Brunello Cucinelli Spa

Good evening and welcome to the presentation of the full year 2024 results of the Fashion House Brunello Cucinelli. The speakers will be Brunello Cucinelli, Executive Chairman and Creative Director, Luca Lisandroni, CEO, Riccardo Stefanelli, CEO, Dario Pipitone, CFO, Moreno Ciarapica, Co-CFO Senior, and Pietro Arnaboldi, Investor Relations and Corporate Planning Director. In order to receive help from an operator during the conference call, you can press star followed by zero. Now I would like to give the floor to Brunello Cucinelli. Please, the floor is yours. Good evening and thank you. So it is great now. The bells are ringing and it's always the right time of the day to hear the bells tolling away. So it is always a personal pleasure to hear from you again and welcome analysts, investors and journalists. It is always so much to take away from these calls if one has the courage to listen. This morning, we had a wonderful board of directors meeting where we first discussed the high-level 10-year plan from 2024-2033, a high-level one, where we focused on high craftsmanship and tailoring and also the production because this is an important topic and we ended our board meeting by saying that we see great opportunities in the offing for our brand for the coming three years and beyond as always we are all gathered here I have to say that 2024 has ended on a high note. One thing that we are certain about, we are convinced of what we must not do because it's important to always outline what someone should never do. What we must do, on the other hand, always stays unchanged. We must uphold the value of exclusivity in craftsmanship, product-wise, and it needs to be contemporary. because otherwise the company does not function. And then we need to manage growth. This is a crucial point for the life of our company. We need to manage growth. If we are able to do that, then our company could last more than a century. Then perhaps it will not happen, but we are set for that. So I will read out the press release, then Dario, our CFO, will go into the details. Ricardo will discuss artisanal and tailoring productions, factory expansion, employee numbers and demographics. I will take the floor again to comment on the 2024 closure, and then we will begin discussing 2025, where the first quarter is drawing to an end, and then We'll talk about taste, overall style. So let me read out the press release. Revenues, 1.278.5 billion, with an excellent growth of 12.2% at current exchange rate and 12.4% at constant exchange rate. As usual for us, current and constant exchange. are always very close. Then we have EBIT 211.7 million euros growing by 12.9% with a margin of 16.6% compared to 16.4% in 2023. Net profit of 128 million euros up by 19.5% to 2023. Net of the effects of an extraordinary capital gain last year with a sales incidence of 10.1%. Major investments amounting to 109 million euros, 109.5 million euros to be precise. And 2024 marked the beginning of a three-year period of significant investments focused on expanding our facilities here and also the other factories. And everything is expected to be completed by 2026. And this project is part of the major 10-year plan 2024-2033. aimed at doubling the production. And this will cater for 2033. Solid financial structure with a net financial debt of 103 million, more or less. So the Board of Directors will submit to the General Assembly, the General Meeting scheduled for April 2029-2025, the distribution of a dividend of €0.94 per share, payout ratio of 50%. Now, very, very positive sales in the nearly completed first quarter. along with an excellent order intake for the fall-winter 2025 collection and the strong enthusiasm we perceive around our brand, all this allows us to confirm for 2025 an expected revenue growth of approximately 10%. We also anticipate equally healthy, balanced and sustainable growth of around 10% also for 2026. Of course, we always like to highlight this number, 10%. The British Fashion Council will honour Brunello Cucinelli, will honour me, with a prestigious Outstanding Achievement Award next December in London during the Fashion Awards 2025.

And my comment was the following.

