Safilo Group S.p.a. · MIL:SFL
Safilo — Q2 2023 Earnings Presentation
26 slides from Safilo's earnings presentation, Aug 2, 2023
Slide 1: H1 2023 Results
Slide 2: Disclaimer
1/2 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 fa
Slide 3: CEO quote on second quarter
“We entered the second quarter, aware that in these three months of the year our business would be facing the biggest headwinds, from a still weak market environment in North America, exacerbated by poor weather conditions, to the expected significant drop of our sales in the former Grand Vision cha
Slide 4: In Q2, gross margin expansion and cash generation despite soft sales
IN Q2, GROSS MARGIN EXPANSION & CASH GENERATION DESPITE SOFT SALES HEADWINDS AND STILL CHALLENGING COMPS BASE HOLDING BACK Q2 TOP LINE -6.6% @cFX/-5.9% organic! ADJ.2 GROSS MARGIN STRONGLY IMPROVING +260 bps at 59.1% POSITIVE FREE CASH FLOW GENERATION €9.2M
Slide 5: Solidifying our brand portfolio for the long-term
SOLIDIFYING OUR BRAND PORTFOLIO FOR THE LONG-TERM e Renewing until 2031 two cornerstones of our licensed portfolio, Kate Spade and Tommy Hilfiger ® Signing a new ten-year agreement for the eyewear of Etro, as kate spade a brand on the rise in the luxury space “ih NEW YORK e Extending some other hist
Slide 6: Our core business drivers
OUR CORE BUSINESS DRIVERS © GEOGRAPHIES Negative momentum in North America in key channels Resilient underlying performance of Europe and significant rebound of Asia wn E i 5) n w 4 ” N ° N bs BRANDS Caroline Herrera, top performer also in Q2 Polaroid, David Beckham and Hugo Boss outperforming the r
Slide 7: Net sales
NET SALES ce Q2 2023 >H1 2023 te y 263.0 €m 550.1 em — -6.6% @cFX -3.5% @cFX -5.9% organic! -1.4% organic! (Q2 ‘22 +9.8%! vs ‘21) (H1 ‘22 +12.0%! vs ‘21) , / /
Slide 8: Net sales in Europe
NET SALES in EUROPE Q2 2023 H1 2023 114.1 €M 235.7 €M -3.1% @cFX 40.4% @cFX -6.1% organic! -0.3% organic! (Q2 ‘22 +20.7%! vs '21) (H1 ‘22 +22.7%! vs ‘21) @ Europe ex GV, up mid-single digits in Q2 and +10% in H1, with all product categories positive Travel retail and B2B clients our strongest channe
Slide 9: Net sales in North America
NET SALES in NORTH AMERICA Q2 2023 H1 2023 106.8 €M 231.5 €M 9° -15.3% @cFX -11.3% @cFX -11.5% organic! - 6.2% organic! Continuation of subdued business trends in independent opticians e Poor weather holding back sales of sunglasses in stores and online e Sport business still confronting a tough com
Slide 10: Net sales in Asia & Pacific
NET SALES in ASIA & PACIFIC Q2 2023 H1 2023 16.5 €M 28.6 €m +36.0% @cFX +17.0% @cFX +38.0% organic! +17.8% organic! Sales rebound in China, up over 60% following reopening Business in Hong Kong back to normal e Ports, Hugo Boss and Polaroid, strongest brands in Asia. Smith leading growth in Australi
Slide 11: Net sales in Rest of World
NET SALES in REST of WORLD Q2 2023 H1 2023 25.5 €M 54.4 em o -0.7% @cFX +7.6% @cFX -0.1% organic! +7.9% organic! e Business normalization in Brazil and Mexico after many quarters of significant growth e India and Middle Eastern markets up mid-single digits as local marketing activations continued
Slide 12: Adj. gross margin
ADJ.2 GROSS MARGIN H1 2023 155.3 €M 323.6 €M -4.6% +1.7% 59.1% 58.8% ¢ +260 bps +300 bps Lower transportation and obsolescence costs Ongoing positive price/mix effect, although in Q2 less accretive than in previous quarters
Slide 13: Adj. EBITDA margin
ADJ.? EBITDA MARGIN H1 2023 24.9 €M 57.3 €M -18.6% -8.4% 9.5% 10.4% ¢ 110 bps -60 bps Sales-related operating deleverage and inflationary pressures on wages Continued investments to progress the Group’s digital transformation
