The Board of Directors of Safilo Group S.p.A. approves the results as at 30 September 2015

05/11/2015
Continued strong Free Cash Flow drives further reduction of Net Debt and financial leverage below 1x

Positive sales momentum in Europe, North America and key new markets, continued headwinds in Asia

Improving operating leverage in Q3 as the Group executes its 2020 Plan, not yet offsetting H1 performance

Padua, November 5, 2015 – The Board of Directors of Safilo Group S.p.A. – the fully integrated Italian eyewear creator, listed on the Italian stock exchange – has today approved the results of the third quarter and first nine months of 2015.

For the first nine months, Safilo’s net sales grew by 10.6% against the corresponding period last year at current exchange rates and by 1.0% at constant exchange rates. Q3 performance by region closely resembled the sales trends recorded over the second quarter; net sales grew by 9.0% against Q3 2014 at current exchange rates and by 0.9% at constant exchange rates, continuing to reflect robust business in Europe, North America and in the new Middle East region, and weaker performances in the more challenging market environments of Asia and Brazil.

In the first nine months gross profit increased by 6.8% and gross margin reached 60.2% of sales. In the third quarter, gross profit grew by 6.6%, while gross margin decreased to 58.8% of sales, negatively impacted by foreign exchange. In the third quarter, the planned industrial efficiencies and cost savings initiatives more markedly offset the cost inflation increases and obsolescence costs that have impacted the industrial performance in the year to date.

At the operating level, adjusted¹ EBITDA was down 10.3% in the first nine months, but the Group reported for the first time in the year an increase for the third quarter, up 1.2% against last year. The adjusted¹ EBITDA margin stood at 8.1% and 5.2% of sales respectively in the first nine months and in the third quarter of the year. The latter period showed some improvement in operating leverage compared to the first part of the year as the pace of growth of investments in new advertising and product campaigns started to soften and the benefits of cost efficiency projects became more evident.

Excluding the negative impacts of exchange rates and discontinued licenses in the third quarter, both Gross margin and EBITDA margin improved versus the same period last year.

For the nine months to end September, the Group generated Free Cash Flow of Euro 66.8 million, taking Group Net Debt at the period end below the threshold of Euro 100 million for the first time, at Euro 97.1 million. This reflected the ongoing improvement in net working capital, the proceeds from the sale of shares held in an associate company and, as previously highlighted, the first of the three compensation payments of Euro 30 million from Kering, received in January.

“In the third quarter we further continued our comprehensive business reinvention, delivering continued growth in revenues, improving our operating leverage, and generating healthy cash flow through our strong focus on working capital management. 

Third quarter constant currency sales growth in our going-forward portfolio was high-single digits, reflecting the continuing and effective rebalancing of our licensed brand portfolio and development of our proprietary brands, with Polaroid and Smith showing good growth and Carrera registering brand health improvements  and changing over to the new collection.

Our core markets in Europe and North America and our newly opened markets in the Middle East and Mexico are showing encouraging growth. Our strategic reorientation in Asia, while in a challenging local market environment, is progressing to plan. We are pleased with our customers’ reactions to our new commercial strategy and our Smile category management programme expansion.  

We are satisfied with the progress in brand building, commercial and supply network, confirming the opportunities identified in the 2020 Strategic Plan.  Our new Product Supply leadership team has assumed global control of logistics, planning, manufacturing and sourcing, and commenced implementation of the first simplifications of the global Distribution Centre footprint and new production flows in the Italian Plants, to make progress in insourcing and deliver early benefits of our cost saving programmes.

Our eyewear collections were also this season among the most loved and editorially featured eyewear worldwide, and included the season’s best selling iconic designs. 

We remain committed to the key strategies underpinning our 2020 plan. In this respect, I am pleased with the underlying progress we are making and it is gratifying to see Safilo people across the world embracing the comprehensive need for change and demonstrating their passionate commitment to taking the Group successfully forward.” 

Last update: 05/11/2015, 18:12