CHARGEURS : Adjustments to our FY 23-24 outlook

We have downgraded our EPS estimates for 2023 and 2024. The main factor impacting our revenue estimates is Chargeurs Luxury Fibers, whose sales are expected to decrease significantly vs. 2022 due to a negative price effect (strong drop in the conventional wool price (i.e.: micron 17 down by -30% on Q3 and -21% for 9M 23), and a change in product mix (less conventional and growing certified Nativa wool). In terms of margins, the main drivers of our downward revision are (i) we had been overly optimistic about Fashion Technologies' margins considering the figures published in H1 23, (ii) we have removed the Healthcare solutions division, which is no longer contributing to Chargeurs' sales and underlying profit, (iii) we have aligned our numbers with the guidance provided by Chargeurs for Museum Studio as we had been a bit too bullish and (iv) as we did not have any information on Swaine, and given the scale-up work that will require opex, we had assumed that Swaine would be consolidated in 2024 and will not contribute to margins. In 2024, our estimates have been negatively impacted mainly by the downward revision of our estimates for Museum Studio. Despite these revisions, we remain positive overall especially on CAM, on which we are confident of a rebound, leading to similar margins in absolute terms, despite the fall in our revenue estimates.

Given that we have based our NAV valuation on EV/EBITDA multiples with an average estimated EBITDA for 2023, 2024 and 2025, the downward revision to our EBITDA forecasts has penalised our NAV estimate. Specifically, consistent with the downward revision of our EBITDA estimates for Chargeurs Fashion Technology, the division's valuation has fallen from €300m to €270m. In addition, we have removed Healthcare solutions, which has also penalised our NAV.

The sharp fall in our DCF comes from the downward revisions to our FY 23-24 EPS forecasts (see EPS commentary). In 2023, we now expect revenues of €669m (vs. €702m) and an underlying operating profit of €27m (vs. €35m), representing a margin of 4% (vs. 5%). In 2024, we expect revenues of around €753m, compared with €788m previously, and an underlying operating profit of €43m (or a margin of 5.7%), compared with €49m (or a margin of 6.2%).