PPage 58age 58 DCF and valuation pIndustry oaramevervieterws I Points of view from EY’s global sector Back to Italy: reshoring is not for everyone specialists and outside experts This is true for the larger luxury groups, but what This means that companies in the high luxury about the medium-sized Italian companies? To segments could increase their share of production understand how the latter are positioned on made in Italy, while those in the medium segment reshoring Pambianco carried out a research through have to make a strategic choice: improve their questionnaires and interviews, considering a panel of positioning with a more-qualified offer by increasing 45 companies (revenues on average €100m) which the share of goods made in Italy or lower their have an overall market value of €4.5b. positioning aiming at a more accessible price Twenty-seven percent of the panel declares it positioning. produces everything in Italy while 71% declares it has According to the research, reshoring, i.e., the trend a mix of production between Italy and foreign of bringing back production to Italy, is still marginal. countries. In terms of trend, in the last three years, This could be due to a scarce flexibility of companies, these companies only slightly increased their share of which are thus slow in changing their production production in Italy, going from 52% to 53%. When strategy, but also to the fact that production costs in asked what they expect the production mix to be in Italy continue to be very high, and this is a strong the next three years, companies gave different factor in slowing down the process of reshoring. This answers depending on whether their positioning is in is true particularly for smaller companies, which, the high or low segment. having lower margins, can’t afford to have higher Seventy-six percent of the companies positioned in production costs as a consequence of reshoring. For the high luxury segment, which already produce 83% big Italian and foreign luxury groups on the other in Italy, said they will keep their share of production hand, the made in Italy factor is very strong, and the in Italy stable; only a minority (24%) declared they will increase in costs are more than offset by the benefits increase it. Answers coming from companies of image and quality of the product. positioned in the medium luxury segment were more varied: 39% said they will keep the production mix stable, 35% that they will increase the share of production in Italy and 26% that it will diminish. The luxury and cosmetics financial factbook 2015