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THE BOARD OF DIRECTORS OF SAFILO GROUP S.P.A. APPROVES
Padua, April 27, 2011, h. 1.00pm – The Board of Directors of Safilo Group S.p.A. today reviewed and approved the results of the first quarter of 2011.
In the period, the Group’s results improved compared to the same period of 2010, with mid single-digits organic sales growth and increase of profitability. In particular:
Roberto Vedovotto, Chief Executive Officer of the Safilo Group, commented:
“This quarter is another important step in the right direction for our Group.
First quarter results pointed to a dynamic start of the year, which remains, nonetheless, characterized by a challenging business environment and an uncertain geo-political scenario.
Safilo started 2011 with renewed growth, in the context of the steady improvement of selected mature economies and the continued momentum of its addressable ‘new’ markets for branded high-end products.
Our unique brand portfolio, enriched by the new January 2011 collections, was the engine behind the new business opportunities that we tackled in order to continue to stretch our reach and presence in the marketplace. Our core wholesale business thus continued to grow, substantially in line with last year.
Revenue growth was accompanied by a significant improvement of the Group’s overall level of profitability and by a financial leverage at 2.4x, in line with the record level reached at year end 2010.
In light of the ongoing strengthening of our business model, as well as the reinforcing of our organisational and managerial structures, we maintain a strong focus and a firm commitment to a constant, long-term oriented growth for our Group.”
Key Economic data
Net sales totalled Euro 300.7 million in the first quarter of 2011, up 5.1% compared to Euro 286.0 million reported in the first quarter of 2010. At constant perimeter1, growth in sales was 7%, including a positive exchange rate effect of 1.9% due to the general strengthening of foreign currencies against the Euro in the first quarter of 2011.
Sales performance in the first quarter of 2011 was the result of the resilient growing trend of the wholesale channel, which posted revenues of Euro 284.5 million, up 6.4% at current exchange rates (+4.4 at constant exchange rates) compared to Euro 267.5 million in the first quarter of 2010.
The Group’s core business benefitted in particular of the stronger consumers’ demand for medium, high-end sunglasses which continues to characterize the fast-growing countries in Asia and the Americas. In these markets, the Group’s top licensed brand collections are increasingly successful thanks to the strong appeal of the propositions and the progressively higher penetration of the products.
Net consolidated sales were impacted by the decline of the retail business (-12.7% to Euro 16.2 million) following the sale of the retail chain in Mexico.
In Europe, sales remained broadly stable compared to the same period of 2010, totalling Euro 130.1 million in the first quarter of 2011 or an increase of 1.5% (+0.5% at current exchange rates). Business trends were uncertain and volatile in the majority of the markets, with few exceptions represented by France, UK and some faster-growing countries, like Russia and Turkey, where all the Group’s top licensed brands registered mid-single digit improvements. Greece and other Mediterranean markets registered strong declines on the back of the difficult economic conditions of the area.
Asian markets remained one of the most important drivers of growth for Safilo also in the first quarter of 2011, reflecting the strong product’s demand and the superior distribution and visibility of the Group’s high-end brands. In February, the trade shows in China and Korea had encouraging results with several new accounts opened in the markets, which together with India achieved better than expected results.
Gross profit amounted to Euro 183.0 million in the first quarter of 2011, or 60.9% of sales, growing by 5.4% compared to the gross profit of Euro 173.6 million (60.7% of sales) reported in the first quarter of 2010. The gross margin, typically high in the first quarter of the year thanks to the better utilization of the production capacity, further improved last year result following the increase in volumes and a better mix.
Operating profit (EBIT) totalled Euro 31.4 million in the first quarter of 2011, growing by 30.2% compared to Euro 24.1 million in the first quarter of 2010. Operating profitability improved to 10.4% of sales (8.4% in the first quarter of 2010), thanks to the resilient performance at the gross profit level and the lower incidence of SG&A costs reflecting the leverage effect of both volumes increase and better costs controls and a more profitable retail business.
EBITDA was equal to Euro 40.7 million in the first quarter of 2011, increasing by 17.6% compared to Euro 34.6 million recorded in the same period of last year. The EBITDA margin stood at 13.5% of sales, improving by 140 basis points over the 12.1% margin registered in the first quarter of 2010.
The Group’s net profit was Euro 18.4 million in the first quarter of 2011 compared to Euro 1.7 million in the first quarter of 2010. Net interest expenses decreased by 27.9% over the same period of 2010 as a result of the reduction of the average financial debt, while the tax rate more than halved in the period to 30.4%.
Key Cash Flow data
The Free Cash Flow in the first quarter of 2011 was negative for Euro 6.8 million compared to the cash generation of Euro 3.1 million recorded in the first quarter of 2010.
The cash flows of the period were the result of three main factors:
The Net Debt at the end of March 2011 was equal to Euro 268.2 million compared to Euro 256.2 million reported at the end of December 2010 and Euro 315.4 million at the end of March 2010.
1 Excluding the sold retail chain in Mexico, which had recorded sales of Euro 5.1 million in the first quarter of 2010.To view full content and tables, open PDF file