Safilo Group — Interim / Quarterly Report 2019

Nov 12, 2019

Q3 and 9M 2019 TRADING UPDATE

November 12, 2019

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.

ECONOMIC HIGHLIGHTS OF THE CONTINUING OPERATIONS

• 1 July, 2019: closing of the transaction to sell Solstice retail operations
• 2019 Group results are commented on a pre-IFRS 16 basis in order to support the transition and to allow proper comparison with the previous periods

The Group elected to implement IFRS 16, applying the modified retrospective approach, whereby the cumulative effect of adopting the standard has been recognized at its relevant effective date on January 1st 2019, without the restatement of 2018 comparative information.

IFRS 16 impact on 9M 2019 results

( in mi llio ns) Eu ro	C O G O A O S N T I N U I N P E R T I N	S C O O A O S D I N T I N U E D P E R T I N ( S O S C A S S S ) L T I E R E T I L B U I N E	O A T T L
In St im ate nt ts co me me p ac
du ion f o ing l e ( d d it ion l A ) Re E B I T D ct t nt o p era re a xp en se s a a	1 0. 4	8 5.	1 6. 2
in de iat ion In cre as e p rec ex p en se s	( 9. ) 7	( 4 ) 5.	( 1 1 ) 5.
in int In st cre as e ere exp en se s	( 1. 1 )	( 0. ) 7	( 1. 8 )
ion f n Re du lt ct et o re su	( 0. 5 )	( 0. 3 )	( 0. 8 )
Ne de bt im Se be 3 0, 2 0 1 9 t t a t tem p ac s a p r
f lea l ia b i l it ies In cre as e o se	( 4 9. 9 )	-	( 4 9. 9 )

NET SALES

1

• • Renewal of strategic partnerships: license agreement with Hugo Boss and supply agreement with KE
• • Ongoing strengthening of commercial capabilities and enhancing of the digital agenda

Eyewear

• Q3 2019 confirms the Group's positive momentum both in terms of sales and cost reduction

in millions of Euro and % change @constant FX vs 2018

wholesale business, excluding the supply agreement with Kering

Pre-IFRS 16 adjusted2 EBITDA

in millions of Euro and % on sales

NET SALES OF THE CONTINUING OPERATIONS

in millions of Euro and % change vs same periods of 2018

Q3 2019 top line performance confirms positive momentum driven by Carrera and Polaroid and continuing positive trends of main licensed brands.

• Q3 2019 net sales at Euro 212.8m, +2.2% @current FX

  • +2.1% forex tailwind: +0.1% @constant FX, reflecting planned double-digit decline of Kering product supply affecting business performance in Europe
  • +2.8% revenues of wholesale business1 @constant FX

• 9M 2019 net sales at Euro 708.7m, +5.2% @current FX

  • +2.5% forex impact mainly from USD appreciation
  • +3.7% revenues of wholesale business1 @constant FX

in millions of Euro and % change vs same periods of 2018

Pace of growth accelerating in EUROPE in core markets and brands

• Q3 2019 at Euro 95.5m, +4.2% @current FX
  • +0.3% forex tailwind: +3.9% @constant FX
  • wholesale business1 up double-digits, with broadbased positive recovery by country, channel and brand
  • expected decline of Kering product supply due to business phasing and contractual volumes

9M 2019 Euro 341.8m, +3.1% @current FX +5.6% wholesale business1 @constant FX 48.2%

in millions of Euro and % change vs same periods of 2018

Consolidation of logistics activities in Denver temporarily affecting NORTH AMERICA

• Q3 2019 at Euro 79.9m, -3.9% @current FX
  • +3.8% forex tailwind: -7.7% @constant FX
  • Smith sport business temporarily affected by the consolidation of all North American logistic activities in the new Denver warehouse
  • more volatile and uncertain business environment impacting business turnaround in the independent optician channel
  • Carrera, Hugo Boss, Tommy Hilfiger and rag&bone continued to grow across different channels

in millions of Euro and % change vs same periods of 2018

Growth in China drives ongoing positive sales performance in ASIA PACIFIC

8.6%

• Q3 2019 at Euro 17.5m, +13.7% @current FX
  • +2.7% forex tailwind: +11.0% @constant FX
  • China continues growing thanks to positive business performance in major chains
  • Another strong quarter for Boss and Hugo. Dior, Max Mara and Carrera also key drivers

