Update of the 2020 Group Business Plan. August 3, 2018

Transcription

1 Update of the 2020 Group Business Plan August 3, 2018

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 facts, most of which being beyond the control of the Group. Therefore actual results could differ, even to a significant extent, with respect to those reported in the statements. 1

3 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Financial Targets 2

4 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Financial Targets 3

5 AN ATTRACTIVE EYEWEAR INDUSTRY Healthy Eyewear Industry EUR bn, Wholesale value Developed Emerging CAGR ~+3%-4% +4% ~+2% 16 Demographics >2bn people in need of eyecare solution Consumer behavior Impact of millennials The share of the world s population aged 45+ will increase significantly Increasing wealth in emerging markets will result in more people gaining access to eyecare Health & wellness trends will continue to generate interest in preventive/protective eyecare Consumers are increasingly willing to pay for brands that offer distinguishing value. Traditional brand segmentation may lose relevance Millennials will be 45% of consumers in 2025 and will influence consumption attitudes also for eyewear E ~+5% Channels Digital growing Eyewear distribution is fragmented, with a large part of business in independent opticians Digital channels currently represent 5% sales, growing fast, with online platforms/multi brand websites and specialist players leading the growth. Omni-channel becomes more and more important SOURCE: Management estimates 4

6 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Financial Targets 5

7 WHAT SAFILO STANDS FOR 2nd Biggest Global Player Distinctive and recognized product design, creation and innovation capabilities, supported by strong communication in reaching key influencers 140 years of eyewear manufacturing: Made in Italy capacity and craftmanship, recently enhanced by smart automation and the latest technologies Know-how in licenses' management and ideal partner for high potential brands within a multi-segment brand portfolio Four own core brands representing 25% of the Group s business Direct distribution in 40 countries and wide network of global partners worldwide, reaching ~ points of sales 6

8 WHAT SAFILO STANDS FOR: Product Design and Manufacturing Footprint A new Product Creation Dep. was created in late 2014 with the purpose to drive the creation, development and innovation of the most unique eyewear collections, operating from a network of international design studios Our products are manufactured both in-house, in our own plants in Italy, China, Slovenia and the United States and through a network of third-party manufacturers in Italy and Asia We tailor production to each brand and market segment, from the value-for-money to the highest end atelier In 2017, we produced 40% of our sale volumes in-house Design studios: Padua, Milan, New York, Portland, Hong Kong Plants: Europe Longarone (Italy) S.Maria di Sala (Italy) Martignacco (Italy) Bergamo (Italy) Ormoz (Slovenia) North America Salt Lake City Far East Suzhou (RPC) 7

9 WHAT SAFILO STANDS FOR: Global Distribution Network We sell our products with an extensive subsidiary network in 40 countries in North and Latin America, Europe, Middle East and Africa, Asia Pacific and China We have a network of more than 50 independent distribution partners covering the other countries. We reach nearly 100,000 points of sale all over the world including opticians, optometrists, ophthalmologists, distribution chains, department stores, specialised retailers, licensors own stores, duty free shops and sports shops : Direct Distribution : Indirect Distribution : Not covered 8

10 WHAT SAFILO STANDS FOR: Multi-segment Brand Portfolio Fashion Luxury 3 bn Retail price*: >200 Premium, Contemporary & Lifestyle 10 bn Retail price*: 80 to 200 Mass/cool (branded) 2 bn Retail price*: 30 to 80 Private label Retail price*: <30 3 bn SOURCE: Management estimates * Recommended retail price 9

11 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Financial Targets 10

12 SAFILO IN CONTEXT Key business drivers 1 Geographic mix Strong and historical position in Developed Markets Opportunity to accelerate growth in Emerging Markets MARKET 57% 43% 2 SAFILO 82% 18% Product mix Developed Markets Emerging Markets 3 Cost structure SOURCE: Safilo s data in % on 2017 sales and management estimates 11

13 SAFILO IN CONTEXT Key business drivers 1 Geographic mix 2 Product mix Strong position in the Sunglasses business Opportunity to recover a stronghold in Prescription frames MARKET 33% 67% SAFILO 65% 35% 3 Cost structure Sun & Other Prescription frames SOURCE: Safilo s data in % on 2017 sales and management estimates 12

