Let the Brand Play on

Transcription

Initiation of Coverage
Outperformer
Price: ¤1.38
19 September 2001
Sector
Market Cap
Free Float
Reuters Code
12-Mth Range
Small Caps/Italy
¤125.30m
20.62%
RG.MI
¤1.03-1.51
¤m
2000
2001E
2002E
2003E
Total Sales
46.0
55.7
90.9
101.5
EBITDA
12.4
16.9
23.7
27.2
9.0
4.9
13.7
7.4
20.0
10.5
23.1
11.8
4.7
7.4
10.5
11.8
0.05
0.05
0.08
0.08
0.12
0.12
0.13
0.13
EBITA
Net Profit
Net Profit Adj.
EPS
EPS Adj.
DIV per share (¤)
0.05
0.06
0.08
0.09
Dividend Yield (%)
P/E
4.5%
20.2
4.1%
17.0
5.9%
12.0
6.6%
10.6
P/E Adj.
26.7
17.0
12.0
10.6
P/CEPS
P/BVPS
13.0
2.0
12.3
2.3
9.3
2.0
8.3
1.9
EV/Sales
EV/EBITDA
EV/EBIT
2.3
2.3
1.6
1.5
8.6
11.8
7.6
9.4
6.3
7.5
5.5
6.4
Net (debt) cash
-7.8
-3.1
-23.5
-23.6
Avg. ROE
Gearing
9.8%
0.2
13.8%
0.1
16.9%
0.4
17.5%
0.3
ROACE
8.5%
11.8%
13.4%
12.3%
Shares outstanding (m)
90.8
90.8
90.8
90.8
Stock Performance
2 .6 0
2 .4 0
2 .2 0
P R IC E R E L . T O M IL A N C O M IT G E N E R A L
2 .0 0
1 .8 0
1 .6 0
1 .4 0
1 .2 0
R IC H A R D -G IN O R I
1 .0 0
S
O
N
D
J
F
M
A
M
J
J
A
S
Source: Datastream.
1mth
Absolute %
3.4
Relative %
34.4
Average Trading Volumes:
Serge Escudé
Alberto Brioschi
3mth
15.5
56.6
12mth
27.2
113.0
125.30 (000s)
Let the Brand Play on
Ginori is implementing a new strategy of (i) product
extension into the prestigious ceramic jewellery market
segment and (ii) development of key foreign markets.
As a consequence, we expect strong growth in sales
and margins, especially boosted by new products.
Rating: Market Outperformer.
¤ Richard-Ginori is the leading Italian manufacturer of
high quality porcelain and is controlled by Pagnossin,
producer of ironstone strong ceramic plates and
terracotta vases (recently dismissed). Over the centuries,
Ginori has built up a high brand reputation around the
world especially for exclusive articles (e.g. Capodimonte
statuettes) and decorations, which allow it to charge a
premium on its branded products.
¤ The management strategy is focused on increasing
critical mass (i) by enlarging the current product
portfolio to porcelain jewellery; (ii) stronger penetration
of key foreign markets such as Japan, USA and Europe;
and (iii) acquisition of a brand dedicated to the medium
segment. The expansion into the high end segment will
also be boosted by the search for a world-wide
distribution agreement with another truly exclusive
luxury brand.
This
growth strategy will strongly push up sales at a
¤
CAGR 2000-2004 of 24.7% and growth in EBIT margins
from 19.5% to 23.2% due to improvements in
production, higher prices, logistics and group structure
rationalisation as well as lower competitive pressure in
the higher end of the segment.
®
¤ DCF, DDM and EVA valuations yield an average target
price of ¤1.6 per share, implying a 16% upside
potential, while on a sensitivity analysis, Ginori shows a
17% downside risk. Based on a peer comparison, the
stock trades at higher multiples, which are fully justified
by superior margins due to the premium price carried
by Ginori products. We rate the stock an Outperformer.
Tel: +39 02 8862 8578 – [email protected]
Tel: +39 02 8862 3574 – [email protected]
Richard-Ginori 1735 – 19 September 2001
UniCredit Banca Mobiliare
Contents
¤1. Investment Case ..........................................................................3
¤2. Valuation.....................................................................................4
¤3. Company overview ....................................................................11
¤4. Strategy and SWOT ...................................................................19
¤5. Consolidated Financials .............................................................24
¤6. Italian sector outlook.................................................................29
2
1. Investment Case
¤ Richard-Ginori is the leading Italian manufacturer in high quality
porcelain tableware, bone china and luxury items
¤ Two main growth drivers are the expansion into key foreign markets
and the product extension strategy for the new ceramic and porcelain
jewellery segment
®
¤ Based on DCF, EVA and DDM methods, Richard-Ginori showed a value
of ¤1.6 which is a 16% upside on current prices.
A high brand reputation
thanks to exclusive
products
¤
¤ Richard-Ginori is the leading Italian manufacturer with a historical technical edge
¤
Products & Markets
expansion...
¤
¤
... will boost sales and
improve EBIT margins
¤
¤
Target price of ¤1.6,
excluding non-core and
extraordinary activities
¤
¤
¤
in high quality porcelain tableware, bone china and luxury articles with the
following products: (i) hard porcelain tableware, giftware and household goods;
(ii) hotels and coffee shops tableware; (iii) artistic goods and Capodimonte
statuettes.
These goods have the dual function of porcelain tableware and decorative gifts,
meaning that demand is mainly determined by aesthetics and design as well as by
prices. We believe that the Richard-Ginori brand name is well associated with
these exquisite products and is a strong Italian brand name in the higher rank of
the segment. Indeed, quality, personalisation and high brand reputation allow the
company to charge a premium on its branded products currently positioned in
higher end and medium high segments. The Group is present in main foreign
markets through local distribution companies still in start up phases (US, Japan).
At present, the management is implementing a strategy aimed at increasing
critical mass through (i) product extension into porcelain jewellery, (ii)
development of key foreign sales through expansion into department stores and
luxury goods distributors (iii) acquisition of a brand dedicated to the medium
segment.
We believe this growth strategy will truly boost sales, to a CAGR of 24.7% in the
2000-2004 period, supported by EBIT improvement from 19.5% to 23.2%. In fact,
over the next four years, Richard-Ginori will benefit from restructuring and
simplification of the corporate structure (including assets and sales transferred
from Pagnossin) and distribution that will produce synergies and recovery in
efficiency of distribution network. We assume that, in the medium-long term,
Ginori will be able to maintain profitability because of its recognised premium
price on brand exclusiveness vs. international porcelain competitors with suffering
margins caused by a marked shift into mass-market products.
We exclude the additional upside potentials that could positively influence Ginori’s
valuation. These are: (i) the spin-off of fixed assets for an extension into the real
estate business (ii) external growth in core business activity (iii) the possibility of a
close agreement with a firm in the luxury sector, for a co-operation in the
marketing and distribution of higher segment branded products.
DCF, DDM and EVA® valuations yield an average target price of ¤1.6 per share,
implying a 16% upside potential. Compared to sector peers, Ginori trades at a
large premium that is fully justified by higher margins due to its products’ dear
prices. We rate the stock a Market Outperformer.
3
2. Valuation
®
¤ Based on DDM, DCF and EVA , at current prices, Richard-Ginori is
trading at a 16% discount on its fair value
¤ In our projections, we have included the restructuring and simplification
of the group structure that will produce synergies during the next three
years. On the other hand, we have excluded additional upside potentials
from non-recurrent and extraordinary activities (in particular the spin-off
of real estate assets)
¤ We assume that in the long-term, group profitability will remain above
that of its industry due to a strategy to keep the brand in the high
segment preventing it from expansion into mass market products that
would be more price sensitive
2.1 Assumptions
¤ We have considered a time period of eight years, in which we believe the Group
¤
¤
¤
¤
¤
¤
¤
will reach its maturity in terms of market development and evolution of
profitability.
We have forecast Richard-Ginori turnover by market (see financial section).
We assume that EBIT margins will mainly improve from 19.5% in 2000 to 23.2% in
2004 on the back of product range expansion into ceramic jewellery and
restructuring and simplification of the group structure that will produce synergies.
We believe that in the long-term, Ginori margins will tend towards 23-24%, due
to its strong, appreciated and exclusive Italian image.
We have assumed that Pagnossin’s sales and production assets will be transferred
to Richard-Ginori in 2002 in exchange for cash. Indeed, in 2002 we have included
an investment of around ¤8.0 million (approximately equal to book value).
In terms of investments, we consider a rate of tangible fixed investments to sales
of 4.6% in 2001 (for new production machinery), 13.1% in 2002 (for Pagnossin’s
assets) and an average 4.6% over the next six years, that we consider appropriate
in order to maintain the assets capacity level. We used the average historical rate
of 7.5% per year as depreciation rate.
To actualise the FFCF, we used the WACC resulting from the Richard-Ginori
financial structure over the 8 year period in order to capture the change in the
liabilities structure.
Tax rate is constant at 45% over the period which following an historical trend;
We assume a normalised pay-out ratio of 70% due to Group restructuring (since
according to historical trends, 90% dividends flow upstream to the controlling
company Pagnossin).
In order to calculate the terminal value we have considered a normalised year:
¤ A normalised EBIT in order to take into account a potential deviation of the
terminal year and maintenance investments match depreciation;
¤ A G (perpetual growth rate) of 2.0% as correct, since Ginori operates in a sector
which grows at least at the same rate as the average general economy;
¤ Working Capital to sales will decrease slightly but still maintain a high 68% of
sales in the long term, due to a combination of the industry’s high WC
4
requirements and the company’s improved management of inventory and
receivables;
¤ For the calculation of the WACC of the terminal value we consider that the Group
will have a D/E ratio of 0.3 in the long-term ;
¤ Our estimations exclude profits deriving from non-core and extraordinary
activities.
