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The Board Of Directors of Safilo Group S.p.A. approves the financial results of the First Half of 2015

Positive sales momentum in core markets, partly offset by expected softness in Asia

Strong Free Cash Flow generation and record low Net Debt


Good progress on 2020 Initiatives – Investing for the Future


Padua, August 4, 2015 -The Board of Directors of Safilo Group S.p.A. – the fully integrated Italian eyewear creator, listed on the Milan Stock Exchange – has today reviewed and approved the results of the second quarter and first half of 2015.


Net sales for the first six months of 2015 grew by 11.3% on a reported basis and by 1.0% at constant currencies, with the business recording an improvement in the second quarter, up 12.0% (+1.2% at constant currencies).

The main growth contributors were key Western European countries, North America, MEA and Latin America.


In the first half of 2015, gross profit grew by 6.9%, having increased by 7% in the second quarter.

Gross margin equalled 60.7% of sales in the first six months and 60.9% in the second quarter. The contraction compared to the comparable periods last year (63.3% and 63.7% respectively in H1 and Q2 2014), continued to be mainly driven by cost inflation increases not yet recovered through industrial efficiencies, as the Group continues to ramp up its cost savings initiatives.


At the operating level, adjusted1 EBITDA was down 12.6% in the first half and 16.9% in the second quarter, with profitability reflecting the margin performance recorded at the gross profit level.

In the second quarter, the adjustedEBITDA margin also reflected the Group’s continuing investments in the new global advertising, product campaigns and strengthening of managerial capabilities, all of which will benefit the Group going forward.


Safilo’s adjusted1 Group’s net result in the first six months of 2015 declined by 68.5%, impacted by financial charges behind the net negative exchange rate differences recorded in the first quarter and the effects of the fair value valuation of the equity-linked bonds. In the second quarter, the adjusted1Group’s net result mainly reflected the operating dynamics described above.   


In the period, Safilo generated Free Cash Flow of  Euro 51.6 million helped on the one hand by the first of three compensation payments of Euro 30 million received in January from Kering, and on the other hand by the ongoing improvement of net working capital management driven by a reduction in inventory days on hand and accounts receivable DSO (days of sales outstanding). At the end of June 2015, Group net debt further declined to Euro 110.1 million, improving the adjusted1 financial leverage at 1.0x. 

Luisa Delgado, CEO, commented:

“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.

Our key geographies are recording good growth, namely our core markets of North America and key Western European countries, as well as the new regions of LA and MEA that we established last year, while our Asia capability re-set is progressing to plan with a slowing decline in the second quarter.


Our licensed brand portfolio is developing positively following the brand re-balancing roadmap of 2020. Our marketing and product interventions on Carrera, Polaroid and Smith including its further integration into Safilo, are showing early results in countries where we have executed with excellence such as Carrera in North America and Polaroid in Spain, and our focus is on now accelerating the roll out.  


We are progressing with our supply & distribution network re-invention focused on cost savings, inventory reduction and consolidation of our logistics network. Reductions of inventory days-on hand are starting to be visible, while the overall savings program is ramping up for the second half of the year, and we have announced the first regional distribution centres’ consolidation in the US. Finally, we are progressing well on the capability front and are adding expert knowledge in key business areas including Product, Supply Chain, Brand and Commercial to drive and sustain our strategic transformation.”           


Economic and financial highlights

H1 2015

In the first half of 2015, Group total net sales totaled Euro 674.9 million, up 11.3% compared to Euro 606.3 million recorded in the same period of 2014. At constant exchange rates, turnover increased by 1.0%.


H1 2015 Gross profit was Euro 409.9 million, up 6.9% compared to Euro 383.5 million in the first half of 2014, while the gross margin moved to 60.7% from 63.3%.


H1 2015 adjustedEBITDA was Euro 62.7 million, down 12.6% compared to the adjusted1 EBITDA of Euro 71.7 million recorded in the same period of 2014.Adjusted1EBITDA margin was 9.3% of net sales in H1 2015, compared to 11.8% in H1 2014.  


H1 2015 adjustedEBIT was Euro 43.1 million, down 21.0% compared to the adjusted1 EBIT of Euro 54.5 million registered in H1 2014. AdjustedEBIT margin was 6.4% of net sales in H1 2015, compared to 9.0% in H1 2014.


