Kering: Press release - First-half 2024 results
KERING_Press release - First-half 2024 results - 24 07 2024
PRESS RELEASE |
July 24, 2024 |
FIRST-HALF 2024 RESULTS
Group revenue: €9,018 million
down 11% as reported and on a comparable basis
Recurring operating income: €1,582 million
Net income attributable to the Group: €878 million
“In a challenging market environment, which adds pressure on our top line and profitability, we are working assiduously to create the conditions for a return to growth. Our Houses pursue their investments to enrich their offer, intensify the impact of their communications, and reinforce the exclusivity of their distribution. We make certain that every one of these investments creates value for the long term. While the current context might impact the pace of our execution, our determination and confidence are stronger than ever.”
François-Henri Pinault, Chairman and Chief Executive Officer
- Group revenue amounted to €9.0 billion in the first half of 2024, down 11% both as reported and on a comparable basis.
- In the second quarter of 2024, revenue totaled €4.5 billion, also down 11% as reported and on a comparable basis. The decline in revenue as reported includes a negative currency effect of 1% and a positive scope effect of 1% from the consolidation of Creed.
- Sales from the directly operated retail network fell by 12% on a comparable basis in the second quarter, adversely affected by lower store traffic. Trends in the various regions in the second quarter remained broadly in line with the first quarter, apart from a sequential improvement in Japan and a deceleration in Asia-Pacific.
- Wholesale and Other revenue fell 6% on a comparable basis, as the Group continued to enhance the exclusivity of its Houses’ distribution. Kering Eyewear pursued its positive trend.
- Wholesale and Other revenue fell 6% on a comparable basis, as the Group continued to enhance the exclusivity of its Houses’ distribution. Kering Eyewear pursued its positive trend.
- Sales from the directly operated retail network fell by 12% on a comparable basis in the second quarter, adversely affected by lower store traffic. Trends in the various regions in the second quarter remained broadly in line with the first quarter, apart from a sequential improvement in Japan and a deceleration in Asia-Pacific.
- As the Group maintains its ongoing investment in its Houses, recurring operating income fell 42% to €1.6 billion in the first half, in line with the guidance provided when the Group reported its first-quarter 2024 revenue. Recurring operating margin was 17.5%, significantly lower than in the first half of 2023, resulting from negative operational leverage. The Group prioritizes expenditures aimed at nurturing the desirability of its Houses and maintains strict control over all operating expenses.
- Net income attributable to the Group was €878 million in the first half of 2024.
- Free cash flow from operations remained high at €1.9 billion in the first half excluding real estate acquisitions, thanks to good inventory management in particular. Including the acquisition of a prestigious property on Fifth Avenue in New York City, free cash flow from operations totaled €1.1 billion.
- Free cash flow from operations remained high at €1.9 billion in the first half excluding real estate acquisitions, thanks to good inventory management in particular. Including the acquisition of a prestigious property on Fifth Avenue in New York City, free cash flow from operations totaled €1.1 billion.
Operating performance
(1) On a comparable scope and exchange rate basis.
Revenue (in € millions) | H1 2024 | H1 2023 | Reported change | Comparable change (1) | |
Gucci | 4,085 | 5,128 | -20% | -18% | |
Yves Saint Laurent | 1,441 | 1,576 | -9% | -7% | |
Bottega Veneta | 836 | 833 | +0% | +3% | |
Other Houses | 1,717 | 1,856 | -7% | -6% | |
Kering Eyewear and Corporate | 1,067 | 869 | +23% | +7% | |
Eliminations | (128) | (127) | N/A | N/A | |
KERING | 9,018 | 10,135 | -11% | -11% |
Recurring operating income (in € millions) | H1 2024 | H1 2023 | Change | |
Gucci | 1,007 | 1,810 | -44% | |
Yves Saint Laurent | 316 | 481 | -34% | |
Bottega Veneta | 121 | 169 | -28% | |
Other Houses | 44 | 224 | -80% | |
Kering Eyewear and Corporate | 101 | 63 | +61% | |
Eliminations | (7) | (8) | N/A | |
KERING | 1,582 | 2,739 | -42% |
Gucci
In the first half of 2024, Gucci’s revenue was €4.1 billion, down 20% as reported and down 18% on a comparable basis. Sales from the directly operated retail network dropped 20% on a comparable basis, while wholesale revenue was down 9%.