The table below sets out the assumptions we have used in our valuation:
cX¦Hu¦j|croQr
#f¦#cro
Risk-free rate
Beta
Market Risk premium
Cost of equity
Cost of debt
Rf
5.0% (Long-term interest rate)
b
Rm-Rf
3.5%
Perpetual growth
Rd(1-tc)
G
Weighted Average Cost of Capital
WACC
1.1
8.9%
7.0%*(1-37%) => 4.4%
2.0%
Annually adapted to net financial position
Source: UBM estimates.
2.2 DCF
Our DCF valuation gives a total Equity Value of ¤153.2 million, implying a target price
of ¤1.7 per share with an upside potential of 22% on current prices.
cX¦H¤c6r¦oH?#`
fr©~>j
2000
2001
2002
2003
2004
2005
2006
2007
EBIT
Taxes
9.0
-3.9
13.7
-6.2
20.0
-9.0
23.1
-10.4
25.8
-11.6
27.7
-12.5
28.6
-12.9
29.2
-13.2
Normalised Y Terminal Value
29.9
-13.5
NOPAT
Depreciation & Amortisation
5.0
2.7
7.5
2.8
11.0
3.0
12.7
3.3
14.2
3.7
15.2
4.0
15.8
4.4
16.1
4.8
16.5
5.2
Capex
-5.3
-2.6
-11.9
-4.7
-5.1
-5.4
-5.6
-5.8
-5.1
D Working Capital
-3.3
-2.8
-25.2
-6.7
-5.9
-2.9
-2.1
-1.2
-1.9
FCFF
Present Value (PV) 01-07
-0.9
-0.9
5.0
5.0
-23.2
-21.5
4.6
4.0
6.9
5.5
10.9
8.0
12.5
8.4
13.9
8.6
14.7
228.0
138.4
cX¦H¦c«#f¦H~>j
2001
Total PV FCFF 01-07
18.0
PV of Terminal value
138.4
Total Asset Value
Net Financial Position
156.3
-3.1
Minorities
Equity Value
Target Price (¤)
Upside Potential
0.0
153.2
1.7
22%
5
2.3 EVA® model
We have also evaluated the company using the EVA® methodology. We have changed
the WACC (used to calculate the EVA® spread) according to the annual financial
structure along the period. We therefore consider that the company will have a
decreasing EVA® spread over the period due to Pagnossin’s asset contribution with a
low return and also due to the competition which the Group will face on entering
new markets and product extension.
cX¦HV#f¦#cro~>j
2000
2001
2002
2003
2004
2005
2006
2007
EBIT
Taxes
9.0
-3.9
13.7
-6.2
20.0
-9.0
23.1
-10.4
25.8
-11.6
27.7
-12.5
28.6
-12.9
29.2
-13.2
29.9
-13.5
NOPAT
Avg. Capital Employed
5.0
59.4
7.5
63.7
11.0
82.0
12.7
103.1
14.2
110.8
15.2
116.6
15.8
120.4
16.1
123.1
16.5
125.1
ROCE
WACC
8.5%
8.2%
11.8%
8.6%
13.4%
7.6%
12.3%
7.7%
12.8%
7.8%
13.1%
8.0%
13.1%
8.2%
13.1%
8.4%
13.2%
8.7%
ROCE-WACC
0.3%
3.2%
5.8%
4.6%
5.0%
5.0%
4.9%
4.6%
4.5%
0.1
0.1
2.1
2.1
4.7
4.4
4.8
4.1
5.5
4.4
5.9
4.3
5.9
3.9
5.7
3.5
5.6
-
EVA
Present Value (PV)
Normalised Y Terminal Value
8.7%
85.6
51.9
cX¦HS¦c«#f¦H~>j
2001
Total PV - EVA 01-07
26.7
PV - Terminal Value
Capital Employed
51.9
64.9
Enterprise Value
Net Financial Position
143.6
-3.1
Minorities
0.0
Severance Provision & Risk
-8.4
Equity Value
Target Price
Upside potential
132.0
1.5
5.4%
cX¦H¨#|H#?
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2000
2001
2002
2003
2004
EVA® Spread
6
2005
2006
2007
Normalised Y
2.4 Dividends Discount Model (DDM)
The historical pay out shows a biased valuation due to an excessively high dividend
pay out which streams up to Pagnossin, the controlling company. Indeed, we use the
Dividend Discount Model with a normalised pay-out ratio of 70% from 2002, which
would follow the Group restructuring between Pagnossin and Richard Ginori 1735
Spa, that shows a fair price of ¤1.7 per share, with a cost of equity of 8.9%.
cX¦Hc¨c?Ho?c6r¦or?Hf~>j
2000
2001
2002
2003
2004
2005
2006
2007
Terminal Value
Pay out %
Dividends
91.8%
4.5
70.0%
5.2
70.0%
7.3
70.0%
8.3
70.0%
9.4
70.0%
10.2
70.0%
10.7
70.0%
11.1
70.0%
11.5
Present Value (PV)
Total PV 01-07
PV Terminal Value
47.1
103.1
5.2
6.7
7.0
7.3
7.3
7.0
6.7
171.4
Value Per Share
Upside potential
1.7
19.8%
Assumptions:
Long-term growth =
2.0%
Risk-free rate
5.0%
Beta
Risk premium
1.1
3.5%
Cost of equity
8.9%
cX¦HIHocc¨c«o#f«crQ
LT Growth
Pay-out ratio
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
1.5%
1.56
1.56
1.56
1.57
1.57
1.58
1.58
1.58
1.59
2.0%
1.64
1.64
1.65
1.65
1.65
1.66
1.66
1.67
1.67
2.5%
1.73
1.74
1.74
1.74
1.75
1.75
1.76
1.76
1.77
3.0%
1.84
1.85
1.85
1.86
1.86
1.86
1.87
1.87
1.88
2.5 Peer group multiples
We selected a group of listed companies as fully comparable in term of products and
markets1. Using the average multiples of ceramic peer groups, the company is
actually trading at a considerable premium that is justified by:
¤ Higher historical and expected profitability, due to the fact that the group has
part of its turnover in the high price range vs. competitors that have expanded
their products ranges towards the medium price segment, reducing average
margins and brand exclusiveness.
¤ A higher historical pay-out ratio (around 90%) which was material to finance the
parent company (Pagnossin).
1
We consider the use of luxury goods stocks multiples inappropriate for valuing Ginori stock as it is not entirely focused on luxury
goods (e.g. Capodimonte and Richard-Ginori 1735) and since a large part of the products is positioned in the medium high price
segment and most of the distribution is still in non premium locations.
7
cX¦HpHHr¦|¦fc|fH
EV/Sales (x)
2001e
2002e
EV/EBIT (x)
2003e
2001e
2002e
P/E (x)
2003e
2001e
2002e
2003e
Royal Doulton
0.2
0.2
0.2
4.4
4.2
4.1
5.3
2.3
2.3
Churchill China
0.4
0.4
0.4
8.5
8.2
7.9
5.0
4.5
4.4
Arthur Wood
Villeroy & Boch
0.5
0.1
0.4
0.1
0.4
0.1
6.6
1.7
6.3
1.6
5.9
1.5
8.5
9.2
8.9
Portmeirion
0.2
0.2
0.2
2.4
2.3
2.2
6.2
5.5
5.3
Libbey
1.4
1.4
1.3
8.5
8.2
8.0
10.5
9.7
9.4
Group Average
0.2
0.5
0.4
5.3
5.1
4.9
7.1
6.2
6.0
Richard-Ginori @ mkt price
2.3
1.6
1.5
0.7
0.5
0.4
17.0
12.0
10.6
Sources: UBM and IBES estimates
Below, we briefly describe Richard-Ginori’s main listed competitors and their
strategies:
`H r«#f r¦fro rj|#o« has a portfolio of internationally recognised brands
(Minton, Royal Doulton, Royal Albert, John Beswick, Caithness Glass, and Holland
Studio Craft), each of which has its own identity and history. Under each of the
principal brands the Company manufactures and distributes a broad product range,
including dinner tableware and tea services to suit every lifestyle, crystal and glass,
gifts, sculptures as well as specialised tableware for the hotel and airline industry.
`¦6`cff`co#|f6 is a major manufacturer and distributor of high quality ceramic
tableware: it supplies a wide range of ceramic tableware and related products to
customers in the hospitality and home markets around the world through an
extensive network of retailers, agents and distributors.
cffHr« & r6`, founded in 1748, have adopted a single brand strategy for all the
countries, in order to conquer the middle and upper market segments. All products
are sold under the same name “The House of Villeroy & Boch”; the group has a wide
offer, including bathrooms and kitchen sinks and tiles.
#HQr?H?X©rr? is one of the world’s leading luxury branded ceramic, crystal
and cookware producers with four world class brands – Waterford Crystal,
Wedgwood, Rosenthal and All-Clad. Waterford Crystal comprises the manufacture,
distribution and retailing of high quality crystal products including giftware,
stemware and lighting ware. Wedgwood comprises the manufacturing, distribution
and retailing of high quality bone china giftware and tableware under the
Wedgwood brand. Rosenthal is a premium ceramics manufacturer based in Germany.
All-Clad is a manufacturer of high quality cookware based in Pennsylvania. Its
products are marketed primarily in the United States. Recently, Waterford Wedgwood
announced a Tender Offer for the 15.38% of Rosenthal AG that it does not already
own. The Tender Offer is at a price of ¤100 per share.
rjHccrorHcH, a British ceramic producer, manufactures an extensive range
of tableware, cookware, kitchenware and giftware that are marketed with a wide
range of co-ordinating accessories in diverse materials. Portmeirion is also actively
involved in the distribution of complementary products from selected partners. In the
UK, Portmeirion is sold by a wide spectrum of good quality retailers, primarily
specialists and department stores. Export sales account for approximately 60% of the
turnover and are made largely through appointed distributors and agents in over 50
different countries worldwide. In 1988, the company was first floated on the London
stock market. The group is pursuing a strategy of developing associated homeware
and gift product ranges under the Portmeirion brand (e.g. glassware, candles). This
diversification continues into textiles and metal products: the management of the
company believes the Portmeirion brand can encompass a broadening homeware and
gift range that concentrates on design excellence and quality.
