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Benetton Group - 2011 First Half Results
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Benetton Group - 2011 First Half Results

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July 28th, 2011

July 28th, 2011

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Benetton Group - 2011 First Half Results Benetton Group - 2011 First Half Results Presentation Transcript

  • 2011First HalfResultsJuly 28th, 2011
  • BusinessB iAnalysis
  • 2011 First Half Highlights 3 €MRevenues Operating Profit Increasing raw material Ordinary pressure. EBIT EBIT Performance Reported: SG&A reduction trend 891 906 +1.7% confirmed; lower one-time costs Performance 75 60 63 58 compared with H1 10. Currency Neutral: +2.0%. H1 H1 Positive impact fromH1 10 H1 11 10 11 currency. 10 11Net Income Net Debt Negative impact from currency hedging: Net Debt: slight increase. -6€ mio in H1 11 vs. +9€ mio in H1 10. 40 30 508 486 543 Cash Flow absorption Lower tax-rate: driven by NWC increase 34% in H1 11 vs. and Investments. 46% in H1 10.H1 10 H1 11 H1 10 FY 10 H1 11
  • Revenues 4 €M H1 10 H1 11 Ch % Ch % CN Revenues 891 906 1.7% 2.0% Textile 52 63 20.0% 20.2% Apparel 839 843 0.6% 0.9% Apparel Segment - Wholesale 616 631 2.6% - Direct Sales 223 212 -5.0%
  • Geographical Revenues 5 Reported C.N. CN Asia Americas RoW 17% (16%) 3% (4%) 1% (1%) Overall Performance +1.7% +2.0% Italy Macro-Areas Europe +1.5% +1.2% Asia +2.6% +4.7% Americas +0.4% +4.5% Europe 79% (79%) Note: ( ) H1 10 dataEurope AsiaThe Mediterranean Double-digit raise in South Korea; Middle East AreaItaly: slightly positive performance (+1%) driven by (+1%), confirming notable upside (+27% C N ) C.N.).2nd quarter results. Negative performance in China, affected by refocusedGreece: double digit decline (-21%), confirming store network, partially balanced by positive LFLnegative previous trend. performance. Japan, Hong Kong and South East AsiaSpain: mild growth (+4%) supported by improving (+4%), continue to reduce overall results results.trend in the second quarter.Other European Countries AmericasFurther acceleration in Russia: revenue growth of Increasing results in Latin & South America, offsettingapprox. +40%.approx +40% negative performance i N th A ti f in North America (USA & iContinental Europe: steady performance, benefiting Canada).by Germany & Switzerland upside.
  • Geographical Revenues 6 Developing and Fast Growth Countries 25% (23%) Traditional Western Economies 75% (77%) Note: ( ) H1 10 data London, London Oxford Circus Reported C.N.Traditional -0.1% -0.4%Western EW t Economies iDeveloping and +8% +10%Fast Growth Countries Moscow, Presnya
  • Highlights – Asia 7 Others India 23% 19% Greater China 10% Turkey South Korea 16% 32% Istanbul, Bagdad Street Highlights India I di Turkey T k Flattish performance in India, strongly affected from Dedicated collection development, starting from ~140 DOS transfer to third parties’ management. F/W 11, leveraging on successful Asian experience. Network: widespread presence accounting more than Strategy supported by local sourcing increase, 400 stores, of which ~300 managed from partners; focusing on selected product categories. ~40 new stores openings in the first part of 2011, Successful price positioning strategies: increasing mainly in South-East area. sell-out of entry-price points categories. Kids offer strengthening, supported by stand-alone stores openings: more than 20 dedicated stores (5 new openings in 2011).
