De`Longhi Group

Transcription

De`Longhi Group

6 March 2014
Target price change
De Longhi
Italy | Home & apparel
Buy (Buy)
Target price
EUR 16.50
Current price
EUR 14.42
Giorgio Iannella
giannella@keplercheuvreux.com
+39 02 8062 8330
Cash machine
De Longhi has rapidly caught up with the market performance this year,
but we believe there is still value in the stock, given its high competitive
quality and sound growth profile. We expect 3Y CAGRs of 15% in EPS
and 25% in FCF, supported by the growth outlook for small appliances
worldwide, the company’s premium positioning and the additional
contribution expected from Braun. We raise our TP from EUR13.5 to
EUR16.5 and confirm our Buy rating.
Reuters DLG.MI
Bloomberg DLG IM
Index FTSE Italy
Market data
Market cap (EURm)
Free float
No. of shares outstanding (m)
Avg. daily trading volume('000)
YTD abs performance
52-week high (EUR)
52-week low (EUR)
2,156
33%
150
148
21.5%
15.03
10.85
Premium niche leader
De Longhi is a global leader in the production and distribution of small
domestic appliances. It operates through four well-established brands: De
Longhi, Kenwood, Ariete and Braun. It is market leader in coffee makers and
food preparation machines in Western Europe, with market shares of 30%
and 20% respectively, and world leader (ex-US/China) in coffee machines,
with 32% of the market (it was 21% five years ago). Its strategic focus is on
the premium niche: half of sales come from the top price quartile of the
market. This is supported by A&P spend of 9-10% of sales. Two-thirds of
production comes from China, and two-thirds of sales from Europe.
Braun addition is a transformational deal
De Longhi bought a perpetual licence for the Braun brand from P&G, for
home care products only. It was consolidated at the beginning of last year.
Thanks to its strong brand awareness and the measures taken by De Longhi
(new products, new markets and an A&P push), Braun is expected to deliver
a 27% 3Y CAGR in sales and contribute half the group’s additional EBITDA.
Sound growth ahead: 3Y CAGR of 15% in EPS and 25% in FCF
We see global demand for small domestic appliances growing in the midhigh single digits in the foreseeable future. De Longhi is expected to deliver
3Y CAGRs in 2014-16 of 10% in EBITDA, 15% in EPS and 25% in FCF. Our
new estimates (EPS cut by 5% for 2013 and 7% for 2014-15) factor in a
higher FX drag: EUR15m on EBITDA this year, after EUR22m last year.
Buy confirmed – TP up from EUR13.5 to EUR16.5
FCF generation is the key positive here. De Longhi has already digested the
Braun deal (priced at EUR221m) and it is set to turn cash-positive this year.
We expect EBITDA conversion into FCF at close to 40% in 2014-16E.
Current valuation is not compelling, as the stock has caught up with the
market performance since the beginning of February. However, we believe
that visibility on earnings momentum and cash generation is fairly high. Our
rolled-over DCF now yields a TP of EUR16.5 (from EUR13.5), based on
higher cash flow growth and lower cost of equity. Buy confirmed.
IMPORTANT. Please refer to the last page of this report for
“Important disclosures” and analyst certification(s)
15.5
15.0
14.5
14.0
13.5
13.0
12.5
12.0
11.5
11.0
10.5
Mar 13
Jun 13
Price
Sep 13
Dec 13
Mar 14
DJ Stoxx 600 (rebased)
FY to 31/12 (EUR)
Sales (m)
EBITDA adj (m)
EBIT adj (m)
Net profit adj (m)
Net fin. debt (m)
FCF (m)
EPS adj. and fully dil.
Consensus EPS
Net dividend
2013E
1,633.0
230.0
187.5
111.1
43.7
62.0
0.74
0.75
0.27
2014E
1,755.0
252.9
208.9
127.8
-11.9
95.9
0.85
0.87
0.31
2015E
1,874.9
279.7
234.2
147.4
-69.5
104.1
0.99
0.99
0.36
FY to 31/12 (EUR)
P/E (x) adj and ful. dil.
EV/EBITDA (x)
EV/EBIT (x)
FCF yield
Dividend yield
Net debt/EBITDA (x)
Gearing
ROIC
EV/IC (x)
2013E
19.4
9.5
11.7
2.9%
1.9%
0.1
6.2%
15.8%
2.7
2014E
16.9
8.4
10.2
4.5%
2.2%
-0.1
-1.5%
17.0%
2.5
2015E
14.6
7.4
8.9
4.9%
2.5%
-0.3
-7.8%
18.1%
2.3
keplercheuvreux.com
De Longhi
Target price change
Summary
Company profile
No1 in coffee makers and food preparation machines in West
Europe, with c. 30% and 20% market share, and in the world exUS/China. Premium player: 50% of products in the top price quartile
of the market. Coffee makers and food preparation machines put
together 3/4 of group sales. 1/3 of sales from emerging countries,
65% of production in China.
Management structure
Giuseppe De' Longhi
Fabio De' Longhi
Fabrizio Micheli
EPS and P/E
Balance sheet structure, 2013E
Key shareholders
De' Longhi Soparfi
FCF and gearing
1.2
25.0
150
20%
15%
1.0
20.0
0.8
15.0
10%
100
5%
10.0
-5%
50
-10%
-15%
5.0
0.2
-20%
0.0
0.0
08
09
10
11
12
13E
EPS adj.
14E
15E
P/E (x)
67.0%
100%
80%
60%
0%
0.6
0.4
Chairman
CEO
CFO
0
40%
20%
0%
08
09
10
11
FCF LS
Shareholders equity
Other liabilities
Financial debt
Goodwill
Other assets
Cash
-25%
12 13E 14E 15E
Gearing RS
Valuation
Base case
DCF is based on long-term (2nd stage) 5% growth of
sales
Best case
sales
Worst case
sales
Target price
25
Base
case
20
15
Current
price
10
5
0
DCF
Risk to our rating
Slowdown of the demand for coffee makers and food
preparation machines, bad execution on Braun
integration, higher currency headwinds.
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keplercheuvreux.com
EPV H-MM
Target
price
Best Worst
case case
De Longhi
Target price change
Contents
Quality: premium niche leader ........................
4
Focus on small domestic appliances…
4
…four-fifths of the business from kitchen and coffee
6
…and two-thirds from Europe
8
Two-thirds of production from China
9
Leading position in coffee and kitchen
9
Growth: sound 15% EPS 3Y CAGR ahead .....
14
The reference market: small domestic appliances…
14
…coffee and kitchen segments
15
The Braun addition
18
Estimates review: 2014-15 EPS cut by 7% due to forex
21
FY 2013 results preview: margins diluted by Braun, FX
21
Sales estimates by region
23
Cash machine
24
Valuation: more upside ahead .........................
25
DCF: EUR16.50 (our new TP)
25
Peer comparison (versus SEB)
26
Research ratings and important disclosures
33
Legal and disclosure information ....................
35
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keplercheuvreux.com
De Longhi
Target price change
Quality: premium niche leader
With its four SDA brands (De Longhi, Kenwood and Ariete owned; Braun under
licence), De Longhi is market leader in coffee makers and kitchen machines in
Western Europe, with market shares of 30% and 20% respectively, and world
leader (ex-US/China) in coffee makers, with 32% of the market, versus 21% five
years ago. Its premium position (half of sales in top price quartile) is supported by
A&P spend at 9-10% of sales.
Focus on small domestic appliances…
De Longhi is a global leading player in the production and distribution (almost entirely
wholesale) of small domestic appliances (SDA), operating through four brands:

De Longhi (57% of sales in 2013, in our estimates): under the family name brand,
the company produces and distributes coffee makers (bean-to-cup, espresso, filter
coffee, combi, grinders, Nespresso and Nescafé systems), kitchen machines (deep
fryers, electric ovens, kettles, toasters, ice-cream makers), air conditioning systems
(with the Pinguino brand), heating products (oil-filled radiators, convectors, fan and
ceramic heaters), dehumidifiers and ironing products. Coffee (the new successful
venture started at the beginning of ‘00s, at the heart of the investment case)
represents about 55% of De Longhi brand’s sales, Nespresso 20%.

Kenwood (30%): under the UK brand bought in May 2001 (via a PTO), De Longhi
produces and distributes kitchen machines (food mixers and processors) and
various other appliances for food preparation (blenders, hand blenders, hand
mixers, kettles, toasters, coffee makers, bread makers, ice-cream makers, food
slicers, electric knives). Kitchen machines currently represent 54% of Kenwood’s
sales, while hand blenders are the main remaining item, with 8% of the total.

Ariete (4%): under the Italian brand bought by Kenwood in 1995, De Longhi
produces and distributes kitchen machines and food preparation appliances
(ovens, electric grills, blenders, hand blenders, centrifuges, squeezers, choppers,
electric graters, electric mills, beaters, toasters, bread makers, ice-cream and
yoghurt makers), along with house cleaning, ironing and personal care products.

Braun (9%): under the perpetual license for the German brand bought from P&G in
September 2012 (only for homecare products, excluding personal care), De Longhi
produces and distributes hand blenders (50% of Braun’s sales 2013, in our
estimates), steam irons (15%) and other kitchen appliances (food preparation units,
basic “drip” coffee makers, kettles and juicers, for the remaining 35%). There are
two main overlaps between the brands’ product offering, namely with Kenwood in
hand blenders and De Longhi in steam irons. Braun may take the lead in both, in
light of its stronger positioning.
De Longhi is a typical Italian family-run business (De Longhi family owns 67% of the share
capital, after an 8% stake placement of 16 November 2012, at EUR9.50), which has become
a niche global champion. Notably, it is also an example of successful generational
succession, a key issue for this kind of company. Today, the CEO is Fabio De Longhi (46),
the son of the founder, Giuseppe De Longhi (74), the Chairman of the company.
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keplercheuvreux.com
One company, four
brands
Family-run business,
successful succession
De Longhi
Target price change
The company’s origins go back to the beginning of last century, when the De Longhi family
was active in the production of wood-burning stoves. In the 1950s, it was organised as a
A bit of history: from
heating systems...
structured entrepreneurial activity, focused on the production of components for domestic
heating systems. The De Longhi brand first became known in 1970s, when Giuseppe De
Longhi’s company started selling the first finished products, mobile oil radiators, initially
manufactured by third parties, then internally produced from 1975. In 1980, the De Longhi
brand was registered and the internationalisation process kicked off. The company rapidly
became the global leader in mobile heating systems, after successfully entering the US and
Japanese markets.
In 1985-87, De Longhi embarked on a diversification process, which enlarged its product
…to kitchen appliances
offering to air conditioning and treatment systems as well as small appliances for cooking.
In the following few years, the company made some acquisitions to enlarge and reinforce
its production structure and started building up a direct distribution network (first step in
the UK, in 1986).
In 1992, De Longhi launched its first machines for espresso coffee, adding the second big
…and coffee machines
leg to its business portfolio. Then in 2007, it started working as a partner of Nestle for the
distribution of Nespresso’s coffee machines.
Under the current structure, De Longhi SpA is the result of the spinoff of the professional
business (professional air treatment plants and radiators, incorporated into listed DeLclima
The spinoff of
professional business
SpA) from the old group, which now only includes the household business (small domestic
appliances). The spinoff project was approved on 21 July 2011 and took effect on 1 January
2012. It was aimed at allowing the two equity stories to become clearer, enhancing the
equity value of both companies.
Table 1: De Longhi pre-spin-off: two different business models
Household
B2C
Resilient
Global
Lifestyle led and highly innovative
Market-driven
Emerging markets > 30%
Secular trend in coffee and gourmet
Professional
B2B
More cyclical
Europe and China
Technological barriers and tailored engineering
Solutions and service
Strong opening to Chinese market
Air conditioning leading growth and profitability
Source: Company data
Following the spinoff, De Longhi is the only company, among the leading listed players, to
Fully focused on SDA
be exclusively focused on SDA (100% of group sales). Groupe SEB is at 68% of sales (the
rest is cookware), Philips 9% (47% of Lyestyle division), Electrolux 8%, Whirlpool estimated
at 5-10% (out of 18% disclosed for cooking) and Indesit <1% (new business, entered last
year).
De Longhi was the best-performing stock on the Italian stock exchange in the five years
following the Lehman Brothers bankruptcy (from 15 September 2008 to 28 August 2013),
with a total return of 450%, followed by Banca Generali, Tod’s, Txt, Azimut and Brembo.
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Best stock in Milan in
five years post-Lehman
De Longhi
Target price change
…four-fifths of the business from kitchen and coffee
In terms of the divisional breakdown of sales 2013 (not disclosed yet), kitchen and coffee
together could represent four-fifths of the group’s total. The other activities are much
smaller, including air conditioning and heating at 12% and ironing and cleaning at 6%.
Kitchen and coffee
account for four-fifths of
total sales
Chart 1: De Longhi’s sales by activity 2013E
Ironing &
Cleaning
6%
Other
3%
Air conditioning &
heating
12%
Coffee machines
36%
Kitchen machines
43%
Source: Company data, Kepler Cheuvreux
Historically, the coffee business was just a small activity for De Longhi, representing 7% of
sales in 2001, then the distribution agreement with Nespresso led the segment to 24% of
sales in 2007 and proprietary cappuccino makers (Nespresso-De’ Longhi “Lattissima”) and
fully automatic machines (branded De Longhi) led it up further to 39% in 2012. In our
estimates for last year, on top of a flattish trend of the company’s sales, coffee decreased to
36% of the total, mostly as a result of the overall mix rebalancing following the addition of
Braun, which just has a small presence in the activity. At the same time, over this period,
cooking machines went from 45% of the total in 2001 to 43% last year, portable air
conditioning and heating systems from 29% to 12% and ironing and cleaning systems from
15% to 6%.
Table 2: De Longhi’s sales by activity 2007-13E
EUR m
Coffee machines
% of total
Kitchen machines
% of total
Air conditioning/heating
% of total
Ironing/Cleaning
% of total
Other
% of total
Total
2007
237
24%
382
39%
242
25%
87
9%
21
2%
970
2008
322
30%
407
38%
225
21%
96
9%
21
2%
1,072
2009
338
30%
438
39%
222
20%
89
8%
24
2%
1,111
2010
420
33%
493
39%
233
18%
106
8%
28
2%
1,281
2011
537
38%
519
36%
247
17%
93
7%
33
2%
1,429
2012
597
39%
568
37%
240
16%
86
6%
40
3%
1,530
2013E
581
36%
702
43%
204
12%
98
6%
47
3%
1,633
YOY 6Y CAGR
-3%
16%
24%
11%
-15%
-3%
14%
2%
19%
14%
7%
9%
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keplercheuvreux.com
Coffee boosted by
Nespresso and fully
automatic
De Longhi
Target price change
In our estimates, Nespresso represents 32% of De Longhi’s coffee sales (and 12% of the
group’s total sales). This is equally split between coffee makers produced by third parties,
and the “Lattissima” cappuccino maker produced by De Longhi.
Much more important is the contribution of fully automatic machines, representing 47% of
coffee sales (and 17% of the group’s total sales).
Chart 2: De Longhi’s split of total…
Chart 3: …and coffee sales 2013E
Nespresso
3rd parties
Nespresso
6%
Lattissima
6%
Full
automatic
17%
Other
15%
Dolce
Gusto
6%
Nespresso
3rd parties
16%
Nespresso
Lattissima
16%
Dolce
Gusto
2%
Noncoffee
64%
Other
5%
Full
automatic
47%
The coffee business lines can be described as follows:
7

