De'Longhi — Investor Presentation 2020

Jul 30, 2020

Foreword

Since Oct. 1 st 2019, some contributions 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 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"
• ForEx or FX stand for Foreign Exchange Rates;
• "M" stands for million and "bn" stands for billion.
• Normalized stands for excluding the change of treatment of the financial discounts;
• Organic stands for net of Foreign Exchange Rates and hedging derivatives effects;
• Q2 stands for second quarter (March 31st June 30th);
• H1 stands for first half (January 1st June 30th);

• Reported stands for official data including the application of IFRS-16 accounting standard and the change of treatment of the financial discounts.

• Update on COVID-19

• First half 2020 results

Our key priorities to keep the business afloat

Main actions taken to overcome the outbreak effects

• New customer experience.

• Enhancing e-commerce strategy.

• Flexible shifts in production sites. • Flexible working practices in office.

• Cost control of general expenses.
• Reducing and optimizing merchandising costs
• Lower travel expenses.

Our production activities during the 1st half

Digital activities to enhance the customer experience

• Update on COVID-19
• First half 2020 results

Highlights (half year normalized)

The topline

		1st Half (Jan. 1st - June 30)		2nd quarter (April 1st - June 30)
(Eur million unless otherwise specified	1st Half 2020	2020 "normalized"	2019	2020 "normalized"	2019
Revenues	896.6	903.7	845.5	507.3	469.1
change %	0% 6	6	9%	2% 8
organic ch %		6	7%	5% 8

• In the first half the normalized revenues grew by 6.9%, soaring by 8.2% in the second quarter;
• All regions, excepted MEIA, were in positive territory, with South-West Europe and APA growing double-digit;
• Revenues have been benefited by strong rebound of household appliances and food, in addition to increasing commitment in A&P.

Revenues by region

million EUR	Half Year 2020 normalized	chg %	organic chg %	Q2-2020 normalized	chg %	organic chg %
South West Europe	374.6	12 1%	11 8%	201.0	12 0%	11 6%
North East Europe	237.5	1% 5	5% 5	126.0	3% 6	4% 8
EUROPE	612.1	9 3%	9 2%	327.0	9 7%	10 3%
MEIA (MiddleEast/India/Africa)	44.9	-26 4%	-27 0%	24.8	-26 5%	-26 5%
APA (Asia/Pacific/Americas)	246.7	0% 10	5% 9	155.5	3% 13	2% 13
TOTAL REVENUES	903.7	6 9%	6 7%	507.3	8 2%	8 5%

Organic performance in the first half (at normalized level):

• the South-West Europe region grew by 11.8%, thanks to the remarkable expansion of revenues in Germany and France; positive contribution from all other countries, except for Italy that has faced severe effects from the lockdown, but recovering in Q2;
• North-East Europe was up 5.5%, supported in particular by the double digit growth of Benelux and Scandinavia; in positive territory also Poland, UK, Russia, Ukraine & CIS;
• APA grew by 9.5% (organic), boosted by Australia & New Zeland and China & Hong Kong (all up double digit); US & Canada recorded a positive growth in both the half year and the quarter;
• MEIA region confirmed the negative trend of the first part of the year and in Q2 as well, due to a tough economic environment and the effects of pandemic on purchasing power.

Revenues by market (normalized )

Revenues by product

Based on management accounts

Margins

		1st Half (Jan. 1st - June 30)		2nd quarter (April 1st - June 30)
(Eur million unless otherwise specified	1st Half 2020	2020 "normalized"	2019	2020 "normalized"	2019
net ind. margin	436.3	443.4	399.5	242.0	217.7
of % revenues	48 7%	49 1%	47 2%	47 7%	46 4%
adjusted Ebitda	111.8	118.8	97.8	73.7	61.3
% of revenues	5% 12	2% 13	6% 11	5% 14	1% 13
Ebitda	105.5	112.6	95.5	72.9	60.4
of % revenues	8% 11	5% 12	3% 11	4% 14	9% 12
Ebit	66.9	74.0	58.0	53.3	41.4
of % revenues	5% 7	2% 8	9% 6	5% 10	8% 8
Net Income	43.1	43.1	42.8	32.1	31.4
of % revenues	8% 4	8% 4	1% 5	3% 6	7% 6
adjusted Net Income	47.9	47.9	44.9	32.8	32.3
of % revenues	3% 5	3% 5	3% 5	5% 6	9% 6

• In the fist half margins have been boosted by the increase in volumes and a favorable price-mix effect, albeit being slightly eroded by the rise of some operating costs, specifically A&P to support core brands, non industrial labour costs and duties in the USA;
• Non recurring costs related to Covid-19 amounted to 5.3 M€, of which 3.1 M€ were donated by the Group for the fight to the outbreak and 2.2 M€ were other costs partially related to the pandemic;
• Net income was impacted by temporary higher tax take.

First half adjusted Ebitda bridge (normalized )

Balance sheet (reported)

million EUR	June 30, 2020	June 30, 2019	change	Dec. 31, 2019	change
Net working Capital	228.4	344.3	-116	318.8	-90 4
Net Equity	1209.7	1060.8	148 8	1190.5	19 2
Net Financial Position	387.9	105.5	282 5	277.8	110 1
NWC / Revenues (12 TMR)	10.6%	16.6%	-6 0 pp	15.2%	-4 6 pp

• The net financial position as at June 30 stood at 388 M€ (net bank position at 455.7 M€), a marked improvement over the last six months. In particular, the Group achieved a Free Cash Flow (before dividends) of € 110.1 million in the six months, after 40.9 M€ investments, while in the same period of last year the Free Cash Flow (before dividends) amounted to 9.6 M€ (ex-application of IFRS-16).
• As to the net working capital, the value at June 30 was equal to 228.4 M€, down by 116 M€ vs. the value shown on the same date of last year. This change is mainly due to the result of a reduction in inventories, a reduction of trade receivables and an increase in trade payables.

The net cash flow in H1 2020 (reported )

Free Cash Flow before dividends

2020 outlook

Massimo Garavaglia, Group C.E.O.:

"We are facing a difficult and complex period that requires us to make a significant effort both on a human and a professional level. In particular, in the first six months, the extraordinary commitment shown by the people of De' Longhi and our business partners allowed us to overcome this great challenge promptly and stubbornly, reaffirming the great qualities of resilience and flexibility of this Group. We still feel a lot of uncertainty on the markets and the visibility on the business for the next few months remains limited, also due to a highly volatile macroeconomic environment, however we believe that the Group, for the current year, can reasonably set the goal of an organic mid-single-digit growth of revenues, with an adjusted Ebitda improving in value compared to 2019".

Revenues growing organically midsingle-digit in the full year

Full Year Adjusted Ebitda improving in value vs. 2019

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 investor.relations@delonghigroup.com