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Q3 2019 continues the Group’s positive momentum in sales and cost reduction
Highlights in the first 9 months of 2019:
Padua, November 12 2019 – The Board of Directors of Safilo Group S.p.A. has today reviewed and approved Q3 and first 9 months 2019 economic and financial key performance indicators.
Angelo Trocchia, Safilo Chief Executive Officer, commented:
“In the third quarter of the year, we continued the improvement of our results, working with determination on those priorities aimed at enhancing our Group’s assets, in particular strengthening our commercial capabilities and enhancing our digital agenda, two areas in which our strategy is focused on the customer and on a continuous and ever closer connection with the final consumer. Meanwhile, we progressed also with actions to improve the efficiency of our production processes and overhead cost structures.
Safilo closed the first 9 months of 2019 with the net sales of the Continuing Operations at Euro 708.7 million, up 5.2% at current exchange rates and 2.7% at constant exchange rates. The performance was positively influenced by a 3.2% growth of the European market, and by the recovery of the main emerging markets, particularly significant in Asia Pacific which ended up 22.5%. Turnover was down 2.0% at constant exchange rates in North America.
NET SALES OF THE CONTINUING OPERATIONS BY GEOGRAPHIC AREA
In the 3rd quarter of 2019, the net sales of the Continuing Operations equaled Euro 212.8 million, up 2.2% at current exchange rates and substantially in line with the same period of last year at constant exchange rates (+0.1%).
The quarterly performance of the top line was influenced by the expected decrease, starting from the second part of the year, of the business relating to the production agreement with Kering, while the wholesale1 revenues recorded a growth of 5.2% at current exchange rates and of 2.8% at constant exchange rates. The latter result was driven by a double-digit revenue growth in Europe, supported by a double-digit growth also of the main distribution channels in Asia and core markets in Latin America.
IMPACTS FROM FIRST ADOPTION OF IFRS 16 ON THE FIRST 9 MONTHS OF 2019
2019 Group’s results are commented on a pre-IFRS 16 basis in order to support the transition and to allow proper comparison with the previous periods.
KEY ECONOMIC AND FINANCIAL PERFORMANCE INDICATORS OF THE CONTINUING OPERATIONS
On a pre-IFRS 16 basis, Safilo closed the first 9 months of 2019 with an adjusted2 EBITDA of the Continuing Operations of Euro 43.9 million, in line with the result recorded in the first 9 months of 2018 which however included the income of Euro 29.3 million for the early termination of the Gucci license.
On a pre-IFRS 16 basis, in the 3rd quarter of 2019 the adjusted2 EBITDA of the Continuing Operations equalled Euro 9.7 million, with a margin on sales of 4.6%. This performance compared to Euro 13.7 million recorded in the same quarter of 2018, a result which however included the income of Euro 9.8 million for the early termination of the Gucci license.
On a pre-IFRS 16 basis, the Group net debt at the end of September 2019 equalled Euro 24.3 million compared to Euro 32.9 million at the end of December 2018 and to Euro 3.9 million recorded at the end of June 2019. At the end of September 2019 the financial leverage stood at 0.5x.
PRESENTATION OF THE NEW GROUP BUSINESS PLAN
1 The wholesale business excludes the business of the production agreement with Kering, reported within the geographical area of Europe.
2 In the first 9 months of 2019, the adjusted EBITDA of the Continuing Operations excludes non-recurring costs for Euro 10.4 million (Euro 5.4 million in Q3 2019) due to restructuring expenses related to the ongoing cost saving program.
In the first 9 months of 2018, the adjusted EBITDA of the Continuing Operations excluded non-recurring costs for Euro 4.4 million (Euro 1.0 million in Q3 2018) mainly related to the CEO succession plan and reorganization costs in North America, and included an income of Euro 29.3 million (Euro 9.8 million in Q3 2018) for the early termination of the Gucci license.
3 In the first 9 months of 2019, the adjusted EBITDA of the Total Operations also excludes non-recurring costs for Euro 1.3 million related to the retail discontinued operations on July 1, 2019.
9M 2019 ECONOMIC HIGHLIGHTS OF THE TOTAL OPERATIONS
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 6.15 pm CET (5.15pm GMT; 12:15pm EST) a conference call will be held with the financial community during which the 3rd quarter and first 9 months 2019 trading update will be discussed.