Boating Market Monitor in the Luxury World Deloitte Italy

Boating market monitor Yachting market monitor in the luxury world

May 10th 2019 - Viareggio Disclaimer

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2 Document objectives

• Global recreational boating retail market trends

• Italian shipyards performance within the global recreational boating market

• Positioning of the boating industry within the luxury market on a global scale

3 Global recreational boating market Global boating: retail market value trend The global recreational boating market continues to grow in 2018, confirming the positive trend from the last 5 years reaching ~ €22.0bn, with Italy representing ~2% of the global market

Global retail market value of recreational boating 88.8% Motor Yachts (Billion €; Percentage)

+~7.0% ~25.0 Inboard ~23.0 CAGR +11.7% ~22.0 Outboard & 20.6 Inflatables 18.9 Sailboats 16.9 ~15.0 14.8

Boat type

North America RoW Italy RoE 1999 2006 2008 2014 2015 2016 2017 2018 Pre Actual

Note: the new build market does not include the PWC and other small boats of less than 2.5 meters. Geography Source: Deloitte Boating Market Monitor 5 Superyachts market: global deliveries evolution Superyacht deliveries in 2018 show an increase of 19 units compared to the previous year, reaching 160 units delivered, with a market mix moving toward Gigayachts (+50mt) Superyacht Market Snapshot

Superyacht deliveries build-up 2018 Units delivered by type (# of boats) (# of boats; percentage) YoY 17-18 +2.9% 12 160 160 14 Sailing 147 149 Sailing -10.0% 141 16 39

79 +9 Units >50mt Motor Motor +15.3% vs 2017

30-39mt 40-49mt 50-59mt 60-79mt 80+mt Total 2015 2016 2017 2018

Units vs +5 +5 +2 +6 +1 +19 YoY n.a. +6.0% -5.0% +13.5% 2017

Sources: Deloitte Boating Market Monitor 6 Italian shipyards performance Italian shipyards: new build production value trend New build production from Italian shipyards in 2018 shows a double digit growth (+11.0%) confirming the strong recovery of the Italian boating sector

Italian shipyards performance CAGR (Billion of €; Percentage) +6.2%

3.6 3.6

3.2 CAGR -21.7%

2.7 CAGR +10.7% ~2.5 2.3 2.0 2.0 1.8 1.7 1.5 1.4 1.4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pre Actual

YoY - 11.4% 1.2% -25.7% -24.8% -11.0% -24.4% 1.5% 7.9% 16.4% 15.3% 14.0% ~11.0%

Fonte: Deloitte Boating Market Monitor 8 Italian shipyards: segment market positioning Italian shipyards are highly focused on large boats with Inboard representing ~87% of total production in 2018 Italian shipyard vs global market mix (2018)

Italian shipyards segments mix Global boating market segment mix (Percentage) (Percentage)

Inboard Outboard & Inflatables Sailboats

Fonte: Deloitte Boating Market Monitor 9 Superyacht Order Book: Italian shipyards market share Italian shipyards are worldwide market leader in the Superyacht segment being responsible for 45.7% of projects currently in the Order Book and 30.7% of projects in terms of gross tonnage

Superyacht order book countries share 2018 45.7% (Percentage)

Order Book Units 8 Italian Superyacht builders appear in Italy Netherlands Germany Turkey USA UK RoW the top 20 of global Superyacht builders 30.7% in the last Order Order Book Book Gross Tonnage

Italy Netherlands Germany Turkey USA UK RoW

Notes: (1) Latest data available in December 2018 Source: Deloitte Boating Market Monitor 10 Recreational boating industry positioning within the luxury market Luxury market global trends (ex. luxury yachting market) The world luxury market in 2018 reached a value of €1.2tr euros with a CAGR of 6.8% between 2008 and 2018 with an expected average growth of 5.8% until 2023 CAGR CAGR Luxury market global trend (ex. Yachting) 08-18 18-23 (Billion €; Percentage) 1,545 6.8% 5.8% Personal 20% Luxury 5.0% 3.7% Goods

1,146 1,164 1,069 +6.8% 1,030 22% 22% 23% 856 24% 799 746 687 26% 27% 607 611 28% 80% Experiential 7.3% 6.4% 543 27% 26% 27% 27% 78% 78% 76% 77% 73% 74% 73% 72% 74% 73% 73%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2023 F

Note: Market data excluding yachting data Source: Analysis based on data from "Altagamma worldwide luxury market monitor“ 12 Yachting market evolution comparison to luxury market The luxury yachts market saw a rebound from 2013, after the downturn started following the 2009 economic crisis, outperforming the luxury market from 2013 to 2018 (+12.2% vs +7.8%)

Market index evolution CAGR CAGR (Index 100= Y 2008) 08-18 13-18

220 Experiential 200 Luxury +7.3% +9.0% 180 +6.8% +7.8% Personal 160 Luxury +5.0% +4.2% 140 120 100

Market index 80 Luxury yachts market -2.1% +12.2% 60 40

20 Downturn Rebound 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Note: the luxury yacht segment includes premium yachts and Superyachts Source: Deloitte Boating Market Monitor and "Altagamma worldwide luxury market monitor“ 13 Positioning of the yachting industry within the luxury market (1/2) Despite the positive performance in the last 5 years, the luxury yachts market represent a niche, with a share of less than 2% of total luxury market