Nespresso third parties: this refers to the coffee makers produced by two
independent OEMs (Swiss Eugster and Hungarian Flextronics), a closed system for
Nespresso capsules, for which De Longhi is one of the authorised distributors in
more than ten countries worldwide.

Nespresso Lattissima: this refers to the cappuccino makers patented (for the milk
frothing technology) and produced by De Longhi (with exclusive manufacturing
rights), for which De Longhi is the only authorised distributor in more than 40
countries worldwide.

Nescafé Dolcegusto: this refers to the coffee makers produced by an independent
OEM (Chinese Vik), a closed system for Nescafé pods, for which De Longhi is one of
the two authorised distributors in 17 countries worldwide.

Fully automatic: This refers to the bean-to-cup coffee makers, top-end of the
espresso coffee market in terms of pricing and margins, a segment in which De
Longhi is the world leader, with 34% market share.

Other: This refers to traditional systems for coffee making (mocha, drip, filter, etc.),
where De Longhi has still a significant presence, holding 31% global market share.
keplercheuvreux.com
Nespresso accounts for
one third of group coffee
sales…
…fully automatic for
almost one half
De Longhi
Target price change
…and two-thirds from Europe
In terms of sales by region in 2013 (not disclosed yet), Europe, including ex-URSS countries,
should account for two-thirds of the group’s total. Developed market (excluding
Europe generates twothirds of total sales
Australia/New Zealand and ex-URSS countries) should account for the remaining third.
Chart 4: De Longhi’s sales by region 2013E
MEIA
8%
RoW
10%
Italy
12%
Germany
13%
Japan
2%
NAFTA
7%
UK
8%
Australia & NZ
7%
Ex-URSS
7%
RoE
23%
Other CEE
3%
The geographical sales mix has not significantly changed over the last three years, as
Europe remained at around two-thirds of the total in 2013 as in 2010. As for the last year’s
trend, it must be taken into account that: 1) currency was a drag in a number of countries,
like the UK (the pound has fallen by 4% YOY versus the euro), Russia (RUB -6%), Australia
(AUD -10%), the US (USD -3%) and Japan (JPY -21%); 2) Braun, consolidated on 1 January,
mostly benefited the Middle East (UAE), Germany/Switzerland/Austria and eastern
European markets.
Table 3: De Longhi’s sales by region 2010-13E
EUR m
Italy
% of total
Germany
% of total
UK
% of total
Ex-URSS
% of total
Other CEE
% of total
RoE
% of total
Australia & NZ
% of total
NAFTA
% of total
Japan
% of total
MEIA
% of total
RoW
% of total
Total
2010
169
13%
141
11%
110
9%
95
7%
31
2%
325
25%
88
7%
95
7%
46
4%
103
8%
77
6%
1,281
2011
176
12%
172
12%
120
8%
111
8%
40
3%
347
24%
133
9%
101
7%
57
4%
80
6%
92
6%
1,429
2012
171
11%
187
12%
125
8%
118
8%
47
3%
334
22%
147
10%
115
7%
75
5%
85
6%
126
8%
1,530
2013E
196
12%
212
13%
122
7%
114
7%
54
3%
376
23%
121
7%
114
7%
33
2%
131
8%
160
10%
1,633
YOY
14%
3Y CAGR
5%
14%
15%
-2%
4%
-3%
6%
14%
21%
13%
5%
-18%
11%
0%
6%
-56%
-11%
54%
8%
27%
27%
7%
8%
8
keplercheuvreux.com
Geo-mix was stable over
last three years
De Longhi
Target price change
Two-thirds of production from China
In terms of production, De Longhi seems to favour a “make” rather than a “buy” strategy.
More “make” than “buy”
The bulk of the high-end production sold under the group’s brand names is internalised.
The only exceptions are the coffee makers produced for Nespresso and Dolcegusto
partnerships (while the cappuccino maker Lattissima is fully internally produced), which are
outsourced by Nestle to third-party OEMs (2+1) and then supplied to De Longhi.
Conversely, low-end production is outsourced to small external producers, which work
according to De Longhi’s specifications and use the moulds it provides.
Currently, measured on COGS, around 50% of the group’s internal production is based in
65% of COGS in China…
Italy and the remaining 50% is in China. Accordingly, 65% of total production, insourced
and outsourced, comes from China. De Longhi directly entered China in 2001 with the
acquisition of Kenwood, which was already producing there (in Dongguan). This was
followed by a massive delocalisation campaign in 2005, aimed at generating significant cost
savings. De Longhi was among the first movers to proceed in this direction, taking a tough
but essential step forward to preserve its competitiveness.
It must be noted here that China also poses risks, in the form of the currency risk related to
the USD-peg (periodically tightening or easing) and the cost inflation risk related to the
…posing currency and
wage inflation risks
current wage trend (that more than tripled from 2003 to 2013).
This is also why De Longhi bought a new plant in Romania (Cluji) from Nokia in Q1 2012, for
a total of EUR40m. The plant started operating at the beginning of last year, with a
production cost of one-quarter that of Italy, and double that of China. It will be dedicated to
New plant in Romania
reduces exposure to
China
coffee makers (starting from four lines for the assembly of super-automatic machines, this
year), adding new capacity to the highly specialised state-of-the-art Italian plant
(Mignagola), as well as other productions that are currently outsourced, including Braun
products (today Braun outsources its entire product range, the only exception being the
electric engines for Minipimer handblenders, produced in Germany).
Table 4: De Longhi’s production plants
Country
Italy
Romania
China
China
China
Russia
Location
Mignagola (Treviso)
Cluji – new
Dongguan (New Tricom)
Zhongshan Dongshen (On Shiu)
Zhongshan Nantou (50% JV with TCL)
Republic of Tatarstan – stopped
Production
Lattissima, full-automatic
Coffee, kitchen (to come)
Homecare, kitchen
Electric radiators, kitchen
Portable air conditioning, dehumidifiers
Oil filled radiators – moved to China
Leading position in coffee and kitchen
According to the company’s indications, based on quite large market panels, De Longhi is
world leader in six SDA segments: espresso coffee (with the De Longhi brand), food
preparation and kitchen machines (Kenwood, De Longhi and Braun), as well as a more
specific niche of handblenders (Braun), oil-filled radiators and portable air conditioning
systems (De Longhi).
9
keplercheuvreux.com
World leader in six
segments
De Longhi
Target price change
The SDA market (split by segment and region in the chart below) is quite crowded. Most of
SDA market is crowded
the big players are well diversified into different segments and/or regions. Economies of
scale are key in this business. Expanding brand awareness and bargaining power towards
retailers are the main sales drivers (via both volumes and prices), making multi-product and
multi-region strategies the most successful.
Chart 5: De Longhi’s main competitors by region
De Longhi differentiates itself through its tight focus on premium segment. This is reflected
by the sales split by price. As shown in the following chart, in 2012 (the latest available
data) De Longhi derived slightly more than half of its sales from the top-end quartile of the
Focus on premium: half
of sales in top-end price
quartile
market (ASP is above EUR172), versus main European competitors all below one third.
Braun’s product range, in terms of the same data referred to 2013 (not disclosed yet), is set
to translate into some erosion of the group’s ASP.
Chart 6: De Longhi sales by price, 2012
P < EUR36
5%
EUR36 < P < EUR71
17%
P > EUR172
52%
EUR71 < P < EUR172
26%
10
keplercheuvreux.com
Braun to dilute ASP a bit
De Longhi
Target price change
Such a premium positioning has been sustained by a constant effort in both advertising &
promotion and research & development spending, on average at 7% and 2% of sales
A&P and R&D
commitment
respectively over 2005-13E. In particular, following the spinoff which separated household
from professional activity, the commitment to invest in brand awareness became even
more pronounced.
We expect the A&P commitment to remain particularly pronounced in the near future, as
well, as the Braun brand will need to be re-launched and even repositioned slightly higher
Braun to reposition a bit
higher
in terms of ASP, through ad hoc campaigns.
Chart 7: De Longhi’s A&P and R&D spending as a percentage of sales, 2005-13E
9.7%
9.2%
9.0%
6.8%
7.1%
2.1%
2.4%
2.3%
2.0%
2.0%
2.0%
08
09
10
11*
12*
13E*
6.0%
5.6%
5.7%
5.7%
2.3%
2.3%
1.9%
05
06
07
A&P
R&D
* Household only, post-spinoff Source: Company data, Kepler Cheuvreux
As a result, De Longhi holds leading market shares in both the coffee and cooking
businesses.
In coffee machines, on a worldwide basis excluding the US and China, the company is
number one, with an overall market share of 32%. As for sub-segments, it is also number
one in fully automatic, with a 34% market share, and number two in capsules, with a 31%
market share, following SEB with 38%.
Chart 8: Market shares in coffee machines, worldwide ex-US/China (July 2012/June 2013)
Other 15th...
10%
Other 6-14th
13%
De' Longhi
32%
Bosch
6%
Jura
8%
Philips
14%
SEB
17%
Source: Kepler Cheuvreux on GFK data
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32% market share in
coffee, worldwide exUS/China…
De Longhi
Target price change
The following table shows how much ground De Longhi has gained in the last five years in
the coffee business – even where it is not yet number one, like in capsules.
...from 21% five years
ago
Table 5: Market shares in coffee machines, worldwide ex-US/China (2008-13)
Jul-07/Jun-08
Jul-12/Jun-13
21.1%
19.2%
21.4%
12.3%
5.2%
9.3%
11.5%
32.4%
16.7%
14.2%
7.7%
5.6%
13.3%
10.1%
20%
46%
31%
38%
All coffee
De Longhi
SEB
Philips
Jura
Bosch
Other 6-14th
Other 15th...
Capsules
De Longhi
SEB
In western Europe, De Longhi is number one in both the coffee and cooking businesses,
with gradually rising market shares, up to 30% and 18% respectively in 2012 (the latest
available data). In cooking, following the Braun addition (mostly thanks to hand blenders),
Market share in western
Europe: 30% in coffee
and 20% in cooking
we estimate that it rose to 20% in 2013.
Chart 9: Western Europe, mkt shares: coffee
15%
14%
15%
59%
59%
55%
26%
27%
30%
2010
2011
2012
Other brands
Private labels
De' Longhi
Chart 10: …and kitchen
41%
40%
40%
43%
43%
42%
16%
17%
18%
2010
2011
2012
Other brands
Private labels
De' Longhi
It is worth comparing De Longhi with its main competitor, French Groupe SEB, which is the
leader in the SDA market worldwide – and is listed as well. In 2013, SEB’s sales were up
2.5% YOY at current and 5.4% at constant forex. Europe (ex-France), North America and
Asia/Pacific (mostly China) were positive, while Russia has been negative since H2.
Table 6: SEB’s sales by region, 2010-13
EUR m
France
Rest of western Europe
North America
South America
Asia/Pacific
CE/Russia & Other
Total
2010
712
787
404
346
764
639
3,652
2011
706
807
410
427
920
693
3,963
2012
688
759
457
451
992
713
4,060
2013
666
821
468
426
1,087
693
4,161
YOY
-3.3%
8.2%
2.3%
-5.5%
9.6%
-2.7%
2.5%
const. FX 3Y CAGR
-3.3%
-2.2%
8.8%
1.4%
5.6%
5.0%
6.5%
7.2%
11.4%
12.5%
0.7%
2.7%
5.4%
4.4%
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Compared with SEB...
De Longhi
Target price change
In 2013, SEB’s operating profit was pretty much unchanged, down 1% YOY to EUR364m,
with a 40bp margin squeeze, from 9.1% to 8.7% (reported on 27 February). This is well
below the 11.4% we estimate for De Longhi (to be reported on 10 March).
De Longhi is a premium player, with higher ASP/margins than SEB. While its margins have
been boosted by the rising weight of Kenwood’s kitchen business and fully automatic
…De Longhi is more
profitable
coffee makers (De Longhi is an OEM, while SEB has just entered the segment as a pure
distributor), SEB’s profitability has been eroded by emerging markets and often dilutive
acquisitions.
Chart 11: De Longhi versus SEB, EBITDA adjusted margin 2005-13
13.1%
12.2%
12.2%
12.2%
13.1%
13.4%
13.0%
8.0%
8.3%
05
06
10.3%
10.5%
07
08
14.7%
12.9%
11.2%
09
De' Longhi (SDA only)
10
11
15.2%
11.7%
12
14.1%
11.4%
13*
SEB (SDA+cookware)
* Reported for SEB, estimated for De Longhi Source: Company data, Kepler Cheuvreux
Table 7: De Longhi versus SEB
EUR m
De Longhi
SEB
Activities, as a percentage of sales 2013
SDA 100% (Coffee 36%, Kitchen 43%)
SDA 68% / Cookware 32%
World leadership
Espresso, food preparation, kitchen,
handblenders, portable conditioning,
oil-filled radiators
Cookers (pressure/steam), ironing,
electric kettles, toasters, deep fryers,
