benetton group - 2011 nine months results
DESCRIPTION
November 14th, 2011TRANSCRIPT
9M 2011 Results
November 14th, 2011
B iBusiness Analysis
3€M
9M 2011 Highlights
OrdinaryEbit Ebit
Revenues Operating Profit
Broad negative impact from raw material.
1,498 1,481
159 119
Ebit Ebit
141 115
Performance reported: -1.1%.
SG&A reduction;lower one-time costs compared with last year.
9M 10 9M 11 10
159 119 141
11 10 11
115
9M 9M
Performance currency neutral: -0.5%
Positive impact from currency (~ 13€ mln).
Net Income Net Debt
Negative impact fromcurrency hedging: -11€ mln in 9M 11 vs. +13€ mln last year
Net Debt increase.
85 74960 486645+13€ mln last year.
Lower tax-rate: 34% in 9M 11 vs. 41% i 9M 10
Cash Flow absorption: rise in NWC & investments dedicated to
9M 10 9M 11 9M 10 9M 11FY 2010
41% in 9M 10 investments dedicated to the network.
Revenues4
€M
9M 10 9M 11 Ch % Ch % CN9M 10 9M 11 Ch % Ch % CN
Revenues 1,498 1,481 -1.1% -0.5%
Textile 80 93 16.2% 16.3%
Apparel 1,418 1,388 -2.1% -1.4%
Apparel Segment
- Wholesale 1,085 76% 1,076 77% -0.8% -0.3% Wholesale 1,085 76% 1,076 77% 0.8% 0.3%
- Direct Sales 333 24% 312 23% -6.3% -5.1%
Geographical Revenues 5
Reported C NRoW
1% (1%)
Asia
16% (16%)
Americas
4% (4%)
Overall Performance
Reported
-1.1%
C.N.
-0.5%
Macro-AreasEurope
Asia
Italy
-1.4%
+0.6%
-1.6%
+4.3%
Europe
79% (79%)Note: ( ) 9M 10 data
Americas +0.2% +5.4%
EuropeThe MediterraneanItaly: revenues decline (-2 7%)
AsiaIndia: rising revenues (+12%), driven by 3rd quarterperformanceItaly: revenues decline ( 2.7%).
Greece: double digit fall (-19%), confirming previousnegative trend.Iberian Peninsula: negative performance in Portugal(-10%) and Spain (-2%); Trend worsening in the 3rd
performance.South Korea: double digit growth (+10%).Ex-USSR Asian Countries: meaningful progress (+26%).Greater China: positive LFL results and improvement ofnegative trend(-10%) and Spain (-2%); Trend worsening in the 3
quarter.Other European CountriesOutstanding performance (+28%) in Russia and ex-USSR European Countries (+16%) Continental
negative trend.Decreasing results in Japan and South East Asia.
AmericasN th A i d li ( 9%)USSR European Countries (+16%). Continental
Europe: growth in Germany, Switzerland and U.K.North America: revenues decline (-9%).Mexico: major double digit growth (+26%).
6Geographical Revenues
Developing and Fast
Growth Countries
26% (24%)
Traditional
26% (24%)
Traditional Western
Economies
74% (76%) Note: ( ) 9M 10 data
Milan, Corso Vittorio Emanuele
Reported C.N.
-4% -4%TraditionalW t E i
+8% +11%
Western Economies
Developing andFast Growth CountriesFast Growth Countries
Milan, Piazza San Babila
7Highlights – Asia
India 22%
Others 10%
Japan11%
ex URSS-Asia3%
Greater China 9%
South Korea 29%
Turkey16%
Revenues: 238€ mln New Delhi, South Extension
Highlights
I di
Revenues: 238€ mln
Turkey
A/W 11 collections: positive sell-out, driven by offerfocused on lighter weights.
India
Performance increase: remarkable sales’ growth ofhigher product range, with positive mix impact.
Dedicated collection, starting from A/W 11 season,includes best-seller items.Positive LFL performance in 3rd quarter: resultsimproved against the first part of the year.
Entry-price point categories show positive trend.Market opportunity, with meaningful potential: newSisley store openings by partners.Kids proposal: accelerating sales, supported by offerstrengthening.
8Highlights – Americas & Europe
Americas EuropeAmericas Europe
Mexico 25%
Others27%
Russia & ex-USSR Europe
7%
Others36%
7%
USA & Canada 48%
Italy 57%
Revenues: 54€ mln Revenues: 1,180€ mln
Mexico Russia & ex-USSR Europe
Outstanding sell-out results for A/W 11: traffic storeincrease and average consumer spending up.Successful price positioning strategies, differentiatedby product range.
