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Q1 2019 Trading Update




  • Net  sales from Continuing Operations grew by 3.4% (+0.6% at constant exchange rates)
  • Adjusted  EBITDA2 from Continuing Operations (pre-IFRS 16) reached Euro 16.5  million and a margin of 6.7%, marking a significant operational improvement thanks  to cost savings progress

Padua, May 09, 2019 – The Board of Directors of Safilo Group S.p.A. has today reviewed and  approved Q1 2019 economic and financial key performance indicators.

Following the Group’s decision announced last April 2, to proceed with  the plan to sell the Solstice retail business to a third party, in 2019  management’s comments focus to the Group’s Continuing Operations, excluding  Solstice.
  Safilo closed the first quarter of 2019 with the net sales from Continuing Operations at Euro 247.3  million, up 3.4% at current exchange  rates and 0.6% at constant exchange rates (+0.8% on the wholesale business1).
  In Q1  2019, Safilo’s adjusted EBITDA2 from Continuing Operations (pre-IFRS  16) reached Euro 16.5 million and a margin of 6.7%, marking a significant  operational improvement compared to the adjusted EBITDA2 of Euro 16.1 million recorded in Q1  2018, which included the income of Euro 9.8 million for the early termination  of the Gucci license.

Sales performance was supported by the gradual improvement of business  trends in Europe, up 1.3% at constant exchange rates (+1.8% on the wholesale  business1) and North America recovering a certain stability (-0.6%  at constant exchange rates), after the decrease recorded in the last two years.  Performance in emerging markets3 was marked on the one hand by the good results of the  Asia-Pacific region, up overall by 17.4% at constant exchange rates, and on the  other by a weak business in the IMEA3 markets.


In the first quarter of 2019, Safilo recorded the overall positive  performance of its own core brands, driven by Smith and Polaroid in their core  markets and product categories. Positive developments were also evident for a  number of licensed brands playing in the fashion luxury and contemporary segments.


The Group elected to implement IFRS 16, applying the modified  retrospective approach, whereby the cumulative effect of adopting the standard  has been recognized at its relevant effective date on January 1st  2019, without the restatement of 2018 comparative information. IFRS 16 has a  significant impact on the Group’s consolidated balance sheet side due to the  right of use assets and lease liabilities that are now recognized for contracts  in which the Group is a lessee. In the consolidated statement of income, the  majority of the current operating rental costs is now presented as depreciation  of right to use assets and interest expenses on the lease liabilities, with a material  positive impact in terms of EBITDA and a minor effect on EBIT and net income.

In 2019, key financial indicators are  commented on a pre IFRS 16 basis in order to support the transition and to  allow proper comparison with the previous period.


In Q1 2019, reported adjusted3  EBITDA of the Continuing Operations reached Euro 20.0 million.

On a pre-IFRS  16 basis, excluding the positive accounting effect, equal to Euro 3.4 million,  of the first application of the new standard to Q1 2019, the Group’s Continuing  Operations posted an adjusted2 EBITDA of Euro 16.5 million, with the  margin on sales standing at 6.7%. For Safilo, this result marked a significant  operational improvement compared to the adjusted2 EBITDA of Euro  16.1 million reported in Q1 2018, which included the income of Euro 9.8 million  for the early termination of the Gucci license.
  In Q1 2019, the Group’s economic performance grew  in fact 200 basis points at the Gross margin level, from 50.7% to 52.7% of net  sales mainly thanks to higher plant efficiencies and lower obsolescence costs,  and recovered additional 200 basis points at the operating expenses level following  the ongoing progress in the overheads saving program.

At the end of March 2019, total Group Net Debt on a pre IFRS 16 basis stood at Euro 26.4 million compared to Euro 166.0 million in Q1 2018  and Euro 32.9 million at the end of December 2018. Q1 2019 Net Debt benefitted  of the remaining proceeds, received on January 2, 2019 and equal to Euro 17.7  million, from the share capital increase. Following the first application of  the new IFRS 16 standard to Q1 2019, Group Net Debt stood at Euro 105.7 million.


1 The wholesale business excludes the business of the production agreement  with Kering, reported within the geographical area of Europe.

2 In Q1 2019, the adjusted EBITDA excludes non-recurring costs for Euro 1.1  million, due to restructuring expenses related to the ongoing cost saving  program.

In Q1 2018, the  adjusted EBITDA excluded non-recurring costs for Euro 1.7 million, mainly  related to the CEO succession plan, and it included an income of Euro 9.8  million, as pro-rata portion of the accounting compensation for the early  termination of the Gucci license, equal to Euro 39 million for the full year  2018.

3 Emerging markets comprise the regions of  India, Middle East & Africa (IMEA) and Latin America (reported within Rest  of the World), Central Eastern Europe (reported within Europe), Greater China  and APAC (reported within Asia Pacific).




The positive  accounting effect of IFRS 16 to Q1 2019 Discontinued Operations EBITDA was Euro  2.9 million.


The positive  accounting effect of IFRS 16 to Q1 2019 Continuing and Discontinued Operations EBITDA  totaled Euro 6.4 million.

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  adding to the Operating profit, depreciation and amortization;


  • The net debt is the sum of bank borrowings and  short, medium and long-term loans, net of cash in hand and at bank.

Conference Call

Today,  at 7.15 pm CET (6.15pm BST; 1:15pm EST) a conference call will be held with the  financial community during which first quarter 2019 trading update will be  discussed.
  It  is possible to follow the conference call by calling +39 06 87500896, +44 844 4933857,  +33 1 70732727 or +1 917 7200178 (for journalists +39 06 87502026) and entering the access code: Safilo.
  A  recording of the conference call will be available from May 9 until May 11, 2019  on +39 06 99721048,  +44 844 5718951 or +1 917 6777532 (access code: 3982147).
  The  conference call is also available via webcast:

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