In the second quarter of 2024, the House's sales were down 19% on a comparable basis, with a 20% decline in the directly operated retail network. Performances in each region were broadly in line with those of the prior quarter, including a continuing marked decrease in Asia-Pacific. Gucci's new offering, rolled out in stores in line with plans, is well received, while sales of carryovers remained lower.
Gucci's recurring operating income totaled €1.0 billion in the first half of 2024. Recurring operating margin was 24.7%, reflecting investments to pursue the House's long-term strategic initiatives.
Yves Saint Laurent
Yves Saint Laurent's revenue in the first half of 2024 was €1.4 billion, down 9% as reported and down 7% on a comparable basis. On a comparable basis, the House's sales from its directly operated retail network were down 6% while wholesale revenue fell 25%.
In the second quarter of 2024, Yves Saint Laurent's sales were down 9% on a comparable basis, with an 8% decline in the directly operated retail network. Performance deteriorated in Asia-Pacific, while trends in Japan showed a sequential improvement. The House pursued initiatives targeting local customers, and its new collections were very well received. Wholesale revenue was down 25% in the second quarter.
Yves Saint Laurent's recurring operating income was €316 million in the first half and its recurring operating margin was 22.0%, as the House continues to invest in its communications and clientele initiatives.
Bottega Veneta
Bottega Veneta had a record first half, with revenue of €836 million, unchanged as reported and up 3% on a comparable basis. Sales from the directly operated retail network rose by 8% on a comparable basis, while wholesale revenue was down 19% on a comparable basis.
In the second quarter, the House's revenue was up 4% on a comparable basis. Sales in the directly operated retail network rose 7% on a comparable basis, supported by double-digit growth in Western Europe and North America and strong momentum in the Middle East. Sales in Asia-Pacific were resilient. Wholesale revenue was down 13%.
Bottega Veneta’s recurring operating income for the first half of 2024 totaled €121 million, and its recurring operating margin was 14.5%, reflecting significant communications expenditure as well as highly exclusive clienteling events.
Other Houses
The Other Houses' revenue in the first half of 2024 was €1.7 billion, down 7% as reported and down 6% on a comparable basis. Sales from the directly operated retail network rose 1% on a comparable basis, while wholesale was down 21%.
Second quarter 2024 sales were down 5% on a comparable basis, with contrasted performance across Houses. Sales in the directly operated retail network were stable year-on-year on a comparable basis. Jewelry Houses Boucheron and Pomellato both achieved double-digit growth. Balenciaga's sales from its directly operated retail network were unchanged on a comparable basis. Alexander McQueen continued its creative transition. Brioni posted strong revenue growth from its directly operated retail network on a comparable basis. Wholesale revenue of Other Houses was down 16%.
The Other Houses' recurring operating income in the first half of 2024 amounted to €44 million, resulting in a recurring operating margin of 2.6%. That performance is attributable to significant reinvestment in communications at Balenciaga and the impact of the transition at Alexander McQueen, while Boucheron delivered sharply higher operating income.
Kering Eyewear and Corporate
In the first half of 2024, total revenue from the Kering Eyewear and Corporate segment was €1.1 billion, mainly from the activities of Kering Eyewear and Kering Beauté, the latter comprising the sales of Creed.
Kering Eyewear's revenue in the first half of 2024 totaled €914 million, up 5% as reported and up 6% on a comparable basis.
In the second quarter, Kering Eyewear's sales rose by 3% both on a comparable basis and as reported, driven by solid progression of the brands in its portfolio.