14 SAFILO IN CONTEXT Key business drivers 1 Geographic mix 2 Product mix 3 Cost structure Higher cost structure Opportunity to significantly reduce costs and improve profitability INDUSTRY BENCHMARKS SAFILO 40% 50% 43% 40% 9% 15% COGS Selling G&A SOURCE: Safilo s data in % on 2017 sales and management estimates 13

15 TODAY AGENDA 1 An Attractive Eyewear Industry 2 What Safilo stands for 3 Safilo in context 4 Key Strategies 5 Financial Targets 14

16 KEY STRATEGIES 1 REIGNITE SALES GROWTH with FOCUS on Key Brands, Geographies and Channels Leveraging world-class PRODUCT CREATION AND INNOVATION Embedding DIGITAL AND E-COMMERCE into our way of work and sell Putting the CONSUMER & CUSTOMER at the heart of what we do 2 RECOVER OPERATING PERFORMANCE Significantly REDUCE THE GROUP COST STRUCTURE Gross margin improvement from COGS savings Overheads reduction with a Culture of AGILITY & SPEED 15

17 KEY STRATEGIES AND IMPACTS Growth (EUR Mio) 1 Multi-segment portfolio Play multi-segment with core licensed/own brands Accelerate Growth in Premium and Contemporary Sales EBITDA REIGNITE SALES GROWTH Geographies and channels Catch growth in Emerging markets Recover growth in Developed markets Start an omni-channel strategy ca +2% CAGR ca +4% CAGR* Product categories Reconquer the Optical business Gucci business Guaranteed volumes to halve starting from Jan. 19 as per contract 2 REDUCE THE COST COGS Obsolescence COGS and Obsolescence savings to improve Gross Margin STRUCTURE Overheads Extra program of Overhead savings to allow significant recovery of operating profitability +30 Total impact Restructuring costs -25 CAGR*: excl. Gucci business 16

18 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Reignite Sales Growth Financial Targets 17

19 REIGNITE SALES GROWTH 1.1 Play our multi-segment portfolio LICENSED BRAND PORTFOLIO Expected to grow MID-SINGLE DIGIT in the next 2Y Key drivers Fashion Luxury as our stronghold, behind the Group renowned product creation skills, Made in Italy capacity and tailored-made selective distribution Accelerated growth in the Premium, Contemporary and Lifestyle segments: biggest part of today business attractive segment trends and profitability capabilities in Fashion Luxury to support growth of Premium clear success cases and potential in the licensed portfolio 18

20 REIGNITE SALES GROWTH 1.1 Play our multi-segment portfolio OWN CORE BRAND PORTFOLIO Expected to grow MID-SINGLE DIGIT in the next 2Y Key drivers Carrera & Polaroid: Clear design language and collection architecture, back to the DNA of the brands Improve current in-store execution Attract millennials through our brand authenticity, empowered by a new integrated digital strategy (e-commerce and communication) Focused investments in key geographies Smith: Expand market leadership in NA core snow business, with product innovation Expand sunglasses in NA, leveraging on ChromaPop lenses Selective expansion of snow business in Europe Accelerate e-commerce in NA and Europe 19

21 REIGNITE SALES GROWTH 1.2 Catch growth in EMERGING MARKETS EMERGING MARKETS Expected to grow HIGH-SINGLE digits in the next 2Y Key drivers Develop Glocal strategies: Increase Asian model product offering Leverage the optical strategy, tailored to Emerging markets Invest in locally relevant influencers and marketing campaigns Accelerate hybrid commercial model for wider geographical and in market coverage Emerging markets comprise the regions of India, Middle East & Africa and Latin America (reported within Rest of the World), Central Eastern Europe (reported within Europe), Greater China and APAC (reported within Asia Pacific) 20

22 REIGNITE SALES GROWTH 1.3 Recover growth in DEVELOPED MARKETS DEVELOPED MARKETS* Expected to grow LOW to MID-SINGLE digits in the next 2Y Key drivers Step up Service Levels and Customer care Complete the commercial reorganization in North America Digitalize the salesforce and exploit more our B2B platform Enhance portfolio opportunities in optical across Europe *: North America and Western Europe (excl. Gucci business) 21