8
cX¦Hu®HHr¦|L¦or¨H&rQc#,cfc«~jcffcrorQfr6#f6¦Ho6«
1994
Royal Doulton - GBP
Turnover
227.52
Operating Income
15.15
% of Sales
Net Income
6.7%
10.12
% of Sales
4.4%
Churchill China - GBP
Turnover
D%
95/94
1995
6.7% 242.83
14.0%
17.27
10.8%
7.1%
11.21
D%
96/95
1996
3.7% 251.81
11.3%
6.3%
4.6%
19.23
D%
97/96
1997
0.1% 252.16
6.4%
D%
98/97
8.1%
3.76
4.7%
1.5%
n.m.
9.70
4.1%
-37.90
42.40
11.0%
47.06
15.0%
54.11
-0.5%
3.27
39.8%
4.57
25.4%
5.73
0.2%
5.74 -79.4%
1.18
% of Sales
Net Income
7.7%
2.44
43.0%
9.7%
3.49
22.6%
10.6%
4.28
-0.5%
10.7%
4.26 -76.5%
2.3%
1.00
% of Sales
5.8%
Rosenthal - EUR
Turnover
Operating Income
185.23
4.11
7.9%
7.9%
-8.8% 168.93 -3.0% 163.84
n.m.
-4.58 -95.6%
-0.20
-2.2% 160.19
n.m.
2.13
% of Sales
Net Income
2.2%
0.01
% of Sales
0.0%
Portmeirion - GBP
Turnover
Operating Income
27.46
4.45
11.9%
13.7%
30.74
5.06
3.0%
18.0%
% of Sales
Net Income
16.2%
3.16
14.6%
16.5%
3.62
16.9%
% of Sales
11.5%
Libbey - USD
Turnover
335.88
-5.7%
-3.9% 182.80
-14.70
-9.2%
-8.0%
-8.60
-18.1%
-4.7%
45.58
9.5%
n.m.
-0.40
n.m.
2.40
n.m.
-0.9%
-4.13
n.m.
4.8%
1.85
-9.1%
49.91
3.7%
1.0% 161.74
3.9% 168.04 18.1% 198.50
85.9%
3.96 -77.3%
0.90 824.4%
8.32
-2.7%
-8.96 178.2%
-0.1%
-24.93 -62.5%
1.3%
-9.36
-5.3%
-15.2%
-5.8%
1.0%
-1.2%
31.67 -2.8%
5.97 -18.3%
30.79 -15.5%
4.88 -76.6%
26.01
5.6%
1.14 107.0%
27.47
2.36
11.9%
17.4%
30.73
2.77
18.9%
4.23 -13.9%
15.8%
3.64 -90.4%
4.4%
0.35 448.6%
8.6%
1.92
20.3%
9.0%
2.31
11.8%
13.4%
11.8%
1.3%
7.0%
7.5%
6.5% 357.55
11.2% 397.66
3.6% 411.97
6.0% 436.52
5.5% 460.59
-4.1% 441.83
n.m.
2.4%
60.65
10.6%
17.0%
30.02
% of Sales
8.1%
8.4%
8.2%
8.8%
5.8%
824.28
-8.0% 758.16
-2.0% 742.98
-0.9% 736.52
4.8% 772.24
97.53 -87.1%
12.58
% of Sales
Net Income
11.8%
31.47 -44.6%
1.7%
17.42
2.3%
64.50
8.4%
16.2%
32.55
2.4%
1.58
17.6%
27.15
Operating Income
6.3%
n.m.
% of Sales
Net Income
3.8%
2000
-9.7%
-34.40 -75.0%
2.0%
59.22
% of Sales
D%
00/99
-18.50 -20.5%
50.77 -10.2%
Operating Income
Villeroy & Boch - EUR
Turnover
1999
n.m.
-15.9%
Operating Income
7.4%
53.85
D%
99/98
-5.3% 238.80 -20.3% 190.30
20.46 -52.6%
7.6%
11.92 -68.5%
1998
4.4%
67.37 -10.4%
60.38
11.0%
16.4%
36.13 -29.6%
13.8%
25.44
n.m.
-13.88 -94.4%
-0.78
n.m.
-1.9%
-52.66
-0.1%
19.59 -41.8%
-7.1%
n.m.
n.m.
2.7%
15.45
n.m.
0.5%
-2.04
23.9%
74.83
70.7%
16.2%
43.43
n.m.
4.2%
4.32
2.2%
-0.3%
74.64
7.9%
16.9%
46.87
9.4%
10.6%
8.0% 834.17
12.6% 939.59
73.9%
26.87
57.9%
42.43
2.0%
11.40 113.7%
3.2%
24.36
1.9%
4.5%
24.82
1.5%
2.9%
2.6%
Richard Ginori - EUR
Turnover
n.a.
n.a.
n.a.
35.73
-0.7%
35.49
22.8%
43.59
5.6%
46.05
Operating Income
n.a.
n.a.
n.a.
6.09
75.7%
10.70
-1.7%
10.52
17.4%
12.35
% of Sales
Net Income
n.a.
n.a.
n.a.
17.1%
1.02 297.3%
30.2%
4.05
12.8%
24.1%
4.57
6.1%
26.8%
4.85
% of Sales
2.9%
11.4%
10.5%
10.5%
Sources: UBM and Bloomberg.
9
2.6 Target Price
Following the above DCF, EVA® and DDM valuations and the considerations on the
peer Group valuation, we believe that Richard-Ginori’s fair price is ¤1.6 per share,
implying a potential upside of 16% on current market price over the next 12 months.
Furthermore, we have not applied a discount for stock liquidity given that Ginori’s
entry into the specialist STAR segment of the Italian Stock Exchange should ensure
good liquidity on the back of specialist Italian broker activity.
Valuation Model
Target Price (¤ per share)
Dividend Discount Model
1.7
Discounted Cash Flow
1.7
EVA®
1.5
Average
Upside potential %
1.6
16%
Hocc¨c«o#f«c
Based on a sensitivity analysis of the worst case scenario of deep world-wide
recession, Ginori’s fair value would be –17% compared to current market prices (sales
decrease 15% in 2002 and increase 3% in 2003, while EBIT margins decrease 3% in
2002 and decrease 2% in 2003). Projections for the remaining years in the eight-year
cycle would stay unchanged with respect to our previous base case.
10
3. Company overview
Richard-Ginori is the leading Italian manufacturer in high quality porcelain tableware
and luxury ornaments and is the only company in Italy to manufacture articles in
bone china.
3.1 The Pagnossin Group
The Pagnossin Group and the entrepreneur Carlo Rinaldini, which hold directly and
indirectly 77.34% of shares, control Richard-Ginori.
The Pagnossin Group, at the end of 2000, operated in three business segments: (see
Figure 11 and Figure 12):
¤ The manufacturing of plates, cups and table services and complementary fittings,
including artistic fittings, produced in ironstone strong ceramic. The parent
company Pagnossin S.p.A. is specialised in the middle price range of the market
and offers coloured products. (23.7% of consolidated sales in 2000)
¤ Richard-Ginori 1735 and its subsidiaries carry on the porcelain and bone china
production. Richard-Ginori’s structure is organised by geographic markets and
segments served. (64.7% of consolidated sales in 2000)
¤ The manufacturing of terracotta vases and pots and high quality complementary
fittings, that is concentrated in the Vaserie Trevigiane International S.p.A. (11.6%
of consolidated sales in 2000). Pagnossin has recently dismissed 65% of this
business segment to Pragma Financial Ltd and the remaining 35% should be sold
shortly.
cX¦Huur¦|¦6¦H
Rinaldini Family
35%
VASERIE TREVIGIANE INT. S.p.A.
52.0%
70.0%
Cop. 84 S.r.l. Cooperazione Padana
PAGNOSSIN S.p.A.
To be completely dismissed
100%
Retma Holding B.V.
74.9%
TARGETS
RICHARD-GINORI 1735 S.p.A.
Country
99.0%
Activity
Brand Promotion
Museo Richard-Ginori 1735 S.r.l.
Italy
50.0%
100%
100%
100%
99.8%
50.0%
Publishing House
Gastronomy
Editrice L’Italia a Tavola S.r.l.
Richard-Ginori 1735 INC
USA / North America
Commercialization
Richard-Ginori 1735 PTY
Australia
Commercialization
Richard-Ginori (Svizzera) SA
Switzerland
Foxtown Shop
Laure Japy France et RG
France
Richard Ginori Japan
Japan
Business Segments:
= Terracotta
flower pots
= Porcelain
= Ceramic
Laure Japy Branded Products
Commercialization
Source: Company data.
11
cX¦Hu¤#Xorcor¦|Lrorfc?#H?#fH,«HXjHo~Ho?¤®®®
65% already dismissed
Terracotta vases
11.6%
Ceramic
23.7%
Porcelain
64.7%
Source: Company data.
3.2 Richard-Ginori overview
r?¦6&#o?
Porcelain falls within the largest category of ceramic material products made of,
which is divided into: (i) Ceramics and (ii) Porcelain
Hard porcelain and
bone china are Richard
Ginori’s specialities
¤
The porcelain sector includes articles made from:
¤ Vitreous china, a thin translucent material which represents the intermediate
stage in the transformation from china to porcelain.