In the first half, Kering Eyewear's recurring operating income was €196 million. Recurring operating income for the segment was €101 million, after taking into account Kering Beauté's recurring operating income along with Corporate costs (€95 million).
Financial performance
In the first half of 2024, net financial expense amounted to €288 million.
The effective tax rate on recurring income was 26.9%.
Net income attributable to the Group was €878 million.
Cash flow and financial position
The Group's free cash flow from operations was €1.1 billion in the first half of 2024. Excluding the acquisition of a prestigious property on Fifth Avenue in New York City, free cash flow from operations totaled €1.9 billion.
At June 30, 2024, Kering's net debt amounted to €9.9 billion.
Outlook
To achieve its long-term vision, Kering invests in the development of its Houses, so that they continuously strengthen their desirability and the exclusivity of their distribution, strike a perfect balance between creative innovation and timelessness, and achieve the highest standards in terms of quality, sustainability, and experience for their customers. In an environment of ongoing economic and geopolitical uncertainty, Kering will continue to execute on its strategy and vision, in pursuit of two key ambitions: to maintain a trajectory of long-term profitable growth, and to confirm its status as one of the most influential groups in the Luxury industry.
Considering the uncertainties weighing on the evolution of demand from luxury consumers in the coming months following the slowdown recorded in the first half of 2024, Kering’s recurring operating income in the second half of 2024 could be down by approximately 30% compared to the second half of 2023 (*).
The group prioritizes expenses and initiatives supporting the long-term development and growth of its houses, while pursuing with determination the actions required in the current situation to optimize its cost structure.
(*) Based on the scope of consolidation and exchange rates at the time of first-half 2024 reporting.
***
At its July 24, 2024, meeting, Kering's Board of Directors, chaired by François-Henri Pinault, approved the consolidated financial statements for the six months ended June 30, 2024, which were subject to a limited review.
WEBCAST
Kering will present its first-half 2024 results in an audiocast, which will be accessible here at 5.45pm (CET) on Wednesday, July 24, 2024.
The presentation will be followed by a Q&A session for analysts and investors.
The slides (in PDF format) will be available ahead of the audiocast at www.kering.com.
A replay of the webcast will also be available at www.kering.com.
About Kering
Kering is a global Luxury group that manages the development of a collection of renowned Houses in Fashion, Leather Goods and Jewelry: Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ginori 1735, as well as Kering Eyewear and Kering Beauté. By placing creativity at the heart of its strategy, Kering enables its Houses to set new limits in terms of their creative expression while crafting tomorrow’s Luxury in a sustainable and responsible way. We capture these beliefs in our signature: Empowering Imagination. In 2023, Kering had 49,000 employees and revenue of €19.6 billion.
Contacts
Press | ||
Emilie Gargatte | +33 (0)1 45 64 61 20 | emilie.gargatte@kering.com |
Marie de Montreynaud | +33 (0)1 45 64 62 53 | marie.demontreynaud@kering.com |
Analysts/investors | ||
Claire Roblet | +33 (0)1 45 64 61 49 | claire.roblet@kering.com |
Julien Brosillon | +33 (0)1 45 64 62 30 | julien.brosillon@kering.com |
APPENDICES EXCERPT FROM THE CONSOLIDATED FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION RELATING TO THE FIRST-HALF 2024 RESULTS SITUATION AS OF JUNE 30, 2024 | ||||
Contents | page | |||
Announcements since January 1, 2024 | 8 | |||
Consolidated income statement | 9 | |||
Consolidated statement of comprehensive income | 10 | |||
Consolidated balance sheet | 11 | |||
Consolidated statement of cash flows | 12 | |||
Breakdown of revenue | 13 | |||
Main definitions | 14 | |||
HIGHLIGHTS AND ANNOUNCEMENTS SINCE JANUARY 1, 2024
Acquisition of strategic real-estate assets in New York and Milan
January 22, 2024 – Kering announced the acquisition of a prestigious New York City property comprising luxury retail spaces across multiple floors and totaling approximately 115,000 sq. ft, or 10,700 sq. m. The building is located at 715-717 Fifth Avenue and the price paid was $963 million (the equivalent of €885 million on the date of the announcement).