Kids commercial proposal & product linereinforcement: high potential segments targetedthrough an increasing offer of dedicated products.
by product range.LFL Performance : double digit growth (+15%).
USANetwork refocusing approach: closure of
ItalyPerformance in 3rd quarter affected by deliveries in 2nd
quarter in order to optimize response to commercialNetwork refocusing approach: closure ofunderperforming stores.
quarter, in order to optimize response to commercialrequests.
9Apparel Revenues
Collections Trend
Positive
~ +2%
PerformanceA/W 11 – improvement in performance trend (+2%), showing anincrease in order collection compared with previous trend
Flat
N i
~ (4%)~ (2%)
~ +2%
D i
increase in order collection compared with previous trend.Positive impact of in-season product initiatives, adopted in S/S 11and re-proposed in A/W 11.
A/W 10 S/S 11 A/W 11
Negative DriversRecent collections trend confirmed: resilient volumesperformance and improvement of price/mix.
Apparel Revenues by channel€M
WholesaleResults in line with previous year (-0.3% currency neutral),supported by favourable collections trend.
333
1,418 1,388
D.O.S.- 6.3%
- 2.1%
312 Directly Operated SalesNegative performance (-5 1% currency neutral) affected by:
1,085 1,076 Wholesale- 0.8%
Negative performance ( 5.1% currency neutral), affected by:
negative impact of network refocusing activities;DOS transfer in India to third parties management;negative LFL (-3%); third quarter results (-3%) in line with 1st
h lf 2011 ti l ff t d b l i S t b
9M 10 9M 11
half 2011, negatively affected by poor sales in September.
Brands & Collections10
Sisley 16% (16%)UCB 51% (52%)
UCB Kids & Sisley Young
Playlife 2% (2%)Kids 31% (30%)
& Sisley Young
Note: ( ) 9M 10 data
Brands: United Colors of Benetton11
UCB & Brand Values UCB & New Media UCB & Product
Lana Sutra Project
Dialogue with the world of art,combining traditional and newvalues of Benetton.
a a Sut a oject
New actions on social media:introduction of Benetton iPhoneApp, dedicated to UCB world.
On-going roll-out of mini-collections proposals: newinnovative total look
Art pieces, conceived as ahomage to love, emphasizing twokey elements of brand DNA: wool
Benetton.com launch, webportal & platform, crossing anew digital creativity border,
deliveries for A/W 11.
Product innovation andresearch: new exclusivey
threads and bright colours.
Itinerant installations in variousstores throughout the world.
featuring web 2.0 and socialnetworking.
knitwear technology “Pin Up”.
stores throughout the world.
… coming soon, the launch of new institutional worldwide communication campaign.
12Brands: New Store Concept Introduction
UCB & Store concept Playlife & Store ConceptSisley & Store Concept
Opening of the renovatedfl hi t i S B bil
Innovative shopping experiencePl lif t t
Flagship Vittorio Emanuele(Mil ) i t d ti f flagship store in San Babila
(Milan), launching the newSisley concept.
Playlife: new concept storeopened in Treviso.
(Milan): introduction of new“Lissoni” store concept, proposinga different display approach.
New lay-out: clarity of productpresentation, enhancingcollections and suggesting newlooks.
Multi-brand store, emphasizingthe different labels in thePlaylife world (Playlife, Jean’sWest, Anthology of Cotton,
On-going roll-out of “Lissoni”concept, adopted from 2H 10 andnow present in more than 30countries.
Killer Loop), and introducingcomplementary accessories.