  • Highlights – Americas & Europe 8Americas Europe Mexico Russia & ex-USSR Others Others 6% 28% 23% 37% USA & Italy Canada 57% 49%Mexico Russia & ex-USSRWidespread network, accounting more than 20 Directly Outstanding progress: positive impact from kidsOperated Stores and over 200 corners in Department performance, performance driven by complete product categoriesStores, including 10 new openings in S/S 11 offer, well appreciated by high-range spendingcollections. customer.Local partnership renewed and extended. Man collections: positive customer response.South AmericaStrong improvement, driven by outstanding Italyperformance in Chile, Peru and Colombia: new corners Increasing performance, positively affected byopenings in Department Stores and new free standing free-standing deliveries, i li d li i in line with commercial requests, & new ith i l tstores. initiatives introduced.
  • Apparel Revenues 9Collections TrendPositive Performance A/W 11: further improvement compared with previous ~ +2%Flat collections trend; positive performance expected. ~ (2%) ~ (4%)NegativeN i Drivers A/W 10 Volumes trend: resilient performance confirmed. S/S 11 A/W 11 expected Price/mix improvement vs. previous collections. Apparel Revenues by channel€M Wholesale Growth performance driven by improving collections trend, p y p g , 839 843 +0.6% differentiated delivery cycle and selected DOS transfer to 212 third parties management in India. 223 212 D.O.S. -5.0% Directly Operated Sales y p Results affected by refocusing store network (non- 616 631 Wholesale profitable stores closing in USA, Japan and China) and +2.6% DOS transfer in India. LFL – slightly positive performance in the 2nd quarter, showing notable progress vs. 1st quarter. H1 10 H1 11 Continued profitability improvement.
  • Brands & Collections 10 Sisley 16% UCB 50% (17%) ( (50%) ) UCB Kids & Sisley Young Kids 32% Playlife 2% (31%) (2%) Note: ( ) H1 10 data
  • Brands & Collections 11United Colors of Benetton Sisley UCB Kids Appointment of the new Ongoing partnership with New A/W 11 mothers-to-be line Creative Director and Chief different artists: new S/S 11 proposals: collections renewal, Merchandising Officer, capsule collection, designed in characterized by higher mix strengthening g g management g collaboration with the world content and targeting younger and creative structure. renowned artist and illustrator moms. Milo Manara. In-season innovative total look New A/W 11 communication International Markets: ongoing proposals: campaign, interpreting new growth, on the back of new new mini-collections, delivered independent life-style brand initiatives adopted in each monthly, monthly show positive sell-out philosophy and integrated with countries. countries performance. new digital and viral projects.
  • Brands & New Media 12United Blogs of Benetton Sisley.com I’m Unique Many successful initiatives New Web platform I’m unique casting: g g targeting Social Media Sisley.com: total new look, y , first casting on-line to find g (Facebook, You Tube, Twitter, interactive browsing and 2.0 faces of S/S 12 campaign. Foursquare), leading to 50% approach. fans’ increase on Facebook since January 2011. Blog.benetton.com Independentpeople.com Dedicate blog and Facebook New international blog, online Launch of new Blog/magazine, page, following the progress of from the end of May May. updated by dedicated editorial casting. casting staff.