scales, cookware
32% (1st) world ex-US/China
17% (2nd) world ex-US/China
Presence
Direct presence in 35 countries worldwide
In nearly 150 countries worldwide
Sales by region 2013
Europe 66% (DE 13%, IT 12%, UK 8%)
RoW 34% (MEIA 8%, AU&NZ 7%, NA 7%)
Europe 50% (FR 16%)
RoW 50% (AP 26%, NA 11%, SA 10%)
COGS by region 2013
In-house 65% (China 35%, Italy 30%)
Outsourcing 35%
In-house 73% (Europe 36%, Asia 26%)
Outsourcing 27%
1,633 / +6.7% (+10%)
14.1% (est.)
+7% / +15% (est.)
25.0% (est.)
4,161 / +2.5% (+5.4%)
11.4%
+7% / +6%
18.7%
6,100
268
25,000
166
De Longhi founder’s family 67%
Free float 33%
Founder’s group 43.4% / 59.3%
FFP 17.2% / 13.1%
Employees 3.5% / 4.1%
Free float 35.9% / 23.5%
Market share in espresso coffee
Sales 2013 / YOY growth (at const. FX)
EBITDA adj. margin 2013
8Y CAGR 2005-13 of sales / EBITDA
ROCE 2013 ( EBIT / D+E )
No. of employees end-2013
Sales/employee (EUR k)
Shareholding (shares/voting rights)
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De Longhi
Target price change
Growth: sound 15% EPS 3Y CAGR ahead
There’s more growth in SDA than LDA. Innovation is the key driver for such
status-related products. Global demand growth is estimated at mid-high single
digit pace (but competition to remain fierce). We assume De Longhi is set to
deliver 3Y CAGRs 2014-16E of 7% in sales, 10% in EBITDA, 15% in EPS and 25%
in FCF. Braun is expected to generate half of the group’s additional EBITDA.
The reference market: small domestic appliances…
De Longhi operates in a highly competitive, but nicely growing market. In fact, in small
More growth in SDA...
domestic appliances (SDA), competition is tough – played on product innovation, pricing
and distribution (as a premium player, De Longhi competes on product differentiation:
quality and innovation), but demand appears to be more resilient or growing faster here
than in large domestic appliances (LDA).
One of the main reasons for this, mostly with regard to developed (mature) markets, is
related to the relatively smaller weight of replacement demand, which accounts for slightly
more than half of the total in LDA. Due to much lower penetration and much lower unit
...fuelled by innovation
to status-related
products
prices, product innovation (R&D) and brand awareness (A&P) appear more likely to spur
new demand in SDA than in LDA. Basically, demand for SDA is driven by strong reactivity
to product innovation, new features, design and a certain “conspicuous” consumption of
status-related products.
This is reflected in the different performances of the two markets in a mature areas like
western Europe: the sales CAGR (in value) is estimated at +3% over 2007-13 for SDA
SDA CAGR 2007-13 in
western Europe: +3%
versus -1% for LDA.
Chart 12: Western European market of large and small domestic appliances (2007-13, EURbn)
25
20
15
10
5
0
07
08
09
10
LDA
11
12
13
SDA
According to SEB, the global SDA market is estimated at around EUR30bn in 2012 (or
EUR43bn including cookware), versus EUR136bn for LDA.
According to Euromonitor, the global five-year scenario is overall positive for SDA, but
regionally polarised in terms of driving segments. Air treatment should be the driver in
emerging areas, coffee makers in North America and vacuum cleaners in western Europe.
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A EUR30bn market
globally
De Longhi
Target price change
…coffee and kitchen segments
Coffee makers and food preparation machines (three-quarters of De Longhi‘s revenues)
are among the healthiest segments in the worldwide SDA market, but also more and more
competitive, as sound growth and returns attract new entrants.
Coffee, and more specifically espresso coffee, is enjoying a secular growing trend on a
Coffee and kitchen, the
healthiest segment of
SDA market
Coffee’s secular trend
global scale. This has the form of a structural change in consumption habits across various
regions worldwide. New technologies, like capsules (closed) and full-automatic (bean-tocup), have given a crucial boost as well.
Nespresso’s performance offers some of the best proof, as the sales CAGR 2000-13 is 25%
(up to EUR2.6bn in 2013, 30% of the world capsule market).
The global coffee machine market is currently worth EUR3.8bn, of which EUR1.9bn in
espresso (single-serve) and EUR0.9bn in drip coffee (American). The top four players hold
c.70% of the market: SEB (Krups), De Longhi, Philips (Saeco) and Bosch-Siemens.
Espresso coffee makers,
a EUR1.9bn market
globally…
Demand for coffee makers remains on the rise in most of the world’s regions. In 2012
(latest data available), with the exception of western Europe (flat), all other areas were
growing nicely: eastern Europe +8%, Middle East +44%, Asia +76%, North America +13%,
Latam +21% and Australia/New Zealand +34%.
In western Europe, the espresso makers’ market was estimated at around EUR1.24bn in
2012, 70% of the world total. The 8Y CAGR 2004-12 was +9% overall, with capsules up
19% (EUR470m), fully automatic up 9% (EUR630m) and filter coffee down 4% (EUR135m).
…and EUR1.2bn in
western Europe, 8Y
CAGR of 9%
The first two segments are those where De Longhi is a leading player worldwide.
Chart 13: Espresso coffee makers, western European market
182
182
189
172
151
149
343
410
457
151
136
504
470
196
114
189
140
372
427
441
494
518
537
605
631
322
04
05
06
07
08
09
10
11
12
270
Full-automatic
Capsules
Other
For coffee, growth prospects remain sound, thanks to new opportunities: converting tea
drinkers to coffee (a slow trend); attracting low-quality coffee drinkers to better coffee (a
faster trend, supporting for instance the shift from capsules to higher-quality bean-to-cup);
China: consumption rapidly growing (currently at c. 10%); the US: espresso coffee makers’
sales were up 13% YOY in 2012.
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New opportunities for
future growth
De Longhi
Target price change
Over a three-year horizon, we assume that demand for coffee machines could progress by
mid-high single digits globally and low-mid single digits in western Europe. Market leader
De Longhi to benefit
from growing demand
(ex-US/China) and premium player De Longhi is well poised to fully profit from such trends,
thanks to its constant focus on product innovation (R&D) and brand promotion (A&P), its
production integration and tight control of its distinctive expertise (Lattissima cappuccino
maker and fully automatic) and the ongoing partnership with Nespresso and Dolcegusto.
Chart 14: Coffee makers, the current offer
De Longhi’s new launch (in
March): Lattissima Pro,
price EUR499 and USD599
Nespresso new launch (in
February): VertuoLine, for
both American coffee and
espresso, price USD299
The food preparation market has also been experiencing trends that favour machine
producers, like customers’ propensity to trade up towards high-end and specialised
Cooking at home is
fashionable again
machines as well as evolving preferences and behaviours in food consumption worldwide,
moving towards healthy, organic, fresh, low fat and… cooking at home.
The western European market of kitchen machines is currently worth EUR3.7bn, with
EUR2.5bn in the breakfast segment and EUR1.2bn in food preparation.
Among SDA segments, kitchen machines (split into food preparation and breakfast) were
Kitchen machines, a
EUR3.7bn market in
western Europe
the only area which enlarged its weight on the total business, rising from 35% of 2007 to
39% of 2012, still on the rise compared to 38% in 2011.
The two biggest sub-segments are food mixers and handblenders. The De Longhi group is
very well represented In both areas, with Kenwood’s high-end Cooking Chef and Braun’s
Minipimer handblender.
De Longhi’s entrance into the business was a good move, through the acquisition of
Kenwood in the UK in 2001 (GBP46m PTO). Since then, the company has taken full
advantage of a fast-growing market: sales of the Kenwood brand (excluding Ariete)
reached GBP120m in 2001 and GBP360m in 2012, implying an 11% 11-year CAGR.
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De Longhi’s Cooking Chef
De Longhi
Target price change
Chart 15: Food preparation, western European market
27.3%
26.8%
26.5%
26.9%
26.5%
26.4%
37.8%
36.7%
35.8%
35.5%
35.1%
35.1%
24.7%
25.7%
26.2%
25.9%
26.2%
26.1%
10.2%
10.8%
11.4%
11.8%
12.2%
12.4%
07
08
09
10
11
12
Food preparation
Breakfast
Home care
Personal care
Global demand for kitchen machines has enjoyed sustained growth (in the teens) for years
and is forecast to keep the same pace in the near future. Last year, in western Europe, it was
up 13% YOY. Over a three-year period, we assume it will continue to grow nicely, at a 10%
Growth set to continue,
even faster than in
coffee
annual pace globally and mid-high single-digit in western Europe.
With regard to the coffee and kitchen segments, De Longhi is certainly exposed to a nicely
growing business. This was the case in the past and is set to remain so for the foreseeable
future, as in both sectors consumer demand seems to be driven by structural underlying
We forecast group
annual organic sales
growth of 4-5%
drivers, which are substantially related to changing habits (in favour of espresso coffee and
cooking at home) and status-related consumption (small appliances are fashionable
gadgets). However, the growth potential of the business should not be exaggerated. In
terms of the group's sales over the next three years, we believe 4-5% annual organic
growth is a reasonable assumption (the addition of Braun should allow the company to do
better). This takes into some account that:

Competition is getting tougher (new entrants, e.g. Breville as the second
authorised distributor of Nespresso in Australia since last year).

Innovation moves fast (new products, e.g. new coffee machine launched by
Nespresso in the US this year, VertuoLine, for both drip and espresso).

Trade relationships are becoming increasingly demanding (online is an additional
opportunity and a threat at the same time - management of both is a complex
issue).
In such a competitive environment, De Longhi's business model looks solid, which should
allow the company to continue to nicely perform. Key strengths are a strategic focus on the
premium segment, four well-established brands (De Longhi, Kenwood, Ariete and Braun),
internal production of top-end products (cappuccino maker Lattissima and fully automatic
espresso coffee makers), direct control of expertise (milk frothing system patent for
Lattissima).
We expect the company to remain a winner in the sector worldwide.
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keplercheuvreux.com
De Longhi to remain a
winner
De Longhi
Target price change
The Braun addition
The Braun deal is transformational for De Longhi. One of the most popular brands in the
SDA field globally is now in the hands of one of the leading SDA players, whose tight focus
Braun (licence) bought
end-2012
on premium niche and large international network should be of help in enhancing the
brand’s performance. The deal was finalised at end-2012, and Braun’s results have been
consolidated since 1 January 2013.
On 16 April 2013, De Longhi announced a perpetual licensing agreement for German brand
Braun with P&G for small kitchen machines, ironing systems and selected household
appliances. Braun's personal care products were excluded (male dry shaving, female
Perpetual licensing
agreement for home
care products
electric hair removal, oral care, hair care and beautronics). This is why P&G retained
ownership of the brand, as it is still running the personal care business (with sales four
times larger than in home care). De Longhi has a right of first refusal if the personal care
business is ever put up for sale.
De Longhi also acquired patents and expertise connected with the home care business, the
inventory related to the relevant product categories, a few productive assets (production
lines and moulds) and 120 employees in Germany (80 working in R&D and marketing and
40 in the production of electric engines for Minipimer handblenders).
On 31 August, after the completion of the authorisation process and the fulfilment of other
conditions, the finalisation of the deal was announced and took effect from 1 September.
Consolidated from 1
January 2013
The new activity was consolidated by De Longhi from 1 January 2013.
The transaction value amounts to EUR221m, split as follows:

EUR50m paid when the deal took effect, on 1 September 2012.

