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The Board of Directors approves the 2018 financial results - PRICE SENSITIVE



Financial performance and Net Debt improved thanks to  progress 
  on cost savings and execution of the share capital  increase.
  New commercial leadership to turn around soft sales  trends



  • Net  sales at Euro  962.9 million, -4.0% at constant exchange rates -7.0% at current exchange rates
  • Adjusted4  EBITDA at Euro  47.5 million, +15.5% compared  to 2017
  • Adjusted4  Net loss of Euro 26.7 million, improving by 43.2% compared to  2017
  • Group net debt at Euro 32.9 million, -75.0% compared to 2017, due  to the proceeds  of the share capital increase, excluding the portion of Euro 17.7 million  received on 2 January 20195.

Padua,  March 13, 2019 – The Board of Directors of  Safilo Group S.p.A. has today approved the Company's consolidated financial  statements for the year ended 31 December 20181 and examined the  separate financial statements for the year ended 31 December 20181,  which will be submitted for approval by the shareholders at the Annual General  Meeting to be held in a single call on April 30, 2019. 
  The Board of Directors has decided not to propose the  payment of a dividend to the next Annual General Meeting.

As anticipated on January 30, 2019, net sales for 2018 equaled Euro  962.9 million, down  4.0% at constant exchange rates and 7.0% at current exchange rates compared to  Euro 1,035.3 million in 20172. 
  In 2018, the  wholesale business3 declined by 4.9% at constant exchange rates,  with the key drivers  being:


  • the  exit of the Céline license, just partially counterbalanced by the launch of the  new Moschino, Love Moschino and rag & bone licenses;
  • the  overall positive results of the Group's own core brands, driven in particular  by a strong season of Polaroid in Spain and the good progress of the brand  Safilo in the optical business;
  • the broadly positive performance of  the licensed brands in the contemporary and premium segment;
  • the weak performance of sunglasses  in the fashion luxury segment.


In the fourth quarter of 2018, Safilo's net sales equaled Euro 249.1 million, up  1.3% at constant exchange  rates and 1.8% at current exchange rates compared to the  same period of 20172. The performance of the wholesale business3 was negative  by 3.3% at constant exchange rates.

In 2018, Safilo's economic results improved  thanks to the Group's­ progress on its cost saving initiatives.
  2018 adjusted4 EBITDA stood at Euro  47.5 million, up 15.5% compared to Euro 41.1 million in 2017, with the margin increasing  by 90 basis points from 4.0% to 4.9% of net sales. 
  In the fourth quarter of 2018, the adjusted4  EBITDA equaled a profit of Euro 10.3 million compared to the loss of Euro 2.1  million recorded in the same quarter of 2017.

Safilo closed the year with an adjusted4 Group  net loss of Euro 26.7 million compared to an adjusted4 net loss of  Euro 47.1 million in 2017.


Angelo Trocchia,  Safilo Group Chief Executive Officer, commented:

"The year closed  substantially in line with our expectations, with a mid-single digit decline in  net sales and first signs of improvement at the operating and net result level.

The second half of 2018  was a key moment for Safilo as we started to implement the new 2020 plan and we  secured our financial structure through a capital increase and a new debt financing.

This was also a period  in which weintently focused on shaping a new  commercial organization in all our key markets, bringing back capabilities and  leadership from the industry, with the aim of improving our go to market  execution and putting customer service at the heart of what we do.

An intense year in  which we renewed our partnership with important brands like Banana Republic,  Fossil, havaianas and Tommy Hilfiger, and we signed new agreements first with Missoni  and with Levi's® at the very beginning of 2019.

In 2019, we envisage  the opportunity to recover top line growth and above all a sustainable level of  profitability, reflecting the progress of our cost saving projects."


Economic and Financial highlights of the Year

In 2018, Safilo's net sales equaled Euro 962.9  million, down 4.0% at constant exchange rates and 7.0% at current exchange  rates. The wholesale business3 declined by 4.9% at constant exchange rates, driven by the exit of the  Céline license and the weakness experienced by sunglasses in the fashion luxury  segment.

