Safilo Q1 net sales up 10.6 percent, core profit down

By

Dominique Muret

Published
Apr 28, 2015

The Italian eyewear group saw its net income dive 91% to 1.4 million euros due to major investments, while sales rose 10.6% to 324.3 million euros thanks to the favourable impact of the exchange rates.

Safilo’s operating performance in the quarter was broadly in line with management expectations, and progress made was in line with the 2020 Strategic Plan.

Net sales grew by 10.6%, benefiting from the currency tailwind recorded in the period, while the increase at constant exchange rates was +0.8%. The Group saw continued strength in North America, further acceleration of growth in
Latin America and a continuation of the positive trends in Europe, while Asia declined in the context of the commercial leadership and capability re-set initiated mid last year, and soft trading in China and Hong Kong.

Gross profit improved by 6.8% to Euro 196.6 million. Gross margin contracted in comparison to a strong base of Q1 last year, driven by cost inflation ahead of COGS savings initiative expected to ramp up during the balance of the
year, certain phasing effects of spending, and by the impact of a higher inventory obsolescence provision mainly for the to-be discontinued brands, without which gross margin was substantially stable vs. the full year 2014.

Adjusted1 EBITDA declined by -8.2% to Euro 32.6 million and adjusted1 EBITDA margin reduced compared to the same quarter of last year, impacted primarily by the lower gross margin previously explained, while the Group continued to invest into building key capabilities particularly in commercial and product.

The Group’s net result also reflected net negative exchange rate differences and the effects of the fair value valuation of the equity-linked bonds due to the increase in Safilo’s share price in the quarter.

At the end of March 2015, the Group net debt declined to Euro 128.3 million.

€1 = $1.08/£0.72