April 4, 2024 – Kering announced the acquisition of the company that owns the iconic building located at 8 Via Monte Napoleone in Milan, for a consideration of approximately €1.3 billion. This 18th-century building is located on the most prestigious corner of Milan’s Quadrilatero della Moda fashion district. It has five floors and gross floorspace of approximately 127,000 sq. ft, or 11,800 sq. m.
These two investments form part of Kering’s selective real-estate strategy aimed at securing key locations that are highly desirable for its Houses.
“Triple A” CDP score for Kering's climate commitments
February 6, 2024 – Kering is one of only 10 companies worldwide to achieve a score of AAA following the Carbon Disclosure Project’s annual assessment, which covers more than 21,000 companies. Kering is the only company in its sector to earn this distinction, confirming its leadership in terms of transparency and performance as regards protecting the climate, forests and water.
Dual-tranche bond issue for a total amount of €1.75 billion
March 5, 2024 – Kering carried out a dual-tranche bond issue for a total of €1.75 billion, consisting of:
- a €1 billion tranche with an 8-year maturity and a 3.375% coupon; and
- a €750 million tranche with a 12-year maturity and a 3.625% coupon.
The issue forms part of the Group’s active liquidity management and increases Kering's financial flexibility.
Creation of a tool to measure ecological impact in Asia-Pacific in partnership with the National University of Singapore
May 13, 2024 – Kering and the National University of Singapore (NUS) officially announced that they were forming a partnership as part of a research project. The aim of the project is to develop a reference framework for measuring the impact of sustainability strategies adopted by large corporations in Asia-Pacific. Over a three-year period, the project will look at those corporations' ecological transition strategies and environmental reports and prepares a baseline study. That study is intended for business leaders, investors, institutional investors and NGOs, and will be a useful resource for measuring progress made by industries in the region.
APPOINTMENTS SINCE JANUARY 1, 2024
Appointments to Kering’s Executive Committee
April 2, 2024 – Kering announced the appointment of Mélanie Flouquet, Chief Strategy Officer, and Armelle Poulou, Chief Financial Officer, to the Group’s Executive Committee.
June 6, 2024 – Kering announced the appointment of Laurent Claquin as its Chief Brand Officer and a member of the Executive Committee, effective July 1, 2024.
Appointments to Kering’s Board of Directors
April 25, 2024 – The Annual General Meeting has approved the appointment of three new independent directors on the recommendation of the Board of Directors and its Appointments and Governance Committee: Rachel Duan, Giovanna Melandri and Dominique D’Hinnin.
Appointment of Ewa Abrams as President of Kering Americas
July 15, 2024 – Ewa Abrams, currently General Counsel of Kering Americas, has been appointed as President of Kering Americas effective August 1, 2024. She will report directly to Jean-Marc Duplaix, Deputy CEO in charge of Operations and Finance.