23 REIGNITE SALES GROWTH 1.4 Start an OMNI-CHANNEL strategy E-COMMERCE BUSINESS Expected to grow HIGH-DOUBLE digits in the next 2Y Double its share of the total sales from 3% to 6% in 2020 Key drivers E-commerce to develop a true omni-channel strategy: New Carrera and Polaroid e-commerce, starting with Western Europe New Smith e-commerce in Western Europe Develop/accelerate partnerships with big marketplace players (e.g., YNAP, Amazon, Farfetch, JD.com)/ Internet pure players (e.g., Mr. Spex,) 22

24 REIGNITE SALES GROWTH 1.5 OPTICAL BUSINESS Expected to grow MID-SINGLE digits in the next 2Y Grow its share on the total sales from 35% to 40% in 2020 Key drivers Broaden the optical category for all our key brands Strengthen and enlarge the product offer and price positioning Improve execution in after-sales service Make our Safilo optical specialist brand the essence of our 360 optical strategy 23

25 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Reignite Sales Growth Reduce Cost Structure Financial Targets 24

26 REDUCE COST STRUCTURE 2.1 Cost of Goods Sold Savings (excl. Obsolescence) Target COGS savings (EUR Mio) Key drivers ~30 PROCUREMENT Partner closer with fewer suppliers Strengthen design-to-cost per segment MANUFACTURING Improve plant efficiency, adopting best-in-class industrial processes and technologies Redesign manufacturing flows and indirect structures Procurement Manufacturing D&L Total DISTRIBUTION & LOGISTICS DC consolidation: from 10 in 2017 to 4 in 2020 Optimization of transportation and warehousing flows 25

27 REDUCE COST STRUCTURE 2.2 Obsolescence Cost Savings Target Inventory DOH and savings (EUR Mio) Key drivers DOH improvement: 50 days ~10 Lead Time Reduction behind better planning and flows optimization/ synchronization with suppliers and within Safilo factories Supply Chain Reliability improvement based on better capacity planning and material stock management Lead time Supply Chain reliability Forecast accuracy Total Improvement of Forecast Accuracy by optimizing safety stock and rationalizing SKU s 26

28 REDUCE COST STRUCTURE 2.3 Overhead Cost Savings Target OVERHEAD savings (EUR Mio) Key drivers ~30 Work process simplification in central and regional offices Agility and efficiency in transactional work, powered by completion of the Eyeway IT systems rollout Detailed, zero-based budgeting effort on G&A Indirect costs efficiencies through Eyebuy platform Simplification G&A ICT Total 27

29 TODAY AGENDA An Attractive Eyewear Industry What Safilo stands for Safilo in context Key Strategies Financial Targets 28

30 FINANCIAL TARGETS 2020 TARGETS* SALES GROWTH ~ Mio ca + 2% CAGR vs 2018e Sales back to growth from 2019 ca +4% CAGR vs 2018, excl. Gucci business EBITDA MARGIN EXPANSION 8% - 10% of Net Sales Steady recovery of economic performance mainly driven by Gross margin improvement and Overhead savings CASH FLOW GENERATION Net Debt/EBITDA: ca 1.5x Positive Cash Flow from 2019, enabled by economic results and better Net Working Capital Cumulated investments around EUR 80 Mio * at 2018 FX 29

31 REFINANCING Safilo s 150 Mio Revolving Credit Facility ( RCF ) is expiring on November 30, 2018 and the 150 Mio Equitylinked Bond ( ELB ) is maturing on 22 May The Company is progressing in its discussions with financial institutions on the refinancing options, in the context of the updated business plan. In addition, the Company is having discussions with its reference shareholder, HAL Holding N.V ( HAL ), to which extent and under which terms and conditions HAL could potentially provide financial support in the refinancing process. The company expects to complete the work and all considerations regarding the final choice of financing options within the coming months and to launch the actual refinancing project within the upcoming maturity timelines. 30