9M 2019 Euro 61.0m, +27.3% @current FX +22.5% @constant FX

in millions of Euro and % change vs same periods of 2018

…while Latin America drives business recovery in the REST OF WORLD

• Q3 2019 at Euro 19.8m, +10.8% @current FX
  • +3.4% forex tailwind: +7.4% @constant FX
  • Broad based business growth in Brazil and Mexico and improving trends in Middle East
  • Carrera, Tommy Hilfiger, Polaroid, Boss and Hugo were top performers

9M 2019 Euro 56.5m, +4.9% @current FX +3.0% @constant FX

8.0%

GROSS PROFIT PERFORMANCE OF CONTINUING OPERATIONS

in millions of Euro, % change vs same periods of 2018 and % on sales

Recovery of industrial performance supported by business mix

375.1m

Q3 2019 gross profit at Euro 109.0m

profit

at Euro

9M 2019 gross

Gross margin up +170 bps

Gross margin up +70 bps mainly due forex tailwind and lower dilution of Kering product supply

ADJUSTED2 EBITDA OF THE CONTINUING OPERATIONS

in millions of Euro, % change vs same periods of 2018 and % on sales

Q3 underlying operating performance continued improving

2019 OPEX efficiencies balancing the income for the early termination of the Gucci license

Q3 2019 adjusted2 EBITDA at Euro 9.7m

• improvement at the OPEX level mainly thanks to overheads cost savings
• ongoing marketing investments in own core brands

9M 2019 adjusted2 EBITDA at Euro 43.9m

ca. Euro 13m overall overheads cost savings

* Q3/9M 2018 adjusted EBITDA included the income of Euro 9.8/29.3 million for the early termination of the Gucci license

Pre-IFRS 16 adjusted2

EBITDA

in millions of Euro

• remaining proceeds of Euro 17.7 million from the share capital increase executed in 2018
• 9M 2019 free cash flow negative for ca Euro 10m mainly reflecting Q3 net working capital dynamics
• Adjusted2 Financial leverage at 0.5x

Sept.30, 2018Dec.31, 2018Mar.31, 2019Jun.30, 2019Sept.30, 2019Pre-IFRS 16 total Group Net Debt 26.4 32.9 144.2 3.9 24.3

AMONG THE MOST FEATURED EYEWEAR WORLDWIDE

Appendices

1 The wholesale business excludes the business of the production agreement with Kering, reported within the geographical area of Europe.

2 In the first 9 months of 2019, the adjusted EBITDA of the Continuing Operations excludes non-recurring costs for Euro 10.4 million (Euro 5.4 million in Q3 2019) due to restructuring expenses related to the ongoing cost saving program.

In the first 9 months of 2018, the adjusted EBITDA of the Continuing Operations excluded non-recurring costs for Euro 4.4 million (Euro 1.0 million in Q3 2018) mainly related to the CEO succession plan and reorganization costs in North America, and included an income of Euro 29.3 million (Euro 9.8 million in Q3 2018) for the early termination of the Gucci license.

3 In the first 9 months of 2019, the adjusted EBITDA of the Total Operations also excludes non-recurring costs for Euro 1.3 million related to the retail discontinued operations on July 1, 2019.

( ns) Eu in mi llio ro	Q 3 2 0 1 9	%	Q 3 2 0 1 8	%	ha % C n g e fo t t a cu rr en re x	ha % C n g e fo t ta t a co ns n re x
Eu ro p a	9 5. 5	% 4 4. 9	9 1. 7	% 4 4. 1	4. 2 %	3. 9 %
No h Am ic t r er a	9. 9 7	% 3 7. 6	8 3. 1	% 3 9. 9	-3 9 %	-7 7 %
As ia Pa i f ic c	1 7. 5	8. 2 %	1 5. 4	7. 4 %	3. % 1 7	1 1. 0 %
f he l d Re t o t s or w	8 1 9.	9. 3 %	1 7. 9	8. 6 %	8 % 1 0.	7. 4 %
l To ta	2 1 2. 8	1 0 0. 0 %	2 0 8. 1	1 0 0. 0 %	2. 2 %	0. 1 %

