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Commencer pagination 1 !!! 2018 First-Half results July 26, 2018 - PowerPoint PPT Presentation

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Commencer pagination 1 !!! 2018 First-Half results July 26, 2018 DISCLAIMER This presentation does not constitute an offer of securities for sale in the United States of America or any other jurisdiction. Certain information contained in

  1. Commencer pagination à 1 !!! 2018 First-Half results July 26, 2018

  2. DISCLAIMER This presentation does not constitute an offer of securities for sale in the United States of America or any other jurisdiction. Certain information contained in this document may include projections and forecasts. They express objectives based on current assessments and estimates of the Group’s executive management which are subject to numerous factors, risks and uncertainties. Consequently, reported figures and assessments may differ significantly from projected figures. The following factors among others set out in the Reference Document (Document de Référence) filed with the French Financial Markets Authority (Autorité des Marchés Financiers - AMF) on March 28, 2018 which is available on Kering’s website at www.kering.com may cause actual figures to differ materially from projected figures: any unfavorable development affecting consumer spending in the activities of the Group in France and abroad, notably for products and services sold by the brands, the events, crises, fears, and resulting costs of complying with environmental, health and safety regulations and all other regulations with which Group companies are required to comply; the competitive situation on each of our markets; exchange rate and other risks related to international activities; risks arising from current or future litigation. Kering gives no commitment to updating and/or revising and/or commenting any projections and forecasts, or their impact on the results and perspectives of the Group, which may be contained in this presentation. The information contained in this document has been selected by the Group’s executive management to present Kering’s 2018 first-half results. This document has not been independently verified. Kering makes no representation or undertaking as to the accuracy or completeness of such information. None of the Kering or any of its affiliates representatives shall bear any liability (in negligence or otherwise) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. IN NO WAY DOES KERING ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED IN THIS PRESENTATION. INFORMATION IN THIS PRESENTATION, INCLUDING FORECAST FINANCIAL INFORMATION, SHOULD NOT BE CONSIDERED AS ADVICE OR A RECOMMENDATION TO INVESTORS OR POTENTIAL INVESTORS IN RELATION TO HOLDING, PURCHASING OR SELLING SECURITIES OR OTHER FINANCIAL PRODUCTS OR INSTRUMENTS AND DOES NOT TAKE INTO ACCOUNT YOUR PARTICULAR INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR NEEDS. BEFORE ACTING ON ANY INFORMATION YOU SHOULD CONSIDER THE APPROPRIATENESS OF THE INFORMATION HAVING REGARD TO THESE MATTERS, ANY RELEVANT OFFER DOCUMENT AND IN PARTICULAR, YOU SHOULD SEEK INDEPENDENT FINANCIAL ADVICE. ALL SECURITIES AND FINANCIAL PRODUCT OR INSTRUMENT TRANSACTIONS INVOLVE RISKS, WHICH INCLUDE (AMONG OTHERS) THE RISK OF ADVERSE OR UNANTICIPATED MARKET, FINANCIAL OR POLITICAL DEVELOPMENTS AND, IN INTERNATIONAL TRANSACTIONS, CURRENCY RISK. READERS ARE ADVISED TO REVIEW THE COMPANY'S REFERENCE DOCUMENT AND THE COMPANY'S APPLICABLE AMF FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISION. 26.07.2018 2

  3. INTRODUCTION JEAN-FRANÇOIS PALUS GROUP MANAGING DIRECTOR

  4. 2018 FIRST-HALF RESULTS INTRODUCTION A STREAMLINED ENSEMBLE OF 1 A PURE LUXURY PLAYER 2 BRANDS  Distribution in kind of 70% of PUMA shares to Kering  Agreement between Kering and Ms. Stella McCartney shareholders effective May 16 at a share price of €429 regarding the sale and purchase of the Group’s stake (50%) in her eponymous brand PUMA shareholding  post Discussions underway with Mr. Christopher Kane for Distribution him to take back full control of his eponymous brand (51% stake held by Kering) PUMA share €501 +16.8% since distribution price as of June 29, 18  End of partnership with Tomas Maier brand ► Net gain on disposal: € 1.18bn booked under Impact on IFRS 5 – net income from discontinued Kering operations financial ► Value of Kering stake as of end of June statements 2018 > € 1.0bn  Initiation of Volcom disposal process IFRS 5 Non-current Assets Held for Sale and Discontinued Operations > Applied to PUMA*, Volcom, Stella McCartney and Christopher Kane * PUMA IFRS 5 from January 1 to May 16 and Equity-accounted since May 16 26.07.2018 4

