Safilo reports 6.9 percent rise in H1 gross profit

Safilo Group net sales for the first six months of 2015 grew by 11.3 percent on a reported basis and by 1 percent at constant currencies, with the business recording an improvement in the second quarter, up 12 percent or 1.2 percent at constant currencies. The main growth contributors were Western European countries, North America, MEA and Latin America. In the first half, gross profit grew by 6.9 percent, having increased by 7 percent in the second quarter.

Gross margin equaled 60.7 percent of sales in the first six months and 60.9 percent in the second quarter. At the operating level, adjusted EBITDA was down 12.6 percent in the first half and 16.9 percent in the second quarter, with profitability reflecting the margin performance recorded at the gross profit level.

Commenting on the results, Luisa Delgado, CEO, said, “We continue on our path of investment as we reinvent ourselves to deliver sustainable growth and higher margins. The lower gross margin result achieved in the first half, impacted by cost inflation, is a key focus area for our cost savings and efficiency interventions going forward. On balance, we are satisfied with the progress of the strategic initiatives that we are implementing in line with our 2020 strategic plan.”

H1 2015 net sales in Europe were up 4.4 percent or 4.1 percent at constant exchange rates. Sales momentum accelerated in Q2 with key markets like Italy, Iberian countries, Germany and France proving positive. In the second quarter, net sales were up 6.1 percent. Reflecting domestic economic conditions, Russia remained weak, excluding which second quarter European constant currency growth amounted to 6.4 percent. H1 2015 net sales in North America increased by 25.1 percent on a reported basis and 2.9 percent at constant exchange rates. In the second quarter, the region showed a solid and resilient performance against a more challenging comparable period last year, with the wholesale business growing by 25.2 percent on a reported basis and by 2.4 percent on a constant forex basis.

H1 2015 net sales in Latin America were up 8.2 percent compared to 5.9 percent on a constant forex basis. The regional business experienced some softness in the second quarter, with net sales down 6.9 percent. Net sales in Asia declined 3.2 percent at current exchange rates and 18 percent at constant exchange rates in the first half. Net sales in the second quarter were up 3 percent at current exchange rates but down 13.4 percent at constant exchange rates. The capability re-set of Greater China and Asia Pacific, and the continued subdued trading environment in Greater China, Hong Kong and Korea, continued to weigh on the regional performance, while growth momentum continued in Australia and South East Asian distributor markets posted a growth in the quarter.

Net sales in the rest of the world in H1 and second quarter increased 28.9 percent and 41.3 percent respectively at constant exchange rates. The marked improvements compared to the same periods last year are driven by Safilo’s strengthened presence in the Middle East markets where investments were made in 2014 with the opening of a fully owned subsidiary in Dubai.