CONSOLIDATED INCOME STATEMENT
(in € millions) | First half 2024 | First half 2023 |
CONTINUING OPERATIONS | ||
Revenue | 9,018 | 10,135 |
Cost of sales | (2,310) | (2,405) |
Gross margin | 6,708 | 7,730 |
Other personnel expenses | (1,547) | (1,505) |
Other recurring operating income and expenses | (3,579) | (3,486) |
Recurring operating income | 1,582 | 2,739 |
Other non-recurring operating income and expenses | (13) | - |
Operating income | 1,569 | 2,739 |
Financial result | (288) | (204) |
Income before tax | 1,281 | 2,535 |
Income tax expense | (345) | (692) |
Share in earnings (losses) of equity-accounted companies | 4 | 3 |
Net income from continuing operations | 940 | 1,846 |
o/w attributable to the Group | 878 | 1,785 |
o/w attributable to minority interests | 62 | 61 |
DISCONTINUED OPERATIONS | ||
Net income (loss) from discontinued operations | - | - |
o/w attributable to the Group | - | - |
o/w attributable to minority interests | - | - |
GROUP TOTAL | ||
Net income of consolidated companies | 940 | 1,846 |
o/w attributable to the Group | 878 | 1,785 |
o/w attributable to minority interests | 62 | 61 |
(in € millions) | First half 2024 | First half 2023 |
Net income attributable to the Group | 878 | 1,785 |
Basic earnings per share (in €) | 7.16 | 14.60 |
Diluted earnings per share (in €) | 7.16 | 14.59 |
Net income from continuing operations attributable to the Group | 878 | 1,785 |
Basic earnings per share (in €) | 7.16 | 14.60 |
Diluted earnings per share (in €) | 7.16 | 14.59 |
Net income from continuing operations (excluding non‑recurring items) attributable to the Group | 888 | 1,789 |
Basic earnings per share (in €) | 7.24 | 14.63 |
Diluted earnings per share (in €) | 7.24 | 14.62 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in € millions) | First half 2024 | First half 2023 |
Net income | 940 | 1,846 |
o/w attributable to the Group | 878 | 1,785 |
o/w attributable to minority interests | 62 | 61 |
Change in currency translation adjustments relating to consolidated Subsidiaries | 11 | (95) |
change in currency translation adjustments | 11 | (95) |
amounts transferred to the income statement | - | - |
Change in foreign currency cash flow hedges | (63) | 119 |
change in fair value | (16) | 204 |
amounts transferred to the income statement | (52) | (79) |
tax effects | 5 | (6) |
Change in other comprehensive income (loss) of equity‑accounted Companies | - | - |
change in fair value | - | - |
amounts transferred to the income statement | - | - |
Gains and losses recognized in equity, to be transferred to the income statement | (52) | 24 |
Change in provisions for pensions and other post-employment benefits | (6) | (2) |
change in actuarial gains and losses | (8) | (2) |
tax effects | 2 | - |
Change in financial assets measured at fair value | 15 | 16 |
change in fair value | 13 | 22 |
tax effects | 2 | (6) |
Gains and losses recognized in equity, not to be transferred to the income Statement | 9 | 14 |
Total gains and losses recognized in equity | (43) | 38 |
o/w attributable to the Group | (44) | 40 |
o/w attributable to minority interests | 1 | (2) |
COMPREHENSIVE INCOME | 897 | 1,884 |
o/w attributable to the Group | 834 | 1,825 |
o/w attributable to minority interests | 63 | 59 |
CONSOLIDATED BALANCE SHEET
Assets
(in € millions) | June 30, 2024 | Dec. 31, 2023 |
Goodwill | 7,090 | 7,112 |
Brands and other intangible assets | 8,185 | 8,178 |
Lease right-of-use assets | 5,098 | 4,984 |
Property plant and equipment | 6,314 | 5,341 |
Investments in equity-accounted companies | 1,775 | 1,750 |
Non-current financial assets | 483 | 536 |
Deferred tax assets | 1,507 | 1,520 |
Other non-current assets | 35 | 16 |
Non current assets | 30,487 | 29,437 |
Inventories | 4,346 | 4,550 |
Trade receivables and accrued income | 1,155 | 1,151 |
Current tax receivables | 762 | 765 |
Current financial assets | 64 | 136 |
Other current assets | 1,404 | 1,406 |
Cash and cash equivalents | 3,934 | 3,922 |
Current assets | 11,665 | 11,930 |
Assets held for sale | - | - |
TOTAL ASSETS | 42,152 | 41,367 |
Equity and liabilities
(in € millions) | June 30, 2024 | Dec. 31, 2023 |
Equity attributable to the Group | 14,901 | 15,212 |
