Safilo has been making eyewear products for over 80 years, designing manufacturing and distributing high-quality prescription frames, sunglasses and sports eyewear under licensing agreements for leading luxury and premium brands as well as under its own brands.
Safilo directly controls the entire business cycle and it is strongly oriented towards product development and design. through its team of designers, who ensure the continual stylistic and technical innovation that has always been a distinguishing feature of the Group.
Based in Padua, Italy, Safilo is the second-largest manufacturer of eyewear products worldwide in terms of turnover and one of the top three sports eyewear manufacturers and distributors.
On December 9, 2005, the shares of Safilo Group S.p.A. were listed on the Milan Stock Exchange. In January 2019, Safilo’s reference shareholder, Multibrands Italy B.V. (a subsidiary of HAL Holding N.V.) increased its stake in the share capital to 49.8%, following the subscription of its option rights relating to the capital increase approved by the Shareholders' Meeting on October 30, 2018, as well as the subscription of the ordinary shares which remained unsubscribed at the end of the rights auction, which ended on 28 December 2018, in compliance with the commitment undertaken on 26 September 2018.
Safilo closed 2019 with the net sales at Euro 939.0 million, up 3.1% at current exchange rates and 0.9% at constant exchange rates compared to Euro 910.7 million in 2018.
In 2019, the wholesale1 revenues increased by 5.2% at current exchange rates and by 2.8% at constant exchange rates, with the latter performance driven by the positive trends recorded in Europe, up 3.2% while North America remained slightly negative, by 0.6%, despite the business recovery achieved in the 4th quarter.
The year marked significant business progress in Asia, up 19.2% at constant exchange rates, while sales in the Rest of the World recorded an improvement of 1.1%, driven by a mid-single digit growth in Latin America.
2019 wholesale1 performance was driven by the good results achieved by the Group’s own core brands Carrera, Polaroid and Smith, overall growing by 5.7% at constant exchange rates, and by the positive performance of the main licensed brands.
2019 gross profit grew by 5.3% to Euro 477.2 million compared to Euro 453.2 million in 2018, with the margin on sales increasing to 50.8% from 49.8% in the previous year.
Below the gross profit:
- the adjusted2 EBITDA reached Euro 51.8 million and a margin on net sales of 5.5%, recording a decline of 9.6% compared to the Euro 57.3 million booked in 2018 (6.3% on sales);
- the adjusted2 Operating result equaled Euro 4.2 million and a margin on net sales of 0.5%, recording a decline of 68.6% compared to Euro 13.5 million booked in 2018 (1.5% on sales);
- net financial charges totaled Euro 5.8 million compared to Euro 13.8 million in 2018, thanks to the lower average net debt and a neutral impact from exchange rates differences;
- the adjusted2 net result equaled a loss of Euro 4.0 million and a margin on sales of -0.4%, recording an improvement of 71.8% compared to a loss of Euro 14.0 million booked in 2018 (-1.5% on sales).
When comparing 2019 results to 2018, it is important to recall that 2018 results included an income of Euro 39.0 million for the early termination of the Gucci license. Excluding such income from the comparative period, 2019 results marked a significant recovery of the Group’s economic performance with 2019 adjusted2 EBITDA, Operating and Net results improving exponentially compared to 2018, with the margins increasing respectively by 350, 330 and 540 basis points.
At the end of December 2019, Group net debt stood at Euro 27.8 million compared to Euro 32.9 million at the end of December 2018, and Euro 24.3 million at the end of September 2019. The position reflected the above-mentioned Free Cash Flow dynamics as well as the remaining proceeds, received on January 2, 2019 and equal to Euro 17.7 million, from the share capital increase executed in 2018. At the end of December 2019, the adjusted2 financial leverage stood at 0.5x compared to 0.7x at the end of December 2018.
On a post-IFRS 16 basis, 2019 Group net debt stood at Euro 74.8 million.
1The wholesale business excludes the business of the supply agreement with Kering, reported within the geographical area of Europe.
2 In 2019, the adjusted economic results of the Continuing Operations exclude: (i) the impairment of the entire goodwill allocated to the Group’s cash generating units of Euro 227.1 million, (ii) the write-down of deferred tax assets of Euro 22.4 million, (iii) the write-down of fixed assets of Euro 9.0 million for the restructuring plan in Italy, announced on December 10, 2019, (iv) non-recurring costs of 39.4 million, related to the above-mentioned restructuring plan in Italy for Euro 21 million, to the cost saving program undertaken by the Company during the year, and to activities linked to acquisitions and divestitures. At the net result level, there was a positive tax effect on the non-recurring costs themselves of Euro 1.9 million.
In 2018, the adjusted economic results excluded non-recurring costs for Euro 5.8 million, mainly related to the CEO succession plan and reorganization costs in North America and Europe, and included an income of Euro 39.0 million, annual portion of the total Euro 90 million accounting compensation for the early termination of the Gucci license.