FY 2019 results

Foreword

The figures of the year 2019 are reported in accordance with the new IFRS 16 accounting standard, introduced since January 1 st , 2019.

Furthermore, since Oct. 1 st , some contribution to customers (previously included within the financial charges section of the Profit & Loss scheme) were treated as commercial premiums, hence netting revenues.

However, for comparative purposes, in some cases, the figures herein presented may be "normalized", i.e. reported on a comparable basis with those of the previous year, hence excluding the effects deriving from the adoption of the aforementioned IFRS 16 and the change of treatment of the financial discounts.

Definitions & assumptions

In this presentation:

Adjusted stands for "before non recurring items and inputed costs of the stock option plan"
Continuing Operations identify the consolidated perimeter excluding NPE s.r.l.;
ForEx or FX stand for Foreign Exchange Rates;
"M" stands for million and "bn" stands for billion.
Normalized stands for excluding the application of IFRS-16 accounting standard and the change of treatment of the financial discounts;
Organic stands for net of Foreign Exchange Rates and hedging derivatives effects;
Q4 stands for fourth quarter (Oct.1st Dec.31st), 9M stands for first nine months (Jan. 1st Sept. 30th), FY stands for full year (Jan. 1st – Dec. 31st);
Reported stands for official data including the application of IFRS-16 accounting standard and the change of treatment of the financial discounts.

FY 2019 results
Appendix

Highlights

In the fourth quarter 2019 (in normalized terms):

revenues of € 802.4 million, up 3.1% (+1.6% organic and +2.5% in organic reported terms);
adjusted ebitda of € 137.3 million (€ 137.4 million in reported terms), equal to 17.1% of revenues;
in Q4 the Group has increased the A&P spending, up to 13.5% of revenues, so as to sustain its brands' leadership in the main markets and categories.

In the twelve months 2019 (in normalized terms):

revenues of € 2,106.1 M, up 1.3% (-0.1% organic and +1.1% in reported terms);
adjusted ebitda of € 280.4 M (€ 295.3 M in reported terms), equal to 13.3% of revenues, with a dilution of 1.7 percentage points compared to the previous year;
a net financial position positive for € 351.8 M, up by € 123.7 M, after investments of € 62.1 million and dividends of € 55.3 M, witnessing the Group's strong cashgeneration capacity.

The topline

	12 months	th quarter	12 months		4th quarter
	2019*	4 2019*	2019 "normalized"	2018	2019 "normalized"	2018

Revenues	2,101.1	797.4	2,106.1	2,078.4	802.4	778.1
change %	1.1%	2.5%	1.3%		3.1%
organic ch. %	-0.3%	1.0%	-0.1%		1.6%

* Including the effect of the reclassification of the financial discounts

The FY19 normalized revenues grew by 1.3% (1.1% reported), sustained by the development of the coffee category:
In Q4 revenues grew by 3.1%, driven by the expansion of the full-auto e pump coffee makers;
The currency effect on revenues was equal to € 29.3 in the full year and € 11.7 in Q4.

The discontinuities in revenues

Revenues by market & product

MAIN ORGANIC UPS & DOWNS MAIN ORGANIC UPS & DOWNS

GROWING DOUBLE DIGIT	FRANCE, POLAND, RUSSIA + CIS
GROWING SINGLE DIGIT	BENELUX, Czeck rep + Slovakia + Hungary
DOWN	SAUDI ARABIA, FINLAND+SCANDINAVIA, GREATER CHINA

GROWING DOUBLE DIGIT	FULL-AUTO, PUMP
GROWING SINGLE DIGIT	IRONING, FLOORE CARE
DOWN	COMFORT, KITCHEN MACHINE

Revenues by product: coffee makers

o The category reached 50% of total revenues
o single serve business suffered from discontinuities highlighted in the Nespresso and DolceGusto distribution (but was up in Q4);
o full-auto and Pump coffee makers grew double digit both in the FY and Q4.

Based on management accounts

Revenues by product: food preparation

o Food preparation down mid single digit in FY, but we have witnessed a slighlty better performance in Q4 (but still weak);
o in the Q4 some categories, like hand mixers and blenders, have shown a positive growth;
o in Q4, Kitchen machines were down low single digit.

Based on management accounts

Revenues by product: comfort & home care

o Home care products achieved a mid single digit growth in the 12 months, but slightly worsening over last 3 months;
o Comfort products in negative territory, affected by the impact of tariffs hikes on imported goods in the USA and by unfavourable weather conditions.