Equity attributable to the minority interests | 849 | 798 |
Equity | 15,750 | 16,010 |
Non-current borrowings | 11,018 | 10,026 |
Non-current lease liabilities | 4,593 | 4,511 |
Non-current financial liabilities | 7 | 13 |
Non-current provisions for pensions and other post-employment benefits | 78 | 68 |
Non-current provisions | 27 | 21 |
Deferred tax liabilities | 1,793 | 1,776 |
Other non-current liabilities | 433 | 311 |
Non current liabilities | 17,949 | 16,726 |
Current borrowings | 2,838 | 2,400 |
Current lease liabilities | 914 | 884 |
Current financial liabilities | 58 | 588 |
Trade payables and accrued expenses | 2,132 | 2,200 |
Current provisions for pensions and other post-employment benefits | 13 | 12 |
Current provisions | 135 | 163 |
Current tax liabilities | 743 | 536 |
Other current liabilities | 1,620 | 1,848 |
Current liabilities | 8,453 | 8,631 |
Liabilities associated with assets held for sale | - | - |
TOTAL EQUITY AND LIABILITIES | 42,152 | 41,367 |
CONSOLIDATED STATEMENT OF CASH FLOWS
(in € millions) | First half 2024 | First half 2023 |
Net income from continuing operations | 940 | 1,846 |
Net recurring charges to depreciation, amortization and provision on non-current operating assets | 1,013 | 878 |
Other non-cash (income) expenses | 10 | (139) |
Cash flow received from operating activities | 1,963 | 2,585 |
Interest paid (received) | 229 | 173 |
Dividends received | (2) | (7) |
Current tax expense | 312 | 684 |
Cash flow received from operating activities before tax dividends and interests | 2,502 | 3,435 |
Change in working capital requirement | 44 | (419) |
Income tax paid | (100) | (419) |
Net cash received from operating activities | 2,446 | 2,597 |
Acquisitions of property, plant and equipment and intangible assets | (1,391) | (1,891) |
Disposals of property, plant and equipment and intangible assets | - | 117 |
Acquisitions of subsidiaries and associates, net of cash acquired | (23) | (55) |
Disposals of subsidiaries and associates, net of cash transferred | - | - |
Acquisitions of other financial assets | (35) | (24) |
Disposals of other financial assets | 97 | 96 |
Interest and dividends received | 30 | 14 |
Net cash received from (used in) investing activities | (1,322) | (1,743) |
Increase (decrease) in share capital and other transactions | - | - |
Dividends paid to shareholders of Kering SA | (1,716) | (1,712) |
Dividends paid to minority interests in consolidated subsidiaries | (6) | (12) |
Transactions with minority interests | (3) | (26) |
(Acquisitions) disposals of Kering treasury shares | 3 | (7) |
Issuance of bonds and bank debt | 1,750 | 1,508 |
Redemption of bonds and bank debt | (512) | (658) |
Issuance (redemption) of other borrowings | 153 | (408) |
Repayment of lease liabilities | (530) | (419) |
Interest paid and equivalent | (254) | (178) |
Net cash received from (used in) from financing activities | (1,116) | (1,912) |
Net cash received from (used in) discontinued operations | - | - |
Impact of exchange rate variations on cash and cash equivalents | 37 | 14 |
Net increase (decrease) in cash and cash equivalents | 46 | (1,044) |
Cash and cash equivalents at opening | 3,650 | 4,094 |
Cash and cash equivalents at closing | 3,696 | 3,050 |
REVENUE FOR THE FIRST AND SECOND QUARTERS
(in € millions) | H1 2024 | H1 2023 | Reported change | Comparable change (1) | Q2 2024 | Q2 2023 | Reported change | Comparable change (1) | Q1 2024 | Q1 2023 | Reported change | Comparable change (1) | |
Gucci | 4,085 | 5,128 | -20% | -18% | 2,006 | 2,512 | -20% | -19% | 2,079 | 2,616 | -21% | -18% | |
Yves Saint Laurent | 1,441 | 1,576 | -9% | -7% | 701 | 770 | -9% | -9% | 740 | 806 | -8% | -6% | |
Bottega Veneta | 836 | 833 | +0% | +3% | 448 | 438 | +2% | +4% | 388 | 395 | -2% | +2% | |
Other Houses | 1,717 | 1,856 | -7% | -6% | 893 | 966 | -8% | -5% | 824 | 890 | -7% | -6% | |
Kering Eyewear and Corporate | 1,067 | 869 | +23% | +7% | 531 | 436 | +22% | +5% | 536 | 433 | +24% | +9% | |
Eliminations | (128) | (127) | - | - | (65) | (64) | - | - | (63) | (63) | - | - | |
KERING | 9,018 | 10,135 | -11% | -11% | 4,514 | 5,058 | -11% | -11% | 4,504 | 5,077 | -11% | -10% |
(1) Change on a comparable scope and exchange rate basis.
