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Q3 AND 9M 2018 TRADING UPDATE
Padua, October 31, 2018 – The Board of Directors of Safilo Group S.p.A. has today reviewed and approved Q3 and 9M 2018 economic and financial key performance indicators.
Safilo closed the third quarter of 2018 with total net sales of Euro 221.5 million, 9.0% lower at current exchange rates and 8.4% at constant exchange rates. Business trends in North America and Europe remained soft, similar to those reported in the first half of the year, while emerging markets turned negative, also due to a challenging comparison base.
Overall, in the first nine months of 2018:
Angelo Trocchia, Chief Executive Officer, commented:
“In the third quarter, we accelerated the important work on the fundamentals on which we aim to build our new 2020 business plan. In Europe and North America, where we aim to reconquer the business, we are progressing in stepping up core capabilities in the areas of customer care and service levels, and we are seeing an improvement in the business performance trends since beginning of September. The work is also ongoing in Asia and Latin America, where in each of the regions we recently appointed new, seasoned leaders with industry experience, who will help us to develop a more effective operating model in important markets like Brazil, China and Japan. On the cost savings front we are progressing well, both at the COGS level and in the area of our Overhead expenses, which in the quarter allowed us to improve the gross margin vs. year ago, and to hold up well at the adjusted EBITDA level where at constant exchange rates we were in line with last year.”
Economic and financial highlights
Net sales by geographical area
In the third quarter of 2018, net sales in Europe equaled Euro 91.7 million, down 7.1% at current exchange rates and 5.9% at constant exchange rates compared to the third quarter of 2017.
In the third quarter of 2018, net sales in North America equaled Euro 96.6 million, down 6.7% at current exchange rates and 7.8% at constant exchange rates compared to the same quarter of 2017. At constant exchange rates, the wholesale revenues decreased by 6.5% in the first nine months, after reporting a decline of 5.6% in the third quarter, a slight improvement compared to the performance recorded in the first half of the year.
In the third quarter of 2018, the region recorded net sales of Euro 15.4 million, down 7.7% at current exchange rates and 8.3% at constant exchange rates compared to the third quarter of 2017.
In the third quarter of 2018, net sales in the Rest of the World equaled Euro 17.9 million, down 26.8% at current exchange rates and 21.5% at constant exchange rates compared to the same quarter of 2017.
Notes to the press release:
1 In 9M 2018, the adjusted economic results exclude non-recurring costs for Euro 4.4 million, mainly related to the CEO succession plan and reorganization costs in North America, and include an income of Euro 29.3 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.
In 9M 2017, the adjusted economic results excluded non-recurring costs of Euro 4.4 million, mainly related to the reorganization of the Ormoz plant in Slovenia and other overhead cost saving initiatives, and included an income of Euro 32.3 million as a pro-rata portion of the accounting compensation for the early termination of the Gucci license, equal to Euro 43 million for the full year 2017.
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 first nine months and third quarter of 2018, had an adjustment effect on the sales and cost of goods sold of the same periods of 2017 equal respectively to Euro 7.2 million and Euro 1.8 million, with a neutral effect on the gross profit. Consequently, 9M and Q3 2017 total net sales were adjusted to Euro 790.5 and Euro 243.4 million respectively. The application of the principle to FY 2017 total net sales had an adjustment effect on the sales and cost of goods sold equal to Euro 11.6 million with a neutral effect on the gross profit.
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:
Today, at 6.00 pm CET (5.00pm GMT; 13.00pm EST) a conference call will be held with the financial community during which first nine month and third quarter 2018 trading update will be discussed.