SALES (EURO 7.94 BLN) AND TRADE SURPLUS (EURO 2.3 BLN) FOR

SALES (EURO 7.94 BLN) AND TRADE SURPLUS (EURO 2.3 BLN) FOR ITALIAN TEXTILES ARE UP 1.3 AND 0.4, RESPECTIVELY. FOR THE SECOND CONSECUTIVE YEAR EMPLOYMENT HOLDS STEADY. CHINA WITH HONG KONG - REPEATS AS BUYER N.1 OF MADE-IN -ITALY FABRICS, AHEAD OF GERMANY. 1. The preliminary balance for 2017 According to SMI estimates based on the reference economic context and on internal Sampling Surveys, Made-in-Italy textiles (including wool, cotton, linen, silk fabrics and knits) are expected to close 2017 with a reversal of the trend. After two negative years, the sector posted a moderately positive performance - in the range of +1.3 - thanks also to the generally improved economic context. Overall turnover is therefore expected to exceed euro 7.9 billion. Sales of Italian textiles account for approximately 15 of the total turnover In 2017 Italian textiles is expected to have bucked the trend with a +1.3 growth rate of the Textiles-Fashion supply chain (see Figure 1). Results reflect the recovery on both international and domestic markets, mainly focusing on high-end products often destined for export. Table 1 Italian Menswear (2011-2017*) (Millions of current euro) 2011 2012 2013 2014 2015 2016 2017* Sales 8.365 7.983 7.730 7.985 7.910 7.839 7938 Var. -4,6-3,2 3,3-0,9-0,9 1,3 Production value 6.542 6.237 6.021 6.173 6.080 6.011 6.056 Var. -4,7-3,5 2,5-1,5-1,1 0,7 Exports 4.537 4.374 4.276 4.400 4.337 4.294 4.330 Var. -3,6-2,2 2,9-1,4-1,0 0,8 Imports 2.101 1.834 1.912 2.036 2.042 2.000 2.026 Var. -12,7 4,2 6,5 0,3-2,1 1,3 Trade balance 2.436 2.540 2.365 2.364 2.295 2.295 2.304 Apparent consumption 4.106 3.697 3.656 3.809 3.785 3.716 3.752 Var. -10,0-1,1 4,2-0,6-1,8 1,0 Structural indicators () Exports/Sales 54,2 54,8 55,3 55,1 54,8 54,8 54,6 Imports/Apparent consumption 51,2 49,6 52,3 53,5 54,0 53,8 54,0 Source: Confindustria Moda on ISTAT data and internal surveys (1) Silk, wool, cotton, linen and knits. (2) Estimates 1

Fig. 1 The role of textiles in the Italian Textiles-Fashion supply chain (2017) (1) ( on sales) Source: Confindustria Moda (1) Estimates Wool and linen fabrics and knits show a positive performance The segment breakdown shows that wool fabrics, linen fabrics and knits are expected to close 2017 with a positive sign. Conversely, cotton fabrics will continue on the negative trend, although at a slower pace and, lastly, silk fabrics are also expected to perform negatively, in line with 2016. Production value (which projections by SMI calculate separately, considering the value of total sales net of the contribution deriving from the sale of imported products) is characterized by a favorable evolution with a projected +0.7 increase. As for employment, there was considerable friction during the year. However, the survey analysis carried out by SMI revealed that wool fabric producers included in the panel registered a slight increase in the sector s headcount in 2017. In 2017, the performance of trade from and to Italy seemed to show signs of improvement. In the year, exports increased by +0.8, bringing the total of international sales above euro 4.3 billion. Concurrently, imports are expected to be positive again with growth at +1.3, exceeding euro 2 billion. Given the aforementioned trade performance, the trade balance for the industry is expected to show a slight increase (euro 8.8 million), totaling euro 2,303 million. The surplus in textiles makes for 25.4 of the total sales generated in the Textiles -Fashion segment. As anticipated, the domestic market (estimated by the apparent consumption projections), often represented by luxury brands, posted a positive performance, estimated at +1.0 on an annual basis. According to ISTAT data, the manufacturing price index on the domestic Production value is expected to recover by +0.8 Exports are expected to grow by +0.8 on a year-on-year basis, while imports by +1.3 The trade balance is on an uptrend, totaling 25.4 of the TM surplus 2

market recorded a +1.8 increase compared to +0.2 of the international market (data from January-November 2017). Fig. 2 - Textiles: ISTAT index of industrial production (adjusted for calendar effects, base year 2010=100), 1 Q 2011 3 Q 2017 ( trend variation) Source: Confindustria Moda on ISTAT (cod. ATECO 2007 CB13 and CB132) According to ISTAT data on industrial manufacturing (see Figure 2), woven fabrics (knits excluded), after a negative performance recorded in the first quarter of 2015 that continued for the next 7 quarters, including the fourth quarter of 2016, reversed the trend in the first quarter of 2017 with a +2.0 increase. In the second quarter of 2017, woven fabrics posted another negative performance equal to -1.8, followed by a sharp rise, equal to +4.7, in the third quarter. Considering the nine-month span, average growth in manufacturing totaled +1.4 against the same period of the previous year. The most recent data available, relative to the October-November period, show a +0.9 recovery over the eleven months. According to the ISTAT manufacturing index, after 8 negative quarters, Italian textiles showed a positive trend in the first and third quarters of 2017 3