EUR45m paid for the inventory bought in 2012 (EUR12m) and 2013 (the total
amount was just indicated in EUR40-50m range, we assume the midpoint).

EUR93m fully paid on 31 December 2012, in a single payment (while it was
originally agreed that the payment would be split over 15 years, in constant annual
instalments, including accrued interests).

A variable earn-out sum depending on Braun's sales performance in the first five
years following the deal (in two instalments calculated on the basis of Braun's
result in the first three and the following two years). The total amount cannot
exceed EUR122m. The NPV of this amount was written down from EUR64m at the
end of 2012 to EUR33m now.
The EUR221m EV is also the equity value, as no debt was involved in the transaction. This
implies a 7.4x EBITDA 2015E multiple (the first year at full tilt for Braun). The deal was not
EUR221m transaction
value
Fairly paid, at 7.4x
EBITDA 2015E
overpaid in our view, also in consideration of its substantial strategic relevance.
Braun is a transformational deal for De Longhi, as it is a widely known and well-recognised
brand worldwide (with a German premium perception). Braun preserved its brand
awareness, even though under P&G it was not present in some of the major markets
worldwide, like the UK, France, the US, Australia, Japan and Latam. It also seems –
according to company surveys – that Braun is associated not only with product categories
it actually sells, but even with products it does not.
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Strong brand awareness,
German premium
De Longhi
Target price change
Chart 16: Pre-deal Braun’s brand awareness by country (blue: operated; orange: not operated)
92%
90%
84%
78%
82%
74%
64%
Spain
Germany
Italy
Russia
France
UK
Australia
70%
65%
US
Japan
We estimate Braun's sales for 2013 at EUR145m, split as follows:

By region, Europe accounted for 70% (ex-URSS countries 25% and Germany,
Switzerland and Austria 20% put together), Middle East (mostly UAE) and Far East
Braun mostly present in
Europe and kitchen
machines
(mostly Japan) 15% each.

By activity, handblenders accounted for 45%, steam irons 15% and other kitchen
gadgets 40% (as for coffee, Braun just has a small presence in drip coffee, but is not
present in espresso). Overall, kitchen machines accounted for 85% of the total.
Chart 17: Braun 2013 sales, by region…
Far East
(Japan)
15%
Chart 18: …and activity (KECH estimates)
Steam
irons
15%
DE/CH/AT
20%
Middle
East (UAE)
15%
Handblenders
45%
Ex-URSS
25%
RoE
25%
Source: Kepler Cheuvreux
Other
kitchen
gadgets
40%
Braun generated EUR184m sales in 2012, the last year under P&G management, and we
estimate EUR145m for 2013, the first year under De Longhi’s management. This was below
We estimate EUR145m
sales in 2013 for Braun
the EUR160-170m early-2013 guidance, mostly due to the weaker-than-expected
performance in Russia (due to commercial issues on pricing and weak currency).
In 2005, the last year under Gillette (bought by P&G), we estimate Braun generated sales of
around EUR450, which could be regarded as a reasonable reference, implicitly as a longterm target, to measure its potential at full steam.
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Sales of around
EUR450m in 2005
under Gilette
De Longhi
Target price change
Braun has huge potential, in terms of sales growth and margin expansion. De Longhi's
management intends to exploit it through a combination of measures, as follows:
New products, new countries: in 2014, it will enter markets in the UK, France and possibly
Australia, with handblenders and steam irons (among the strongest products in current
New products, new
countries
Braun's portfolio) plus a couple of new kitchen lines (with new design). In 2015, De Longhi
will address the US market with a new full-range Braun offer, and will also introduce
ironing systems all across regions.
Repositioning (A&P and R&D): De Longhi will implement an abmitious advertising and
promotion strategy for Braun as well, the same strategy it adopts for all its brands (it
Repositioning (A&P and
R&D)
successfully adopted this strategy for Kenwood following its acquisition in 2001). Braun's
A&P spending could amount to 15% of sales in 2014 and remain at least at 10% over the
next two years. Also, R&D expenses, aimed at fuelling innovation, could be above the
group's average, at 5-6% of the brand's sales in the period.
Insourcing (Romania): Braun currently outsources its entire supply, except only for engines
Insourcing (Romania)
for Minipimer handblenders. Part of this supply could be gradually insourced, located in the
group's new Romanian plant. This should give a small additional boost to the group's
margins, via stronger operating leverage. As there is no disclosure from the company about
the insourcing programme, we assume about one third of the total supply could be
insourced over the next 2-3 years.
In our estimates, this could translate into a 27% sales CAGR 2014-16E and almost 7x
EBITDA over the period, with the margin reaching the level we expect for De Longhi's pre-
A 27% sales CAGR over
2014-16E
Braun perimeter at the end of the period (15.5% in 2016E).
The following table summarises Braun’s and De Longhi's old perimeter contribution to the
group's expected performance. Braun is expected to contribute 42% and 50% to the
cumulated increase in group sales and EBITDA over 2014-16E; quite a significant addition.
Table 8: De Longhi - sales and EBITDA adj. before and after Braun 2012-16E
EURm
2012
De Longhi old perimeter
Sales
1,530
growth
7.0%
EBITDA adj.
232
margin
15.2%
BRAUN
Sales
growth
EBITDA adj.
margin
184(pf)
De Longhi new perimeter
Sales
1,530
growth
7.0%
EBITDA adj.
232
margin
15.2%
2013E
2014E
2015E
2016E
3Y CAGR
1,488
-2.8%
223
15.0%
1,555
4.5%
236
15.2%
1,625
4.5%
250
15.4%
1,698
4.5%
263
15.5%
4.5%
145
-21%
7
5.0%
200
38%
17
8.5%
250
25%
30
12.0%
300
20%
47
15.5%
27%
1,633
6.7%
230
14.1%
1,755
7.5%
253
14.4%
1,875
6.8%
280
14.9%
1,998
6.6%
310
15.5%
7.0%
5.7%
86%
10.4%
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keplercheuvreux.com
50% of additional group
EBITDA in 2014-16E
De Longhi
Target price change
Estimates review: 2014-15 EPS cut by 7% due to forex
We have cut our sales estimate for 2014-15 by 2%, the same as the gap between our
estimate and reported sales for 2013 (out on 31 January), lowered our EBITDA and EBIT
EPS cut by 5% for 2013
and 7% for 2014-15…
estimates by 2% for 2013, and by 3% for 2014-15. EPS is cut by 5% for 2013 and 7% for
2014-15. This is entirely due to higher forex headwinds now in sight.
The currency devaluation versus the euro is not over, with regard to the RUB, USD, AUD,
...entirely due to FX
JPY (the only exception being the strengthening GBP). We have to factor in a further
devaluation, as implied by the current forex level, projected over the full year (assumed as a
FY 2014 average). Basically, the currency drag we expected for H1 (taking into account
forex turbulence that emerged last summer) is now set to extend into H2. The EUR8m
lower EBITDA we now forecast for this year is entirely connected to higher currency
headwinds (based on the same EBITDA/sales as last year: we estimate EUR22/EUR50m for
2013 and EUR15/EUR30m for 2014).
Table 9: De Longhi, KECH’s new versus old estimates 2013-15E
EURm
Sales
EBITDA
EBIT
EBT
Net profit
EPS (EUR)
NFP
old
233
190
151
115
0.77
-75
2013E
new
1,633*
228
186
147
110
0.73
-44
change
-2%
-2%
-3%
-5%
-5%
41%
old
1,790
259
214
178
136
0.91
-20
2014E
new
1,755
251
207
170
126
0.85
12
change
-2%
-3%
-3%
-5%
-7%
-7%
NM
old
1,915
286
239
206
157
1.05
46
2015E
new
1,875
278
232
196
146
0.98
70
change
-2%
-3%
-3%
-5%
-7%
-7%
52%
* Reported on 31 January Source: Kepler Cheuvreux
FY 2013 results preview: margins diluted by Braun, FX
De Longhi reported preliminary sales for Q4/FY 2013 on 31 January. Full results are due to
be released on 10 March.
Sales were +7% YOY to EUR1,633m in the FY (1.5% below our EUR1,655m and consensus
EUR1,658m), after +10% in Q4 to EUR595m.
At constant currency, sales were up 10% in FY 2013 and 15% in Q4 2013. The currency
drag amounted to EUR50m in FY 2013, as a consequence of the main currencies’
FY 2013 results out on
10 March
Sales already reported,
+7% YOY…
…or +10% at constant
FX
devaluation versus euro: GBP -4% YOY (representing about 8% of sales), USD -3% (c. 7%),
AUD -10% (c. 7%), RUB -6% (7%) and JPY -21% (2%).
We estimate Bran’s sales contribution (not disclosed) at EUR145m in FY 2013, after
EUR145m from Braun
EUR55m in Q4. This reflects the typically high seasonality of the SDA business in Q4 2013
(sustained by the Christmas season), which we expect to be stronger than the EUR25EUR35m-EUR30m seen in 9M 2013.
Net of the Braun addition, we estimate De Longhi’s old perimeter at EUR1,488m sales in FY
2013 and EUR540m in Q4 2013, respectively -2.8% and -0.3% YOY LFL. The organic
performance gradually improved along the year: -7.0% in Q1, -3.5% in Q2, -2.1% in Q3 and
