Padua, August 2, 2011 – The Board of Directors of SAFILO GROUP S.p.A. today reviewed and approved
the results of the second quarter and first half of 2011.
In the second quarter of 2011, the Group reported an acceleration in the underlying growth trends, delivering a double-digit organic sales increase and solid improvement of margins.
Specifically, in the period:
• Revenues grew by 10.5% at constant perimeter1 and exchange rates, with the quarterly trends driven
by the upbeat growth of the main fast-growing Asian and Latin American countries, the sound
trading conditions of the US market and better performance of Europe;
• EBITDA and EBIT rose by 30.9% and 48.3% respectively, benefitting of the higher gross margin
and the continuing deleverage of SG&A expenses both in the core wholesale business as well as at
retail stores level. Below the operating line, lower financial expenses and tax rate also contributed to
the consistent improvement of the Group’s net result;
• Net Debt declined both compared to the end of the previous quarter and the end of June 2010 thanks
to the improved profitability of the period and the tight control on working capital management.
Roberto Vedovotto, Chief Executive Officer of the Safilo Group, commented:“We are pleased with the additional growth delivered by our business during the second quarter of this year, especially as the positive performance of the top line came with an even more significant improvement of the Group’s profitability.
Expansion in high-growth regions further accelerated in the period, confirming both the quality of our
products and of our commercial propositions, which are today further strengthened by the very dynamic
work of the Group on all its strategic top licensed brands as well as its house brand, Carrera.
In our core regions, we were glad with the resilient performance of the US market and the momentum gained by our strategic European countries.
sales as well as the leaner operating and financial costs structure.
Quarterly results allowed the Group to close the first half of the year with a new record financial leverage of net debt to EBITDA below 2.0x.
In the period, all business areas developed according to our plans. We continued to work for the reduction of the Group’s net interest expenses through the early redemption of Euro 60 million of Safilo Capital
International Senior Notes 9 5/8% 5/2013.
We are well aware that the economic and business environment in which we operate remains dotted by
numerous uncertainties and we must maintain a strong focus on the sustainable improvement of the Group’s business and financial indicators.”
Net sales increased by 2.8%, reaching Euro 302.6 million in the second quarter of 2011, heavily impacted by the USD devaluation against the Euro. At constant perimeter1 and exchange rates, the Group delivered an organic sales growth of 10.5%.
In the first half of 2011, revenues totalled Euro 603.3 million, reporting an increase of 4.0% over the same
period of 2010. The growth was equal to 7.8% at constant perimeter1 and exchange rates.
In the second quarter of 2011, the wholesale business posted revenues of Euro 282.3 million, up 5.0% at
current exchange rates and 10.3% at constant exchange rates (Euro 268.9 million in the second quarter of
2010). Sales of sunglasses and prescription frames contributed similarly to the organic, double-digit
performance of the second quarter, with the prescription business growing nicely also in the more mature
Such results translated into a growth, for the first half of 2011, equal to 5.7% at current exchange rates and
7.4% at constant exchange rates (Euro 566.8 million compared to Euro 536.4 million in the first half of
Net consolidated sales continued to be impacted by the non organic decline of the retail business (-20.1% to
Euro 20.3 million in the second quarter of 2011, -16.9% to Euro 36.5 million in the first half of 2011),
following the sale of the retail chain in Mexico at the end of 2010.
At constant perimeter1 and exchange rate, the retail business grew by 12.1% and 14.9%, respectively in the
second quarter and first half of 2011, thanks to the good performance of Solstice stores in US.
From a geographical standpoint, in the second quarter of 2011, the American market reported a 6.7%
decline in sales to Euro 114.3 million. Such results were affected by the strong devaluation of the USD.
The underlying performance, at constant perimeter1 and exchange rates, remained good at +8.7%, fuelled by the accelerated growth of the Latin American markets where the Group has been strengthening its
organisation and commercial presence.
