The Board of Directors of Safilo Group S.P.A. approves the results of the first quarter 2013
THE BOARD OF DIRECTORS OF SAFILO GROUP S.P.A.
APPROVES THE RESULTS OF THE FIRST QUARTER OF 2013
Padua, April 22, 2013, h. 5.35pm - The Board of Directors of Safilo Group S.p.A. today reviewed and approved the results of the first quarter of 2013.
2013 began for Safilo with the improvement of all key performance indicators reflecting an increase of consolidated net sales of 2.9% (+3.7% at constant currency), equal to Euro 297.0 million.
Growth was led by the contribution of both organic business performance and Polaroid's sales which more than compensated the termination of the brands phased out in 2012, allowing Safilo to improve its industrial and economic profile.
In the quarter, the EBITDA was 11.7% of sales, reaching Euro 34.7 million, while the Group net profit was up 12.1%, to Euro 13.4 million.
At the end of March, the net debt totalled Euro 220.4 million, confirming financial leverage at 1.9 times.
Economic and financial highlights
Roberto Vedovotto, CEO of Safilo Group, commented:
"We started 2013 with positive results, ending the first quarter with a significant increase in our organic business. This was driven by the double-digit sales growth of the go-forward brands coupled with the strengthening of the overall performance in our key markets.
On top of this, we were able to manage effectively the final exit of the Armani licences improving Safilo's economic and capital structure with no impact at top line level.
In a still volatile market, we are glad with the results we are achieving, testifying the strength of our long term strategy."
Key economic and financial performance
In the first quarter of 2013, Group net sales totalled Euro 297.0 million compared to Euro 288.7 million in the same period of 2012.
Turnover in the wholesale business increased by 3.0% to Euro 279.6 million, compared to Euro 271.5 million in first quarter of 2012 (+3.9% at constant exchange rates) while the organic sales growth1 of prescription frames and sunglasses was 11% at constant exchange rates, recording double-digit trends in all three main regions in which the Group operates.
Despite the difficult economic environment in Europe, Group net sales totalled Euro 128.2 million compared to Euro 118.4 million in the first quarter of 2012, up 8.3% both at current and constant exchange rates. In particular, such results were driven by the Polaroid sales and the positive trend in organic sales confirmed by the key brands in the licensed portfolio, Gucci, Dior, Marc Jacobs, Hugo Boss and Tommy Hilfiger.
The Northern European area progressed well thanks to the good performance of the travel retail and key account channels while Southern regions still experienced a negative trend, mainly due to the persisting weakness of the Italian and Spanish markets.
In the period, Safilo continued to achieve double-digit sales growth in the emerging markets of the area, with Russia increasing organically around 18%.
The American market confirmed also in this quarter a positive trend, with a wholesale turnover that equalled Euro 101.2 million, up 1.0% at current exchange rates and 2.5% at constant exchange rates, and retail sales at Solstice directly operated stores increasing by 1.7% at constant exchange rates, at Euro 17.4 million, with a reduced number of points of sales.
In the period, the organic performance of the North American area proved to be one of the strongest among the mature markets, highlighting the competitiveness of the Group's commercial policies and the appeal of the new product collections both of the high-end brands and of the American and international brands in the diffusion segment which has become the key driver of the strong growth rates that the Group continues to post in Latin American countries where Safilo's strategic action is progressively increasing.
For Safilo, the year started positively also in the Asian markets, where go-forward brands were up double digit even though total sales of Euro 46.0 million, were down 5.9% compared to Euro 48.9 million in the first quarter of 2012
(-4.3% at constant exchange rates). In the period, the main countries in the area, China, Hong Kong and Japan, but also distributors in countries like Singapore and Malaysia and the travel retail channel showed the most significant progress in terms of sales and orders collected during the period.
The progression recorded by the organic business has allowed the Group a good absorption of the sales and marketing costs, which slightly increased in the quarter compared to the same period in 2012 due to growth and expansion projects on the strategic licensed and Safilo brands.
The gross profit increased by 3.2%, totalling Euro 179.7 million compared to Euro 174.2 million in first quarter of 2012, while the incidence on sales improved to 60.5% from 60.3%.
EBITDA in the first quarter of 2013 reached Euro 34.7 million compared to Euro 32.3 million posted in the corresponding period in 2012, while the margin increased by 50 basis points to 11.7% of sales.
The operating profit (EBIT) totalled Euro 25.7 million compared to Euro 23.1 million in the first quarter of 2012, up 11.4%. The operating margin improved by 70 basis points to 8.7% of sales (8.0% in the first quarter of 2012).
Below the operating line, on one hand net financial interests for the period decreased by 7.3%, on the other there was also a reduction in the positive impact deriving from exchange rate differences.
The tax rate, at 32.6%, remained stable compared to the corresponding period of 2012.
The first quarter of 2013 therefore closed with Group net profit, increasing by 12.1% to Euro 13.4 million compared to Euro 12.0 million in the first quarter of 2012.
Key Cash Flow data
Free Cash Flow was negative for Euro 5.5 million compared to Euro 5.9 million in the first quarter of 2012.
The cash flows from operating activities in the first quarter of 2013 were positively impacted by the improved net result for the period while the absorption of resources from working capital, typical of the first three months of the year, was characterized by a more marked decrease in trade payables due to the significant increase in turnover registered in the last quarter of 2012.
The investment activities reached Euro 4.7 million in the period and were primarily related to the regular industrial maintenance and renewal activities.
At the end of March, the Group net debt totalled Euro 220.4 million, slightly up compared to the Euro 215.3 million at the end of December 2012 but improving compared to the Euro 243.2 million of the corresponding period of 2012.
1 Excluding the sales of the new brand Polaroid and the Armani brands not renewed at the end of 2012.
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. Vincenzo Giannelli, 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 net capital employed for Safilo is the sum of current assets and non-current assets net of current liabilities and non current liabilities, with the exception of the items previously considered in the net debt;
- 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.
Today, at 6.00pm CEST (5.00pm BST; 12.00am US EDT) a conference call will be held with the financial community during which the results of the first quarter of 2013 will be discussed.
It is possible to participate to the call by dialing the following number: +39 02 69633533 or +44 203 3645381 (for journalists: +39 02 38591420) and quoting the following confirmation code: 1837254.
The playback of the conference call will be available until April 24, 2013 by dialing the number +39 02 30413127 or +44 203 4270598 (access code: 1837254).
The conference call can also be followed via webcast on the site www.safilo.com/en/investors.html. The presentation is available and downloadable from the company website.
Intermediate quarterly report at 31st March 2013
Please note that the intermediate quarterly report at 31st March 2013 will be made available to the public, as soon as they are available and in accordance with the law, at the company's registered offices and on the company's internet website at the address http://www.safilo.com/it/investors.html.