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2020 Plan

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2020 Plan

In light of the results achieved in the period 2015-2017 and the evolving industry context, on August 2, 2018, Safilo revised the economic and financial targets communicated on March 16, 2015, presenting an update of the 2020 Plan.

Presentation Press release

“Our objective is to improve the performance of our Company, focusing on few, very clear, priorities. First and foremost, we need to return to grow our top line, exploiting more and better the core strengths of the Group: our product creation and development capabilities, our 140 years of eyewear manufacturing experience, and our deep worldwide distribution network. We need to focus on our go to market execution, combining commercial capabilities, brand execution and customer service and leveraging our strong portfolio of brands.
We have revised our overall expectations for 2018 and in the second half of the year we will work on making the required adjustments and changes to reignite the engines of growth, while executing our cost saving initiatives.
We are in the process of creating a leaner organization and therefore an agile, performance-based and customer-centric culture, able to respond more effectively to key opportunities and risks, and as a consequence significantly align our cost structure to the scale of the Group, to restore an adequate and sustainable level of profitability.”

Angelo Trocchia, Safilo Chief Executive Officer


Main drivers and financial targets of the Plan:

Interventions to support sales growth between 2019 and 2020:

  • actions aimed at achieving a balanced business across the different consumer and product segments of the eyewear industry. In particular, Safilo expects to be able to seize increasing business opportunities in the premium, contemporary and lifestyle segments, for the development of its core licenses and own brands;
  • actions aimed at increasing the Group's share of business in emerging markets, with a particular emphasis on China;
  • actions aimed at improving the Company go-to-market execution strategies, through new sales force capacity and capability, improving customer service levels and more focused investments by brand and channel in North America and Europe;
  • actions aimed at developing an omni-channel distribution strategy, with a more significant role to be played by the e-commerce business;
  • actions aimed at increasing revenues from the revenues of optical frames both in absolute terms and as a percentage of the Group total net sales.
See Slides

Interventions to support the recovery of the EBITDA margin between 2019 and 2020:

  • actions aimed at achieving significant savings in the cost of goods sold: (i) further acceleration on procurement efficiency, increasingly exploiting the global and integrated scale of the Company, (ii) an integrated supply chain approach, through greater production efficiencies, thanks to the adoption of the best-in-class technologies, industrial processes and the redesign of manufacturing flows, (iii) further review of the logistics footprint and (iv) a significant reduction in costs of obsolescence, behind a more efficient management of operational processes;
  • actions aimed at achieving further reduction of overhead costs: optimization and simplification of work processes in local and central structures, making back-office activities and transactional work more agile, also thanks to the completion of the IT roadmap;
  • the streamline approach will also include a revision of the Group's employment levels worldwide.
See Slides

Financial Targets:

2018 Outlook

  • Safilo revised its expectations for 2018 following the soft Q2 performance impacted by the weak start and development of the sun season, with total net sales now forecasted to decline by around 3% at constant exchange rates (around 6% at current exchange rates) compared to Euro 1,035.4 million in full year 2017;
  • On the economic front, Safilo expects that the continuation of cost reduction initiatives will allow the Group to achieve an adjusted EBITDA margin in a range of 4% to 5% of net sales. The Group's Net Debt is expected slightly above the level recorded at the end of June 2018.

2019-2020 Financial

  • In the 2-year period, the Group foresees its total net sales to return to grow at a pace of approximately 2% per annum (approximately +4%, excluding the Gucci business), reaching total net sales of Euro 1,000-1,020 million in 2020;
  • Net of the accounting compensation for the early termination of the Gucci license and of any non-recurring costs, the EBITDA margin is expected to steadily improve between 2019 and 2020, mainly behind significant cost saving programs, reaching 8% to10% of total net sales in 2020;
  • In the 2-year period, Safilo expects its Plan to be supported by a cumulative program of investments amounting to around Euro 80 million, dedicated to the ongoing projects of plant modernization, through automation and redesign of the industrial flows, as well as the completion its IT roadmap
  • Safilo expects the business returning to positive cash generation starting from 2019, reflecting the foreseen improvement of the economic results and of working capital management, with particular reference to the optimization of inventory levels. In 2020, Safilo expects a Net Debt/EBITDA leverage of approximately 1.5x.

Last updated: December 10, 2019

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