P&LP&L Analysis
Profit & Loss14
€M
9M 10 9M 11 Ch %
Revenues 1,498 1,481 -1.1%
Gross Profit 696 645 -7.3%% 46.5% 43.5%
Contribution Margin 583 530 -9.0%% 38.9% 35.8%
SGA -424 -411 -2.9%
Ordinary EBIT 159 119 -25.2%% 10.6% 8.1%
Non recurring items -18 -4
EBIT 141 115 -18.4%% 9.4% 7.8%
P fi B f T i 139 91 3 2%Profit Before Taxation 139 91 -35.2%
Net income 85 60 -29.8%% 5.7% 4.1%
Ordinary EBITDA 235 195 -17.2%% 15.7% 13.2%
EBITDA 224 193 -14.1%% 15.0% 13.0%
Gross Profit Analysis15
€M
9M 10 9M 11 Ch % Ch % CN
Gross Profit 696 645 -7.3% -8.7%
% on Revenues 46.5% 43.5% -300 bp -390 bp
Apparel
696
(7)
(60) +10 +6
645
Gross Profit 9M 10
Commercial Side
Industrial Side
FX Impact Textile Gross Profit 9M 119M 10 Side Side 9M 11
Ebit Analysis16
€M
One-off Ordinary Ebit
(18) 1599M 10
Reported EBIT % on revenues
(18) 159
119 6
9M 10
9M 11
141
115
9.4%
7.8%(4)
141 115+13 +14(51) (2)141 115+13 +14(51) (2)
EBIT 9M 10
ApparelSGA
Non Recurring
EBIT 9M 11
Gross Profit
Selling Costs
Financial Cost & Net Income Analysis17
Financial expenses€M
Tax Rate
p
(15) (14)
41%
34%
9M 10
9M 119M 10 9M 11
Currency hedging
+13
Minority Interests
(3)
(0)
9M 10
9M 11 (0)9M 11
9M 10 9M 11
(11)
9M 10 9M 11 Ch % 9M 10 9M 11 Ch %
P.B.T. 139 91 -35.2%
% on Revenues 9.3% 6.1%
Net Income 85 60 -29.8%
% on Revenues 5.7% 4.1%
B l Sh tBalance Sheet & Cash Flow Analysisy
Net Capital Employed 19
€M
12.31.2010 09.30.2011 Ch
Working Capital 622 889 267
Asset to be sold 10 1 -9Tang. and Intang. fixed assets 1,314 1,306 -8Financial fixed assets 25 21 -4Other assets/(liabilities) 13 15 2
N t C it l E l d 1 984 2 232 248Net Capital Employed 1,984 2,232 248
financed by
Net Indebtedness 486 749 263Total Shareholders' Eq it 1 498 1 483 15
Net Capital Employed Analysis
Total Shareholders' Equity 1,498 1,483 -15
+267
(12) (7)
1,984
+2672,232
(*) T.I.F.: Tangible, Intangible and Financial Fixed Assets
Net Capital Employed 12.31.10
Ch. in Working Capital
Ch. in T.I.F.* Fixed Assets
Ch. in Other Liabilities
Net Capital Employed 09.30.11
Working Capital 20
€M
09.30.2010 09.30.2011 Ch
W ki C i l 86 889 103Working Capital 786 889 103
Net trade receivables 879 950 71
Inventories 291 348 57
(Trade payables) -371 -391 -20
Other credits/(debts) -13 -18 -5
Working Capital Analysis
Net Debt 21
€M
819
2009689
763
678
819
556556 589749
2010
2011
556556
508
645
486486 534
543
Initial Net Debt
Q1 H1 9M Year End Net Debt
Net Debt & Cash Flow generation
Free cash absorption in the first nine months of the year, due NWC increase, share buy-back programme
and continued investments.
Cash Flow22
€M
Net cash flow from operating activities Net cash flow from Investment activities
+78
(101) (82)
9M 10 9M 11 9M 10 9M 11
(131)
DividendsTreasury Shares
(41) (46)(18)
9M 10 9M 119M 10 9M 11
0
Net Investments23
€M
Net Investments+ 101 + 82
Real Estate
Commercial53
38
+ 91 + 53
13
40
Commercial Operations
53+ 91 + 5340
Production+ 10
+ 17
+ 14
+ 14Others
Disinvestments(8) (12)
Other changes(9) +13
9M 10 9M 11
AAnnex
Breakdown by segment25
€M
Apparel 9M 10 9M 11 Ch %Apparel 9M 10 9M 11 Ch %
Revenues 1,421 1,390 -2.1%
EBIT 146 107 -26.6%% 10.3% 7.7%
EBITDA 223 179 -19.7%% 15.7% 12.9%
Textile 9M 10 9M 11 Ch %
R 144 159 10 4%Revenues 144 159 10.4%
EBIT -5 8 n.s% -3.3% 5.3%
EBITDA 1 14 n.s% 1.0% 8.7%
Consolidated Balance Sheet & Working Capital26
€M
12.31.2010 09.30.2011 Ch 09.30.2010
Working Capital 622 889 267 786
Asset to be sold 10 1 -9 13Tang. and Intang. fixed assets 1,314 1,306 -8 1,317Financial fixed assets 25 21 -4 24Other assets/(liabilities) 13 15 2 0
