environmental Profit & Loss (EP&L) by 40% by 2025, via actions to tackle the impact of our sourcing, manufacturing and operations; – Redu
Slide 46: Crafting tomorrow's luxury: we collaborate
CRAFTING TOMORROW’S LUXURY WE COLLABORATE WITH PEOPLE ACROSS OUR BUSINESS ECOSYSTEM INCLUDING SUPPLIERS, EMPLOYEES & CLIENTS TO: PRESERVE OUR INDUSTRY’S HERITAGE – Create a suppliers’ platform, with training on Kering standards; – Provide craftsmanship and artisanal training programmes to those in o
Slide 47: Crafting tomorrow's luxury: we create
CRAFTING TOMORROW’S LUXURY WE CREATE INNOVATIONS TO ENSURE OUR PLANET, OUR INDUSTRY AND OUR BRANDS THRIVE FOR THE LONG -RUN BY: LAUNCHING DISRUPTIVE INNOVATION – Develop new sourcing solutions, raw materials and processes by applying new innovations such as biotech and the circular economy to luxury
Slide 48: Sustainability: Materiality Matrix
SUSTAINABILITY MATERIALITY MATRIX 48
Slide 49: Environmental P&L
ENVIRONMENTAL P&L AN INNOVATIVE TOOL TO MEASURE THE ENVIRONMENTAL FOOTPRINT AND TO RESPOND TO ENVIRONMENTAL CHALLENGES 1 MAPPING OF THE ENVIRONMENTAL IMPACT 2 QUANTIFICATION & SEARCH FOR ALTERNATIVES 3 IMPLEMENTATION OF TARGETED PROJECTS AND INNOVATIVE SOLUTIONS THAT MAKE THE DIFFERENCE 49
Slide 50: Voluntary reporting
VOLUNTARY REPORTING THE FIRST INTEGRATED REPORT IN THE LUXURY SECTOR FROM CREATION TO CUSTOMER EXPERIENCE: A CHAIN OF ACTORS DELIVERING BOLD AND MODERN LUXURY 50
Slide 51: Appendix
APPENDIX 51
Slide 52: H1 and FY 2017 restatements
H1 and FY 2017 RESTATEMENTS H1 2017 FY 2017 In €m RESTATED (*) REPORTED RESTATED (*) REPORTED Revenue 5,073 7,296 10,816 15,478 Gross margin 3,674 4,725 7,916 10,133 Gross profit margin 72.4% 64.8% 73.2% 65.5% Recurring operating income 1,158 1,274 2,691 2,948 Recurring operating income margin 22.8%
Slide 53: Kering brand portfolio
Gucci • Saint Laurent • Bottega Veneta Balenciaga • Alexander McQueen • Brioni Boucheron • Pomellato • Dodo • Qeelin • Ulysse Nardin • Girard-Perregaux Kering Eyewear
Slide 54: Ce Cuuagynalin
Ce Cuuagynalin