Another year has come to a close. one which we have described as enchanting for our fashion house with revenue growth of 12.4% and profit growth of 19.5%. Compared to 2023, it has been a pivotal year for our brand's image, crowned by the prestigious American Awards, called WWD John Fairchild Honor. And the reason why we were granted this accolade for Woolf's constant dedication to mastery, creativity, craftsmanship, exclusivity and human dignity. I have to say that it's always very pleasant to receive accolades like these. Then 2025, first thing first, I would like to mention that in December, on December 1st, I will receive from the British Fashion Council, I will receive the prestigious Outstanding Achievement Awards that has been previously awarded to great fashion figures such as Karl Lagerfeld, Ralph Lauren, Miuccia Prada, Giorgio Armani, Tommy Hilfiger, Valentino Garavani, who is always very kind. He always asks for a discount in my stores. And then Tom Ford. But here to please do listen for the reason why this award was granted to me for the innovation in the world of Kashmir and for how the Solomeo based fashion house has transformed the industry's possibilities alongside its ethical vision of humanistic capitalism and sustainable humanity. setting a model for the fashion industry and business at large. So this is what they wrote about us. So thus we see 2025 as a particularly important year. We have concluded our fall winter 2025 men's and women's sales campaign with excellent results. And this is also key. We have closed it with highly flattering reviews from the international press. regarding our style and lifestyle vision. So the first quarter of the year is also wrapping up with very, in about 10 days, with very, very strong results. And by the way, spring, summer 2025 collections last September were met with great appreciation. Because when the collection is beautiful, you broach the semester with a different attitude, regardless what happens across the market. So for 2025, we see significant commercial opportunities ahead. And with gracious awareness, we want to reaffirm and restate the importance of managing growth to ensure growth. a healthy plus 10% revenue increase for the current year, as well as for 2026. Now, Dario, go ahead. You are not used to being translated, so please read slowly. Good evening, everyone, and thank you, Brunello. I would like to start with with the analyst presentation, starting off from slide 25, analysing the performance, economic and financial performance of 2024. So the revenues values confirm the preliminary results presented on January 13th, with an increase of revenues at current exchange rate of 12.2%, constant 12.4%. Now, I'd like to move on to the other items in the income statement. On slide 27, this confirms a balanced margin and cost structure with EBIT at the end of 2024 rising by 12.9% vis-à-vis 2023 and margins that move from 16.4% up to 16.6%. The first margin raised by 15.4% and it accounts for 74.5% of revenues vis-a-vis 72.5% last year. This increase, which basically confirms what had already been said about the half-year figures, in this 2024 it can be ascribable to the positive contribution from the sales mix in terms of geographies, channel mix and product mix, But it is also down to the increase in in-house production and expansion of production, as I was saying. And by that, we mean the start of in-house production targeted at making suits and outerwear and menswear jackets, jackets like the ones we make in Penne and Gubbio. that will start opening the second half of 2023 and 2024. So this outsourcing of some workmanship is reducing external production costs, which is offset by the increase in some operating costs, mailing the staff-related or personnel-related costs. Now, moving on to the operating costs, we can say that the increase by 17.8% in these costs mirrors the insourcing process, as well as the target growth of our network, the development of new commercial and technological initiatives, as well as the significant investments in communication. On slide number 29, we basically provide the income statement highlights, and also we dwell on the personal costs, the investments in communication, and the rent-related costs. So the first item, personal cost, €233.5 million, up by 19.8%, with an incidence of 18.3% vis-à-vis 17.1% incidence on sales vis-à-vis last year. As of 31st December 24, the number of human resources amounted to 3,101 full-time equivalents plus 478 FTEs, which is 50% down to the strengthening of labourers linked to the increase in in-house artisanal production and especially down to the development in our commercial network. As to the investments in communication, 92.3 million euros, up by 17%, with an incidence on sales of 7.2%, slightly higher than 6.9% the previous year. The cost of rents net of the IFRS 16 amounts to 183.2 million euros, 14.3% up by 18.2% vis-a-vis the 155 million and 13.6% relating to the previous year. This increase is mainly down to the new selected openings, the contract renewals and the extensions that were performed during the year. And then finally, still on the income statement highlights, DNA amounted to 153 million euros vis-a-vis 138.8 billion last year. As a result of all this, EBIT went up, amounting to 211.7 million euros, up by 12.9%, with operating margin amounting to 16.6%. compared to 16.4 last year. And now I would comment the total net financial expense details on slide 30.