  • P&LAnalysis
  • Profit & Loss 14 €M H1 10 H1 11 Ch % Revenues 891 906 1.7% Gross Profit 425 403 -5.3%% 47.7% 44.4% Contribution Margin 356 332 -6.8%% 39.9% 36.6%SGA -281 -272 -3.4% Ordinary EBIT y 75 60 -19.4%% 8.5% 6.7%Non recurring items -12 -2 EBIT 63 58 -7.6%% 7.1% 6.4% Profit Before Taxation 65 44 -32.5% Net income 40 30 -25.5%% 4.5% 3.3% Ordinary EBITDA 126 112 -10.6%% 14.1% 12.4% EBITDA 118 110 -6.2% 6 2%% 13.2% 12.2%
  • Gross Profit Analysis 15 €M H1 10 H1 11 Ch % Ch % CN Gross Profit 425 403 -5.3% -6.7% % on Revenues 47.7% 44.4% -330 bp -410 bp Apparel A l (1) (28) +6 +1 425 403 Gross Profit Commercial Industrial FX Impact Textile Gross Profit H1 10 Side Side H1 11
  • Ebit Analysis 16 €M One-off Ordinary Ebit Reported EBIT % on revenuesH1 10 (12) 75 63 7.1%H1 11 (2) 60 6 58 6.4% 63 (22) (2) 9 10 58 EBIT Gross Selling Apparel Non EBIT H1 10 Profit Costs SGA Recurring H1 11
  • Financial Cost & Net Income Analysis 17 €MFinancial expenses p (9) (7) Tax Rate H1 10 46% H1 11 34% H1 10 H1 11Currency hedging +9 Minority Interests H1 10 -5 (6) H1 11 -1 1 H1 10 H1 11 H1 10 H1 11 Ch % H1 10 H1 11 Ch %P.B.T. 65 44 -32.5% Net Income 40 30 -25.5%% on Revenues 7.3% 4.8% % on Revenues 4.5% 3.3%
  • Balance SheetB l Sh t& Cash FlowAnalysis y
  • Net Capital Employed 19 €M 12.31.2010 12 31 2010 06.30.2011 06 30 2011 ChWorking Capital 622 684 62Asset to be sold 10 1 -9 9Tang. and Intang. fixed assets 1,314 1,294 -20Financial fixed assets 25 22 -3Other assets/(liabilities) 13 10 -3Net Capital Employed p p y 1,984 , 2,011 , 27financed byNet Indebtedness 486 543 57Total Shareholders Equity q y 1,498 , 1,468 , -30Net Capital Employed Analysis (23) (12) +62 2,011 1,984 Net Capital Ch. in Working Ch. in T.I.F.* Ch. in Other Net Capital Employed 12.31.10 Capital Fixed Assets Liabilities Employed 06.30.11 (*) T.I.F.: Tangible, Intangible and Financial Fixed Assets
  • Working Capital 20 €M 06.30.2010 06.30.2011 ChWorking Capital 623 684 61Net trade receivables 709 783 74Inventories 375 423 48(Trade payables) -455 455 -497 497 -42 42Other credits/(debts) -6 -25 -19Working Capital Analysis (42) +48 (19) +74 684 623 Working Capital Ch. in Net Trade Ch. Inventories Ch. In Trade Ch. In Other Working Capital 06.30.10 Receivables Payables Credits/(Debts) 06.30.11
  • Net Debt 21 €M 819 763 689 2009 678 645 589 556 556 543 2010 534 486 2011 486 508 Initial Q1 H1 9M Year End Net Debt Net DebtNet Debt & Cash Flow generation Free cash absorption in the first half of the Year, due NWC increase and continued investments.
  • Cash Flow 22 €M +150 +40Net cash flow from operating activities H1 10 H1 11 (54) (51)Net cash flow from Investment activities H1 10 H1 11 (41) (46) Dividends H1 10 H1 11
  • Net Investments 23 €M + 54 + 51 Net Investments 11 Real Estate 11 + 44 33 Commercial 16 + 27 Commercial Operations +6 +5 Production + 10 +9 Others (7) Disinvestments (8) Other changes g + 18 +1 H1 10 H1 11
  • Annex
  • Breakdown by segment 25 €M Apparel H1 10 H 11 Ch % Revenues 840 844 0.5% EBIT 64 54 -16.6% % 7.7% 7 7% 6.4% 6 4% EBITDA 115 102 -10.9% % 13.6% 12.1% Textile H1 10 H 11 Ch % Revenues 101 111 9.5% 9 5% EBIT -1 5 n.s % -1.0% 4.8% EBITDA 3 9 n.s % 3.2% 8.0%