-0.3% expected in Q4. This was the result of the improving performance in Europe
(reported at +17% in Q4 2013), both western and eastern Europe, even though the latter
was hit by mismanagement issues and following the reorganisation in Russia (in Q3 2013).
21
keplercheuvreux.com
-2.8% YOY LFL (exBraun), Q4 flat helped
by strong Europe
De Longhi
Target price change
Germany (fuelled by Braun) and Italy were the strongest countries in western Europe,
while Poland and Ukraine were among the best performers in eastern Europe, offsetting
weak Russia. Extra-European business represented one-third of the total and was broadly
Extra-European business
flat, at one-third of the
group’s total
flat YOY, dragged down by contracting Australia (where Nespresso authorised the second
distributor, Australian Breville, which eroded De Longhi’s market share).
Table 10: De Longhi - sales by macro-region (2012-13, quarterly)
EUR m
West Europe
Growth YOY %
East Europe
Growth YOY %
Total Europe
Growth YOY %
Middle East / India / Africa
Growth YOY %
Asia / Pacific / Americas
Growth YOY %
Total sales
Growth YOY %
De Longhi
Growth YOY %
Braun
Q1-12
169
0.2%
43
30.2%
212
5.1%
18
-1.1%
88
28.7%
318
10.4%
Q2-12
180
5.0%
25
6.4%
204
5.1%
24
6.2%
98
16.9%
327
8.5%
Q3-12
187
1.6%
39
-11.2%
226
-0.8%
28
99.3%
90
9.6%
344
6.2%
Q4-12
313
4.2%
54
16.3%
366
5.8%
16
-37.8%
160
10.1%
541
4.9%
FY-12
848
3.0%
160
9.6%
1,008
4.0%
85
7.3%
437
14.9%
1,530
7.0%
Q1-13
175
3.5%
41
-3.5%
216
2.1%
27
53.7%
77
-12.6%
321
0.9%
296
-7.0%
25
Q2-13
191
6.5%
27
10.5%
219
7.0%
36
48.3%
96
-2.2%
350
7.2%
315
-3.5%
35
Q3-13
206
9.9%
39
0.6%
245
8.3%
40
43.2%
82
-8.8%
367
6.6%
337
-2.1%
30
Q4-13
361
15.3%
67
25.9%
428
16.8%
28
80.4%
139
-12.8%
595
9.9%
540
-0.3%
55
FY-13
932
9.9%
175
9.5%
1,107
9.8%
131
53.6%
395
-9.6%
1,633
6.7%
1,488
-2.8%
145
As for earnings, we expect margins to be slightly down YOY, as a consequence of the
dilution produced by Braun (assumed at 5.0% margin in FY 2013, versus 15.0% for De
Margins diluted by
Braun and FX
Longhi’s old perimeter) and the currency burden (assumed at EUR22m). We expect the
group’s adjusted EBITDA to be down by 1% YOY and EBIT down 2%. Net profit could
decrease further, down 7% YOY, due to higher bills for currency hedging (EUR4m) as well
as a higher tax rate (by 190bp to 25.0%).
Table 11: De Longhi - sales and earnings (2012-13E, quarterly)
EUR m
Sales*
Growth YOY %
Gross profit
Margin %
Growth YOY %
EBITDA adj.
Margin %
Growth YOY %
EBITDA
Margin %
Growth YOY %
EBIT
Margin %
Growth YOY %
EBT
Growth YOY %
Net profit adj.
Growth YOY %
Q1-12
318
10%
149
47.0%
9%
43
13.5%
8%
41
13.0%
7%
34
10.6%
6%
31
8%
23
17%
Q2-12
327
9%
156
47.8%
11%
39
12.0%
21%
33
10.1%
3%
25
7.5%
-1%
13
-31%
10
-12%
Q3-12
344
6%
164
47.5%
0%
56
16.3%
1%
55
16.0%
4%
46
13.4%
0%
38
20%
31
20%
Q4-12
541
5%
267
49.2%
8%
94
17.4%
15%
95
17.6%
20%
85
15.6%
21%
72
20%
54
45%
FY-12
1,530
7%
735
48.1%
7%
232
15.2%
11%
225
14.7%
10%
189
12.4%
10%
154
11%
118
26%
Q1-13
321
1%
161
50.1%
8%
45
13.9%
4%
45
13.9%
7%
34
10.6%
1%
26
-17%
19
-17%
Q2-13
350
7%
167
47.7%
7%
39
11.1%
-1%
38
11.0%
17%
28
7.9%
12%
18
34%
13
30%
Q3-13 Q4-13E FY-13E
367
595 1,633
7%
10%
7%
176
284
788
47.8%
47.8% 48.3%
7%
7%
7%
51
95
230
14.0%
16.0% 14.1%
-8%
1%
-1%
51
94
228
14.0%
15.8% 14.0%
-7%
-1%
2%
41
83
186
11.2%
13.9% 11.4%
-11%
-2%
-2%
33
71
147
-14%
-1%
-4%
25
53
110
-18%
-3%
-7%
* Sales 2013 were reported on 31 January Source: Company data, Kepler Cheuvreux
22
keplercheuvreux.com
De Longhi
Target price change
Sales estimates by region
Our sales estimates for this year and the next three (split by country/region) are
7% sales 3Y CAGR
summarised in the following table. We project a 3Y group sales CAGR of 7%.
Our estimates are based on the assumption that 4-5% is the normal organic annual pace of
the SDA business globally and De Longhi is poised to perform at least in line with the
market. Braun’s additional sales are mostly in the UK, France and Australia in 2014 and the
US in 2015. Current forex levels are taken as a proxy of the 2014-16 averages. We assume
a currency drag of EUR30m and EUR15m for sales and EBITDA in 2014.
Table 12: De Longhi - sales by region 2010-16E
EUR m
SALES BY COUNTRY/REGION
Italy
Germany
UK
Ex-URSS
Other CEE
Rest of Europe
Australia & NZ
North America
Japan
RotW (MEIA)
Total
2010*
2011*
2012
2013E
2014E
2015E
2016E
169
141
110
95
31
325
88
95
46
181
1,281
176
172
120
111
40
347
133
101
57
172
1,429
171
187
125
118
47
334
147
115
75
211
1,530
196
212
122
114
54
376
121
114
33
291
1,633
210
227
135
100
57
398
117
119
33
359
1,755
220
239
142
106
61
418
123
127
34
405
1,875
231
250
149
112
64
439
129
136
36
450
1,998
13%
11%
9%
7%
2%
25%
7%
7%
4%
14%
100%
12%
12%
8%
8%
3%
24%
9%
7%
4%
12%
100%
11%
12%
8%
8%
3%
22%
10%
8%
5%
14%
100%
12%
13%
8%
7%
3%
23%
7%
7%
2%
18%
100%
12%
13%
8%
6%
3%
23%
7%
7%
2%
20%
100%
12%
13%
8%
6%
3%
22%
7%
7%
2%
22%
100%
12%
13%
7%
6%
3%
22%
6%
7%
2%
23%
100%
4%
22%
9%
-1%
0.87
18%
-1%
40.87
30%
7%
50%
7%
1.35
7%
-5%
1.39
24%
5%
110.97
-5%
12%
11%
-2%
9%
4%
7%
0.81
6%
2%
39.91
19%
-4%
10%
9%
1.24
13%
8%
1.29
31%
8%
102.62
23%
7%
5%
14%
14%
-2%
-4%
0.85
-3%
-6%
42.30
14%
13%
-18%
-10%
1.38
0%
-3%
1.33
-56%
-21%
129.57
38%
7%
10%
7%
7%
10%
3%
0.82
-13%
-15%
49.48
6%
6%
-3%
-10%
1.53
4%
-3%
1.37
0%
-7%
139.67
23%
7%
9%
5%
5%
5%
0%
0.82
6%
0%
49.48
6%
5%
5%
0%
1.53
7%
0%
1.37
5%
0%
139.67
13%
7%
7%
5%
5%
5%
0%
0.82
6%
0%
49.48
6%
5%
5%
0%
1.53
7%
0%
1.37
5%
0%
139.67
11%
7%
7%
AS A % OF TOTAL
Italy
Germany
UK
Ex-URSS
Other CEE
Rest of Europe
Australia & NZ
North America
Japan
RotW (MEIA)
Total
YOY GROWTH %
Italy
Germany
UK
EUR:GBP YOY (1/x)
EUR:GBP
Ex-URSS
EUR:RUB YOY (1/x)
EUR:RUB
Other CEE
Rest of Europe
Australia & NZ
EUR:AUD YOY (1/x)
EUR:AUD
North America
EUR:USD YOY (1/x)
EUR:USD
Japan
EUR:JPY YOY (1/x)
EUR:JPY
RotW (MEIA)
Total
At constant FX
* Household only Source: Company data, Kepler Cheuvreux
23
keplercheuvreux.com
EUR15m FX headwinds
expected on 2014
EBITDA
De Longhi
Target price change
Cash machine
Putting together the earnings and cash flow models (below), we can appreciate the key
quality of De Longhi: a generous cash flow generation, based on ~40% FCF/EBITDA. We
anticipate 3Y CAGR of 7% for sales, 10% for EBITDA, 15% for EPS and 25% for FCF.
Table 13: De Longhi - earnings model 2010-16E
EUR m
Sales
Growth YOY %
COGS
Gross profit
Margin %
Opex
% of sales
A&P
% of sales
EBITDA adj.
Margin %
Non-recurring items
EBITDA
Margin %
Depreciation
EBITA
Margin %
Amortisation
Impairment
EBIT
Margin %
Associates
Net interest items
Financial discounts
Other financial items
EBT
Margin %
Taxes
Tax rate %
Minorities
Excep./Disc. (post-tax)
Net profit
Margin %
EPS (EUR)
DPS (EUR)
Payout %
2010
1,281
NA
672
609
47.5%
324
25.3%
115
9.0%
170
13.2%
-3
167
13.0%
18
149
11.6%
12
1
135
10.6%
6
-7
-13
-10
112
8.7%
31
28.0%
0
-5
75
5.8%
0.50
0.15
29%
2011
1,429
11.6%
742
687
48.1%
339
23.7%
139
9.7%
210
14.7%
-6
203
14.2%
20
183
12.8%
11
0
172
12.1%
0
-7
-15
-12
139
9.7%
44
32.0%
0
-4
90
6.3%
0.60
0.33
55%
2012
1,530
7.0%
795
735
48.1%
362
23.7%
141
9.2%
232
15.2%
-8
225
14.7%
24
201
13.1%
12
0
189
12.3%
0
-12
-15
-8
154
10.1%
36
23.1%
0
0
118
7.7%
0.79
0.29
37%
2013E
1,633
6.7%
845
788
48.3%
411
25.2%
147
9.0%
230
14.1%
-2
228
14.0%
31
197
12.1%
12
0
186
11.4%
0
-12
-15
-12
147
9.0%
37
25.0%
1
0
110
6.7%
0.73
0.27
37%
2014E
1,755
7.5%
906
849
48.4%
426
24.3%
170
9.7%
253
14.4%
-2
251
14.3%
32
219
12.5%
12
0
207
11.8%
0
-12
-16
-10
170
9.7%
42
25.0%
1
0
126
7.2%
0.85
0.31
37%
2015E
1,875
6.8%
966
908
48.5%
443
23.6%
186
9.9%
280
14.9%
-2
278
14.8%
33
245
13.1%
13
0
232
12.4%
0
-12
-17
-8
196
10.4%
49
25.0%
1
0
146
7.8%
0.98
0.36
37%
2016E
1,998
6.6%
1,028
970
48.5%
460
23.0%
200
10.0%
310
15.5%
-2
308
15.4%
34
274
13.7%
13
0
261
13.0%
0
-12
-18
-8
223
11.2%
56
25.0%
1
0
166
8.3%
1.11
0.41
37%
Table 14: De Longhi - cash conversion model 2011-16E
EUR m
Net profit
Non-cash costs
Change in WC
Capex
Capex/Sales
Tangibles
Intangibles
Free cash flow
FCF/EBITDA %
Acquisitions
Dividends
Capital measures
Share buy-back
Other changes
Change in NFP
2011
91
31
70
41
2.9%
34
7
10
5%
0
22
0
0
-79
-91
2012
118
36
6
62
4.1%
53
9
85
38%
140
49
0
0
-107
-210
2013E
110
43
36
55
3.4%
45
10
62
27%
0
43
0
0
31
49
2014E
127
44
25
50
2.8%
40
10
96
38%
0
40
0
0
0
56
2015E
147
46
35
53
2.8%
43
11
104
37%
0
46
0
0
0
58
2016E
167
47
36
57
2.8%
46
11
122
40%
0
54
0
0
0
68
24
keplercheuvreux.com
Sound FCF generation
De Longhi
Target price change
Valuation: more upside ahead
We assume 5% long-term growth in sales and a 14% sustainable EBIT margin.
Based on slightly faster cash flow growth in the long run and lower cost of equity
(9% from 10%, reflecting a lower equity risk premium and free-risk rate on Italian
stocks), our DCF now yields a TP f EUR16.5 versus EUR13.5 previously. Upside is
14%. We confirm our Buy rating.
DCF: EUR16.50 (our new TP)
We value De Longhi using a DCF model (rolled over), based on the following assumptions:

Sales growth in the "second-stage" period 2017-23E of 5.0% (sustainable organic
growth, as we determined above). Global demand drivers, which are structural in
coffee and kitchen businesses, should remain at work.

EBIT margin expanding from 13.0% of 2016E up to 14.0% of 2019E, then stable for
the following years. Operating leverage is set to gradually increase, along with
progressive insourcing at the Romanian plant.

Cash flow long-term CAGR lifted from 7% to 8% (on D&A and WC fine-tuning).

Capex above the maintenance level, currently indicated at EUR40-50m by the
company. We assume capex at 3% of sales over 2014-23E.

WACC of 9.0% - from previous 10% – intended just as a cost of equity, based on
slightly squeezed risk free and risk premiums, both at 4.5%, reflecting Italy’s
generally increasing appeal (lower risk perceived).
DCF yields EUR16.50,
our new TP (EUR13.50)
Our DCF valuation yields EUR16.50 per share, which is our new TP (up from EUR13.50).
Table 15: De Longhi - DCF model
EURm
Sales
Growth %
EBIT
Margin %
Taxes
NOPAT
Change in WC
Depreciation
Capex
Net cash flow
Time factor
Present value
WACC
2014E
1,755
7.5%
207
11.8%
-52
155
-25
44
-50
124
0.8
116
9.0%
Share value derived from:
Enterprise value
thereof terminal value
Net debt at year start (incl. PP)
Equity value
Shares outstanding (m)
2,531
54%
65
2,467
150
Share value (EUR)
16.50
2015E
1,875
6.8%
232
12.4%
-58
174
-35
46
-53
131
1.8
113
9.0%
2016E
1,998
6.6%
261
13.0%
-65
195
-36
47
-57
150
2.8
118
9.0%
2017E
2,098
5.0%
280
13.4%
-70
210
-31
49
-60
168
3.8
122
9.0%
2018E
2,203
5.0%
302
13.7%
-75
226
-32
50
-63
182
4.8
121
9.0%
2019E 2020E 2021E 2022E
2,313
2,429
2,550
2,678
5.0%
5.0%
5.0%
5.0%
324
340
357
375
14.0% 14.0% 14.0% 14.0%
-81
-85
-89
-94
243
255
268
281
-33
-34
-36
-37
52
53
62
71
-66
-69
-73
-76
196
205
222
239
5.8
6.8
7.8
8.8
119
115
114
112
9.0%
9.0%
9.0%
9.0%
Perpetual growth rate
WACC derived from:
Interest costs, pre-tax
Tax rate
Interest costs, after taxes
Required ROE
Risk premium
Risk-free
Beta
2023E
2,811
5.0%
394
14.0%
-99
296
-39
80
-80
256
9.8
111
9.0%
TV
3,176
1,371
1%
6.0%
27.5%
4.4%
9.0%
4.5%
4.5%
1.0
25
keplercheuvreux.com
De Longhi
Target price change
Peer comparison (versus SEB)
The only direct listed peer for De Longhi is French Groupe SEB.
Current multiples suggest De Longhi is widening its premium above historical average, at
Currently at premium to
SEB
least on EV multiples.
Table 16: De Longhi versus SEB
2014E
1.22
0.88
38%
De Longhi
SEB
DLG/SEB
EV/Sales
2015E 11-13 avg
1.11
0.99
0.82
0.96
35%
4%
2014E
8.4
7.6
11%
EV/EBITDA
2015E 11-13 avg
7.4
6.8
6.6
7.2
12%
-5%
2014E
16.9
15.9
6%
P/E
2015E
14.6
13.0
12%
11-13 avg
14.6
13.0
12%
Same indications we obtain putting valuations into historical perspective. De Longhi went
through a clear relative re-rating versus SEB in the period running from the beginning of
2012 (when the spinoff of the professional business took effect) to the start of 2013 (when
Relative valuation:
De Longhi is rerating
again
fears about European recession and slower the expected integration of Braun started
undermining the stock’s performance). Currently, De Longhi is re-rating again, due to SEB’s
weak performance connected with higher than expected currency headwinds.
The two following charts show this comparison in terms of relative EV/EBITDA and P/E
NTM for 2009-14.
Chart 19: De Longhi versus SEB, EV/EBITDA 2009-14
De'Longhi S.p.A. (DLG-IT)
DL G-IT 71 695 17 Mila n C om mon sto ck
06 -Mar-200 9 to 05-Mar-2014 (Weekl y)
En terp rise Valu e to EBITDA
Averag e
Averag e: 6.7 H igh: 11.9 Lo w: 3 .3 Late st: 9 .7
14
12
10
8
6
4
2
Averag e: 0.97 High : 1.6 8 L ow: 0.54 La test: 1.3 0
En terp rise Valu e to EBITDA - Re lative to SEB SA
Averag e
1,8
1,6
1,4
1,2
1
0,8
0,6
0,4
'09
Data Source: FactSet Fundamentals,
'10
'11
'12
'13
©FactSet Research Systems
Source: FactSet
26
keplercheuvreux.com
De Longhi
Target price change
Chart 20: De Longhi versus SEB, P/E NTM 2009-14
De'Longhi S.p.A. (DLG-IT)
DL G-IT 71 695 17 Mila n C om mon sto ck
06 -Mar-200 9 to 05-Mar-2014 (Weekl y)
Price to Ea rning s - NTM
Averag e
Averag e: 11 .2 High : 16 .5 L ow: 5.8 Latest: 15.7
18
16
14
12
10
8
6
4
Averag e: 0.94 High : 1.5 2 L ow: 0.65 La test: 1.1 3
Price to Ea rning s - NTM - Re lative to SEB SA
Averag e
1,6
1,5
1,4
1,3
1,2
1,1
1
0,9
0,8
0,7
0,6
'09
Data Source: FactSet Esti mates ,
'10
'11
'12
'13
©FactSet Research Systems
Source: FactSet
27
keplercheuvreux.com
De Longhi
Target price change
Valuation
FY to 31/12 (EUR)
Per share data
EPS adjusted
% Change
EPS adjusted and fully diluted
% Change
EPS reported
% Change
EPS Consensus
Cash flow per share
Book value per share
DPS
Number of shares, YE (m)
Number of shares, fully diluted, YE (m)
Share price
Latest price / year end
52 week high (Year high)
52 week low (Year low)
Average price (Year)
Enterprise value (EURm)
Market capitalisation
Net financial debt
Pension provisions
Market value of minorities
Market value of equity affiliates (net of
tax)
Others
Enterprise value
Valuation
P/E adjusted
P/E adjusted and fully diluted
P/E consensus
P/BV
P/CF
Dividend yield (%)
FCF yield (%)
ROE (%)
ROIC (%)
EV/Sales
EV/EBITDA
EV/EBIT
28
keplercheuvreux.com
2010
2011
2012
2013E
2014E
2015E
high
0.63
high
0.63
high
0.60
high
0.82
30.5%
0.82
30.5%
0.79
30.7%
high
0.15
0.0
0.0
0.34
4.00
0.33
149.5
149.5
0.99
4.23
0.29
149.5
149.5
0.74
-9.9%
0.74
-9.9%
0.73
-7.0%
0.75
0.78
4.67
0.27
149.5
149.5
0.85
15.0%
0.85
15.0%
0.85
15.2%
0.87
0.98
5.25
0.31
149.5
149.5
0.99
15.4%
0.99
15.4%
0.98
15.5%
0.99
1.05
5.91
0.36
149.5
149.5
5.9
6.1
2.8
3.7
6.8
9.3
5.8
7.5
10.9
11.3
6.3
9.2
11.9
13.0
10.8
11.9
14.4
14.4
0.0
-208.5
0.0
1,121.9
-117.4
-15.5
3.7
0.0
1,373.7
92.9
-20.6
4.8
0.0
1,786.4
43.7
-21.0
9.2
0.0
2,155.8
-11.9
-21.8
10.4
0.0
2,155.8
-69.5
-22.6
11.2
0.0
0.0
0.0
992.7
0.0
1,450.9
0.0
2,187.6
0.0
2,132.4
0.0
2,074.8
0.0
11.9
11.9
11.1
11.1
19.4
19.4
19.2
16.9
16.9
16.6
14.6
14.6
14.6
1.9
21.8
4.4%
0.9%
2.2
9.3
3.2%
6.2%
3.1
18.4
1.9%
2.9%
2.7
14.8
2.2%
4.5%
2.4
13.7
2.5%
4.9%
31.5%
43.9%
20.0%
19.8%
16.6%
15.8%
17.2%
17.0%
17.6%
18.1%
0.69
4.7
5.6
0.95
6.2
7.4
1.34
9.5
11.7
1.22
8.4
10.2
1.11
7.4
8.9
0.0
0.0
3.9%
De Longhi
Target price change
Income statement
FY to 31/12 (EURm)
2010
2011
2012
2013E
2014E
2015E
1,281.4
na
1,429.4
11.6%
1,530.1
7.0%
1,633.0
6.7%
1,755.0
7.5%
1,874.9
6.8%
EBITDA reported
% Change
Depreciation and amortisation
Goodwill impairment
Other financial result and associates
166.6
na
-29.7
-1.5
0.0
203.4
22.1%
-30.7
-0.2
0.0
224.6
10.4%
-35.6
0.0
0.0
228.0
1.5%
-42.5
0.0
0.0
250.9
10.1%
-44.0
0.0
0.0
277.7
10.7%
-45.5
0.0
0.0
EBIT reported
% Change
135.5
na
172.5
27.3%
189.0
9.6%
185.5
-1.8%
206.9
11.5%
232.2
12.2%
Net financial items
-29.9
-33.7
-34.9
-38.2
-37.3
-36.4
6.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Earnings before tax
% Change
111.6
na
138.8
24.4%
154.0
11.0%
147.3
-4.4%
169.6
15.1%
195.9
15.5%
Tax
-31.3
-44.4
-35.6
-36.8
-42.4
-49.0
Net profit from continuing operations
% Change
Net profit from discontinuing activities
80.3
na
-5.2
94.4
17.6%
-3.9
118.5
25.4%
0.0
110.5
-6.7%
0.0
127.2
15.1%
0.0
146.9
15.5%
0.0
Net profit before minorities
Minorities
75.1
-0.2
90.5
-0.3
118.5
-0.5
110.5
-0.8
127.2
-0.8
146.9
-0.8
Net profit reported
% Change
74.9
na
90.2
20.5%
118.0
30.7%
109.7
-7.0%
126.4
15.2%
146.1
15.5%
Adjustments
Net profit adjusted
% Change
2.0
77.0
na
4.2
94.5
22.8%
5.3
123.3
30.5%
1.4
111.1
-9.9%
1.4
127.8
15.0%
1.4
147.4
15.4%
Gross profit
EBITDA adjusted
EBIT adjusted
609.0
169.6
138.4
687.1
209.6
178.7
735.3
232.3
196.7
788.0
230.0
187.5
848.7
252.9
208.9
908.5
279.7
234.2
Gross profit margin (%)
EBITDA margin (%)
EBIT margin (%)
Net profit margin (%)
47.5%
13.2%
10.8%
6.0%
48.1%
14.7%
12.5%
6.6%
48.1%
15.2%
12.9%
8.1%
48.3%
14.1%
11.5%
6.8%
48.4%
14.4%
11.9%
7.3%
48.5%
14.9%
12.5%
7.9%
Tax rate (%)
Payout ratio (%)
28.0%
na
32.0%
29.1%
23.1%
54.7%
25.0%
36.7%
25.0%
36.7%
25.0%
36.7%
high
na
high
na
na
na
0.15
na
0.60
high
0.63
high
0.63
na
0.33
126.0%
0.79
30.7%
0.82
30.5%
0.82
30.5%
0.29
-12.1%
0.73
-7.0%
0.74
-9.9%
0.74
-9.9%
0.27
-7.0%
0.85
15.2%
0.85
15.0%
0.85
15.0%
0.31
15.2%
0.98
15.5%
0.99
15.4%
0.99
15.4%
0.36
15.5%
1,633.0
230.3
186.0
0.75
0.29
1,744.3
251.0
209.0
0.87
0.33
1,893.0
275.3
232.7
0.99
0.38
Sales
% Change
Associates
Others
EPS reported (EUR)
% change
EPS adjusted (EUR)
% change
EPS adj and fully diluted(EUR)
% change
DPS (EUR)
% change
Consensus Sales (EURm)
Consensus EBITDA (EURm)
Consensus EBIT (EURm)
Consensus EPS (EUR)
Consensus DPS (EUR)
29
keplercheuvreux.com
De Longhi
Target price change
Cash flow statement
FY to 31/12 (EURm)
2010
2011
2012
2013E
2014E
2015E
Net profit before minorities
Depreciation and amortisation
Goodwill impairment
Change in working capital
Others
Cash Flow from operating activities
% Change
75.1
29.7
1.5
0.0
0.0
106.3
na
90.5
30.7
0.2
-70.0
0.0
51.5
-51.6%
118.5
35.6
0.0
-6.2
0.0
147.8
187.3%
110.5
42.5
0.0
-36.0
0.0
117.0
-20.8%
127.2
44.0
0.0
-25.3
0.0
145.9
24.7%
146.9
45.5
0.0
-34.9
0.0
157.5
7.9%
0.0
-41.5
-62.3
-55.0
-50.0
-53.4
106.3
na
10.0
-90.6%
85.5
755.4%
62.0
-27.5%
95.9
54.6%
104.1
8.5%
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-21.8
0.0
0.0
-79.3
-140.0
0.0
-49.3
0.0
0.0
-106.5
0.0
0.0
-43.4
0.0
0.0
30.6
0.0
0.0
-40.3
0.0
0.0
0.0
0.0
0.0
-46.5
0.0
0.0
0.0
106.3
na
-91.1
-118.4
-210.3
30.6
49.3
-35.3
55.6
55.6
57.6
57.6
na
10.0
85.8
62.3
96.4
104.6
high
na
0.34
high
0.99
187.3%
0.78
-20.8%
0.98
24.7%
1.05
7.9%
na
na
0.07
na
0.57
755.6%
0.42
-27.4%
0.64
54.7%
0.70
8.6%
Capex / Sales (%)
Capex / D&A (%)
0.0%
0.0%
2.9%
135.1%
4.1%
175.2%
3.4%
129.4%
2.8%
113.6%
2.8%
117.4%
Cash flow / Sales (%)
FCF / Sales (%)
8.3%
8.3%
3.6%
0.7%
9.7%
5.6%
7.2%
3.8%
8.3%
5.5%
8.4%
5.6%
na
na
0.9%
2.5%
6.2%
7.3%
2.9%
3.7%
4.5%
5.5%
4.9%
6.1%
Capex
Free cash flow
% Change
Acquisitions
Divestments
Dividend paid
Share buy back
Capital increases
Others
Change in net financial debt
Change in cash and cash equivalents
Attributable FCF
Cash flow per share (EUR)
% Change
FCF per share (EUR)
% Change
FCF Yield (%)
Unlevered FCF Yield (%)
30
keplercheuvreux.com
De Longhi
Target price change
Balance sheet
FY to 31/12 (EURm)
2010
2011
2012
2013E
2014E
2015E
Cash and cash equivalents
Inventories
Accounts receivable
Other current assets
Current assets
347.9
0.0
0.0
0.0
347.9
229.5
278.0
349.5
-22.9
834.1
260.1
273.8
381.2
-23.3
891.8
224.8
317.6
399.3
-18.8
922.8
280.4
341.3
429.1
-13.5
1,037.2
338.0
364.6
458.4
1.7
1,162.7
Tangible assets
Goodwill
Other Intangible assets
Financial assets
Other non-current assets
Non-current assets
0.0
0.0
0.0
0.0
0.0
0.0
109.1
41.6
134.2
0.7
0.0
285.5
158.6
115.6
249.0
0.7
0.0
523.9
172.6
85.0
247.5
0.7
0.0
505.9
180.6
85.0
245.5
0.7
0.0
511.9
190.5
85.0
243.5
0.7
0.0
519.8
Short term debt
Accounts payable
Other short term liabilities
Current liabilities
79.9
0.0
0.0
79.9
61.0
330.8
0.0
391.7
115.3
351.7
0.0
467.1
70.0
377.9
0.0
447.9
70.0
406.1
0.0
476.1
70.0
433.9
0.0
503.9
Long term debt
Pension provisions
Other long term provisions
Other long term liabilities
Non-current liabilities
59.5
0.0
0.0
0.0
59.5
51.1
-15.5
-61.5
0.0
-25.9
237.7
-20.6
-56.3
0.0
160.7
198.5
-21.0
-60.1
0.0
117.3
198.5
-21.8
-64.6
0.0
112.0
198.5
-22.6
-69.0
0.0
106.8
0.0
0.0
0.0
597.8
2.0
599.8
631.8
2.2
634.0
698.2
3.0
701.2
784.3
3.8
788.0
883.9
4.6
888.5
139.4
na
965.5
592.9%
1,261.8
30.7%
1,266.3
0.4%
1,376.1
8.7%
1,499.2
8.9%
na
na
4.00
na
4.23
5.7%
4.67
10.5%
5.25
12.3%
5.91
12.7%
Net debt
Net financial debt
Trade working capital
Working capital
Inventories/sales
Invested capital
-208.5
-208.5
0.0
0.0
0.0%
0.0
-132.9
-117.4
296.7
273.8
19.4%
558.7
72.3
92.9
303.3
280.0
17.9%
803.2
22.6
43.7
339.0
320.1
19.4%
825.3
-33.7
-11.9
364.3
350.7
19.4%
861.9
-92.1
-69.5
389.2
390.8
19.4%
909.9
Net debt / EBITDA (x)
Net debt / FCF (x)
-1.2
-2.0
-0.6
na
0.3
0.8
0.1
0.4
-0.1
-0.4
-0.3
-0.9
na
na
-19.6%
6.9%
14.7%
18.2%
6.2%
12.1%
-1.5%
10.8%
-7.8%
9.6%
Shareholders' equity
Minority interests
Total equity
Balance sheet total
% Change
Book value per share (EUR)
% Change
Gearing (%)
Goodwill / Equity (%)
31
keplercheuvreux.com
De Longhi
Target price change
Divisions and regions
FY to 31/12 (EUR)
2010
2011
Key assumptions
De Longhi stand-alone sales
De Longhi stand-alone sales growth
Braun sales
Braun sales growth
De Longhi stand-alone EBITDA
De Longhi stand-alone EBITDA growth
Braun EBITDA
Braun EBITDA growth
Sales by division
Coffee
Kitchen
Conditioning & Heating
Ironing & Cleaning
Other
2012
2013E
2014E
2015E
1,530.1
0.1
0.0
0.0
232.3
0.2
0.0
0.0
1,488.0
0.0
145.0
-0.2
222.8
0.1
7.3
0.1
1,555.0
0.0
200.0
0.4
235.9
0.2
17.0
0.1
1,624.9
0.0
250.0
0.3
249.7
0.2
30.0
0.1
420.3
493.3
233.2
106.4
28.2
537.5
518.9
247.3
92.9
32.9
596.7
567.7
240.2
85.7
39.8
581.3
702.2
204.1
98.0
47.4
624.8
754.6
219.4
105.3
50.9
667.5
806.2
234.4
112.5
54.4
Geographic breakdown of sales, adjusted (%)
Eurozone
of which Germany
of which Italy
of which Others
Europe ex Eurozone
of which Russia
North America
Asia
of which Japan
Middle East
43.3%
11.0%
13.2%
19.1%
24.8%
7.4%
7.4%
16.5%
3.6%
7.7%
42.5%
12.0%
12.3%
18.2%
25.1%
7.8%
7.1%
19.7%
4.0%
5.3%
39.8%
12.2%
11.2%
16.4%
24.5%
7.7%
7.5%
22.7%
4.9%
5.3%
42.3%
13.0%
12.0%
17.3%
23.6%
7.0%
7.0%
19.2%
2.0%
7.6%
41.9%
12.9%
11.9%
17.0%
22.3%
5.7%
6.8%
29.0%
1.9%
0.0%
41.2%
12.7%
11.7%
16.7%
22.0%
5.7%
6.8%
30.0%
1.8%
0.0%
Currency exposure of sales (%)
EUR
USD
GBP
JPY
43.3%
25.0%
8.6%
3.6%
42.5%
25.0%
8.4%
4.0%
39.8%
25.0%
8.2%
4.9%
42.3%
25.0%
7.5%
2.0%
41.9%
25.0%
7.7%
1.9%
41.2%
25.0%
7.6%
1.8%
EBIT by division
