- Prachi Singh |
Safilo’s operating performance in the first quarter of 2015 was broadly in line with management expectations, and progress made was in line with the 2020 strategic plan, the company said. Net sales grew by 10.6 percent, benefiting from the currency tailwind recorded in the period, while the increase at constant exchange rates was over 0.8 percent. The group saw continued strong performance in North America, further acceleration of growth in Latin America and a continuation of the positive trends in Europe, while Asia declined.
Gross profit improved by 6.8 percent to 196.6 million euros (213.8 million dollars). Gross margin contracted in comparison to a strong base of Q1 last year, driven by cost inflation ahead of COGS savings initiative expected to ramp up during the rest of the year. Adjusted EBITDA declined by 8.2 percent to 32.6 million euros (35.4 million dollars) and adjusted EBITDA margin reduced compared to the same quarter of last year, impacted primarily by the lower gross margin.
Commenting on the company’s first quarter performance, Luisa Delgado, CEO, said, “This has been another quarter of investment, on track with our plans for the year. As we progress further with the commercial reinvention to enable worldwide quality sales growth, and the supply network reinvention to enhance gross margins and reduce the level of cash tied up in inventory, we plan to see increasing benefit as we move through 2015.”
Sales in North America rose 26.9 percent at current exchange rates and 5.3 percent at constant exchange rates, whereas sales in Latin America rose 30.1 percent at current exchange rates and 23.4 percent at constant exchange rates. Business in Mexico was particularly positive within key accounts, while sales in Brazil also increased strongly. Turnover in Europe was up 2.6 percent or over 2.8 percent at constant exchange rates. Sales trends across the region were very resilient, with the Iberian countries, Germany and the Nordic markets continuing to move fast. Italy saw a positive start of the year, while Russia remained weak, reflecting domestic economic conditions.
In Asia-Pacific, revenues were down 9.8 percent at current exchange rates and 22.9 percent at constant exchange rates. While Australia witnessed growth and Japan started to show an early positive impact of brand driven commercial approach, Hong Kong saw some general market softness, also felt in China where additionally, order phasing and internal commercial strategy and capability gaps that are being addressed impacted business delivery.