Combined General Meeting (behind closed doors) June 16, 2020
O P E N I N G O F T H E G E N E R A L M E E T I N G 2 0 2 0 FRANÇOIS-HENRI PINAULT CHAIRMAN AND CHIEF EXECUTIVE OFFICER
A G E N D A A N D R E G U L ATO RY I S S U E S ÉRIC SANDRIN GROUP GENERAL COUNSEL
CONTENTS Introduction Full-year 2019 highlights & financial results analysis Creating value Sustainability Governance & Remuneration Conclusion Statutory Auditors’ report Vote on the resolutions 4
I N T R O D U CT I ON FRANÇOIS-HENRI PINAULT CHAIRMAN AND CHIEF EXECUTIVE OFFICER
FULL-YEAR 2019 AND BEGINNING OF 2020 KEY HIGHLIGHTS Another year of sustained profitable growth in 2019 • Revenue > €15 billion • Record operating margin > 30% First-quarter of 2020 heavily impacted by COVID-19 and marked by strong disparities • A very promising start to the year for all our Houses • Performance in our main markets affected by the rapid spread of COVID-19 6
FULLY MOBILIZED AGAINST COVID-19 PANDEMIC SUPPORTING OUR EMPLOYEES, OUR CONSUMERS AND SOCIETY • Making health and safety of employees and clients our top priority • Manufacturing medical equipment in Italy and France • Masks and overalls in Gucci’s Italian workshop network • Masks in the French workshops of Balenciaga and Yves Saint Laurent • Importing masks from China for French and British health systems • Supporting research on Covid-19 with a financial donation to Institut Pasteur • Supporting innovative projects such as the “3D COVID” project, making bank of 3D printers available to the Public Hospitals of Paris • Tackling the emergency needs through financial donations to : • the Hubei Red Cross in China • four major hospitals foundations in Italy in Kering’s Houses home regions • the CDC Foundation in the US • Backing initiatives supporting the fashion industry in the US • Along with concrete initiatives from our Houses : • Gucci, in support of the World Health Organization, and the Italian Civil Protection Department • Pomellato and Dodo through a crowdfunding initiative against domestic violence in Italy 7
SUSTAINED GROWTH TRAJECTORY IN 2019 GROUP GROUP RECURRING RECURRING NET INCOME, OPERATING INCOME (1) GROUP SHARE (2) REVENUE €15,884m €4,778m €3,211m +16.2% reported +19.6% +15.1% +13.3% comparable 30.1% recurring operating margin FREE CASH FLOW FROM OPERATIONS EMPLOYEES SUSTAINABILITY 38,068 -14% EP&L intensity (3) as of Dec. 31, 2019 €1,521m 55% women managers Full carbon neutrality within the Group achieved in 2019 (offsetting, Scopes 1, 2, 3 across all operations and supply chains) (1) Following the first-time application of IFRS 16 in 2019, comparative data for 2018 has been restated... (2) Recurring net income, Group share: net income from continuing operations, Group share, excluding non-recurring items. In 2019, this item excludes the non-recurring tax expense relating to the tax settlement in Italy (3) 2015-2018 8
FULL-YEAR 2019 HIGHLIGHTS AND FINANCIAL RESULTS ANALYSIS JEAN-FRANÇOIS PALUS GROUP MANAGING DIRECTOR
ANOTHER YEAR OF SUSTAINED PROFITABLE GROWTH IN 2019 GROUP REVENUE (€m) 15,884 13,665 €15,884m +16.2% reported +13.3%* +13.3% comparable 2018 2019 33% Western Europe of revenue +14%* North America 8% 19% of revenue Japan of revenue +6%* +7%* 6% of revenue 34% RoW +6%* of revenue Asia Pacific +20%* * % comparable growth (at constant scope and exchange rates) 10
ANOTHER YEAR OF SUSTAINED PROFITABLE GROWTH IN 2019 GROUP RECURRING OPERATING INCOME (€m) +90bp 4,778 • Sharp increase in EBIT and margin 3,995 €4,778m up 19.6% • Group EBIT margin topping 30% for the first time ever 30.1% from 2018 restated 29.2% • Virtuous operating leverage (IFRS 16) 2018* 2019 2018** 2019 Group recurring operating income in €m and margin in % ENHANCED OPERATING MARGIN (€m) Recurring Recurring operating income Recurring operating income Revenue operating income reported change (%) margin (%) Luxury Houses 15,383 5,042 +19.0% 32.8% Corporate & other 501 (264) -8.3% n.a. Kering 15,884 4,778 +19.6% 30.1% FCF AND NET DEBT (€m) FCF FROM OPERATIONS NET DEBT FCF of €1.5bn after CAPEX of €956m (6.0% of revenue) 3,551 2,812 2,955 and one-off cash out 1,711 1,521 Net financial debt at €2.8bn (excl. lease liabilities) 2018 reported 2018* 2019 2018 2019 * Restated IFRS 16 11