2018 was a year of  growth for Polaroid and the brand Safilo, which together with the key licensed brands  in the contemporary and premium segment, namely Tommy Hilfiger, Hugo Boss and Kate  Spade, drove the Group's positive performance in the prescription frames  business.

Safilo's operating  results improved in 2018, reflecting i) a substantial stability at the gross  margin level, driven by higher plant efficiencies offset by a negative impact  from foreign exchange and some obsolescence costs, ii) a total of approximately  Euro 26 million of overhead cost savings and iii) higher D&A.

2018 Gross profit equaled Euro 481.5  million, down 7.3% compared to Euro 519.6 million in 2017, with the gross  margin at 50.0% of sales from 50.2%. At constant exchange rates, the margin was  up 20 basis points.

2018 adjusted4 EBITDA was Euro 47.5 million, up 15.5% compared  to the adjusted4 EBITDA of Euro 41.1 million recorded in 2017. The adjusted4 EBITDA margin equaled 4.9% of  sales from 4.0%. At constant exchange rates, the adjusted4 EBITDA  margin improved by 130 basis points compared to 2017.

2018 adjusted4 EBIT was at  breakeven compared to the adjusted4 EBIT equal to a loss of Euro 0.8  million in 2017. 
  At constant exchange  rates, the adjusted4 EBIT margin was 0.5% of sales from -0.1% in  2017.

Below the operating  line, in 2018 total net financial charges equaled Euro 17.3 million compared to  Euro 14.0 million in 2017, reflecting an increase of net interest expenses, due  to the utilization of the Revolving Credit Facility during the year. On the other  hand, income taxes declined from Euro 29.4 million to Euro 9.2 million.

2018Group  adjusted4 net result equaled a loss of Euro 26.7 million compared  to the adjusted4net loss  of Euro 47.1 million recorded in 2017.

Economic highlights of the Fourth Quarter


In the fourth  quarter of 2018, Safilo's net sales equaled Euro 249.1 million, up  1.3% at constant exchange rates and 1.8% at current exchange rates. The  wholesale business3, which declined by 3.3% at constant exchange  rates, experienced a positive sales recovery in Europe, that was in the period  counterbalanced by the weak performance of Asia and the Rest of the World as  well as ongoing softness in North America.

In Q4 2018, the Group's  operating performance improved behind a slight upturn of gross margin and a  more significant improvement of the operating leverage thanks to efficiencies  in SG&A costs.

Q4 2018 Gross  profit equaled Euro 115.0 million, up 2.7% compared to Euro 112.0 million  in Q4 2017. Gross margin equaled 46.2% of sales compared to 45.7% in Q4 2017.

Q4 2018 adjusted4 EBITDA equaled Euro 10.3  million compared to the loss of Euro 2.1 million recorded in the same quarter  of 2017. The adjusted4 EBITDA margin moved to 4.1% of sales from -0.8% in Q4 2017.

Key Cash Flow data

In 2018, Safilo's  Free Cash Flow was negative for Euro 25.6 million compared to a negative  flow of Euro 70.1 million in 2017. The year included the third and last  compensation payment of Euro 30 million received in September 2018 from Kering.

In 2018, Cash flow from operating activities equaled  a generation of Euro 2.7 million compared to an absorption of Euro 31.1 million  in 2017. Key drivers of this result were the improvement in EBITDA and a cash  flow from the recovery of tax credits.  

In the year, Safilo's net investments equaled Euro  28.3 million, mainly dedicated to its product supply and logistics network and  to the roll out of new IT systems.

At the end of December 2018, Safilo's Net Debt stood at Euro 32.9  million compared to Euro 131.6 million at the end of December 2017, with a  leverage ratio of 0.7x adjusted4 EBITDA. The significant decrease in  Net Debt reflected the proceeds from the share capital approved by the  Extraordinary Shareholders' meeting on 29 October 2018, and launched on 3  December 2018. It excludes the portion of Euro 17.7 million received on 2  January 2019.5


Net sales by geographical  area:

In Europe, full year net sales ended in line  with 2017, after growing 25.1% in the fourth quarter at constant exchange  rates. The performance of the wholesale business3 in Europe was  negative by 4.0% in the year, while recording a significant improvement in the  fourth quarter, up 12.1% at constant exchange rates. Healthy business trends  resulted in positive performance in particular in the Iberian markets, Germany  and Central and Eastern European countries.