¤ Soft porcelain, which is fired at a lower temperature than hard porcelain, with the
use of a higher percentage of fluidisers and pure kaolin to maintain the white
colour and the translucency.
¤ Hard porcelain, which is generally defined as ‘real’ porcelain. The classic
composition is 50% clay, 25% feldspar and 25% quartz.
¤ Bone china (phosphatic porcelain), which is originally an English product made
from, among other things, calcium phosphate, obtained originally from the
calcification of animal bones. Bone china is different from the hard porcelain for
the following reasons: a better shine given by the rare and expensive raw
materials, a palette of colours enriched with brighter and warmer tonalities and a
better resistance to impact and to splintering.
Richard-Ginori manufactures only hard porcelain and bone china.
Within these two sectors, Richard-Ginori products can then be divided into three
different classes, which present certain specific characteristics in terms of their
manufacturing, the relationship between price and quality, and the use of the article
and its artistic content:
¤ Porcelain tableware products, giftware and household goods. Such products are
characterised by refinement and the aesthetic value of their content, as well as by
the functionality of their forms, which fulfil the most modern design
requirements, whilst respecting a consolidated tradition. These articles are sold
mainly through specialised shops. Table collections may be grouped into three
categories: hand decorated (the most prestigious one), fine porcelain and bone
china products
12
¤ Products for hotels and coffee shops. These are articles made of doubly thick
porcelain, which provides the robustness specifically requested for this use. The
products are decorated in detail, but with a more sober and basic artistic content
than for objects intended for private consumers; often the decorations are
personalised at the specific request of the client. The price per kilogram of the
porcelain made for hotels, restaurants and coffee-bars is, on average,
approximately half the price per kilogram of the porcelain of products made for
private clients
¤ Artistic goods and Capodimonte statuettes. These are products with a very high
level of artistic content and quality, principally made using very old models and
handcrafted by expert craftsmen. The majority of these products are made
according to original designs and models bought at the beginning of the 19th
century from the famous Capodimonte factory. To celebrate the Jubilee of 2000,
the Florentine Factory has produced a new wide collection of objects.
Production takes place in the factories in Sesto Fiorentino (Florence) where hard
porcelain products are manufactured and decorated and in Laveno Mombello
(Varese), where bone china products are manufactured.
The figure below illustrates the manufacturing process of ceramics at the Sesto
Fiorentino factory.
cX¦Hu#o¦Q#6¦coXr6H
Washery
Modelling
Manufacture
Moulding on the lathe
Manufacture by hand
Pouring
Moulding by pressing
Fining and glazing
Pouring under pressure
Grades and polishing
Packaging and shipping
Source: Richard-Ginori.
Richard-Ginori brands are actually positioned in 2 price segments:
Higher end of the market: the following types of products and brands are used:
“Richard Ginori 1735 – Manifattura di Doccia (Golden letters)” which are
representative of all the very high end segment in particular for the following
products collection: porcelain tableware sets and bone china; crystal goblets;
silver cutlery; lamps for interiors and office; porcelain jewels to be distributed
in the jewellery stores.
¤ “Richard Ginori 1735”: all products (except for porcelain) with very high
feature of quality, and a positioning in terms of pricing lower by nearly 20%.
¤
13
¤
“Manifattura di Laveno”: in Laveno, Richard-Ginori produces bone-china
tableware products.
Medium Segment: the following types of products and brands are used:
¤ “Hotel and Restaurant” customers are made up of 10% of the higher end
segment of the 35,000 Italian hotels and restaurants. The brand used is
“Ginori.” In 2001 the company expects a 20% growth in this segment due to
the increasing quality standards in the Italian hotels and restaurants together
with Ginori restructuring of its dealers network. The Group is also present in
the public administration sector such as the representation offices of the Italian
government ministries. The Group is in a phase of sign contracts for
collaboration with the main Italian coffee producers (Illy, Segafredo ecc.) to
supply coffee cups from which consistent sales volumes are expected. All the
marketing actions are aimed at enhancing the Richard Ginori brand value
world-wide, indeed the focus of the company is on product quality and
different distribution methods. To strengthen its position in the hotel channel,
Richard-Ginori is restructuring its distribution structure.
¤ White porcelain in the Ginori Group is aimed at daily use but still respects the
traditional Ginori design and quality.
cX¦HuV#cor?¦6#o?#o?
Hand-decorated
Fine Porcelain
Bone china
Manifattura di Laveno
Artistic Objects and Jewelry
Products for hotels and coffee-shops
White Porcelain
Sources: UBM and Richard-Ginori.
rj|Hcc¨H|rccrocoX
Less extensive but more
exclusive product
ranges, compared to its
competitors
¤
Richard-Ginori has one of the least extensive product portfolios, compared to its
peers. Other companies offer a wide range of products, not only strictly in the
ceramic segment. This is due to the fact that they are more oriented to the medium
price segment and mass market.
We have grouped all products in nine categories and the table below compares
Richard-Ginori’s product portfolio to that of its main competitors.
14
cX¦HuSr?¦6rQrfcr
Richard-Ginori Villeroy & Boch
Consumers:
Porcelain
Wedgwood
Royal Doulton
Portmeirion Churchill China
x
x
x
x
x
Crystal
Cutlery
x
x
x
x
x
x
x
Ceramic accessories
x
x
x
x
Textile accessories
Furniture
x
x
x
x
x
x
x
x
x
x
Cutlery
Stemware
Ceramic accessories
x
x
Cookware
Hotels & Restaurants:
Dinnerware
x
x
Libbey
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Textile accessories
Cookware
x
x
x
x
x
x
x
Artistic Objects
x
x
Objects (Vases, etc.)
x
x
x
x
x
Limited Collections
x
x
x
x
x
Corporate Gifts
x
x
x
x
Jewellery
+
x
x
Bathrooms & Kitchen sinks
x
x
Tiles
x
x
Source: UBM. + To be launched at the end of September.
fcHo<cc,¦cro`#ooHf#o?#eH
Richard-Ginori’s clients can be grouped into two main categories, each one with a
specific product range and a dedicated distribution channel:
¤ Private consumers and general public;
¤ Hotels and catering operators: Richard-Ginori has dealings with the most
glamorous hotels, restaurants, cruise companies, ministries, bars and
confectioner's shops. The Richard-Ginori brand guarantees a continuity of product
and personalised decorations according to the customers’ exclusive aesthetic
choices.
Italy
In Italy, products are marketed through the following distribution channels:
¤ Specialised retailers: approximately 1,000 shops, reached by a network of 20
agents, each of them with exclusive geographical areas.
¤ Institutional channels: hotels, restaurants, coffee shops, canteens, clubs and
airlines are served by a network of 25 specifically dedicated agents and by the
direct management of the Company. In this case, the post-sale assistance is
important, particularly in replacing broken items. The hotel segment also targets
the readers of the gastronomic magazine “A Tavola”, edited by the “L’Italia a
tavola Srl”.
15
cX¦Hu#fc#o#fHcª,«`#ooHfL#f«~>j
1995
1996
1997
1998
1999
9.0
9.5
10.9
13.1
14.8
14.9
YoY %Change
Hotels
5.3
5.3%
5.1
14.1%
5.5
20.4%
7.2
13.0%
7.5
1.0%
7.7
YoY %Change
Richard –Ginori Shops
2.8
-4.2%
2.2
9.1%
2.5
31.1%
1.6
3.1%
1.6
3.0%
1.6
YoY %Change
Others
5.5
-23.0%
5.4
14.2%
4.2
-37.6%
3.4
5.8%
3.8
-2.1%
5.0
Retail
YoY %Change
2000
-1.4%
-23.1%
-19.0%
12.3%
30.7%
22.6
22.2
-2.1%
23.0
3.9%
25.2
9.6%
27.7
9.6%
29.2
5.4%
% breakdown
Retail
Hotels
39.9%
23.4%
42.9%
22.8%
47.1%
24.0%
51.8%
28.7%
53.4%
27.0%
51.2%
26.4%
Shops
12.5%
9.8%
10.8%
6.2%
5.9%
5.5%
Others
24.3%
24.4%
18.1%
13.4%
13.7%
17.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Total Sales - Italy
YoY %Change
Total Sales – Italy
Source: Company data and UBM.
Foreign countries
More than 30% of total sales are realised abroad. Figure 17 shows the most
important markets where products are sold.
cX¦Hu#fHcª,«#eH~>j
1995
1996
1997
1998
1999
22.6
22.2
23.0
25.2
27.7
29.2
YoY % Change
Japan
4.5
-2.1%
5.2
3.9%
6.5
9.6%
3.9
9.6%
8.5
5.4%
9.5
YoY % Change
USA
1.1
16.7%
0.8
25.5%
0.9
-39.9%
0.7
117.6%
0.6
11.5%
1.1
YoY % Change
France
0.9
-32.8%
0.7
18.4%
1.1
-27.9%
1.7
-12.9%
0.6
95.4%
0.6
YoY % Change
Others
7.0
-22.6%
6.0
58.4%
4.1
47.3%
3.8
-64.5%
6.1
-5.3%
5.4
-14.5%
-31.7%
-5.9%
58.4%
-10.6%
34.8
35.7
35.3
43.5
45.8
a
¤V
au®
¤®
SV
Italy
YoY % Change
Total Sales
36.1
!r!`#oXH
2000
% breakdown
Italy
62.6%
63.6%
64.5%
71.4%
63.7%
63.7%
Japan
USA
12.3%
3.1%
14.9%
2.2%
18.3%
2.5%
11.1%
1.8%
19.7%
1.3%
20.8%
2.4%
France
2.6%
2.1%
3.2%
4.7%
1.4%
1.2%
Others
19.3%
17.2%
11.4%
10.9%
14.0%
11.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Total Sales
Source: Company data and UBM.