Total net financial charges increased to Euro 22.7 million from Euro 4.5 million in H1 2014 due to the negative impact of exchange rates differences of Euro 9.9 million in the first semester (positive impact of Euro 3.4 million in H1 2014) and the effects of the fair value valuation of the option component embedded in the equity-linked bonds for Euro 4.9 million.

In H1 2015, net interest charges slightly increased Euro 4.2 million from Euro 4.0 million in H1 2014.


H1 2015Group adjusted1net result equaled a profit of Euro 9.9 million, down 68.5% compared to the adjusted1 net result of Euro 31.5 million recorded in H1 2014.

Q2 2015

In Q2 2015, Safilo reported total net sales of Euro 350.6 million, up 12.0% compared to Euro 313.1 million recorded in the same quarter of 2014, supported by a weaker Euro. At constant exchange rates, turnover increased by 1.2%.


Q2 2015 Gross profit equaled Euro 213.4 million, up 7.0% compared to Euro 199.5 million in the same quarter of 2014. Gross margin moved to 60.9% of net sales from 63.7%.


Q2 2015 adjustedEBITDA was Euro 30.2 million, down 16.9% compared to the adjusted1 EBITDA of Euro 36.3 million recorded in the same period of 2014.Adjusted1EBITDA margin was 8.6% of net sales in Q2 2015, compared to 11.6% in Q2 2014. 


Q2 2015 adjustedEBIT was Euro 19.8 million, down 28.7% compared to the adjusted1 EBIT of Euro 27.7 million registered in Q2 2014. AdjustedEBIT margin was 5.6% of net sales in Q2 2015, compared to 8.8% in Q2 2014.


Total net financial charges moved to Euro 3.9 million from Euro 2.2 million in Q2 2014. Net exchange rates differences turned slightly positive in the quarter, to Euro 0.7 million (positive for Euro 2.4 million in Q2 2014) while  net interest charges declined to Euro 1.9 million from Euro 2.2 million in Q2 2014.


Q2 2015Group adjusted1net result equaled a profit of Euro 7.7 million, down 49.0% compared to the adjusted1 net result of Euro 15.0 million recorded in Q2 2014.

Key Cash Flow data

In H1 2015, Free Cash Flow improved to Euro 51.6 million compared to a negative flow of Euro 6.4 million in H1 2014 and an outflow of Euro 12.4 million at the end of 2014. This result included the first of three compensation payments of Euro 30 million received in January from Kering, without which free cash flow remained nonetheless positive.

Net working capital management continued to improve in the second quarter, freeing Euro 22.9 million compared to Euro 3.6 million in the same quarter of last year. Inventories in the quarter decreased by Euro 9.5 million, with the inventory days on hand, on a constant currency basis, down markedly. As far as trade receivables are concerned, the ratio of days of sales outstanding continued to improve, recording a sizeable decrease compared to the same period of last year.

In H1 2015, Cash Flow for investing activities was Euro 15.4 million compared to Euro 18.1 million in H1 2014, driven by product supply upgrades and IT investments.


At the end of June 2015, Group net debt stood at Euro 110.1 million, down 14.2% compared to Euro 128.3 million at the end of March 2015 and 33.7% compared to Euro 166.1 million at the end of June 2014.


H1 2015 net sales in Europe were up 4.4% (+4.1% at constant exchange rates) to Euro 276.7 million compared to Euro 265.0 million in H1 2014.

Sales momentum accelerated in Q2 with key markets like Italy, Iberian countries, Germany and France proving increasingly solid.

In the second quarter, net sales reached Euro 143.8 million, up 6.1% compared to Euro 135.4 million in Q2 2014 (+5.4% at constant exchange rates). Reflecting domestic economic conditions, Russia remained weak, excluding which second quarter European constant currency growth amounted to 6.4%.


North America

H1 2015 net sales in North America reached Euro 270.5 million compared to Euro 216.1 million in H1 2014, growing by 25.1% on a reported basis and 2.9% at constant exchange rates, thanks to broad based positive trends across the different market segments and channels in which Safilo plays.  

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% on a reported basis and by 2.4% on a constant forex basis.