MAIN DEFINITIONS
“Reported” and “comparable” growth
The Group’s “reported” growth corresponds to the change in reported revenue (previously referred to as “actual” growth) between two periods.
The Group measures “comparable” growth (also referred to as “organic” growth) in its business by comparing revenue between two periods at constant scope and exchange rates.
Changes in scope are dealt with as follows for the periods concerned:
- the portion of revenue relating to acquired entities is excluded from the current period;
- the portion relating to entities divested or in the process of being divested is excluded from the previous period.
Currency effects are calculated by applying the average exchange rates for the current period to amounts in the previous period.
Recurring operating income
The Group’s operating income includes all revenues and expenses directly related to its activities, whether these revenues and expenses are recurring or arise from non-recurring decisions or transactions.
Other non-recurring operating income and expenses consist of items that, by their nature, amount or frequency, could distort the assessment of the Group’s operating performance as reflected in its recurring operating income. They include changes in scope, the impairment of goodwill and brands and, where material, of property, plant and equipment and intangible assets, capital gains and losses on disposals of non-current assets, restructuring costs and disputes.
“Recurring operating income” is therefore an alternative performance indicator for the Group, defined as the difference between operating income and other non-recurring operating income and expenses. This indicator is intended to facilitate understanding of the operating performance of the Group and its Houses and can therefore be used as a way to estimate recurring performance. It is presented in a manner that is consistent and stable over the long term in order to ensure the continuity and relevance of financial information.
EBITDA
The Group uses EBITDA as an alternative performance indicator to monitor its operating performance. This financial indicator corresponds to recurring operating income plus net charges to depreciation, amortization and provisions on non-current operating assets recognized in recurring operating income.
Free cash flow from operations, available cash flow from operations and available cash flow
The Group uses an intermediate line item, “Free cash flow from operations”, to monitor its financial performance. This financial indicator measures net operating cash flow less net operating investments (defined as acquisitions and disposals of property, plant and equipment and intangible assets).
The Group has also defined a new indicator, “Available cash flow from operations”, in order to take into account capitalized fixed lease payments (repayments of principal and interest) pursuant to IFRS 16, and thereby reflect all of its operating cash flows.
“Available cash flow” therefore corresponds to available cash flow from operations plus interest and dividends received, less interest paid and equivalent (excluding leases).
Net debt
Net debt is one of the Group’s main financial indicators, and is defined as borrowings less cash and cash equivalents. Lease liabilities are not included in the calculation of this indicator. Borrowings include put options granted to minority interests. The cost of net debt corresponds to all financial income and expenses associated with these items, including the impact of derivative instruments used to hedge the fair value of borrowings.
Effective tax rate on recurring income
The effective tax rate on recurring income corresponds to the effective tax rate excluding tax effects relating to other non-recurring operating income and expenses.
Attachment
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