Slide 1: Second Quarter FY20 Results
COTY SECOND QUARTER FY20 RESULTS February 5, 2020
Slide 2: 2Q20: Progress Continues
2Q20: PROGRESS CONTINUES ▪ Turnaround progressing as planned ▪ Momentum in gross margin and cash ▪ FY20 targets confirmed ▪ Reshaping of portfolio on track ➢ Strategic review well underway ➢ New partnership with Kylie Jenner 2
Slide 3: Turnaround Activation: Progress to Date
TURNAROUND ACTIVATION Progress to Date STRENGTHENING LEANER & MORE MARKETING GROSS MARGIN ALIGNED FUNDAMENTALS FOCUS ORGANIZATION ▪ 8% increase in ▪ Selective price ▪ New organizational working media, increases structure being outsized spend implemented ▪ Active mix behind priority management brands
Slide 4: Initial Positive Signals – Building a Healthier Base
INITIAL POSITIVE SIGNALS – BUILDING A HEALTHIER BASE Drivers of improvement: Consumer Beauty – 1H20 Net Rev Per Unit Growth ~6% • Active net price management • Revenue mix management ~2% ~2% • More disciplined promos North America Europe Total Consumer Beauty Luxury Market Price per Unit Growth Driv
Slide 5: Initial Positive Signals – Tangible Progress in Mass Cosmetics
INITIAL POSITIVE SIGNALS – TANGIBLE PROGRESS IN MASS COSMETICS United Kingdom Coty Color Cosmetics Improvement USA Nielsen Global Mass Color Cosmetics Coty • Coty’s color cosmetics sell-out • Coty’s cosmetics sell-out remains improved by ~140 bps* over pressured in mass retail, though the past year
Slide 6: Continued Progress – E-Commerce Growth
CONTINUED PROGRESS– E-COMMERCE GROWTH E-Commerce Revenue Share Luxury (% of Revenues) ~20% Revenue • Coty’s e-commerce revenue share 15% Growth relatively consistent with Lux fragrance market 12% • Strong momentum despite current 9% limited presence on Tmall ~20% Revenue Growth 6% Consumer Beauty 3%
Slide 7: Recent Clean Label Launches
RECENT CLEAN LABEL LAUNCHES ▪ Vegan & Cruelty-free ▪ Eco-friendly/recycled packaging ▪ Naturally-derived ingredients ▪ Excludes parabens, sulphates, phthalates, and other contested ingredients
Slide 8: Coty Sustainability Ambitions
COTY SUSTAINABILITY AMBITIONS Accelerate the INCLUSIVE TRAINING of our teams and maximize our DIVERSITY Committed to gender balance in our leadership Drive PRODUCT INNOVATION with positions * Broaden the measurement and reduction SUSTAINABILITY and circular economy in mind of GENDER PAY GAPS** Conti
Slide 9: 2Q20 Revenue
2Q20 REVENUE Results In-line with Expectations 2Q20 REVENUE GROWTH • 2Q20 revenue trend in-line with Total Revenue LFL guidance -1.4% • Solid Luxury and Professional Beauty LFL, with sequential Consumer Beauty improvement -6.6% • Continued focus on building a LFL BY DIVISION healthier business suppo
Slide 10: Luxury Brand Highlights
LUXURY BRAND HIGHLIGHTS 10
Slide 11: Luxury 2Q20 Results
LUXURY 2Q20 RESULTS Strong Profit Growth ▪ Solid growth on high comparables 2Q20 REVENUE GROWTH ▪ Good sell-out performance: Total Revenue LFL ➢ Tiffany & Love, Gucci make-up ▪ We are cutting low value sales, temporarily driving negative LFL 1.3% in Q3, so as to strengthen the business quality -0.1%
Slide 12: Consumer Beauty Brand Highlights
CONSUMER BEAUTY BRAND HIGHLIGHTS 12
Slide 13: Consumer Beauty 2Q20 Results
CONSUMER BEAUTY 2Q20 RESULTS Gradual Improvement ▪ Improving performance gap vs. overall 2Q20 REVENUE GROWTH market Total Revenue LFL ▪ Priority brand-country combos declined -6.7% low single digits, ahead of divisional average -17.4% ▪ Launched clean label products for Sally Hansen and CoverGirl AD
Slide 14: Professional Beauty Brand Highlights
PROFESSIONAL BEAUTY BRAND HIGHLIGHTS 14
Slide 15: Professional Beauty 2Q20 Results
PROFESSIONAL BEAUTY 2Q20 RESULTS Solid Revenue Growth ▪ Steady growth in Europe 2Q20 REVENUE GROWTH Total Revenue LFL ▪ ghd continues to deliver solid growth on the back of strong launches 2.2% ▪ Continued margin strength 0.6% ADJUSTED OPERATING MARGIN -10 bps 17.3% 17.2% 2Q19 2Q20 15
Slide 16: 2Q20 Coty Margins Continue to Improve
2Q20 COTY MARGINS CONTINUE TO IMPROVE ▪ Strong gross margin expansion supported by divisional mix and organizational focus ▪ Working media up sizeably, with overall A&CP down slightly on lower promotions ▪ Robust adjusted operating margin expansion driven by increased gross margin ▪ 1H20 adjusted op
Slide 17: Q2 Free Cash Flow Growth
Q2 FREE CASH FLOW GROWTH 2Q20 Adj Operating Income 325 Depreciation 101 Adj EBITDA 426 ▪ 2Q20 FCF up significantly YoY, supported Noncash Addbacks 74 by improvement in Net Working Capital Working Capital (incl one-off costs) 46 ▪ Driven by underlying Receivables and Capex (59) Interest (Cash) (86) I
Slide 18: FY20 Outlook: Targets Reaffirmed
FY20 OUTLOOK Targets Reaffirmed LFL NET REVENUES Stable to slightly down YoY ADJUSTED OI +5-10% YoY (At Constant Scope Strong working media reinvestment and Currency) ADJUSTED EPS Mid-single digit growth YoY FREE CASH FLOW Moderate improvement YoY
Slide 19: Strategic Review
STRATEGIC REVIEW 1. Strong business delivery, teams fully focused 2. Multiple, strong interests confirmed 3. Information Memoranda distributed, progressing inline with initial timeline 19
Slide 20: Kylie Partnership
KYLIE PARTNERSHIP ▪ Transaction closed January 6, 2020 ▪ Christoph Honnefelder appointed CEO ▪ Ended CY19 with over $200M in revenues ➢ Very strong Black Friday and Cyber Monday results ➢ Strong skin care start ➢ Next 12 months focus will be on skincare and preparing for rapid expansion ▪ Continue t
Slide 21: Conclusion: Progress Continues
CONCLUSION: PROGRESS CONTINUES ▪ Turnaround progressing as planned ▪ Momentum in gross margin and cash ▪ FY20 targets confirmed ▪ Reshaping of portfolio on track ➢ Strategic review well underway ➢ New partnership with Kylie Jenner 21
Slide 22: Q&A
Q&A
Slide 23: Disclaimer
DISCLAIMER Forward-Looking Statements Certain statements in this presentation are forward-looking statements. These forward-looking statements reflect Coty Inc.’s (“Coty’s”) current views with respect to, among other things, Coty’s turnaround plan announced on July 1, 2019 (the “Turnaround Plan”), s