Latin America

H1 2015 net sales in Latin America were Euro 25.6 million, up 8.2% compared to Euro 23.7 million in H1 2014 (+ 5.9% on a constant forex basis). The regional business experienced some softness in the second quarter, with net sales at Euro 13.1 million, down 6.9% compared to Euro 14.1 million in Q2 2014 (-6.0% on a constant forex basis), mainly driven by phasing of deliveries between the two quarters.


H1 2015 net sales in Asia were Euro 86.7 million compared to Euro 89.6 million in the same period of last year (-3.2% at current exchange rates, -18.0% at constant exchange rates). Net sales in the second quarter equaled Euro 47.5 million compared to Euro 46.1 million in the quarter of last year (+3.0% at current exchange rates, -13.4% at constant exchange rates), marking a deceleration of the decline vs. the first quarter as the Group continued its interventions to create sustainable business models in every Asian market.

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.


Rest of the world

Net sales in the rest of the world were Euro 15.4 million in the first six months of 2015 and Euro 8.6 million in the second quarter, up 28.9% and 41.3% 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.


In the first half of 2015, the adjusted economic results do not include non-recurring items related to commercial restructuring costs in the EMEA region for Euro 1.2 million and other non-recurring costs for Euro 1.2 million mainly related to the consolidation of the Group’s North American distribution network into its Denver facility.


In the first half of 2014, the adjusted economic results did not include non-recurring expenses for Euro 3.0 million related to the voluntary exit incentives recently signed with employees and trade unions, as the solidarity contracts come to an end, and to some reorganization costs.


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.


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 Group, 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;

·         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 debt;

·         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.

Conference Call

Today, at 6.15 pm CEST (5.15pm BST; 12.15pm EDT) a conference call will be held with the financial community during which the results of Q2 and H1 2015 will be discussed.

It is possible to follow the conference call by calling +39 06 99749000, +44 203 4271918 o +1 646 2543365 (for journalists +39 06 87500876) and entering the access code 3022192.

A recording of the conference call will be available until August 6, 2015 on 39 06 45217196, +44 203 4270598 o +1 347 3669565 (access code: 3022192).

The conference call may be followed via webcast at The presentation is available and may be downloaded from the Company’s website.

Financial statement as of June 30, 2015

Please note that the half-yearly financial report as of June 30, 2015 - 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, at the central storage of regulated information and will be published on the company's internet website, at the address

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.

About Safilo Group

Safilo Group is the fully integrated Italian eyewear creator and worldwide distributor of quality and trust, leader in the premium sector for sunglasses, optical frames and sports eyewear. Design inspired and brand driven, Safilo translates extraordinary design into excellent products created thanks to a superior craftsmanship expertise dating back to 1878. Internationally present through 31 owned subsidiaries and exclusive distributors in key markets – in North and Latin America, Europe, Middle East and Africa, and Asia Pacific and China –, Safilo is committed to quality distribution in over 130 countries around the world. Safilo’s portfolio encompasses proprietary brands – Carrera, Polaroid, Smith, Safilo and Oxydo – and licensed brands Dior, Fendi, Gucci, Alexander McQueen, Banana Republic, Bobbi Brown, BOSS, BOSS Orange, Bottega Veneta, Céline, Fossil, Givenchy, HUGO, J.Lo by Jennifer Lopez, Jack Spade, Jimmy Choo, Juicy Couture, Kate Spade, Liz Claiborne, Marc Jacobs, Marc by Marc Jacobs, Max Mara, Max&Co., Pierre Cardin, Saint Laurent, Saks Fifth Avenue and Tommy Hilfiger.


Listed on the Italian Stock Exchange (ISIN code IT0004604762, Bloomberg SFL.IM, Reuters SFLG.MI), in 2014 Safilo recorded net revenues for Euro 1,178 billion.

Safilo Group Investor Relations
Barbara Ferrante
Ph. +39 049 6985766
Safilo Group Press Office
Milano – Ph. +39 02 77807607
Padua – Ph. +39 049 6986021
Weber Shandwick | Advisory
Annamaria Ferrari
Ph. +39 02 00641102
Lisa Nanu
Ph. + 39 02 00641103

Last update: 04/08/2015, 18:33

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