( ns) Eu in mi llio ro	9 M 2 0 1 9	%	9 M 2 0 1 8	%	ha % C n g e fo t t a cu rr en re x	ha % C n g e fo t ta t a co ns n re x
Eu ro p a	3 4 1. 8	8. 2 % 4	3 3 1. 6	9. 2 % 4	3. 1 %	3. 2 %
No h Am ic t r er a	2 4 9. 4	% 3 5. 2	2 4 0. 5	% 3 5. 7	3. % 7	-2 0 %
As ia Pa i f ic c	0 6 1.	% 8. 6	9 4 7.	% 7. 1	2 3 % 7.	2 2. 5 %
Re f he l d t o t s w or	5 6. 5	8. 0 %	3. 9 5	8. 0 %	9 % 4.	3. 0 %
l To ta	7 0 8. 7	1 0 0. 0 %	6 7 3. 8	1 0 0. 0 %	5. 2 %	2. 7 %

Economic highlights of the Continuing Operations

( ) Eu in mi llio ro ns	9 M 2 0 1 9 d t r e p o r e	9 M 2 0 1 9 R S 6 -I F 1 p re	9 M 2 0 1 8	h % C g a n e R S 6 -I F 1 p re
Ne les t s a	7 0 8. 7	0 8. 7 7	6 7 3. 8	2 % 5. +
Gr f i t os s p ro	3 7 5. 1	3 7 5. 1	3 4 4. 9	8. 8 % +
% le t s on n e a s	5 2. 9 %	5 2. 9 %	5 1. 2 %
E B I T D A	4 3. 9	3 3. 6	3 9. 5	0 % -1 5.
% le t s on n e a s	% 6. 2	% 4. 7	% 5. 9
2 d d A j E B I T D A te us	5 4. 3	3. 9 4	4 3. 9	-
% le t s on n e a s	% 7. 7	% 6. 2	% 6. 5

( ) Eu in mi llio ro ns	Q 3 2 0 9 1 d t r e p o r e	Q 3 2 0 1 9 S 6 -I F R 1 p re	Q 3 2 0 1 8	h % C g a n e S 6 -I F R 1 p re
les Ne t s a	2 1 2. 8	2 1 2. 8	2 0 8. 1	2. 2 % +
Gr f i t os s p ro	0 9. 0 1	1 0 9. 0	0 1 5. 1	3. 7 % +
% le t s on n e a s	5 1. 2 %	5 1. 2 %	5 0. 5 %
E B I T D A	7. 7	3 4.	1 2. 7	-6 9 % 5.
% t s le on n e a s	3. 6 %	2. 0 %	6. 1 %
2 A d j d E B I T D A te us	1 3. 1	9. 7	1 3. 7	-2 8. 8 %
% le t s on n e a s	% 6. 2	% 4. 6	% 6. 6

( in mil lio ) Eu ro ns	9 2 0 1 9 M d te re p or	9 2 0 1 9 M -I F R S 1 6 p re	9 2 0 1 8 M	% C ha ng e -I F R S 1 6 p re
Ne les t s a	3 4. 4 7	3 4. 4 7	1 3. 7 7	2. 9 % +
Gr f i t os s p ro % les t s on ne a	3 8 5. 6 5 2. 5 %	3 8 6 5. 2. % 5 5	3 6 6. 5 5 1. 3 %	2 % 5. +
E B I T D A % les t s on ne a	4 0. 6 % 5. 5	2 4. 5 3. 3 %	3 2. 7 4. 6 %	-2 3 % 5.
2,3 A d j d E B I T D A te us % les t s on ne a	2. 3 5 7. 1 %	3 6. 2 4. 9 %	3 2 7. 5. 2 %	-2 % 7