In North America, full year net sales declined by  8.1% at constant exchange rates and by 9.5% in the fourth quarter, with the  wholesale business down 6.6% and 6.7% in the respective periods. Sales at the  80 Solstice stores in the United States (102 stores at the end of December  2017) declined by 16.5% in the year and by 23.9% in the fourth quarter, caused  by a combination of declining traffic and store closures.

The Group had a challenging second half of the  year in Asia Pacific and in the Rest of the World, two key geographies  where the Group has changed the go-to-market organization and its key  leadership. 
  Sales in Asia-Pacific closed up 2.1% at  constant exchange rates in the year, while declining by 19.2% at constant  exchange rates in the fourth quarter. Rest of the World turned negative by 8.6%  at constant exchange in the year, down 26.1% in the fourth quarter.



In 2019, Safilo plans to gradually revive top line growth, leveraging  the implementation of new commercial organizations in the Group's key markets  and the upgrading of customer service levels. 
  For the current year, Safilo will continue its cost savings plan aimed  at recovering a sustainable economic profile.


Other  resolutions by the Board of Directors
  Approval  of the Sustainability Report

Together with the 2018 Annual Report, the Board of Directors of Safilo  Group S.p.A. approved the Sustainability Report (concerning 2018), in line with  the application of the non-financial reporting obligation for listed companies  under Legislative Decree 254/2016.

Amendments  to the 2017-2020 Stock Option Plan

The Board of Directors, on the basis of the proposal of the Remuneration  and Nomination Committee, has also resolved to propose to the next  Shareholders' Meeting certain amendments to the 2017-2020 Stock Option Plan  approved by the Shareholders' Meeting on April 26, 2017 and amended by the Shareholders'  Meeting on April 24, 2018.
  The updated informative document relating to the Plan, integrated with  the proposed amendments, will be published within the deadlines set forth by  applicable law. 
  The abovementioned Shareholders' Meeting will be also convened in an  Extraordinary session to amend the resolution of the capital increase at the  service of the 2017-2020 Stock Option Plan.
  The related Illustrative Report will be made available to shareholders  within the terms set forth by applicable law.

Share  buy-back program

The Board of Directors agreed to present to the Shareholders' meeting a  new proposal for the purchase and disposal of treasury shares for up to 10,000,000  shares subject to revocation of the authorization granted by the Shareholders'  meeting of April 24, 2018. The purchases shall be executed on regulated markets  or on multilateral trading facilities, at a price not lower than 10% and not  higher than 5% of the reference price of Safilo Group shares on the Italian  Stock Exchange organized and managed by Borsa Italiana S.p.A. (Mercato  Telematico Azionario) of the trading day prior to the date of the purchase  trade and, in any case, not higher than Euro 3,00 per share. 
  The purchase and disposal of treasury shares may be used: (i) to perform  the obligations to deliver the Company's shares arising from programs of  distributions, against payment or for free, of options or shares of the Company  to directors, employees and collaborators of the Company or the relevant  subsidiaries, as well as arising from programs for free allocation of shares to  the shareholders; (ii)  to perform the  obligations to deliver the Company's shares arising from convertible bonds or  bonds cum warrants; and (iii) as a compensation in extraordinary transactions,  including the exchange of shares, with other parties in the context of  transactions in the interests of the Company.
  Authorization to purchase shares will be requested for a period of 18  months, as from the shareholder resolution date; authorization to sell own  shares will be requested for an unlimited period. 
  As of today, the Company has no treasury shares in portfolio.

All information concerning the terms and procedures of the authorization  will be made available through the related Illustrative Report, to be made  available to shareholders within the terms set forth by applicable law.


Change to the  2019 Financial Calendar

The Shareholders' Meeting for the  approval of the Financial Statements as at December 31 2018, previously scheduled  for Monday, April 29, 2019 in a single call, has been postponed to Tuesday,  April 30 2019.