Net Capital Employed 1,984 2,232 248 2,140
financed byfinanced by
Net Indebtedness 486 749 263 645Total Shareholders' Equity 1,498 1,483 -15 1,495
12.31.2010 09.30.2011 Ch 09.30.2010
Working Capital 622 889 267 786Working Capital 622 889 267 786Net trade receivables 804 950 146 879
Inventories 293 348 55 291
(Trade payables) -442 -391 51 -371( p y )
Other credits/(debts) -33 -18 15 -13
Net Book Value of Land & Building27
€M
Land and Building 09.30.2010 09.30.2011 Ch
Commercial 645 647 2Industrial 100 109 9Industrial 100 109 9Other 19 19 0Total 764 775 11
Commercial 09.30.2010 09.30.2011 Ch
Italy 164 168 4Russia-Ex USSR 140 145 5Russia Ex USSR 140 145 5France 104 104 0Spain 66 66 0Japan 40 43 3Portugal 28 28 0Belgium 18 17 -1Turkey 19 15 -4Austria 15 15 0Iran 19 14 -5USA 15 15 0USA 15 15 0India 10 9 -1Kosovo 4 4 0Switzerland 2 2 0Mongolia 1 2 1Mongolia 1 2 1Total 645 647 2
Statement of Consolidated Cash Flow28
€M
9M 10 9M 119M 10 9M 11
Cash from operating act. before changes in Working Capital 244 198Change in Working Capital -146 -275Interests paid/received - Foreign currency gains/(losses) -2 -26Payment of taxes -18 -28Net Cash Flow from operating activities 78 -131
Net Operating Assets -94 -86Financial Fixed Assets -7 4Net Cash Flow from investment activities -101 -82
Free Cash Flow -23 -213
Payment of dividends -41 -46
Purchase of treasury shares 0 -18
Surplus/(Deficit) -64 -277
29Credit Facilities available as of September 30th, 2011
Term loansTerm loans
400€ m (2007-2012)3 Term loans
Current Position Fully drawn
C t**
100€ m BNL150€ m Unicredit150€ m Intesa S. Paolo
Cost: Euribor 1/2/3/6 months +20/50 bp*
H1 11EBITDA / Net Fin. Exp.
min 4 11.6 x
Covenant**
250€ m (2010-2015)Club Deal
Current Position Fully drawn
50€ m BNL 50€ m Credit Agricole50€ m Cassa risp
N.D / EBITDA
max 3.5 1.8 x
50€ m Cassa risp. del Veneto 50€ m Mediobanca50€ m UnicreditCost: Euribor 1/2/3/6 months + 150/250 bp*
5.000Jpy m (2011–2014)Term loan
Current Position Fully drawn
5.000Jpy m Development Bank of JapanBank of Japan
Cost: Libor Jpy 6 months + 65 bp
** Covenants calculated every six months* Depending on the ratio N.D./EBITDA
30Credit Facilities available as of September 30th, 2011
60€ m (2009-2014) Current Position
Revolving Credit FacilitiesRevolving Credit Facilities
60€ m( )Committed credit facility Drawn for 40€ m
60€ mBanca Pop. Vicenza
Cost: Euribor 1/2/3/6 months +150/250 bp*H1 11
EBITDA / Net Fin. Exp.
min 4 11.6 x
Covenant**
150€ m (2010-2015)Committed credit facility
Current Position Not drawn
30€ m BNL 30€ m Credit Agricole30€ m Unicredit30€ m Cassa Risp
p
N.D / EBITDA
max 3.5 1.8 x
30€ m Cassa Risp. del Veneto30€ m MediobancaCost: Euribor 1/2/3/6 months + 150/250 bp*
Uncommitted Credit FacilitiesUncommitted Credit Facilities
446€ mUncommitted credit facilities
Current Position Drawn for 83€ m
Cost: Interbank (or prime) rate + spread
** Covenants calculated every six months* Depending on the ratio N.D./EBITDA
( p ) p
31Disclaimer
This presentation contains forward looking statements which reflect Management’s current views andestimates. The forward looking statements involve certain risks and uncertainties that could cause actualresults to differ materially from those contained in the forward looking statements. Potential risks anduncertainties include such factors as general economic conditions, foreign exchange fluctuations,competitive product and pricing pressures and regulatory developments.