International sales in the first ten months of 2017 The analysis of international sales of knits and woven fabrics composed of mainly natural fibers (see Fig. 3 Note 1) reveals that exports in the January-October 2017 span reversed the trend, showing a slight increase in the range of +0.3. Exports in this period totaled euro 3,039 million, up euro 9 million compared to the January-October 2016 time span. However, in terms of volumes, this translates into a -3.9 reduction. Similarly, imports also reversed the negative trend with a feeble +0.2, for a total of euro 1,395 million. The geographic breakdown shows that export results differed depending on whether they were destined to EU or extra-eu markets, as indicated in Figure 3: the first, with a 51.1 incidence, dropped -1.1, while the second grew by +1.8. Concurrently, imports reveal exactly the opposite performance: the extra-eu markets, making for 66.3 of total imports of fabrics to Italy, dropped by -0.8, while EU markets posted a +2.2 rise. In addition to the average figures by macro-area, it is also worthwhile to analyze the individual performances recorded by the countries that are the main commercial partners of Italian mills (see Table 2), which posted peculiar and often diverging trends. In the first ten months of 2017, the German market, after the marked reduction registered in the previous two-year period, slowed down its fall to -0.5. Rumania and France, two other important markets, considered close, also showed downtrends of -5.8 and -1.6, respectively. In the first ten months of 2017, Italian textiles were up +0.3 in exports and +0.2 in imports UE and extra-ue exports show a dichotomy in performance Direct sales to Germany slowed down to -0.5, outperformed by exports to China & Hong Kong, which are now in first position Fig. 3 Imports and exports of textiles: analysis by geographic macro area (1) (January-October 2011-2017) 3.1) Imports 3.2) Exports ( trend variation) ( trend variation) (1) The products analyzed here represent a sub-group (including only woven fabrics with at least 50 of natural fiber) of those used for the definition of the industry s total results reported in Table 1. Conversely, Table 1 also considers woven fabrics with a percentage of natural fiber below 50 and the rest composed of man-made fibers. Knits are instead considered as a whole in both aggregates. Source: Confindustria Moda on ISTAT 4

This critical data is counterbalanced by the progress of China, showing double digit growth equal to +12.4; exports to China totaled euro 186 million, which, summed up to the euro 125 million of Hong Kong (down -2.9), make the China-Hong Kong region the top market for Made-in-Italy fabrics, topping Germany (euro 311 million against euro 291 million). More specifically, it should be noted that China first overtook Germany in the month of December 2015 (euro 378 million against euro 364 million), when Germany was still the No.1 market ahead of China&Hong Kong in the first eleven months of 2015. If we scroll the list of the other top markets for Made-in-Italy textiles, there are also other countries posting positive performances for exports : the United States and Spain show moderate increases, by +6.8 and +7.7, respectively; on similar levels are also Tunisia and Turkey, the first in line with the value of the past year (+0.1), while the second posted a +1.3 increase. Continuing the analysis of the top markets, though with lower absolute values, Portugal and the UK confirmed the values of 2016, targeting +0.2 and -0.1, respectively. Conversely, Japan registered a -2 reduction, while Bulgaria and Poland grew by +1.1 and +2.2, respectively. Lastly, South Korea continued to grow, though at a slower pace with +2.6. Exports to China grew by +12.4 Exports to the United States were up +6.8 and Spain +7.7 Table 2 Imports and exports of Italian textiles: analysis by country (1) (January-October 2017) 2.1) Imports 2.2) Exports Destination countries euro mln Var. on total Total 3.039 0,3 100,0 of which: Intra UE28 1.554-1,1 51,1 Extra UE28 1.485 1,8 48,9 The top 15 markets Germany 291-0,5 9,6 Romania 241-5,8 7,9 France 209-1,6 6,9 China 186 12,4 6,1 United States 146 6,8 4,8 Tunisia 142 0,1 4,7 Spain 137 7,7 4,5 Turkey 132 1,3 4,3 Hong Kong 125-2,9 4,1 Portugal 121 0,2 4,0 Japan 103-2,0 3,4 United Kingdom 101-0,1 3,3 Bulgaria 94 1,1 3,1 Poland 84 2,2 2,8 South Korea 83 2,6 2,7 Country of origin euro mln Var. on total Total 1.395 0,2 100,0 of which: Intra UE28 471 2,2 33,7 Extra UE28 925-0,8 66,3 The top 15 suppliers China 345-0,5 24,7 Turkey 285-3,1 20,4 Pakistan 109 3,0 7,8 Czech Republic 94 6,1 6,7 Germany 75 3,8 5,3 Spain 56 0,8 4,0 Hungary 38 5,7 2,7 United Kingdom 36 12,4 2,6 France 34-19,3 2,4 Egypt 32-8,8 2,3 India 31 3,7 2,3 South Korea 27-6,5 1,9 Romania 26-12,0 1,9 Japan 23 8,0 1,6 Belgium 21-22,2 1,5 (1) See Figure3 Note 1 Source: Confindustria Moda on ISTAT 5