Notes to the press release:

1 The auditing process of the consolidated  and separate financial statements is currently under finalization.

2 The new accounting standard  IFRS 15 regarding "Revenue from contracts with customers" entered into effect  starting from 1 January 2018. Following the fully retrospective approach chosen  by the Group, the application of the principle to the fourth quarter and full  year 2018 had an adjustment effect on the sales and cost of goods sold of the  same periods of 2017 equal respectively to Euro 4.4 million and Euro 11.6  million, with a neutral effect on the gross profit. Consequently, net sales in  the fourth quarter and full year 2017 were adjusted to Euro 244.8 and Euro  1,035.3 million respectively.

3 The performance of the wholesale business excludes the  business of the production agreement with Kering and sales of the Solstice  retail chain in the USA. The Kering production agreement is reported within the  Europe geographical area.

4 In 2018, the adjusted economic  results exclude non-recurring costs for Euro 5.8 million, mainly related  to the CEO succession plan and reorganization costs in North America and Europe,  and include 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. 
  In Q4 2018, the adjusted EBITDA excludes non-recurring costs for Euro 1.3 million and includes an  income of Euro 9.8 million, as pro-rata portion of the annual accounting  compensation for the early termination of the Gucci license.

In 2017, the adjusted economic  results excluded an impairment charge on the goodwill allocated to the  Group's cash generating units for Euro 192.0 million and non-recurring costs  for Euro 15.3 million (Euro 15.2 and 12.5 million, respectively on EBITDA and  Net result) related to the reorganization of the Ormoz plant in Slovenia, cost  saving and restructuring initiatives, and to some legal litigations. Adjusted  results included an income of Euro 43 million, as accounting  compensation for the early termination of the Gucci license.
  In Q4 2017, the adjusted EBITDA excluded non-recurring costs for a total of Euro 10.9 million related to  cost saving and restructuring initiatives and to some legal litigations and included an income of Euro 10.8 million, pro-rata portion of the annual accounting  compensation for the early termination of the Gucci license.

5 Safilo's share capital increase was completed on 2 January 2019, for a  total consideration of Euro 149,982,892.22, following the subscription and  payment by the reference shareholder Multibrands Italy B.V. of all the No.  25,193,337 ordinary shares which remained unsubscribed at the end of the rights  auction ended on 28 December 2018, for a total consideration of Euro  17,736,109.25. This amount was therefore booked in January 2019.


Statement by the manager responsible for the  preparation of the company's financial documents

The  manager responsible for the preparation of the company's financial documents,  Mr. Gerd Graehsler, hereby declares, in accordance with paragraph 2 article 154  bis of the "Testo Unico della Finanza", that the accounting information  contained in this press release corresponds to the accounting results,  registers and records.


This  document contains forward-looking statements, relating to future events and  operating, economic and financial results for Safilo Group. Such forecasts, due  to their nature, imply a component of risk and uncertainty due to the fact that  they depend on the occurrence of certain future events and developments. The  actual results may therefore vary even significantly to those announced in  relation to a multitude of factors.

Alternative Performance Indicators

The  definitions of the "Alternative Performance Indicators", not foreseen by the  IFRS-EU accounting principles and used in this press release to allow for an  improved evaluation of the trend of economic-financial management of the Group,  are provided below:


  • Ebitda (gross operating profit) is calculated by  Safilo by adding to the Operating profit, depreciation and amortization;
  • The Net Debt is for Safilo the sum of bank  borrowings and short, medium and long-term loans, net of cash in hand and at  bank;
  • The Free Cash Flow for Safilo is the sum of the  cash flow from/(for) operating activities and the cash flow from /(for) investing  activities.


Conference Call and Webcast

Today,  at 6.30 pm CET (5.30pm GMT; 13.30pm EST) a conference call will be held with  the financial community during which 2018 full year and fourth results will be  discussed. 
  It  is possible to follow the conference call by calling +39 06 87500896, +33 170732727, +44 844 4933857 or +1 917 7200178 (for journalists +39 06 87502026) and entering the access code: Safilo. 
  A  recording of the conference call will be available until March 15, 2019 on +39 06 99721048, +44 844 5718951  or +1 917 6777532  (access code: 8672489 ). 
  The  conference call can be also followed via webcast: .


