(Press Release)
PADUA, ITALY – The Board of Directors of Safilo Group has reviewed and approved the company’s first quarter economic and financial key performance indicators. Safilo has decided to release on a voluntary basis a trading update for its first quarter.
In the first quarter of 2016, Safilo’s net sales reached Euro 301.6 million, down 7 percent at current exchange rates and 6.6 percent at constant exchange rates, compared to Euro 324.3 million in the first quarter of 2015.
Sales performance reflected on one side the negative impact of the brands that the company stopped/will stop servicing, on the other the positive trends of the going forward brands portfolio, up 1 percent at constant exchange rates, reflecting solid performance in core markets and a mixed performance among emerging markets.
First quarter sales in Europe equaled Euro 130.1 million compared to Euro 132.9 million in the first quarter of 2015, down 2.1 percent at current exchange rates and 1.7 percent at constant exchange rates. In the period, sales of the going forward brands increased by 3.6 percent at constant exchange rates.
First quarter sales in North America were Euro 127.2 million compared to Euro 132.9 million in the first quarter of 2015, down 4.3 percent at current exchange rates and 5.6 percent at constant exchange rates.
In the period, sales in the 121 Solstice stores in the United States (132 stores at the end of March 2015) remained weak, falling by 15.2 percent at current exchange rates and by 17 percent at constant exchange rates.
The North America wholesale business equaled Euro 110.4 million compared to Euro 113.1 million in the corresponding period of last year, down 2.4 percent at current exchange rates and 3.6 percent at constant exchange rates. Sales performance of the going forward brands portfolio was positive by 3.1 percent at constant exchange rates.
First quarter sales in Asia totaled Euro 26.7 million compared to Euro 37.5 million in the first quarter of 2015, down 28.7 percent at current exchange rates and 28.3 percent at constant exchange rates. In the period, sales performance of the going forward brands in the region was down 14.6 percent at constant exchange rates.
First quarter gross profit was Euro 184.2 million, down 6.3 percent compared to Euro 196.6 million in the first quarter of 2015. Gross margin increased to 61.1 percent of net sales compared to 60.6 percent in the first quarter of 2015.
In the period, the company’s EBITDA was affected by non-recurring, restructuring costs of Euro 5.4 million, related mostly to the its overhead cost-saving initiatives announced in March.
Excluding these items, first quarter adjusted1 EBITDA was equal to Euro 25.2 million, down 22.6 percent compared to the adjusted1 EBITDA of Euro 32.6 million in the first quarter of 2015. In the first quarter of 2016, adjusted1 EBITDA margin stood at 8.4 percent of net sales compared to 10 percent in the same period of 2015, mainly reflecting the negative operating leverage stemming from the declining sales.
At the end of March, Safilo’s net debt stood at Euro 109.7 million, down 14.5 percent compared to Euro 128.3 million at the end of March 2015, while increasing by 22 percent compared to the end of December 2015 for the normal seasonality of the business.
Notes:
1Q1 2016 adjusted EBITDA does not include non-recurring costs for Euro 5.4 million of which Euro 4.2 million related to overhead cost-saving initiatives, such as the planned integration of Vale of Leven (Scotland) Polaroid lens production into Safilo’s China based corporate supply network, and Euro 1.2 million related to commercial restructuring costs in the EMEA region.
Q1 2015 adjusted EBITDA did not include non-recurring costs for Euro 1.2 million related to commercial restructuring costs in the EMEA region.
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.
Disclaimer
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 company, are provided below:
- EBITDA (gross operating profit) is calculated by Safilo by adding to the operating profit, depreciation and amortization;
- The net debt is for Safilo the sum of bank borrowings and short, medium and long-term loans, net of cash in hand and at bank.