Momentum in the US market remained strong, driven by the healthy performance – in particular in the
independent opticians channel – of the Group’s top licensed brands as well as the continuing expansion of the
house brand Carrera.
In the first half of 2011, sales in the Americas totalled Euro 233.0 million, down by 0.6% at current currency
and increasing by 8.9% at constant perimeter1 and exchange rates.
European sales reached Euro 131.7 million in the second quarter of 2011, increasing by 9.3% compared to
the same period of 2010. Business trends were generally positive in the core markets where the growth of
the big Retail Network is also contributing to the recovery of the countries still beset by weaker economic
conditions, like Italy and Spain.
The new markets area, represented by Russia, Turkey and Eastern European countries, continued to deliver
In the first half of 2011, sales in Europe totalled Euro 261.8 million, up 5.3% compared to Euro 248.7
million in the first half of 2010.
Asian markets more than confirmed the strong path of growth outlined in previous quarters, with China,
Hong Kong, Korea, India and the Travel Retail business showing the most dynamic performances. Purchases
of high-end, premium branded collections represented the major driver of growth in the region, with the
Group progressively more active also in introducing the house brand Carrera and other branded collections.
In the second quarter of 2011, sales in Asia were equal to Euro 52.6 million, up 9.4% at current currency and
17.3% at constant exchange rates. The region contributed, at the end of the first half of 2011, to 16.6% of the
total consolidated business (Euro 99.9 million, +12.1% at current exchange rates, +14.6% at constant
Gross profit amounted to Euro 181.3 million in the second quarter of 2011, or 59.9% of sales, up 4.8%
compared to the gross profit of Euro 172.9 million (58.8% of sales) reported in the second quarter of 2010.
The 110 basis point improvement is explained by the increasing utilization of the internal production
capacity, thanks to the growing flows of high-volume brands, the higher quality of products in stock and a
more favourable mix.
In the first half of 2011, gross profit totalled Euro 364.3 million compared to Euro 346.5 million reported in
the first half of 2010. The gross margin improved to 60.4% of sales from the 59.7% of the same period of
Operating profit (EBIT) totalled Euro 30.5 million in the second quarter of 2011, growing by 48.3%
compared to Euro 20.6 million in the second quarter of 2010. Operating profitability improved to 10.1% of
sales (7.0% in the second quarter of 2010), reflecting the performance at the gross profit level and the more
efficient costs structure of the wholesale business in the area of selling and marketing costs as well as general
and administrative expenses. The retail business – today represented exclusively by the Solstice stores chain
in US – significantly improved its operating performance, contributing to the enhancement of the Group’s
In the first half of 2011, the Group’s operating profit totalled Euro 61.9 million, up 38.5% compared to Euro
44.7 million reported in the first half of 2010. The operating profitability improved to 10.3% of sales from
the 7.7% margin reached in the same period of 2010.
EBITDA was equal to Euro 39.5 million in the second quarter of 2011, increasing by 30.9% compared to
Euro 30.2 million recorded in the same period of 2010. The EBITDA margin stood at 13.1% of sales, up 290
basis points over the 10.2% margin registered in the second quarter of 2010.
In the first half of 2011, EBITDA totalled Euro 80.2 million, up 23.8% compared to Euro 64.8 million
reported in the first half of 2010. The EBITDA margin improved to 13.3% of sales from the 11.2% margin
reached in the same period of 2010.
The Group’s net profit amounted to Euro 12.9 million in the second quarter of 2011 compared to the loss
of Euro 5.0 million recorded in the second quarter of 2010. The Group’s net result also benefitted of the
continued decrease of the net financial charges as a result of the reduction of the average financial debt, the
positive impact of exchange rate differences and better tax rate of the period.
In the first half of 2011, the Group’s net profit reached Euro 31.3 million, compared to the loss of Euro 3.3
million registered in the first half of 2010.
The Free Cash Flow in the first half of 2011 was positive for Euro 22.6 million compared to the cash
generation of Euro 51.9 million recorded in the first half of 2010.