¤ In France, the group operates through its subsidiary Laure Japy France et RG S.A.
The company sells luxury tableware products through its points of sale branded
Laure Japy. The branch was acquired in 1998 through judiciary liquidation.
¤ In Japan, Richard-Ginori has created a 50% Joint Venture held by Itochu
Corporation which has gained exclusive import and retail rights in Japan until
2004. The group intends to establish a stable, long-term presence in Japan, which
is an attractive market for luxury Italian products. Through this joint venture with
Itochu, Richard-Ginori expects to gain an even stronger foothold in Japan.
Products will be distributed through directly operated stores and counters within
department stores. In Japan, small shops selling imported tableware have become
16
extremely popular, particularly among young women. Ideally positioned to tap
this demand, Richard-Ginori Japan will strive to solidify the Ginori brand’s position
at the top end of Japan’s market for imported fine porcelain. The commercial
margin of Japan is around 40.4%
¤ In the United States, the group has a totally controlled subsidiary (Richard-Ginori
1735 Inc.), whose activity is the commercialisation of products in the North
American market. Products are sold in most famous department stores (Fortunoff,
Bergdorf Goodman, M.C. Fina, Saks Fifth Avenue, Neimen & Marcus, RossSimons). Before the end of this year, the Company intends to sign an agreement
with Bloomingdale’s and Dayton Hudson.
3.3 Shareholder structure
Carlo Rinaldini is Richard-Ginori’s major shareholder with a current stake of 77.34%.
cX¦HuI`#H`rf?H¦6¦H
% with Voting Rights
Retma Holding BV
Pagnossin SpA
Richard Ginori 1735 SpA
Carlo Rinaldini
Iniziativa SA
Free float
Total
74.89
0.36
2.09
77.34
2.04
20.62
100.00
Source: Consob.
17
cX¦Hup#co
co#o6c#f##
Values per Share (¤)
2000
2001E
2002E
2003E
2004E
No. of Ordinary Shares (mil)
EPS
90.8
0.05
90.8
0.08
90.8
0.12
90.8
0.13
90.8
0.15
EPS Adj.
0.05
0.08
0.12
0.13
0.15
CEPS
BVPS
0.08
0.53
0.11
0.59
0.15
0.68
0.17
0.75
0.19
0.82
Dividend
0.05
0.06
0.08
0.09
0.10
Income Statement (¤m)
2000
2001E
2002E
2003E
2004E
Sales
46.0
55.7
90.9
101.5
111.2
EBITDA
EBIT
12.4
9.0
16.9
13.7
23.7
20.0
27.2
23.1
30.3
25.8
Pre-tax Income
8.6
13.3
19.0
21.4
24.3
Net Income
Adj. Net Income
4.9
4.7
7.4
7.4
10.5
10.5
11.8
11.8
13.4
13.4
Cash Flow (¤m)
2000
2001E
2002E
2003E
2004E
4.9
2.7
7.4
2.8
10.5
3.0
11.8
3.3
13.4
3.7
Dividends
Gross Cash Flow
-4.2
3.3
-4.5
5.7
-5.2
8.4
-7.3
7.8
-8.3
8.8
Capital Expenditure
-5.3
-2.6
-11.9
-4.7
-5.1
D Working Capital
D Net Worth
Other
-3.3
0.0
-2.8
2.6
-25.2
3.1
-6.7
1.3
-5.9
1.6
0.3
1.7
5.3
2.2
2.1
Net Cash Flow
-5.0
4.7
-20.3
-0.1
1.5
2000
2001E
2002E
2003E
2004E
Fixed & LT Assets
Working Capital
23.9
38.5
23.6
41.3
32.5
66.6
33.8
73.3
35.3
79.2
Capital Employed
62.4
64.9
99.1
107.2
114.5
Net Cash (Debt)
Funds
-7.8
6.7
-3.1
8.4
-23.5
13.7
-23.6
15.9
-22.0
18.0
Net Income
Balance Sheet (¤m)
Minorities
0.0
0.0
0.0
0.0
0.0
Net Equity
Enterprise Value
48.0
105.8
53.4
128.5
61.8
148.9
67.7
148.9
74.4
147.4
Stock Market Ratios
2000
2001E
2002E
2003E
2004E
P/E
P/CEPS
20.2
13.0
17.0
12.3
12.0
9.3
10.6
8.3
9.3
7.3
P/BVPS
Dividend Yield (%)
2.0
4.5%
2.3
4.1%
2.0
5.9%
1.9
6.6%
1.7
7.5%
2.3
2.3
1.6
1.5
1.3
8.6
11.8
7.6
9.4
6.3
7.5
5.5
6.4
4.9
5.7
1.7
2.0
1.5
1.4
1.3
EV/Sales
EV/EBITDA
EV/EBIT
EV/CE
Profitability & Financial Ratios
EBITDA Margin (%)
EBIT Margin (%)
Tax Rate (%)
Net Income Margin (%)
ROE (%)
D/E
Interest Cover
Growth
Sales (%)
EBIT (%)
Pre-tax Income (%)
Net Income (%)
Adj. Net Income (%)
18
2000
2001E
2002E
2003E
2004E
26.8%
30.4%
26.0%
26.8%
27.3%
19.5%
-43.9%
24.6%
45.0%
22.0%
45.0%
22.7%
45.0%
23.2%
45.0%
10.2%
13.2%
11.5%
11.6%
12.1%
9.8%
0.2
13.8%
0.1
16.9%
0.4
17.5%
0.3
18.0%
0.3
n.m.
36.4
20.2
13.7
16.8
2000
2001E
2002E
2003E
2004E
5.6%
20.9%
63.3%
11.7%
9.5%
14.6%
2.9%
52.6%
54.7%
45.7%
42.4%
15.7%
12.8%
11.8%
13.4%
6%
52%
42%
13%
13%
3.1%
57.0%
42.4%
12.8%
13.4%
4. Strategy and SWOT
¤ Richard-Ginori products are currently positioned in the higher end
segment of the market, with a strong and recognised brand
¤ The Group is extending its products into porcelain jewellery together
with the search of a distribution agreement with a high end fashion
brand which will positively impact on operating margins
¤ In order to reach critical mass the management plans to develop into
the medium price segment through an acquisition
¤ Geographical expansion and development of the existing distribution
network will create a strong basis for sales and margins growth
4.1 Strategic plan
New strategy to protect
brand exclusiveness
¤
At present, the management is implementing a new strategy aiming at preserving the
premium price deriving from brand and thus margins together with an increase of
critical mass of the Group. All new corporate actions will enable the optimisation of
the efficiency and capital return of the Company’s activities with particular regards to
the manufacturing and distribution of products.
The new strategy will be driven by the following current objectives:
¤ The completion of the brand portfolio, by creating specialised brands in terms of
products and customers targeted
¤ A rationalisation of the current distribution structure and marketing campaigns to
avoid overlapping and to reach new clients
Product extension to
luxury goods such as
porcelain jewellery...
¤
H© r?¦6 Qr `H `cX` Ho? HXjHo< j#eHH? ¦o?H `H
c6`#?acorc,#o?
The Company intends to strengthen and develop its presence in the luxury goods
market, by bringing into effect a production diversification and client targeting. The
following actions are being pursued:
¤ The reinforcing of its presence in luxury goods and objects (lamps, office sets,
¤
¤
¤
¤
... possibly with global
luxury firm for
distribution and
marketing
¤
pots, etc.): these collateral sectors will grow substantially during the next few
years.
Penetration of the jewellery channel by creating new products (cuff links,
brooches, eardrops, etc.) in which silver, gold and porcelain are artistically
blended.
Engaging the Research & Development Department in studying new designs and
luxury decors in order to renew its current portfolio, in accordance with changes
in client and market needs.
The augmentation of its presence in the Corporate Gifts sector, where demand
seems more oriented towards luxury goods.
The extension into the luxury home lifestyle will be done through advertising and
marketing PR, new products, together with new and upgraded distribution
channels.
According to the management there is also the possibility of a close agreement with
a world-wide known firm in the luxury sector, for a co-operation in the marketing of
branded ceramic articles in the higher segment of the Group. Richard-Ginori should
penetrate this new distribution network and reach new potential high-end market
customers. We value this kind of agreement very positively as in the medium termit
will enhance the Richard Ginori brand world-wide.
19
Furthermore the Group plans to extend its range of products into the silver cutlery
sector to expand its brand space and visibility in department stores.
Brand specialisation to
segment clients and
market
¤
ª|#ocro co `H jH?c¦j HXjHo `r¦X` #6¦cccro r ,#o?
HªHocro
Below we summarise the new main value-creation drivers for Richard-Ginori. The
different brands of the group specialise in specific price and product segments.
Indeed, the management in particular wants to preserve the Richard-Ginori premium
price and extend the products offered, and at the same time avoid mass-market
competition.
cX¦H¤®#o?|H6c#fc#cro#o?r?¦6HªHocro
Brand
Richard-Ginori
Products marketed
Hand decorated products
Porcelain Jewellery
Artistic collections
Capodimonte Statuettes
Silver Cutlery
Manifattura di Laveno
New brand acquired
Pagnossin
Luxury ceramic products
Everyday porcelain tableware
(medium price segment)
Ironstone ceramic products
Target: young people
Characteristics: coloured and medium price
Source: UBM on Richard-Ginori. As discussed in the paragraph of group presentation, Pagnossin is dismissing the
terracotta vases business, not having a critical mass for competing in this market.
The Group plans to
expand into medium
segment of porcelain
products through an
acquisition
¤
¤ According to management information, the Group is planning to expand into the
medium segment through an acquisition. The Ginori brand is looking for a brand
of porcelain to be used mainly for everyday tableware and for young couples,
specifically targeted at middle range customers, who are seeking a good quality
product at a reasonable price.