Based on management accounts

Revenues by region

EUR million	12 months 2019	chg. %	organic chg. %	4th Q 2019	chg. %	organic chg. %

North East Europe	601.5	8.9%	7.3%	241.5	7.3%	4.9%
South West Europe	823.4	1.2%	1.0%	312.8	4.2%	4.0%
EUROPE	1,424.9	4.3%	3.6%	554.4	5.5%	4.4%

APA (Asia/Pacific/Americas)	541.6	-4.3%	-6.7%	202.1	-2.9%	-4.9%

MEIA (MiddleEast/India/Africa)	139.6	-4.9%	-8.8%	46.0	2.6%	-0.6%

TOTAL REVENUES	2,106.1	3% 1	1% -0	802.4	1% 3	6% 1

the South West Europe region grew by 1% in the FY and 4% in Q4, led by France and Germany, while Italy and the Iberian region showed persistent weakness;
North-East Europe grew +7.3% in the FY and +4.9% in Q4, thanks in particular to the double digit growth of Poland, Russia, Ukraine and Cis and, in the quarter, of Benelux. The UK market closed in negative territory, also due to a particularly weak quarter;
APA region, showed a drop of -6.7% in the year and -4.9% in Q4, mainly because of discontinuities. Greater China area in Q4 had a strong expansion of the coffee machines;
MEIA region down -8.8% in the year, but partially improving vs. the 9M, thanks substantially to an important recovery of Saudi Arabia in Q4.

Margins

	12 months		12 months		4th quarter
2019*		th quarter 4 2019*	2019 "normalized"	2018	2019 "normalized"	2018

net ind. margin	990.2	374.3	995.2	990.7	379.3	373.1
% of revenues	47.1%	46.9%	47.3%	47.7%	47.3%	48.0%
adjusted Ebitda	295.3	137.4	280.4	312.8	137.3	150.7
% of revenues	14.1%	17.2%	13.3%	15.1%	17.1%	19.4%
Ebitda	289.2	135.8	274.3	304.5	135.7	147.4
% of revenues	13.8%	17.0%	13.0%	14.7%	16.9%	18.9%
Ebit	210.9	114.8	215.0	242.9	119.7	130.0
% of revenues	10.0%	14.4%	10.2%	11.7%	14.9%	16.7%
Net Income	161.0	89.2	161.7	183.9	89.4	101.9
% of revenues	7.7%	11.2%	7.7%	8.8%	11.1%	13.1%

* Including the effect of the application of the IFRS 16 accounting standard and of the reclassification of the financial discounts

In 2019 the Ebitda margin was impacted by several elements, mainly the increase in COGS, the negative effect of the US duties and the rise of the A&P spending;
in the 12 months, the US duties imposed on some product categories imported from China have affected the margins and the flow of goods requiring higher transportation costs;
in Q4 the Group boosted the A&P spent, reaching 13.5% on revenues;

FY '19 adjusted Ebitda bridge (normalized)

Q4 adjusted Ebitda bridge (normalized)

Price-Mix effect by quarter

Net Financial Position and working capital

	31.12.2019 *	31.12.2019 normalized	31.12.2018	12 months change normalized
	million EUR	million EUR	million EUR	million EUR

Net debt / (Net Cash)	-277.8	-351.8	-228.1	-123.7

Net Equity	1,190.5	1,191.2	1,065.9	125.2

Net Working Capital	318.8	318.1	322.5	-4.4

N.W.C. / Revenues	15.2%	15.1%	15.5%	-0.4%

The normalized free cash flow before capex of € 62.1 M and dividends of € 55.3 M - stood at € 241.1 M in the FY (€ 204 M in 2018);
The normalized net financial position as at December 31st, reached € 351,8 M, thanks to a strong cash generation provided by the operating activities and the slight improvement of the net working capital (NWC);
The normalized NWC stood at € 318.1 M, slightly improving as a percentage of revenues from 15.5% (2018) to 15.1%, thanks also to the 61.3 M€ reduction of the inventory level.

A&P and Capex by quarter

A&P by quarter

In Q4 the Group boosted the A&P spending, reaching 13.5% of revenues (11.7% in the FY);
the aim of the investment is to support and strengthen our brands' leadership in the main markets and product categories.

Capex by quarter

0 5 10 15 20 q1-18 q2-18 q3-18 q4-18 q1-19 q2-19 q3-19 q4-19 capex (M€)

In the FY Capex were slithly increasing vs. the previous year;
in the last 2 years the investments are comprising the expansion of the HQ offices.