EBIT margin (%)
Hedging policy
32
keplercheuvreux.com
Exstensive hedging of currency (mostly USD), raw materials (steel, plastic and copper) and interest rates.
De Longhi Target price change
Research ratings and important disclosures
Disclosure checklist - Potential conflict of interests
Stock
ISIN
Disclosure (See Below)
Currency
De Longhi
IT0003115950
nothing to disclose
EUR
Philips
NL0000009538
nothing to disclose
EUR
SEB
FR0000121709
nothing to disclose
EUR
Source: Factset closing prices of 05/03/2014
Stock prices: Prices are taken as of the previous day’s close (to the date of this report) on the home market unless otherwise stated.
Price
14.42
25.12
58.84
Key:
Kepler Capital Markets SA (KCM) holds or owns or controls 100% of the issued shares of Crédit Agricole Cheuvreux SA (CA Cheuvreux), collectively
hereafter KEPLER CHEUVREUX .
1. KEPLER CHEUVREUX holds or owns or controls 5% or more of the issued share capital of this company; 2. The company holds or owns or controls 5% or
more of the issued share capital of Kepler Capital Markets SA; 3. KEPLER CHEUVREUX is or may be regularly carrying out proprietary trading in equity
securities of this company; 4. KEPLER CHEUVREUX has been lead manager or co-lead manager in a public offering of the issuer’s financial instruments during
the last twelve months; 5. KEPLER CHEUVREUX is a market maker in the issuer’s financial instruments; 6. KEPLER CHEUVREUX is a liquidity provider in
relation to price stabilisation activities for the issuer to provide liquidity in such instruments; 7. KEPLER CHEUVREUX acts as a corporate broker or a sponsor
or a sponsor specialist (in accordance with the local regulations) to this company; 8. KEPLER CHEUVREUX and the issuer have agreed that KEPLER
CHEUVREUX will produce and disseminate investment research on the said issuer as a service to the issuer; 9. KEPLER CHEUVREUX has received
compensation from this company for the provision of investment banking or financial advisory services within the previous twelve months; 10. KEPLER
CHEUVREUX may expect to receive or intend to seek compensation for investment banking services from this company in the next three months; 11. The
author of, or an individual who assisted in the preparation of, this report (or a member of his/her household), or a person who although not involved in the
preparation of the report had or could reasonably be expected to have access to the substance of the report prior to its dissemination has a direct ownership
position in securities issued by this company; 12. An employee of KEPLER CHEUVREUX serves on the board of directors of this company; 13. As at the end of
the month immediately preceding the date of publication of the research report Kepler Capital Markets, Inc. beneficially owned 1% or more of a class of
common equity securities of the subject company; 14. KEPLER CHEUVREUX and UniCredit Bank AG have entered into a Co-operation Agreement to form a
strategic alliance in connection with certain services including services connected to investment banking transactions. UniCredit Bank AG provides investment
banking services to this issuer in return for which UniCredit Bank AG received consideration or a promise of consideration. Separately, through the Cooperation Agreement with UniCredit Bank AG for services provided by KEPLER CHEUVREUX in connection with such activities, KEPLER CHEUVREUX also
received consideration or a promise of a consideration in accordance with the general terms of the Co-operation Agreement; 15. KEPLER CHEUVREUX and
Crédit Agricole Corporate & Investment Bank (“CACIB”) have entered into a Co-operation Agreement to form a strategic alliance in connection with certain
services including services connected to investment banking transactions. CACIB provides investment banking services to this issuer in return for which
CACIB received consideration or a promise of consideration. Separately, through the Co-operation Agreement with CACIB for services provided by KEPLER
CHEUVREUX in connection with such activities, KEPLER CHEUVREUX also received consideration or a promise of a consideration in accordance with the
general terms of the Co-operation Agreement; 16. UniCredit Bank AG holds or owns or controls 5% or more of the issued share capital of KEPLER CAPITAL
MARKETS SA. UniCredit Bank AG provides investment banking services to this issuer in return for which UniCredit Bank AG received consideration or a
promise of consideration; 17. CACIB holds or owns or controls 15% of more of the issued share capital of KEPLER CAPITAL MARKETS SA. CACIB provides
investment banking services to this issuer in return for which CACIB received consideration or a promise of consideration; 18. An employee of UniCredit Bank
AG serves on the board of directors of KEPLER CAPITAL MARKETS SA; 19. Two employees of CACIB serve on the board of directors of KEPLER CAPITAL
MARKETS SA. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a p romise of consideration; 20.
The services provided by KEPLER CHEUVREUX are provided by Kepler Equities S.A.S., a wholly-owned subsidiary of KEPLER CAPITAL MARKETS SA.
Rating history:
KEPLER CHEUVREUX current rating for De Longhi is Buy and was issued on 08/05/2013. The preceding rating was Hold and was issued on 13/11/2012,
We did not disclose the rating to the issuer before publication and dissemination of this document.
Rating ratio Kepler Cheuvreux Q4 2013
Rating breakdown
Buy
Hold
Reduce
Not Rated/Under Review/Accept Offer
Total
A
45.5%
29.0%
21.0%
4.5%
100.0%
B
0.0%
0.0%
0.0%
0.0%
0.0%
A: % of all research recommendations
B: % of issuers to which Investment Banking Services are supplied
From 9 May 2006, KEPLER CHEUVREUX’s rating system consists of three ratings: Buy, Hold and Reduce. For a Buy rating, the minimum expected upside is
10% in absolute terms over 12 months. For a Hold rating the expected upside is below 10% in absolute terms. A Reduce rating is applied when there is
expected downside on the stock. Target prices are set on all stocks under coverage, based on a 12-month view. Equity ratings and valuations are issued in
absolute terms, not relative to any given benchmark.
Analyst disclosures
The functional job title of the person(s) responsible for the recommendations contained in this report is Equity Research Analyst unless otherwise stated on
the cover.
Name of the Equity Research Analyst(s): Giorgio Iannella
Regulation AC - Analyst Certification: Each Equity Research Analyst(s) listed on the front-page of this report, principally responsible for the preparation and
content of all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of the report
with respect to an issuer or security that the equity research analyst covers in this research report, all of the views expressed in this research report accurately
reflect their personal views about those issuer(s) or securities. Each Equity Research Analyst(s) also certifies that no part of their compensation was, is, or will
be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that equity research analyst in this research report.
Each Equity Research Analyst certifies that he is acting independently and impartially from KEPLER CHEUVREUX shareholders, directors and is not affected
by any current or potential conflict of interest that may arise from any KEPLER CHEUVREUX activities.
Analyst Compensation: The research analyst(s) primarily responsible for the preparation of the content of the research report attest that no part of the
analyst’s(s’) compensation was, is or will be, directly or indirectly, related to the specific recommendations expressed by the research analyst(s) in the research
report. The research analyst’s(s’) compensation is, however, determined by the overall economic performance of KEPLER CHEUVREUX.
33
keplercheuvreux.com
Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of KEPLER CHEUVREUX, which
is a non-US affiliate and parent company of Kepler Capital Markets, Inc. a SEC registered and FINRA member broker-dealer. Equity Research Analysts
employed by KEPLER CHEUVREUX, are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of Kepler
Capital Markets, Inc. and may not be subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public
appearances, and trading securities held by a research analyst account.
Please refer to www.keplercheuvreux.com for further information relating to research and conflict of interest management.
Regulators
Location
Kepler Capital Markets S.A - France
Kepler Capital Markets, Sucursal en España
Kepler Capital Markets, Frankfurt branch
Kepler Capital Markets, Milan branch
Kepler Capital Markets, Amsterdam branch
Kepler Capital Markets, Zurich branch
Kepler Capital Markets, Inc.
Kepler Capital Markets, London branch
Kepler Capital Markets, Vienna branch
Crédit Agricole Cheuvreux, SA - France
Crédit Agricole Cheuvreux España S.V
Crédit Agricole Cheuvreux Niederlassung Deutschland
Crédit Agricole Cheuvreux S.A., branch di Milano
Crédit Agricole Cheuvreux Amsterdam
Crédit Agricole Cheuvreux Zurich Branch
Crédit Agricole Cheuvreux North America, Inc.
Crédit Agricole Cheuvreux International Limited
Crédit Agricole Cheuvreux Nordic AB
Regulator
Abbreviation
Autorité des Marchés Financiers
Comisión Nacional del Mercado de Valores
Bundesanstalt für Finanzdienstleistungsaufsicht
Commissione Nazionale per le Società e la Borsa
Autoriteit Financiële Markten
Swiss Financial Market Supervisory Authority
Financial Industry Regulatory Authority
Financial Conduct Authority
Austrian Financial Services Authority
Autorité des Marchés Financiers
Comisión Nacional del Mercado de Valores
Bundesanstalt für Finanzdienstleistungsaufsicht
Commissione Nazionale per le Società e la Borsa
Autoriteit Financiële Markten
Swiss Financial Market Supervisory Authority
Financial Industry Regulatory Authority
Financial Conduct Authority
Finansinspektionen
AMF
CNMV
BaFin
CONSOB
AFM
FINMA
FINRA
FCA
FMA
AMF
CNMV
BaFin
CONSOB
AFM
FINMA
FINRA
FCA
FI
Kepler Capital Markets S.A and Crédit Agricole Cheuvreux SA, are authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des
Marchés Financiers.
For further information relating to research recommendations and conflict of interest management please refer to www.keplercheuvreux.com..
34
keplercheuvreux.com
Legal and disclosure information
Other disclosures
This product is not for retail clients or private individuals.
The information contained in this publication was obtained from various publicly available sources believed to be reliable, but has not been independently
verified by KEPLER CHEUVREUX. KEPLER CHEUVREUX does not warrant the completeness or accuracy of such information and does not accept any liability
with respect to the accuracy or completeness of such information, except to the extent required by applicable law.
This publication is a brief summary and does not purport to contain all available information on the subjects covered. Further information may be available
on request. This report may not be reproduced for further publication unless the source is quoted.
This publication is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any
securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of any securities, or for engaging in any other transaction.
This publication is not for private individuals.
Any opinions, projections, forecasts or estimates in this report are those of the author only, who has acted with a high degree of expertise. They reflect only the
current views of the author at the date of this report and are subject to change without notice. KEPLER CHEUVREUX has no obligation to update, modify or
amend this publication or to otherwise notify a reader or recipient of this publication in the event that any matter, opinion, projection, forecast or estimate
contained herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. The analysis, opinions, projections,
forecasts and estimates expressed in this report were in no way affected or influenced by the issuer. The author of this publication benefits financially from the
overall success of KEPLER CHEUVREUX.
The investments referred to in this publication may not be suitable for all recipients. Recipients are urged to base their investment decisions upon their own
appropriate investigations that they deem necessary. Any loss or other consequence arising from the use of the material contained in this publication shall be
the sole and exclusive responsibility of the investor and KEPLER CHEUVREUX accepts no liability for any such loss or consequence. In the event of any doubt
about any investment, recipients should contact their own investment, legal and/or tax advisers to seek advice regarding the appropriateness of investing.
Some of the investments mentioned in this publication may not be readily liquid investments. Consequently it may be difficult to sell or realise such
investments. The past is not necessarily a guide to future performance of an investment. The value of investments and the income derived from them may fall
as well as rise and investors may not get back the amount invested. Some investments discussed in this publication may have a high level of volatility. High
volatility investments may experience sudden and large falls in their value which may cause losses. International investing includes risks related to political and
economic uncertainties of foreign countries, as well as currency risk.
To the extent permitted by applicable law, no liability whatsoever is accepted for any direct or consequential loss, damages, costs or prejudices whatsoever