¤ Under the Group reorganisation process, the Pagnossin brand will be used for
ironstone ceramic products, targeting young people in particular, as the products
are characterised by strong colours and medium prices.
¤ The existing brand “Manifattura di Laveno – Richard Ginori Group” will be used to
launch luxury ceramic products that would also allow Ginori to produce high
margins.
We believe that extension into medium segment through separate brands is very
positive for the Group since it prevents a risk of a decrease in brand exclusiveness and
in the “Ginori” premium price in the medium term. Indeed the Ginori management
will strictly control the brand-segment marketing levers:
¤ New separate advertising campaigns that give good visibility and prestige to the
Richard Ginori brand for the product ranges in the various segments;
¤ Strict control of the distribution network and the methods used to display the
products for the various segments; e.g. the Group has created a separate display
concept in order to differentiate the Richard Ginori products and the products by
“Manifattura di Laveno” Richard Ginori Group.
20
Expansion and
reorganisation of
distribution channels in
key foreign markets
¤
HrX#|`c6#fHª|#ocro#o??cc,¦cro6`#ooHfHrX#oc#cro
The group intends to consolidate its presence in key foreign markets, in particular
Japan, USA and France.
Japan
In Japan, expansion will continue. The group is reaching good commercial results
through the Joint Venture with Itochu Corporation. The trading company is currently
managing a flagship and another two will be opened by the end of the year. In
addition, products are distributed in 73 Department Stores, but the objective for
2001 is to reach 100.
USA
In the USA, the subsidiary commercialises products in the most important
Department Stores (Fortunoff, Bergdorf Goodman, MC Fina, Saks Fifth Avenue,
Neimen & Marcus, Ross-Simons). By the end of the year they will also move into
Bloomingdale’s and Dayton Hudson. We think that good results will only be achieved
in the medium term. The subsidiary is still a start-up.
UK
The UK is one of the most important markets in Europe with high margins for Richard
Ginori Group (equivalent to Japan). After solving the problem of parallel importation,
partly caused by the former distributor, the growth rate for the Group should almost
reach nearly 15%.
France
In France, after acquiring Laure Japy, they made the strategic mistake of transferring
production from Limoges to Italy. This has caused enormous problems and delays in
deliveries and productions. As of September 2000, Richard-Ginori has signed an
agreement with Lafarges, to re-transfer production to France: the supplier has
assured high qualitative standards and deliveries. Losses will be reduced in 2002, and
we expect to reach breakeven in 2003-2004.
4.2 The group reorganisation
Re-organisation of the
Group through a
streamlining of the
corporate structure
¤
The current group structure is the result of the Pagnossin Group’s acquisition of
Richard-Ginori in 1997. During this period, the two corporate structures have been
managed separately, with low integration between them. According to the
management, in the medium term, some actions that could reorganise and simplify
the current group structure will be implemented.
cX¦H¤u`HH©r¦|¦6¦H
Rinaldini family
Centralized Services
HOLDING COMPANY
•Supply
•Logistics
•Marketing
•Finance & Controlling
52.0%
74.9%
Pagnossin
Richard- Ginori
< 100%
Real Estate
Activities
• Ceramic
• Porcelain
• Laveno
Production concentrated
in Treviso
• Bone-china
• Sesto Fiorentino
= Assets for cash swap
= Spin-off of non-core production sites
Source: UBM estimates on Richard Ginori
21
cX¦H¤¤r¦|HrX#oc#cro
Actions
Brands & Corporate structure
Business Segments
Porcelain
Bone-china
Ceramic
Production sites
The management wants to extend Production should be reorganised as
use of the “Richard-Ginori” brand to follows:
porcelain jewellery products.
¤ Laveno: by the end of 2002,
production will have been
The brand “Manifattura di Laveno”
transferred to Treviso.
(or a new acquired brand) will be
dedicated to medium-price porcelain ¤ Treviso: ironstone ceramic and
bone-china products
products.
Sesto Fiorentino: high-quality
The “Pagnossin” brand will fit in ¤ porcelain,
hand-decorated
perfectly
with
medium
price
products in the historical
products. The group would invest in
“Manifattura di Doccia”
marketing activities for reinforcing
The
site in Laveno will either be
brand recognition, especially aimed
dismissed
or converted for other
at young people.
uses. Within three months the
In 2002, Pagnossin’s sales and assets ground in Sesto will become a
will be transferred in exchange for building site.
cash to Richard-Ginori.
Some of the real estate assets
Distribution
Richard-Ginori high and medium
price segment products (Italy and
abroad):
¤ Specialised retailers
¤ Richard-Ginori shops
¤ Top department stores
The Pagnossin group distributes its
medium price products (Italy and
abroad) through:
¤ Wholesalers
¤ Supermarkets
The group will create a unique
logistic platform within the group
and a single management software
unessential to production capacity
will be dismissed in the mediumterm period (2003).
The Pagnossin group has already sold 65% of this business segment.
Terracotta vases The remaining 35% will be sold shortly.
Sources: Richard-Ginori and UBM estimates.
We expand some of the points made in the above table:
Spin-off of real-estate
assets into a NewCo.
will create value in
2003
¤
The management declares that following the reorganisation of production sites, noncore fixed assets will be spun-off to create value for the Group. Indeed the company
intends to spin-off industrial land and change these into areas for residential use,
which will enhance their value to nearly ¤10.3 million. According to management
information, in 2003 the building area will of nearly 600 flats (average of 80 square
metres each) with a commercial value of around ¤2000 per square metre (vs. a
construction cost of ¤775 per square metre). However, we have excluded the real
estate activities’ value from our projections due to:
However we exclude
these values from our
valuation as they are
not core business
activities and one-off
features
¤
¤ The inability to assess the value of these assets independently and correctly;
¤ The non-core characteristic of the real estate business into the Ginori Group;
¤ The extraordinary feature of this income activity (it is only one-off).
We positively view the fact that the management is now considering a serious group
reorganisation. The value of possible synergies could be estimated at ¤1.5-2.0 million.
The functions involved will be:
¤ Production
¤ Logistics
¤ Marketing & Commercialisation
In the terracotta vases segment the group does not have a competitive critical mass.
Consequently at the end of June 2001, the Pagnossin group has sold 65% of
terracotta pots business segment to Pragma Financial Ltd (UK) and the remaining
35% will be sold shortly.
22
4.3 SWOT Analysis
cX¦H¤o#f«c
Strengths
Weaknesses
¤ Since the beginning, Richard-Ginori has been building up a high
¤ In recent years, the group has neglected the distribution
brand reputation around the world especially through exclusive
structure, which is now one of main weaknesses especially in
products (Capodimonte) which allow the company to charge a
the European markets. The company has also suffered from
premium on its products.
parallel imports in many countries (e.g. Japan and UK). Indeed
¤ Personalisation of decorations helps the company create stable
relationships with its major clients in the hotel segment. In fact,
an appreciated characteristic is the continuity of designs for the
product replacement in the catering sector.
¤ Decorations of XVIII century are unique and can be easily
adapted to new porcelain jewellery products.
the management is trying to reorganise the distribution process,
with results that will only be achieved in medium term.
¤ In the top end of the market, Ginori’s capacity production is
limited due to oven processing;
¤ The inventory management is difficult which is resulting in a
total inventory of more than 50% of annual sales.
¤ The group is closely linked to the district of Florence, known for
¤ Compared to other major competitors, Richard-Ginori does not
its highly specialised handcrafts. Unfortunately professional
have a whole product portfolio extension into other related
training is long and handcrafts are rare. Consequently the
segments
Group has developed a local training program to form new
management is preparing the launch of new products, such as
resources in this very specialised field (handcrafts specialist grew
jewels, lamps, etc.
of
porcelain
made
products.
However
the
in 2001).
Opportunities
Threats
¤ Geographical expansion to new markets (e.g. Asia, Japan, South
¤ The new product extension strategy through specific brands
America, etc.). The company can increase both its sales and
(Ginori, Laveno and Pagnossin) could create managerial
brand recognition due to: (i) the “Italian Style” which is
problems. In fact, the management of a growing structure is
appreciated and well known around the world; (ii) in particular
more difficult in terms of distribution channels, advertising
South America penetration might be easier due to the vast
campaigns, for avoiding overlapping, etc.
presence of the Italian community.
¤
¤ To concentrate the attention on medium-price products will
Richard-Ginori intends to enlarge its product portfolio by
create higher exposure to economic cycle, because consumers’
introducing new products (lamps, crystalware, jewellery, etc.) as
behaviour and sales are more price-sensitive. In addition these
already made by the other main competitors.
products are more tied to current fashion and less to classic
¤ The group could outsource some activities to small local
producers, to create a more flexible structure and to augment
the punctuality on carrying out orders.
¤ We positively value the possibility of a close agreement with a
firm in the luxury sector, for a co-operation in the production of
style.
¤ Far east countries have cost advantaged labour and price
concurrence is used to conquer developed markets.
¤ The expansion of product range if not correctly managed could
create overstocking problems.
branded ceramic articles. Richard-Ginori should penetrate this
new distribution network and reach new potential customers.