The net cash flow in the 12 months

FY 2019 results
Appendix

APPENDIX

Profit & loss 2017-2019 *

	"CONTINUING OPERATIONS"						"CONTINUING OPERATIONS"					NORMALIZED DATA
(Euro million)	2017						2018						2019
	Q1-17	Q2-17	H 1	Q3-17	Q4-17	FULL YEAR	Q1-18	Q2-18	H 1	Q3-18	Q4-18	FULL YEAR	Q1-19	Q2-19	H 1	Q3-19	Q4-19	FULL YEAR
Revenues	385.1	431.6	816.7	421.7	734.4	1,972.8	402.6	452.1	854.7	445.6	778.1	2,078.4	376.4	469.1	845.5	458.2	802.4	2,106.1
% change y-o-y	6.3%	4.2%	5.1%	8.7%	7.7%	6.8%	4.5%	4.7%	4.6%	5.7%	5.9%	5.4%	-6.5%	3.8%	-1.1%	2.8%	3.1%	1.3%
net industrial margin	192.3	208.8	401.1	206.6	359.6	967.3	198.0	209.0	407.1	210.5	373.1	990.7	181.7	217.7	399.5	216.4	379.3	995.2
%	49.9%	48.4%	49.1%	49.0%	49.0%	49.0%	49.2%	46.2%	47.6%	47.2%	48.0%	47.7%	48.3%	46.4%	47.2%	47.2%	47.3%	47.3%
adjusted EBITDA	52.5	54.0	106.5	53.0	150.0	309.5	53.4	55.7	109.1	53.1	150.7	312.8	31.8	56.4	88.2	54.9	137.3	280.4
%	13.6%	12.5%	13.0%	12.6%	20.4%	15.7%	13.3%	12.3%	12.8%	11.9%	19.4%	15.1%	8.4%	12.0%	10.4%	12.0%	17.1%	13.3%
EBITDA	51.6	53.0	104.7	50.5	148.5	303.7	52.4	52.6	105.0	52.1	147.4	304.5	30.4	55.4	85.8	52.7	135.7	274.3
%	13.4%	12.3%	12.8%	12.0%	20.2%	15.4%	13.0%	11.6%	12.3%	11.7%	18.9%	14.7%	8.1%	11.8%	10.1%	11.5%	16.9%	13.0%
EBIT	38.9	38.9	77.9	35.3	132.2	245.4	39.3	38.6	77.9	35.0	130.0	242.9	16.4	41.1	57.5	37.9	119.7	215.0
%	10.1%	9.0%	9.5%	8.4%	18.0%	12.4%	9.7%	8.5%	9.1%	7.9%	16.7%	11.7%	4.3%	8.8%	6.8%	8.3%	14.9%	10.2%
Profit before Taxes	32.9	43.7	76.6	32.9	119.8	229.2	32.2	36.6	68.8	30.0	125.0	223.9	11.9	38.3	50.3	36.2	110.3	196.7
Taxes	(7.4)	(11.7)	(19.1)	0.4	(30.8)	(49.5)	(5.8)	(7.1)	(12.9)	(4.0)	(23.1)	(40.0)	(0.2)	(6.7)	(7.0)	(7.1)	20.8	(35.0)
Profit / (Loss) pertaining to the G.	25.5	32.0	57.5	33.3	89.0	179.8	26.4	29.5	55.9	26.0	101.9	183.9	11.7	31.6	43.3	29.1	89.4	161.7
%	6.6%	7.4%	7.0%	7.9%	12.1%	9.1%	6.6%	6.5%	6.5%	5.8%	13.1%	8.8%	3.1%	6.7%	5.1%	6.4%	11.1%	7.7%

* 2019 figures are normalized, i.e. they exclude the effects of the application of the IFRS 16 accounting standard and of classification of some financial discounts.

APPENDIX

Disclaimer

This presentation might contain certain forward-looking statements that reflect the company's current views with respect to future events and financial and operational performance of the company and its subsidiaries.

Forward looking statements are based on De' Longhi's current expectations and projections about future events. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments, many of which are beyond the ability of De Longhi to control or estimate. Consequently, De' Longhi S.p.A. cannot be held liable for potential material variance in any looking forward in this document.

Any forward-looking statement contained in this presentation speaks only as of the date of the document. Any reference to past performance or trends or activities of De' Longhi S.p.A. shall not be taken as a representation or indication that such performance, trends or activities will continue in the future. De' Longhi S.p.A. disclaims any obligation to provide any additional or updated information, whether as a result of a new information, future events or results or otherwise.

This presentation does not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.

The manager responsible for preparing the company's financial reports declares, pursuant to paragraph 2 of Article 154-bis of Legislative Decree no. 58 of February 24 1988, that the accounting information contained in this presentation corresponds to the results documented in the books, accounting and other records of the company.

THANK YOU.

Contacts:

Investor Relations: Fabrizio Micheli / Samuele Chiodetto T: +39 0422 4131 [email protected]

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De'Longhi Earnings Release 2019