  • Consolidated Balance Sheet & Working Capital 26 €M 12.31.2010 06.30.2011 Ch 06.30.2010 Working Capital 622 684 62 623 Asset to be sold 10 1 -9 10 Tang. and Intang. fixed assets 1,314 1,294 -20 1,311 Financial fixed assets 25 22 -3 25 Other assets/(liabilities) 13 10 -3 20 Net Capital Employed 1,984 2,011 27 1,989 financed by Net Indebtedness 486 543 57 508 Total Shareholders Equity 1,498 1,468 -30 1,481 12.31.2010 06.30.2011 Ch 06.30.2010 Working Capital 622 684 62 623 Net trade receivables 804 783 -21 709 Inventories 293 423 130 375 (Trade payables) -442 -497 -55 -455 Other credits/(debts) -33 33 -25 25 8 -6 6
  • Net Book Value of Land & Building 27 €M Land and Building 06.30.2010 06.30.2011 Ch Commercial 639 648 9 Industrial 103 110 7 Other 20 19 -1 Total 762 777 15 Commercial 06.30.2010 06.30.2011 Ch Italy 158 169 11 Russia-Ex USSR R i E 148 149 1 France 105 105 0 Spain 66 66 0 Japan 42 39 -3 Portugal 28 28 0 Belgium 18 17 -1 Turkey 19 16 -3 Austria 16 15 -1 Iran 21 14 -7 USA 0 14 14 India 11 9 -2 Kosovo 4 4 0 Switzerland 2 2 0 Mongolia M li 1 1 0 Total 639 648 9
  • Statement of Consolidated Cash Flow 28 €M H1 10 H1 11 Cash from operating act. before changes in Working Capital 130 111 Change in Working Capital 31 -49 Interests paid/received - Foreign currency gains/(losses) 0 -15 Payment of taxes -11 -7 Net Cash Flow from operating activities 150 40 Net Operating Assets -47 -53 Financial Fixed Assets -7 2 Net Cash Flow from investment activities -54 -51 Free Cash Flow 96 -11 Payment of dividends -41 -46 Purchase of treasury shares 0 0 Surplus/(Deficit) 55 -57
  • Credit Facilities available as of June 30th, 2011 29 €M Term loans400€ m (2007-2012) Current Position:3 Term loans Fully drawn 1° half Covenant** 2011100€ m BNL150€ m Unicredit EBITDA / Net Fin. Exp. min 4 11.6x150€ m Intesa S. Paolo N.D. / EBITDA max 3.5 1.8xCost: Euribor 1/2/3/6 months +20/50 bp*250€ m (2010-2015) Current Position:Club deal Fully drawn F ll d 1° half50€ m BNL Covenant** 201150€ m Credit Agricole EBITDA / Net Fin. Exp. min 4 11.6x50€ m Cassa Risp. del Veneto N.D. / EBITDA max 3.5 1.8x50€ m Mediobanca50€ m UnicreditCost: Euribor 1/2/3/6 months + 150/250 bp** Depending on the ratio N.D./EBITDA ** Covenants calculated every six months
  • Credit Facilities available as of June 30th, 2011 30 €M Revolving Credit Facilities 60€ m (2009-2014) ( ) Current Position: Committed credit facility Not drawn 1° half Covenant** 2011 60€ m Banca Pop. Vicenza EBITDA / Net Fin. Exp. min 4 11.6x Cost: Euribor 1/2/3/6 months +150/250 bp* N.D. / EBITDA max 3.5 1.8x 150€ m (2010-2015) Current Position: Committed credit facility (Club deal) Not drawn 1° half 30€ m BNL Covenant** 2011 30€ m Credit Agricole g 30€ m Unicredit EBITDA / Net Fin. Exp. min 4 11.6x 30€ m Cassa Risp. del Veneto N.D. / EBITDA max 3.5 1.8x 30€ m Mediobanca Cost: Euribor 1/2/3/6 months + 150/250 bp* 460€ m Current Position: Uncommitted credit facilities Drawn for 44€ m Cost: Interbank (or prime) rate + spread* Depending on the ratio N.D./EBITDA; ** Covenant calculated every six months
  • Disclaimer 31This 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.