23
5. Consolidated Financials
¤ Richard-Ginori’s consolidated turnover should grow by an estimated
CAGR of 24.7% in the 2000-2004 period
¤ In the medium term, we expect the strategy will produce an
improvement in current margins, due to rationalisation of group
structure and savings in production (outsourcing), logistics and
marketing. EBIT margin will pick up from 19.5% in 2000 to 23.2% in
2004
¤ In the long term, we envisage that the brand’s premium price will be
maintained, stabilising EBIT margin at around 23-24%. Competitive
pressure will not squeeze margins nor affect overperformance, due to
the fact that the company will remain in the high-price range
¤ Owing to good first-half results, we are confident on reaching the
target by the year end
5.1 1H01 Results
First half results are in line with expectations for the end of 2001:
¤ Sales improved by 16.3% compared to 1H00, due to good commercial results in
the consumers and Business-to-Business segments in Italy. Foreign countries
accounted for 33.5% (+17.4%). USA and European countries drove the growth,
while Asia remained stable. The USA subsidiary totalled sales of US$866,000 and a
net result of US$152,894 (17.7% of sales)
cX¦H¤V#fH,«HXjHo#o?#eH~>j
D%
1H00
1H01
Italy:
Consumers
8.8
11.3
29.0%
Business to Business
Others – Italy
4.0
2.7
4.9
1.8
22.0%
-36.0%
15.5
18.0
15.7%
1.5
0.7
2.7
1.0
79.7%
32.9%
Italy
Foreign Countries:
European Union
America
Asia
4.8
4.7
-1.5%
Other Countries
0.3
0.2
-34.3%
Foreign Countries
7.4
8.7
17.4%
22.9
26.6
16.3%
Total Consolidated Sales
Source: UBM on Richard-Ginori.
¤ Richard-Ginori has low exposure to the American consumer confidence drop
expected after the terrorist attack. Indeed, America represents less than 4% of
total consolidated sales, vs. Italy that accounts for 67.5%.
¤ Margins have been affected by the restructuring process of Laure Japy in France
that is still in operation.
¤ Foreign subsidiaries are developing sales and market penetration rapidly even
though they are still in a start-up phase.
24
cX¦H¤Su#fQ¤®®urorfc?#H?&~>j
1H00
D%
1H01
2001 E
Total sales
Cost of Goods Sold
22.90
-10.13
16.3%
6.0%
26.62
-10.74
55.68
-21.12
Added Value
Value Added/Sales
Labour Cost
12.77
55.8%
-7.54
24.4%
7.0%
3.0%
15.88
59.7%
-7.77
34.56
62.1%
-17.64
EBITDA
EBITDA/Sales
Depreciation & Provisions
5.23
22.8%
-1.74
55.1%
33.4%
10.2%
8.11
30.5%
-1.92
16.92
30.4%
-3.21
EBIT
EBIT/Sales
Financial Items
3.49
15.2%
-0.39
77.5%
52.7%
115.2%
6.20
23.3%
-0.83
13.71
24.6%
-0.38
3.10
-0.01
72.8%
4176.9%
5.36
-0.29
13.33
0.00
3.10
13.5%
-1.76
63.9%
41.0%
43.5%
5.08
19.1%
-2.52
13.33
23.9%
-6.00
Profit from Ordinary Activities
Extraordinary Items
Pre-tax Profit
Pre-tax/Sales
taxes
Minorities
-
-
-
0.03
Net Profit
Net Margin
1.34
5.9%
90.7%
64.1%
2.56
9.6%
7.36
13.2%
Adjusted net profit
1.34
101.1%
2.70
7.36
Source: UBM.
5.2 Consolidated Profit & Losses
r|coH
Sales will be pushed up by two main factors:
¤ Higher efficiency in the distribution structure, especially in foreign markets;
¤ Product extension to ceramic/porcelain jewellery and medium-price porcelain
¤ We have included, as pro-forma, the sales of Pagnossin starting from 2002, when
the group reorganisation will be complete.
Italy
¤ We estimate that sales in the hotel segment will be driven by higher marketing
efforts to existing and new clients,
¤ The retail channel will reach its growth peak at a considerable rate this year,
maintaining a double-digit improvement both in 2002 and 2004.
Key Foreign Markets
We consider the main drivers, for each market will be:
¤ Japan and USA: Richard-Ginori will enter into agreements with new top
Department Stores and their effects will be seen in 2002;
¤ In France, even if only in the medium term, the restructuring of Laure Japy will be
completed and will contribute to group profit;
¤ In UK, Richard-Ginori is stopping parallel imports;
¤ The management is preparing specific business plans to enter new markets with a
local distributor for each: Germany, North Europe countries, Spain, and Latin
America.
25
cX¦H¤rorfc?#H?#fH,«`#ooHf#o?#eH~>j
2000
Italian Sales by Channel
Retail
% growth
Hotels
% growth
Shops
2001 E
2002 E
2003 E
2004 E
14.9
20.9
24.0
28.8
32.3
1.0%
7.7
3.0%
40.0%
8.8
14.2%
15.0%
14.0
60.0%
20.0%
15.9
13.0%
12.0%
17.8
12.0%
1.6
1.5
1.6
1.7
1.9
% growth
Others
-2.1%
5.0
-3.7%
5.0
3.5%
5.0
8.0%
5.1
8.5%
5.4
% growth
Pagnossin*
30.7%
-
1.0%
-
1.0%
8.3
-
1.0%
9.0
5.0%
9.6
8.0%
7.0%
29.2
5.4%
36.2
24.2%
53.1
46.5%
60.5
14.1%
66.9
10.6%
% growth
Total Sales – Italy
% growth
Foreign Sales by Market
Japan
9.5
12.9
15.4
17.0
18.6
% growth
USA
11.5%
1.1
36.0%
1.3
19.0%
5.2
10.0%
5.5
10.0%
6.0
% growth
France
95.4%
0.6
16.4%
0.7
300.0%
0.9
7.5%
1.0
7.5%
1.1
%growth
Others
-5.3%
4.4
29.3%
4.5
20.0%
5.4
16.7%
5.5
10.0%
5.6
% growth
Pagnossin
-7.4%
-
1.0%
-
20.0%
11.0
2.7%
11.9
2.0%
12.9
-
-
2.5%
8.3%
8.0%
16.6
5.3%
19.5
17.0%
37.9
95%
41.0
8.3%
44.3
8.0%
% growth
Total Sales – Foreign Markets
% growth
Source: UBM estimates. *Included as pro-forma from 2002.
#Xcocj|r¨HjHo
In our projections we included various synergies realised within the whole Group as
production, distribution and overheads. The most important are developed on main
costs of:
¤ Supply: the increasing critical mass of the Group in term of contractual power
with suppliers will generate important savings; the centralisation of the function
and the realisation of the general contract with the main suppliers (i.e. transport)
will take place in the second half of 2001;
¤ Logistics: the objective is to create only one logistic platform, the realisation of the
project is foreseeable by FYE 2003.
¤ Marketing: based on the concept of the customer-partner, the synergies to
develop the whole range of products, porcelain, ceramic, crystal, silver, steel.
¤ Labour Costs: the company is pushing the distribution of fine products with high
artistic content, sustaining high labour costs for specialised craftsmen. However
Ginori can charge a premium price on these products.
We estimate that in the long term, the premium price due to the brand exclusiveness
will be maintained thus avoiding strong competition in the foreign markets, especially
in department stores. Thus, we expect a relative stability in margins, maintaining over
performance compared to competitors at an EBIT margin of around 23-24% of sales
(Figure 27).
26
cX¦H¤c6`#?acorcLj#XcoH¨rf¦cro
35.0
30.0%
30.0
25.0%
25.0
20.0%
20.0
15.0%
15.0
10.0%
10.0
5.0%
5.0
0.0
0.0%
1999
2000
2001
2002
2003
EBIT Euro m (lhs)
2004
2005
2006
2007
2008
EBIT % of Sales (rhs)
cX¦H¤Irorfc?#H?&~>j
1999
2000
2001 E
2002 E
2003 E
2004 E CAGR 00-04
Total sales
Cost of Goods Sold
43.59
-18.89
46.05
-19.19
55.68
-21.12
90.93
-38.44
101.53
-42.27
111.21
-45.87
24.7%
Added Value
Value Added/Sales
Labour Cost
24.70
56.7%
-14.18
26.86
34.56
52.49
59.26
65.34
24.9%
58.3%
-14.51
62.1%
-17.64
57.7%
-28.81
58.4%
-32.06
58.8%
-35.01
EBITDA
EBITDA/Sales
Provisions
10.52
24.1%
-2.54
-0.15
12.35
26.8%
-2.69
-0.68
16.92
30.4%
-2.80
-0.42
23.68
26.0%
-3.04
-0.68
27.20
26.8%
-3.34
-0.76
30.33
27.3%
-3.67
-0.83
25.2%
EBIT
EBIT/Sales
Financial Income/Expenses
7.84
18.0%
0.87
8.98
19.5%
0.01
13.71
24.6%
-0.38
19.97
22.0%
-0.99
23.10
22.7%
-1.68
25.82
23.2%
-1.53
30.2%
-0.4
-0.7
Adj. on financial fixed assets
Others
Profit from Ordinary Activities
Extraordinary Items
8.32
0.05
8.33
0.29
13.33
0.00
18.98
0.00
21.41
0.00
24.28
0.00
30.7%
Pre-tax Profit
Pre-tax/Sales
Taxes
Minorities
8.37
19.2%
-3.81
0.02
8.62
18.7%
-3.78
0.02
13.33
23.9%
-6.00
0.03
18.98
20.9%
-8.54
0.04
21.41
21.1%
-9.64
0.05
24.28
21.8%
-10.93
0.05
29.6%
Net Profit
Net Margin
4.57
10.5%
4.85
10.5%
7.36
13.2%
10.48
11.5%
11.82
11.6%
13.41
12.1%
28.9%
4.55
4.69
7.36
10.48
11.82
13.41
30.0%
Adjusted net profit
27
5.3 Consolidated Balance Sheet
cX¦H¤prorfc?#H?#f#o6H`HH~>j
1999
2000
2001E
2002E
2003E
2004E
Assets
Net Working Capital
Fixed Assets
35.25
21.23
38.54
23.86
41.31
23.62
66.56
32.52
73.31
33.85
79.18
35.29
Capital Employed
56.48
62.40
64.94
99.07
107.16
114.47
Liabilities
Net Debts
2.78
7.81
3.14
23.48
23.57
22.05
Funds
Net Equity
6.37
47.34
6.65
47.97
8.39
53.38
13.73
61.83
15.89
67.66
18.00
74.38
Minorities
Total Liabilities & Net Equity
-0.02
-0.02
0.02
0.04
0.04
0.04
56.48
62.40
64.94
99.07
107.16
114.47
cX¦H®rorfc?#H?#`
fr©#HjHo~>j
Cash Flow
1999
2000
2001E
2002E
2003E
2004E
13.41
Net Profit
4.57
4.85
7.36
10.48
11.82
2.54
2.69
2.80
3.04
3.34
3.67
0.13
-2.70
0.28
-5.32
1.74
-2.56
5.33
-11.93
2.16
-4.67
2.11
-5.12
Funds
Net Investments
D Working Capital
-8.67
-3.29
-2.77
-25.24
-6.75
-5.87
Operating Cash Flow
Dividends
-4.12
-3.61
-0.79
-4.21
6.57
-4.45
-18.32
-5.15
5.90
-7.34
8.21
-8.28
Change in Net Worth
-0.02
-0.03
2.56
3.13
1.35
1.59
Cash Flow
-7.76
-5.02
4.67
-20.34
-0.08
1.52
4.97
7.76
-2.78
-5.02
-7.81
4.67
-3.14
-20.34
-23.48
-0.08
-23.57
1.52
-2.78
-7.81
-3.14
-23.48
-23.57
-22.05
Beginning of the period net (debt) cash
Change
End of the period net (debt) cash
The change in net financial position can be explained by:
¤ Investments made in 2002 to finance the acquisition of Pagnossin’s assets (fixed
assets and working capital);
¤ Working Capital needs, due to expansion of sales;
¤ The financing of investments for adapting the current production capacity;
In the long term, debt will be reduced and partially absorbed (to a D/E ratio we
consider sustainable of 0.3) by growing positive free cash flows.