In the second quarter of 2011, the Group generated a positive free cash flow of Euro 29.4 million (Euro 48.8
million in the second quarter of 2010) as a result of the following factors:
• the positive result of the period;
• the tight management of working capital, especially as far as inventories are concerned. In the
period, stocks remained in fact under control, declining despite the growing turnover.
At the end of June 2011, the incidence of net working capital on the last 12-month rolling sales
declined to 26.6% from 30.0% in June 2010;
• the stable cash outflow for investing activities, which in the second quarter of 2011 was equal to
Euro 5.5 million compared to Euro 4.5 million in the second quarter of 2010.
The Net Debt at the end of June 2011 was equal to Euro 240.3 million, declining both compared to Euro
268.2 million reported at the end of March 2011 and Euro 269.4 million in June 2010.
The financial leverage (Net Debt/EBITDA LTM) declined at the end of the period below 2.0x (1.95x from
2.4x of the previous quarter).
Outlook for the year
After reaching a significant improvement in the economic and financial performance of the first half-year,
the Group remains focused on development and improvement projects. At the same time it remains cautious
on the outlook for the current year in the light of the macroeconomic uncertainty, particularly in Europe and
in the US.
1 Excluding the sold retail chain in Mexico, which had recorded sales of Euro 5.2 million in the second quarter of 2010 and a total of 10.3 million in the first half of 2010.
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. Francesco
Tagliapietra, 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 economicfinancial
management of the Group, are provided below:
• Ebitda (gross operating profit) is calculated by Safilo by adding to the Operating profit, depreciation and
• The net financial position 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
• 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 6.30 pm CET (5.30 pm GMT; 12.30 am EST) a conference call will be held with the financial
community during which the results of the second quarter and first half of 2011 will be discussed.
It is possible to participate to the call by dialling the following number: +39 02 69682337 or +44 203
1408286 (for journalists: +39 02 69682336) and quoting the following confirmation code: 4716378. The
playback of the conference call will be available from August 2 to August 4, 2011 by dialing the number +39
02 30413127 o +44 207 1111244 (access code: 4716378#). The conference call can also be followed with
the webcast on the sitewww.safilo.com/en/investors.html. The presentation is available and downloaded
from the company website.
Financial statement as of June 30, 2011
Please note that before the end of the day, the half-yearly financial report as of June 30, 2011 – containing the half-year condensed financial statements, interim directors’ report and the declaration pursuant to article 154- bis subsection 5 of ‘T.U.F.’ (Testo Unico sulla Finanza or Italy’s Financial Markets Consolidation Act) – will be made available to the public at the company’s registered offices and the offices of Borsa Italiana S.p.A.; the report will be published on the company’s internet website, at the address www.safilo.com/en/investors.html. Furthermore, the Auditors’ report and any eventual observations made by the Board of Statutory Auditors will be made available to the public in the same way, as soon as they are available and in accordance with the law.
The Safilo Group is worldwide leader in the premium eyewear sector and maintains a leadership position in the prescription, sunglasses, fashion and sports eyewear sectors. Present in the international market through exclusive distributors and 30 subsidiaries in primary markets (U.S.A., Europe and Far East). The main proprietary branded collections distributed are: Safilo, Carrera, Smith Optics, Oxydo, Blue Bay, and the licensed branded collections are: Alexander McQueen, A/X Armani Exchange, Balenciaga, Banana Republic, Bottega Veneta, BOSS by Hugo Boss, Boss Orange, Dior, Emporio Armani, Fossil, Giorgio Armani, Gucci, HUGO by Hugo Boss, J.Lo by Jennifer Lopez, Jimmy Choo, Juicy Couture, Kate Spade, Liz Claiborne, Marc Jacobs, Marc by Marc Jacobs, Max Mara, Max&Co., Nine West, Pierre Cardin, Saks Fifth Avenue, Tommy Hilfiger, Valentino, Yves Saint Laurent.
This press release is also available on the website www.safilo.com.