Exchange Rates

Cu rr en cy		As f o		( ia io ) Ap / t p re c n De ia io t p re c n	Av fo ag er e r		( ia io ) Ap / t p re c n De ia io t p re c n
	de Co	be Se 3 0, 2 0 1 9 te p m r	be De 3 1, 2 0 1 8 ce m r	%	be Se 3 0, 2 0 1 9 te p m r	be Se 3 0, 2 0 1 8 te p m r	%
S l lar U Do	S U D	1. 0 8 8 9	1. 1 4 5 0	% -4 9	1. 1 2 3 6	1. 1 9 4 2	% -5 9
Ho -K Do l lar ng on g	H K D	8. 5 3 6 8	8. 9 6 7 5	-4 8 %	8. 8 0 7 4	9. 3 6 2 8	-5 9 %
Sw iss Fr an c	C H F	1. 0 8 4 7	1. 1 2 6 9	% -3 7	1. 1 1 7 9	1. 1 6 1 1	% -3 7
Ca d ian Do l lar na	C A D	1. 4 4 2 6	1. 5 6 0 5	-7 6 %	1. 4 9 3 5	1. 5 3 7 2	-2 8 %
Ja Ye p an es e n	Y E N	1 1 7. 5 9 0 0	1 2 5. 8 5 0 0	% -6 6	1 2 2. 5 6 9 6	1 3 0. 9 2 5 3	% -6 4
Br i is h Po d t un	G B P	0. 8 8 5 7	0. 8 9 4 5	-1 0 %	0. 8 8 3 5	0. 8 8 4 1	-0 1 %
Sw d is h Kr e ow n	S E K	1 0. 6 9 5 8	1 0. 2 5 4 8	% 4. 3	1 0. 5 6 7 9	1 0. 2 3 7 5	% 3. 2
Au l ian Do l lar tra s	A U D	1. 6 1 2 6	1. 6 2 2 0	-0 6 %	1. 6 0 7 7	1. 5 7 6 2	2. 0 %
So t h- A fr ica Ra d u n n	Z A R	1 6. 5 5 7 6	1 6. 4 5 9 4	0. 6 %	1 6. 1 3 2 0	1 5. 3 9 2 0	4. 8 %
Ru ian Ru b le ss	R U B	0. 7 7 5 5 7	9. 3 7 7 1 5	2 % -1 1.	3. 0 8 3 7 5	3. 7 4 1 6 4	-0 % 5
Br i l ian Re l as a	B R L	4. 5 2 8 8	4. 4 4 4 0	1. 9 %	4. 3 6 4 7	4. 2 9 6 6	1. 6 %
In d ian Ru p ee	I N R	7 7. 1 6 1 5	9. 2 9 8 7 7	-3 2 %	8. 8 3 7 0 1	8 9 0. 1 0 5	% -1 7
S ing Do l lar ap or e	S G D	1. 5 0 6 0	1. 5 5 9 1	-3 4 %	1. 5 3 3 2	1. 6 0 0 3	-4 2 %
Ma lay ian R ing i t s g	M Y R	4. 5 5 9 2	4. 7 3 1 7	% -3 6	4. 6 4 6 3	4. 7 6 4 6	% -2 5
C h ine Re in b i se nm	C N Y	7. 7 7 8 4	7. 8 7 5 1	-1 2 %	7. 7 1 3 5	7. 7 7 8 9	-0 8 %
Ko W re an on	K R W	1, 3 0 4. 8 3 0 0	1, 2 7 7. 9 3 0 0	% 2. 1	1, 3 0 6. 3 7 7 4	1, 3 0 3. 1 2 5 8	% 0. 2
Me ica Pe n so x	M X N	2 1. 4 5 2 2	2 2. 4 9 2 1	-4 6 %	2 1. 6 3 3 6	2 2. 7 3 8 1	-4 9 %
k is h ira Tu L r	T R Y	6. 1 4 9 1	6. 0 5 8 8	% 1. 5	6. 3 3 9 0 1	5. 5 0 9 8 1	% 1 5. 0
D ir ha U A E m	A E D	3. 9 9 9 0	4. 2 0 5	-4 9 %	4. 1 2 6 4 9	4. 3 8 5 7 1	-5 9 %