28
6. Italian sector outlook
The world-wide supply of ceramic and porcelain tableware products is principally
concentrated in Europe (in particular Germany, United Kingdom, Italy and Hungary),
and in Japan and United States.
In 2000, Italian domestic production of ceramics and porcelain amounted to ¤777.3
million, compared to ¤978.7 million in 1995. The decrease has involved all the subsegments of the sector:
¤ Tableware porcelain
¤ Tableware ceramic
¤ Ornamental ceramic
cX¦Hur?¦6crorQH#jc6#o?r6Hf#coco#f«~>j
1995
D%
96/95
1996
D%
97/96
1997
D%
98/97
1998
D%
99/98
1999
Tableware porcelain
Domestic Production
266.5
-3.5%
257.2
-2.0%
252.0
-20.3%
200.9
-11.3%
Export
Import
-63.5
140.0
5.7%
-7.0%
-67.1
130.1
8.5%
-2.0%
-72.8
127.6
-3.5%
3.2%
-70.2
131.7
-14.0%
7.1%
Domestic Consumption
Trade Balance
342.9
-76.4
-6.6%
320.2
-63.0
-4.2%
306.8
-54.7
-14.5%
262.4
-61.5
-1.4%
Export/Domestic Production
Import/Domestic consumption
23.8%
40.8%
Tableware ceramic
Domestic Production
Export
363.1
-182.8
Import
Trade Balance
26.1%
40.6%
-5.8%
0.6%
341.9
-183.9
28.9%
41.6%
12.1%
4.8%
383.2
-192.6
35.0%
50.2%
-4.2%
-2.1%
367.2
-188.5
D%
00/99
2000
178.2
0.0%
178.2
-60.4
141.0
23.1%
3.3%
-74.4
145.6
258.7
-80.6
-3.6%
249.4
-71.3
33.9%
54.5%
-21.5%
-13.2%
288.2
-163.7
41.7%
58.4%
11.8%
-21.1%
322.3
-129.1
33.6
-16.9%
27.9
13.0%
31.5
6.6%
33.6
10.8%
37.2
-6.9%
34.6
213.8
149.3
-13.0%
185.9
156.0
19.4%
222.1
161.1
-4.4%
212.3
154.9
-23.8%
161.7
126.5
40.9%
227.8
94.5
50.4%
53.8%
50.3%
51.3%
56.8%
40.1%
15.7%
15.0%
14.2%
15.8%
23.0%
15.2%
Ornamental ceramic
Domestic Production
349.1
-20.3%
278.4
-1.1%
275.3
-3.6%
265.5
-3.7%
255.6
8.3%
Export
-130.7
-12.3%
-114.7
-1.8%
-112.6
-5.5%
-106.4
-9.7%
-96.1
2.2%
-98.1
Import
45.4
2.3%
46.5
23.3%
57.3
34.2%
77.0
11.4%
85.7
28.9%
110.5
263.9
85.2
-20.4%
210.2
68.2
4.7%
220.0
55.3
7.3%
236.0
29.4
3.9%
245.3
10.3
17.9%
289.2
-12.4
Trade Balance
276.8
37.4%
41.2%
40.9%
40.1%
37.6%
35.4%
17.2%
22.1%
26.1%
32.6%
34.9%
38.2%
Total Sector
Domestic Production
978.7
-10.3%
877.5
3.8%
910.5
-8.5%
833.6
-13.4%
722.0
7.7%
777.3
Export
-377.0
-3.0%
-365.7
3.4%
-378.0
-3.4%
-365.1
-12.3%
-320.2
-5.8%
-301.6
Import
219.0
-6.6%
204.5
5.8%
216.4
11.9%
242.2
9.0%
263.9
10.2%
290.8
Trade Balance
820.7
158.0
-12.7%
716.3
161.1
4.5%
748.9
161.7
-5.1%
710.6
122.9
-6.3%
665.7
56.3
15.1%
766.4
10.8
38.5%
41.7%
41.5%
43.8%
44.3%
38.8%
26.7%
28.6%
28.9%
34.1%
39.6%
37.9%
Source: Federceramica.
29
The following key elements are pointed out in our analysis of the Italian sector data:
¤ Exports to foreign countries
Last year, the percentage of domestic production marketed to foreign countries by
the total porcelain and ceramic sector has decreased. In 2000, only 38.8% of
domestic production was sold outside Italy, after a peak of 44.3% registered in
1999.
¤ Imports from foreign countries
On the contrary, foreign products have increased their penetration in the Italian
market, from 26.7% in 1995 to 37.9% in 2000. The sum of the previous two
effects has contributed to considerably reduce the trade-of-balance surplus. This
contraction is mainly due to the ceramic tableware segment, which has suffered
from the price wars between developing countries’ producers, which have a
competitive advantage from low labour costs. The sector, which is highly labour
intensive (personnel cost accounts for 50-70% of total product value), has
accumulated a dramatic disadvantage compared with Far East countries. The
elimination of limits on importing Chinese products will negatively impact over the
sector determining a risk of overstocking and additional price reductions.
¤ Domestic consumption
The negative trend can be explained by:
¤ Changes in lifestyles in Italy and around the world. People eating more
frequently in restaurants, and new materials (i.e. plastic) are being used at
home: ceramic tableware is thus less necessary.
¤ The sector production has suffered from the progressive reduction, during
the last years, of token collecting for ceramic tableware offers.
According to latest Federceramica data, the sector is highly fragmented: there are
3,460 firms with over 18,000 workers.
A strategic positioning on the medium and high-price band of the market will be
essential for maintaining the recognised premium price for the “Italian Style” and
quality. The demand of these products is rigid and less sensitive to price changes.
30
31
EQUITY TEAM
Head Kevin Tempestini
Analysts
p®¤II¤I®S
p®¤II¤I®¤V
Head Pio De Gregorio
Institutional Sales
Head Angelo Di Cresce
+39 02 7200 2096
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Industrial/Small Cap
Pierfrancesco Battistini
+39 02 8862 8461
Roberta Ciaccia
Telecoms/Utilities
Marinella Bottoni
+39 02 878 661
Giovanni d’Amico
E-Business
Francesco Branda
+39 02 878 476
Francesca di Pasquantonio
Consumer Goods
Pierre Coutin
+44 207 606 4867
Serge Escudé
Industrials/Auto/Small Cap
Giusy Cremonesi
+39 02 878 753
Antonella Frongillo
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Marie-Christine Keith
+44 207 606 4867
Roberto Marchesi
Banks
Massimiliano Papile
+39 02 874 845
Alberta Martino
Telecoms/Utilities
Sergio Smaldone
+39 027202 3905
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Francesca Tucci
+39 028646 0027
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Media/Building Materials
Monica Volo
+39 02 878 999
Aurelio Palombo
Banks
Nicola Pochettino
Oil /Utilities
Federico Salerno
Insurance
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Diana Millar
Technical Analysis
Tel: +39 02 8862 3172
Fax: +39 02 8862 3458
Head Marco Zulberti
Roberto Pasello
+39 02 8862 8462
+39 02 8862 8473
[email protected]
Prime Brokerage Desk
Office Administration
Cinzia Casaretti
+39 02 8862 3050
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+39 02 8862 8315
Rita Olivas
+39 02 8862 8024
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+39 02 8862 8465
Sales/Trading
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Maurizio Offredi
+39 02 8862 8476
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+39 02 8862 8467
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+39 02 8862 5908
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+39 02 8862 5469
Marco Sciutto
+39 02 8862 5499
This publication is for private circulation only and is not available to private customers. It may not be copied or reproduced in any way. It should not be construed as an offer or solicitation
to buy or sell any securities or any interest in securities. The information, opinions, estimates and forecasts contained herein have been obtained from, or are based upon, sources we
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