Considering the analysis of the markets of origin of textiles imported to Italy, characterized by a high concentration - from a geographic perspective - in the extra-eu regions (66.3), China and Turkey confirmed their leading and closer position, as it was already observed in the economic notes of the past years, with a share of 24.7 and 20.4, respectively. It should be noted that in the January-October 2010 span China made for 39.9 of the semi - finished products analyzed in this survey, while Turkey accounted for 12.4. In the period in question, both markets were characterized by reductions: China by -0.5 and Turkey by - 3.1. The other main suppliers even if with an incidence below 10 - recorded growing rates: imports from Pakistan grew by +3.0 and imports from the Czech Republic by +6.1. Imports from Germany were up +3.8, followed by Spain (+0.8), Hungary (+5.7) and the UK (+12.4). As detailed further below, the results on the international markets for textiles do not show the rather divergent performances of the individual categories of fabrics considered (Fig.4). In the January-October 2017 period, knits recovered growth (+2.4) after a period of reductions. In the same period, exports of worsted wool fabrics dropped by -4.5, while combed wool fabrics grew by +5.5, for a value of well over euro 707 million. Exports of cotton fabrics, which showed a positive performance in the first half of the year (+1.2), halted and posted a value of -0.9 over the ten-month period. Exports of linen fabrics dropped by -5.3. Similarly to 2016, the worst performance was that of pure silk, which fell sharply (-9.2); silk fabrics composed of chemical fibers (though included only in the data presented in Table 1) were instead up by +5.5. As for imports, in the January-October 2017 period, linen fabrics registered a significant increase (+19.0). Knits grew by +1.3. Imports of cotton fabrics slowed down (-0.3) along with combed wool fabrics (-0.5). Imports of worsted wool fabrics and pure silk fabrics showed more negative performances, equal to -8.1 and -6.8, respectively. Imports from China, Italy s main supplier with an incidence of approximately 25, slowed down to -0.5 In the January- October 2017 period exports of knits grew by +2.4 and combed wool fabrics by +5.5 Exports of cotton fabrics declined by -0.9 Imports of linen fabrics registered a significant increase 6

Fig. 4 Imports and exports of Italian textiles: analysis by segment (1) (January-October 2017) 4.1) Imports 4.2) Exports (euro millions; trend variation) (euro millions; trend variation) (1) See Fig.3 Note 1 Source: Confindustria Moda on ISTAT As for the short term prospects analyzed in the survey carried out by SMI las t November, all the wool fabric producers selected in the sample expect that the business conditions experienced in 2017 will continue in the upcoming months. Orders placed for SS2018, though still provisional and incomplete at the moment of the drafting of this note, are positive. In particular, a +5.1 increase is expected for combed fabrics, while double-digit growth is expected for worsted fabrics. Apart from these still incomplete figures, Milano Unica will serve as a barometer of the market, assessing market conditions and the short-to-medium term outlook for the industry. Thanks to the feedback collected from the main players/buyers in the industry, it will be possible to shape projections on the evolution of Italian textiles in the upcoming months. Milan, February 6, 2018 Publication by Confindustria Moda This publication (hereinafter the Document ) is an exclusive and original draft prepared by Confindustria Moda in favor of F ederazione Tessile e Moda SMI (on behalf of Tessile & Moda Service Sole Proprietorship). Confindustria Moda is committed to carrying out numerous activities to promote the interests of businesses operating in the reference industries. This Document, developed for SI.TEX SpA, is meant to be circulated by mail, both email and ordinary mail, and may not be re-distributed, reproduced, published or changed in any of its parts by subjects not explicitly authorized. All copyrights are reserved. This Document is exclusively intended to provide information and does not contain any offer or request to carry out any transaction. The information, opinions, evaluations and projections included herein were obtained or derived from sources tha t Confindustria Moda considers reliable, but they do not represent any guarantee, either implicit or explicit, and therefore Confindustria Moda and Federazione Tessile e Moda shall in no event be held liable. 7