arising from the use of this publication or its contents.
KEPLER CHEUVREUX (and its affiliates) have implemented written procedures designed to identify and manage potential conflicts of interest that arise in
connection with its research business, which are available upon request. The KEPLER CHEUVREUX research analysts and other staff involved in issuing and
disseminating research reports operate independently of KEPLER CHEUVREUX Investment Banking business. Information barriers and procedures are in
place between the research analysts and staff involved in securities trading for the account of KEPLER CHEUVREUX or clients to ensure that price sensitive
information is handled according to applicable laws and regulations.
Country and region disclosures
United Kingdom: This document is for persons who are Eligible Counterparties or Professional Clients only and is exempt from the general restriction in
section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds
that it is being distributed in the United Kingdom only to persons of a kind described in Articles 19(5) (Investment professionals) and 49(2) (High net worth
companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not
intended to be distributed or passed on, directly or indirectly, to any other class of persons. Any investment to which this document relates is available only to
such persons, and other classes of person should not rely on this document.
United States: This communication is only intended for, and will only be distributed to, persons residing in any jurisdictions where such distribution or
availability would not be contrary to local law or regulation. This communication must not be acted upon or relied on by persons in any jurisdiction other than in
accordance with local law or regulation and where such person is an investment professional with the requisite sophistication to understand an investment in
such securities of the type communicated and assume the risks associated therewith.
This communication is confidential and is intended solely for the addressee. It is not to be forwarded to any other person or copied without the permission of
the sender. This communication is provided for information only. It is not a personal recommendation or an offer to sell or a solicitation to buy the securities
mentioned. Investors should obtain independent professional advice before making an investment.
Notice to U.S. Investors: This material is not for distribution in the United States, except to “major US institutional investors” as defined in SEC Rule 15a-6
("Rule 15a-6"). Kepler Cheuvreux refers to Kepler Capital Markets, Société anonyme (S.A.) (“Kepler Capital Markets SA”) and its affiliates, including CA
Cheuvreux, Société Anonyme (S.A.). Kepler Capital Markets SA has entered into a 15a-6 Agreement with Kepler Capital Markets, Inc. ("KCM, Inc.”) which
enables this report to be furnished to certain U.S. recipients in reliance on Rule 15a-6 through KCM, Inc.
Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is a "major U.S. institutional investor" (as such term is defined
in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or
receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the
purchase or sale of such securities, should contact a registered representative of KCM, Inc.
KCM, Inc. is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) under the U.S. Securities Exchange Act of 1934, as amended,
Member of the Financial Industry Regulatory Authority (“FINRA”) and Member of the Securities Investor Protection Corporation (“SIPC”). Pursuant to SEC
Rule 15a-6, you must contact a Registered Representative of KCM, Inc. if you are seeking to execute a transaction in the securities discussed in this report. You
can reach KCM, Inc. at 600 Lexington Avenue, New York, NY 10022, Compliance Department (212) 710-7625; Operations Department (212) 710-7606;
Trading Desk (212) 710-7602. Further information is also available at www.keplercapitalmarkets.com. You may obtain information about SIPC, including the
SIPC brochure, by contacting SIPC directly at 202-371-8300; website: http://www.sipc.org/
KCM, Inc. is a wholly owned subsidiary of Kepler Capital Markets SA. Kepler Capital Markets SA, registered on the Paris Register of Companies with the
number 413 064 841 (1997 B 10253), whose registered office is located at 112 avenue Kléber, 75016 Paris, is authorised and regulated by both Autorité de
Contrôle Prudentiel (ACP) and Autorité des Marchés Financiers (AMF).
Nothing herein excludes or restricts any duty or liability to a customer that KCM, Inc. may have under applicable law. Investment products provided by or
through KCM, Inc. are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository
institution, may lose value and are not guaranteed by the entity that published the research as disclosed on the front page and are not guaranteed by KCM, Inc.
Investing in non-U.S. Securities may entail certain risks. The securities referred to in this report and non-U.S. issuers may not be registered under the U.S.
Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Rule 144A securities may
35
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be offered or sold only to persons in the U.S. who are Qualified Institutional Buyers within the meaning of Rule 144A under the Securities Act. The information
available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as
U.S. companies. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Securities discussed herein may be
rated below investment grade and should therefore only be considered for inclusion in accounts qualified for speculative investment.
Analysts employed by Kepler Capital Markets SA, a non-U.S. broker-dealer, are not required to take the FINRA analyst exam. The information contained in this
report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such
information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of
1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be
unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position.
In jurisdictions where KCM, Inc. is not registered or licensed to trade in securities, or other financial products, transactions may be executed only in accordance
with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with
applicable exemptions from registration or licensing requirements.
The information in this publication is based on sources believed to be reliable, but KCM, Inc. does not make any representation with respect to its completeness
or accuracy. All opinions expressed herein reflect the author's judgment at the original time of publication, without regard to the date on which you may
receive such information, and are subject to change without notice.
KCM, Inc. and/or its affiliates may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this
report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be
taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance.
KCM, Inc. and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities;
(b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer
of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the
meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company's actual results and financial condition to
differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for
the company's products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive
environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this
cautionary statement.
France: This publication is issued and distributed in accordance with Articles L.544-1 and seq and R. 621-30-1 of the Code Monétaire et Financier and with
Articles 313-25 to 313-27 and 315-1 and seq of the General Regulation of the Autorité des Marchés Financiers (AMF).
Germany: This report must not be distributed to persons who are retail clients in the meaning of Sec. 31a para. 3 of the German Securities Trading Act
(Wertpapierhandelsgesetz – “WpHG”). This report may be amended, supplemented or updated in such manner and as frequently as the author deems.
Italy: This document is issued by Kepler Capital Markets, Milan branch and Crédit Agricole Cheuvreux S.A., branch di Milano, authorised in France by the
Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel (ACP) and registered in Italy by the Commissione Nazionale per le Società e la
Borsa (CONSOB) and is distributed by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.), authorised in France by the AMF
and the ACP and registered in Italy by CONSOB. This document is for Eligible Counterparties or Professional Clients only as defined by the CONSOB
Regulation 16190/2007 (art. 26 and art. 58).Other classes of persons should not rely on this document. Reports on issuers of financial instruments listed by
Article 180, paragraph 1, letter a) of the Italian Consolidated Act on Financial Services (Legislative Decree No. 58 of 24/2/1998, as amended from time to time)
must comply with the requirements envisaged by articles 69 to 69-novies of CONSOB Regulation 11971/1999. According to these provisions Kepler Capital
Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)warns on the significant interests of Kepler Capital Markets S.A and Crédit Agricole
Cheuvreux, Société Anonyme (S.A.)indicated in Annex 1 hereof, confirms that there are not significant financial interests of Kepler Capital Markets S.A and
Crédit Agricole Cheuvreux, Société Anonyme (S.A.)in relation to the securities object of this report as well as other circumstance or relationship with the issuer
of the securities object of this report (including but not limited to conflict of interest, significant shareholdings held in or by the issuer and other significant
interests held by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)or other entities controlling or subject to control by Kepler
Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)in relation to the issuer which may affect the impartiality of this document].
Equities discussed herein are covered on a continuous basis with regular reports at results release. Reports are released on the date shown on cover and
distributed via print and email. Kepler Capital Markets, Milan branch and Crédit Agricole Cheuvreux S.A., branch di Milano analysts are not affiliated with any
professional groups or organisations. All estimates are by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.) unless otherwise
stated.
Spain: This document is only intended for persons who are Eligible Counterparties or Professional Clients within the meaning of Article 78bis and Article 78ter
of the Spanish Securities Market Act. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. This report has been
issued by Kepler Capital Markets, Sucursal en España and Crédit Agricole Cheuvreux España S.V, registered in Spain by the Comisión Nacional del Mercado de
Valores (CNMV) in the foreign investments firms registry and it has been distributed in Spain by it or by Kepler Capital Markets S.A and Crédit Agricole
Cheuvreux, Société Anonyme (S.A.) authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des Marchés Financiers. There is no
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Market Law (Ley del Mercado de Valores), there is no need for the CNMV to verify, authorise or carry out a compliance review of this document or related
documentation, and no information needs to be provided.
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not constitute a prospectus within the meaning of Articles 652a and 1156 of the Swiss Code of Obligations.
Canada: The information provided in this publication is not intended to be distributed or circulated in any manner in Canada and therefore should not be
construed as any kind of financial recommendation or advice provided within the meaning of Canadian securities laws.
Other countries: Laws and regulations of other countries may also restrict the distribution of this report. Persons in possession of this document should inform
themselves about possible legal restrictions and observe them accordingly.
36
keplercheuvreux.com
Local insight, European scale
Amsterdam
Kepler Cheuvreux Benelux
Johannes Vermeerstraat 9
1071 DK Amsterdam
+31 20 573 06 66
Frankfurt
Kepler Cheuvreux Germany
Taunusanlage 18
60325 Frankfurt
+49 69 756960
Geneva
Kepler Cheuvreux SA
Route de Crassier 11
1262 - Eysins
Switzerland
+41 22361 5151
London
Kepler Cheuvreux UK
12th Floor, Moorhouse
120 London Wall
London EC2Y 5ET
+44 20 7621 5100
Madrid
Kepler Cheuvreux Espana
Alcala 95
28009 Madrid
+3491 4365100
Milan
Kepler Cheuvreux Italia
Corso Europa 2
20122 Milano
+39 02 855 07 1
Paris
Kepler Cheuvreux France
112 Avenue Kleber
75016 Paris
+33 1 53653500
Stockholm
Kepler Cheuvreux Nordic
Regeringsgatan 38
10393 Stockholm
+468 723 5100
Vienna
Kepler Cheuvreux Vienna
Schottenring 16/2
Vienna 1010
+43 1 537 124 147
Zurich
Kepler Cheuvreux Switzerland
Stadelhoferstrasse 22
Postfach
8024 Zurich
+41 433336666
Kepler Cheuvreux has exclusive international distribution rights for UniCredit’s CEE product.
North America
Boston
Kepler Capital Markets, Inc
225 Franklin Street, Floor 26
Boston MA 02110
+1 617-217-2615
New York
Kepler Capital Markets, Inc.
600 Lexington Avenue, Floor 28
10022 New York, NY USA
+1 212-710-7600
San Francisco
Kepler Capital Markets, Inc
50 California Street, Suite 1500
San Francisco, CA 94111
+1 415-439-5253

De`Longhi Group

Transcription

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