  5. H1 and FY 2017 RESTATEMENTS H1 2017 FY 2017 RESTATED (*) REPORTED RESTATED (*) REPORTED In €m Revenue 5,073 7,296 10,816 15,478 Gross margin 3,674 4,725 7,916 10,133 Gross profit margin 72.4% 64.8% 73.2% 65.5% Recurring operating income 1,158 1,274 2,691 2,948 Recurring operating income margin 22.8% 17.5% 24.9% 19.0% Consolidated net income 861 861 1,865 1,865 Of which net income, Group share 826 826 1,786 1,786 Net income, Group share, from continuing operations 815 872 1,887 2,002 excluding non-recurring items 605 752 CAPEX 227 283 CAPEX/sales 4.5% 3.9% 5.6% 4.9% Free Cash Flow from operations 848 718 2,206 2,318 * Restatement: PUMA, Volcom, Stella McCartney and Christopher Kane reclassified as discontinued operations for H1 and FY17 (IFRS 5) 5 26.07.2018

  6. ANALYSIS OF RESULTS JEAN-MARC DUPLAIX GROUP CHIEF FINANCIAL OFFICER

  7. 2018 FIRST-HALF RESULTS NEW PROFILE DELIVERS SUPERIOR PERFORMANCES % comparable growth* +33.9% RoW Western Europe GROUP REVENUE 7% (+34%) 32% (+25%) continuing operations +36.6% +31.5% Asia Pacific 33% ( +38%) €6,432m €5,073m H1 revenue North America Japan €3,326m +26.8% reported, +€1.4bn €3,106m 19% (+45%) 9% (+ 31%) Q2 revenue +26.4% reported As a % of revenue and (% comparable growth) H1 17 restated Q1 18 Q2 18 H1 18 RECURRING OPERATING RECURRING OPERATING • GROUP RECURRING Record recurring operating INCOME MARGIN OPERATING INCOME income In €m +470 bps +53% 1,772 27.5% • Focus on organic growth drives 22.8% 1,158 € 1,772m substantial operating leverage +53% yoy and margin expansion H1 17 restated H1 18 H1 17 restated H1 18 FCF FROM OPERATIONS NET DEBT FCF AND NET DEBT • Sharp increase in FCF In €m 1,401 In €m 4,573 +65% generation 848 3,049 • 2,793 Further deleveraging, net debt significantly down yoy FCF x1.7 at €1,401m H1 17 restated H1 18 FY 17 H1 17 H1 18 Q1’18 revenue excluding Christopher Kane * : at constant scope and exchange rates 7 26.07.2018

  8. LUXURY HOUSES CONTINUED OUTPERFORMANCE DELIVERS HIGH MARGIN EXPANSION H1 18 revenue: +26.9% reported; +33.9% comparable R e v e n u e c h a n g e i n € m , a n d c o m p a r a b l e g r o w t h i n % +28% +6% 6,209 +37% Reported In €m H1 18 change 4,893 0% Revenue 6,209 +26.9% -5% Recurring operating income 1,886 +51.3% Recurring operating income margin 30.4% +4.9pt Gross CAPEX 222 +25.7% as % of revenue 3.6 % 0.0pt H1 17 FX impact Scope Retail Wholesale Royalties H1 18 and others H1 REVENUE GROWTH LARGELY AHEAD OF INDUSTRY SOUND RECURRING OPERATING MARGIN, ABOVE 30% • • Sustained and well balanced across channels Significant operating leverage at Gucci, Saint Laurent and Balenciaga • E-commerce more than doubled, close to 6% of retail sales - while continuing to invest in retail network, A&P and • Negative FX headwinds easing in Q2 (-5 pt vs. Q1 -9 pt) CRM/digitalization • Ongoing investment in Jewelry Q2: COMPARABLE REVENUE UP 31% • Combined FX and hedging impact negative in absolute • Retail trends very strong with all regions up double digit terms and marginally dilutive in terms of profitability - Strong momentum confirmed in North America, APAC and Japan CAPEX SELECTIVITY - W. Europe moderating on high comps and softer tourism trends • • Wholesale up 24%, royalties & others improving at +9% 3.6% of revenue in H1, higher ratio expected in H2 • Total number of DOS 1,382, 47 net openings in H1 8 26.07.2018

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