Performance matrix positioning (Percentage)

15% Market Value 2018 Luxury Yachts Personal Experential 10% Design and Furniture Luxury Cars (%) Luxury Cruises Mkt performance : +7.8% 18

- Beauty Hospitality 5% Wines Food Accesories Apparel Hard Luxury

Market Growth 13 Fine Arts

Private Jets

-5% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 41% 42% Market share 2018 (%)

Source: Deloitte Boating Market Monitor and "Altagamma worldwide luxury market monitor“ 14 Positioning of the yachting industry within the luxury market (2/2) Despite the high value-added features of luxury yachts the industry shows a lower marginality compared to other segments within the market

Luxury market profit pool 2018 Analysis based on (Percentage) Global Powers of Luxury Goods report by Deloitte

25%

Mkt avg ~14%* EBIT margin %

5% ~ 4%

0% Luxury Cars Hotels Apparel & Accessories Wines Watches & Jewelry Fine arts Yachts Cosmetics & Fragrances Furniture Private Jets X Axis width represents market Market value 2018 value

Note: (*) Does Not include the yachting profitability 15 Source: Deloitte Boating Market Monitor and Global Powers of Luxury Goods by Deloitte Market potential: HNWI population landscape The global HNWIs population accounts for 18.2 million of people holding €70.2tr, with billionaires expected to be the highest growing category from 2017 to 2023

HNWI global landscape 2017 Population Wealth CAGR (Million of people) (CAGR 14-17) (CAGR 14-17) 17-23

# of HNWI Trillion of € Population 3.3M€ 2.040 6.7 4.8 Billionaires +4.6% Million +4.0% (7.7%) (10.5%) 5.7 Million 6.2 Million 173K 17.8 3.5M€ UHNWI +3.9% (7.7%) (6.8%) +3.0% 0.2 18.0M 45.7 Million 3.5M€ Millionaires +3.5% 0.6 (7.6%) (7.5%) Number of HWNI per area 0.7 +3.7% Million 8.5M€ Million Average net worth per 14.5M€ HWNI +3.2% 3.6M€ 18.2M 70.2 Total +3.6% +3.6% (+7.6%) (+7.6%) Population CAGR 17-23 +3.3%

Source: Deloitte elaboration based on data from ”The Wealth Report” 16 Market potential: Superyachts market penetration Overall superyachts penetration on total HNWI individuals population in 2017 is estimated to be around 3.0% with the highest penetration in the range between 50 and 100 meters

Superyachts Price / Fleet Main Target Market segment Mgmt cost 2017 target potential penetration (Millions €) Boats (#) Net Wealth (€) People (K#) (Percentage)

Billionaires 100mt+ ~150 / ~10 72 2.1 (1B+)

Ultra- 60-100mt ~100 / ~7 190 HNWI 5.0 (500M+)

~3.0% Ultra- 51-60mt ~50 / ~5 446 HNWI 12.0 (250M+)

Ultra- 41-50mt ~25 / ~3 1,120 HNWI 38.0 (100M+)

Ultra- 30-40mt ~10 / ~1 3,423 HNWI 174.8 (30M+)

Source: Deloitte Boating Market Monitor 17 Advertising and communication evolution in the luxury industry In 2019 spending in communication from luxury brands reached €13.3bn growing at a CAGR of 2.6% between 2017 and 2019

Does not include yachting Spending by channel - 2017 Spending by channel - 2019 industry (Percentage) (Percentage)

Search Video Social Media Average spending on Other digital communication and Newspaper Magazine advertising in the TV yachting industry Radio amounts to ~1.2% of Cinema revenues compared to Outdoor CAGR Display (17-19) ~1.5% average luxury market spending €12.6bn €13.3bn +2.6%

Digital share 29.7% 35.1% +11.5%

Offline share 70.3% 64.9% -1.4%

Sources: Deloitte analysis based on secondary data 18 Advertising evolution in the yachting industry ILLUSTRATIVE

80s’ 2000 2005 Today

19 Deloitte Yachting Practice

• Deloitte Yachting practice has a deep and relevant international experience within of the nautical value chain (components, shipbuilding, service, marine, etc.), from strategy to marketing, operational and finance advisory, with a strong point of view about the change over and industry evolution.

• Deloitte has a strong vertical knowledge on the yachting industry with 50-60 projects around the world concerning a wide range of business, finance and accounting topics, serving both global and national clients.

• For any questions or further discussion, please contact:

Luca Petroni Tommaso Nastasi Tancredi Currao Chairman Partner | Value Creation Services Senior Staff | Value Creation Services Deloitte Financial Advisory Deloitte Financial Advisory Deloitte Financial Advisory Office: +39 06 36749217 Office: +39 02 833 25110 Office: +39 02 833 23671 Email: [email protected] Email: [email protected] Email: [email protected] Location: Rome, Italy Location: Milan, Italy Location: Milan, Italy

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