Notice of the call of the Ordinary Shareholders' Meeting 
  In  the coming days, the notice of the call of the Shareholders' Meeting will be  available on the website and on the central  storage of regulated information, where the Reports from the Directors to the  Shareholders' Meeting on the proposals regarding the items on the agenda, will  also be made available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Sàfilo Group S.p.A.



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      Sàfilo Group S.p.A.

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A - Opening net cash and cash equivalents (net    financial


    indebtedness - short term)




B - Cash flow from (for) operating activities


     Net profit/(loss) for the    period (including minority interests)



     Depreciation and amortization



     Impairment loss on goodwill



     Other non-monetary



     Interest expenses, net



     Income tax expenses



     Flow    from operating activities prior


     to    movements in working capital




     (Increase) Decrease in    trade receivables



     (Increase) Decrease in    inventory, net



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     (Increase) Decrease in    other receivables



     Increase (Decrease) in    other payables



     Interest expenses paid



     Income taxes paid



     Total     (B)




C - Cash flow from (for) investing activities


     Investments in  property, plant and equipment  



     Net disposals of property,    plant and equipment



     Acquisition of minorities    (in subsidiaries)



     (Acquisition) Disposal of    investments and bonds



     Purchase of intangible    assets, net of disposals



     Total     (C)




D - Cash flow from (for) financing activities


     Proceeds from borrowings



     Repayment of borrowings



     Increase in share capital,    net of transaction costs



     Dividends paid



     Total     (D)




E - Cash flow for the period (B+C+D)




     Translation exchange differences



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       indebtedness - short term) (A+E+F)






Sàfilo Group S.p.A.


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Sàfilo Group S.p.A.


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December 31, 2018

December 31, 2017










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Sàfilo Group S.p.A.


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A - Opening net cash and cash equivalents (net    financial


     indebtedness - short term)




B - Cash flow from (for) operating activities


     Net profit/(loss) for the    period



     Depreciation and Amortization



     Stock Options figurative cost



     Net changes in employees    benefits liability



     Net changes in provision    for risks



     Other non monetary P&L    items



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     to    movements in working capital




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     (Increase) Decrease in    other receivables



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     Interests expenses paid



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D - Cash flow from (for) financing activities


     Proceed from borrowings



     Share capital increase,    net of transaction costs



     Dividends received



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E - Cash flow for the period (B+C+D)




F - Closing net cash and cash equivalents (net    financial


        indebtedness - short term) (A+E)





About  Safilo Group 
  Safilo Group is a worldwide  leader in the design, manufacturing and distribution of sunglasses, optical  frames, sports eyewear and products. Thanks to strong craftsmanship expertise  dating back to 1878, Safilo translates its design projects into high-quality  products created according to the Italian tradition. With an extensive wholly  owned network of subsidiaries in 40 countries – in North and Latin America,  Europe, Middle East and Africa, and Asia Pacific and China – and more than 50  distribution partners in key markets, Safilo is committed to quality  distribution of its products in nearly 100,000 selected points of sale all over  the world. Safilo's portfolio encompasses: own core brands Carrera, Polaroid,  Smith, Safilo, Oxydo, and licensed brands: Dior, Dior Homme, Fendi, Banana  Republic, BOSS, Elie Saab, Fossil, Givenchy, havaianas, HUGO, Jimmy Choo, Juicy  Couture, kate spade new york, Liz Claiborne, Love Moschino, Marc Jacobs, Max  Mara, Max&Co., Moschino, Pierre Cardin, rag&bone, Rebecca Minkoff, Saks Fifth Avenue, Swatch, and Tommy  Hilfiger.

Listed on the Italian Stock  Exchange (ISIN code IT0004604762, Bloomberg SFL.IM, Reuters SFLG.MI), in 2018  Safilo recorded net revenues for Euro 962.9 million.


Safilo  Group Investor Relations
  Barbara  Ferrante
  Ph.  +39 049 6985766

Safilo  Group Press Office
  Antonella Leoni
  Milan – Ph. +39 02 77807607
  Padua – Ph. +39 049 6986021

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