Slide 14: Adj. net result
ADJ.? NET RESULT H1 2023 6.9 €M vs 33.7 €M in H1 2022 -17.3 €M due to different dynamics on put and call options on non- controlling interests Higher net financial charges due to the increase of interest rates and negative exchange rate differences compared to a positive difference last year
Slide 15: Positive free cash flow in a period of seasonal absorption
POSITIVE FREE CASH FLOW in a period of seasonal absorption H1 2023 FREE CASH FLOW (14.5) 99 Cash Flow from operating activities (3.6) 21.1 Cash Flow for investments (6.2) (6.2) Payment principal portion IFRS 16 lease liabilities (4.7) (5.0) More moderate absorption from Working Capital, thanks to a
Slide 16: Slide 16
Slide 17: Appendices
Slide 18: Notes to the presentation
//18 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 H1 2023, the
Slide 19: H1 2023 net sales by geographical area
19 H1 2023 NET SALES BY GEOGRAPHICAL AREA Change at current forex Change at constant forex {E10 milion) H1 2023 _% H1 2022 % Reported Reported Organic! North America 231.5 42.1 2587 45.3 -10.5% -11.3% -6.2% Europe 2357 42.8 237.1 AS 0.6% +0.4% -0.3% Asia Pacific 23.6 5.2 25.1 44 +13.7% +17.0% +17.8%
Slide 20: Q2 2023 trading update
20 Q2 2023 TRADING UPDATE -- hichli %on on % Change Key Economic highlights -in Euro milion Q22023 —ersales Q2 2022 ictrates 2023 vs:2022 Net sales 263.0 288.3 8.8% Reported at cFX -6.6% Organic! at cFX 5.9% Gross Profit 150.8 57.3% 162.8 56.5% -7A% Adjusted” Gross Profit 155.3 59.1% 162.8 56.5% 4.6
Slide 21: H1 2023 income statement
H1 2023 INCOME STATEMENT % Chai Key Economic highlights -in Euro milion H1 2023 netates H1202200 kt ome os Net sales 550.1 570.9 3.6% Reported at cFX 3.5% Organic! at cFX -14% Gross profit 318.6 57.9% 318.3 55.8% +0.1% Adjusted” Gross profit 323.6 58.8% 318.3 55.8% 41.7% EBITDA 44.6 8.1% 62.1 10.9%
Slide 22: Balance sheet as of June 30, 2023
22 BALANCE SHEET AS OF JUNE 30, 2023 in Euro million June 30, 2023 December 31, 2022 Net working capital 296.2 292.3 Tangible, Right of Use, and Intangible fixed assets 252.4 281.1 Goodwill 34.3 34.9 Non-current assets/ (liabilities) held for sale 48 2.3 Other assets / (liabilities), net (65.8) (58.
Slide 23: Working capital as of June 30, 2023
23 WORKING CAPITAL AS OF JUNE 30, in Euro million June 30, 2023 December 31,2022 Change Trade receivables 227.3 214.0 13.3 Inventories 230.7 259.0 (28.3) Trade payables (161.9) (180.7) 18.8 Net working capital 296.2 292.3 3.9 % on net sales 28.0% 27.1% 2023
Slide 24: Free cash flow
24 (Euro in millions) H1 2023 H1 2022 Cash flow from operating activities before changes in working capital 35.8 52.0 Change in working capital (14.7) (55.6) Cash flow from operating activities 21.1 (3.6) Cash flow for organic investment activities (6.2) (6.2) Cash payments for the principal portion
Slide 25: Exchange rates
25 EXCHANGE RATES Asof (Appreciation)/ Average for (Appreciation) / Depreciation Depreciation June 30, December 31, Currency Code 2023 7029 % HI 2023 H1 2022 % US Dollar usD 1.0866 1.0666 1.9% 1.0807 1.0934 1.2% Hong-Kong Dollar. HKD 8.5157 8.3163 2.4% 8.4709 8.5559 1.0% Swiss Franc CHF 0.9788 0.984
Slide 26: Strong brand portfolio to reach a broad audience of target consumers
STRONG BRAND PORTFOLIO TO REACH A BROAD AUDIENCE OF TARGET CONSUMERS * The right offer for all distribution channels, for all customer types CARRERA SMITH Pr PR * Centered on contemporar nporary BANANA REPUBLIC BOSS CAROLINA HERRERA 4 segment where the highest MARA Fennaon veal oy onto aes demand of