LUXURY HOUSES In €m 2018 2018 2019 Restated Change Reported * +13.2% comparable Revenue 15,383 13,247 +16.1%* 13,247 5,042 4,238 +19.0% 4,191 Recurring operating income - 32.8% 32.0% +0.8pt Margin (%) Adjusted margin IAS 17 (%) 32.5% - +0.9pt 31.6% 652 610 +6.8% 610 Gross CAPEX As % of revenue 4.2% 4.6% -0.4pt 4.6% In €m Saint Bottega Other Gucci Laurent Veneta Houses 2019 Revenue 9,628 2,049 1,168 2,538 Change* +16.2% +17.5% +5.3% +20.3% Comparable change** +13.3% +14.4% +2.2% +17.8% Recurring operating income 3,947 562 215 318 Change* +19.8% +20.0% -14.3% +42.1% Recurring operating margin 41.0% 27.4% 18.4% 12.5% * vs. 2018 Restated from IFRS 16 12 * * At constant scope and exchange rates
FINANCIAL PERFORMANCE In €m FY 2018 FY 2018 Restated Reported FY 2019 IFRS 16 13,665 13,665 Revenue 15,884 10,198 10,198 Gross margin 11,775 3,995 3,944 Recurring operating income 4,778 Other non-recurring operating income and expenses (222) (222) 1 (168) Finance costs, net (294) (207) (310) Mainly PUMA contribution, Income tax expense (859) (868) (2,134) based on Vara 1 Share in earnings of equity-accounted companies 12 12 consensus 42 Net income from continuing operations 2,631 2,659 2,208 2 2 Net income from discontinued operations 1,095 1,095 126 Net income of consolidated companies 3,726 3,754 Mainly PUMA 2,334 contribution: 3,688 3,715 Of which net income, Group share 2,309 net income and net capital Net income, Group share, from continuing gain of €1.18bn 2,790 2,817 3,211 operations excluding non-recurring items* Net income, Group share, per share (in euro) 18.40 29.28 29.49 Net income per share from continuing operations, Group share, excluding non-recurring items (in euro) 25.59 22.15 22.36 * In 2019, this item excludes the non-recurring tax expense relating to 13 the tax settlement in Italy
CHANGE IN NET FINANCIAL DEBT FY 2019 NET DEBT BRIDGE In €m 2,812 46 750 402 1,711 161 1,342 -79 -1,521 Net debt at IFRS 16 first FCF from Dividend Net interest paid Share Repayment of Net financial Net debt at December application operations paid and dividend repurchase lease liabilities investments December 31, 2018 received and other 31, 2019 14
A SOLID FINANCIAL STRUCTURE SHAREHOLDERS’ NET DEBT-TO-EQUITY CAPITAL EQUITY DEBT RATIO EMPLOYED €10,439m €2,812m 26.9% €13,251m OPERATING INVENTORIES RECEIVABLES PAYABLES WORKING CAP €2,959m €996m €809m €3,146m 19.8% * * of FY19 group revenue 15
2019 DIVIDEND REVISED DOWNWARDS WITHIN THE CONTEXT OF THE COVID-19 OUTBREAK DIVIDEND PER SHARE in € (for the FY in reference) -30% 10.50 vs. the dividend 8.00 initially proposed 6.00 4.60 4.00 2015 2016 2017 2018 2019 Proposed to June 16, 2020 AGM €3.50 per share interim dividend paid on January 16, 2020 €4.50 per share balance to be paid on June 25, 2020 DIVIDEND PAYOUT in % in % of recurring net income, Group share in % of available cash flow 102.2% 57.1% 49.6% 47.8% 47.0% 45.3% 40.1% 37.3% 35.1% 31.3% 2015 2016 2017* 2018 2019** * 2017 data restated for IFRS 5 16 * * 2019 available cash flow excluding one-off tax settlement
STEADY SHAREHOLDER RETURN SHARE REPURCHASE PROGRAM €570m between EXCEPTIONAL October 2018 DISTRIBUTION and July 2019 IN KIND of PUMA shares DIVIDEND GROWTH ≈ €36 per share as of May 16, 2018 LINKED TO GROUP PERFORMANCE Payout target STRONG STRONG SHARE PRICE of 50%* PUMA SHARE PRICE APPRECIATION APPRECIATION X4 + c.60% from distribution between 2015 and 2019 until 2019 y/e SUSTAINED GROWTH AND FINANCIAL PERFORMANCE * Target of 50% on average of recurring net income, Group share 17 and available cash flow
SHARE PRICE PERFORMANCE KERING SHARE PRICE PERFORMANCE VS. CAC40 INDEX (REBASED) SINCE JANUARY 1, 2019 (in €) 650 Performance in 2019 600 +42% 550 Kering 500 -8% 450 Performance in 2019 +26% CAC 40 400 -13% 350 300 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Source: Euronext, as of June 5, 2020 18
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