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The Board of Directors of SAFILO GROUP approves the result for the first six month of 2007.


31/07/2007
SAFILO GROUP: GROWTH OF CONSOLIDATED TURNOVER (668 MILLION EURO,+ 10.3%) AND NET PROFIT (33 MILLION EURO, +52.5%) COMPARED TO THE SAME PERIOD OF 2006

· Net sales: 667.8 million Euro, +10.3% (+14.2% a   
  constant exchange rates)
· EBITDA: 100.5 million Euro, +6.2% (equal to 15.1% of
  sales)
· Operating Profit: 81.2 million Euro, +6.1% (equal to 12.2%
  of sales)
· Net profit: 33.3 million Euro, +52.5% ( equal to 5.0% of
  sales)
· Net financial position: 520.7 million Euro (531.8 million at
  the end of 2006)


Padova, 31st July 2007 – The Board of Directors of SAFILO GROUP S.p.A. today reviewed and approved the results relating to the first six months of 2007 which confirm strong growth of both turnover and net profit.
“I would like to express my satisfaction for the growth achieved by Safilo Group in these six months – commented Vittorio Tabacchi, Chairman of Safilo Group - especially in consideration of the particularly strong results achieved in the preceding quarters.
These results in fact confirm the effectiveness of the decisions we have taken. Our history and our passion have lead us to focus the activities of Safilo Group on the creation, development and distribution of high end products, in collaboration with the most celebrated international fashion
brands.
I am confident therefore that 2007 will be another positive year for Safilo following on from the constant growth which accompanies us. The Group can, in fact, count on a consolidated management team committed to the improvement of our results and the growth of the business. A year on from their appointment, I am convinced that the Chief Executive Officer Claudio Gottardi and the Co-Chief Executive Officer Massimiliano Tabacchi have given a decisive boost to the company’s progress.”

Safilo Group’s Net sales registered an increase of 10.3%, (+14.2% at constant exchange rates), reaching 667.8 million Euro compared to 605.4 million Euro in the same period of the previous year. In the second quarter turnover grew by 7.6% to 326.4 million Euro (+10,9% at constant exchange rates) compared to 303.3 million Euro in the second quarter of 2006.
All world markets have seen increases in sales, with significant results achieved in Asia (+13.1% in the first six months of 2007, +22.0% at constant exchange rates), thanks above all to the positive performances of the Armani, Dior and Gucci brands.
During the first six months of 2007 Europe registered a growth in sales of 25.4%, continuing to benefit from the recovery in the sale of prescription frames together with a balanced growth of both house brands and licensed brands.
Sales in America also increased, at constant exchange rates, and saw a growth of 2.7% in the first semester of 2007 (-4.7% at current exchange rates) due also to the contribution of the new licences A/X Armani Exchange and Marc by Marc Jacobs.
Sales performance during the period was influenced by the following factors:
- the positive result achieved by the strategic brands and
  new licences;
- the greater contribution from the retail channel which 
  closed the first six months of 2007 with 100 directly 
  managed Solstice shops in the United States and 63 
  Loop shops in Spain (the chain was purchased at the end
  of 2006);
- the unfavourable trend of exchange rates (in particular the
  US dollar);
- the sale of stock and returns of finished products relating
   to a brand which is no longer part of the Group’s portfolio.

Gross profit reached 393.5 million Euro against the 365.0 million Euro of the first six months of 2006, registering an increase of 7.8% and a margin on sales of 58.9% (60.3% in the first six months of 2006) which was negatively impacted by the weakness of the US dollar and the effects mentioned above resulting from the termination of a licence.

Operating profit in the first six months of 2007 was equal to 81.2 million Euro, an increase of 6.1% compared to the same period of 2006. The margin on sales was 12.2% (12.6% in the first six months of 2006). The development of the retail channel resulted in an increase of the incidence of
general, administrative and sales costs.

Ebitda registered an increase of 6.2% reaching 100.5 million Euro compared to the 94.7 million of the first semester of 2006, with a margin on sales of 15.1% (15.6% in the first semester of 2006).

Net profit attributable to the Group was 33.3 million Euro compared to 21.8 million Euro during the same period of 2006, with an increase of 52.5% and an incidence on sales of 5.0% (3.6% in the first semester of 2006), thanks to the considerable reduction of net financial expenses which in the first semester of 2006 were increased by the non recurring costs relating to the refinancing transaction. The tax rate during the six month period fell to 39.0% compared to 41.3% in the first semester of 2006.

Net working capital registered an increase of 54 million Euro if compared to the figure at June 30th 2006, and was influenced by the following factors:
- The improved trade receivables management, which increased less than sales, benefiting from the improved payment conditions and the greater retail incidence;
- The increase of inventory owing to the development of the retail channel and to the activities undertaken in the second half of 2006 which aimed at guaranteeing improved customer service;
- The increase of trade payables in support of business’s growth.

Net capital employed at 30th June 2007 reached 1,389.3 million Euro compared to 1,376.0 million Euro at 31st December 2006, boosted by the normal growth of net working capital.

Group shareholders’ equity at 30th June 2007 reached 861.8 million Euro, an increase of 23 million compared to 31st December 2006, while the Net financial position at 30th June 2007 fell to 520.7 million Euro compared to 531.8 million Euro at 31st December 2006, benefiting from the improved working capital management.

The Cash flow from operating activities increased during the first six months of 2007 to 32.8 million Euro (9.8 million Euro in the first six months 2006), benefiting above all from the greater profits of the period and the improved working capital management.
In the first six months of 2007, the Free Cash Flow was equal to 10.1 million Euro compared to an absorption of 3.4 million Euro registered in the corresponding semester of the previous year and despite the greater investments of the period, destined, above all, to the opening of new Solstice shops and the normal replacement of production machinery and equipment.

Outlook for the year
On the basis of the factors which have influenced the results of the first six months of 2007, the estimate for the current financial year confirms a growth in the level of sales of approximately 7% compared to the previous financial year, while EBITDA should reach 180 million Euro against the
190 million Euro previously indicated.

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 economicfinancial
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 financial position 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 Financial Position;
· 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.

Disclaimer
This document contains forward-looking statements, in particular in the Management Expectations section, 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.

Conference Call
At 3.00pm CET, 9:00am EST today a conference call will be held with the financial community durino which the Group’s economic and financial results will be discussed.
It is possible to connect to the call by dialling the following number: +39 02 802 09 11.

The Safilo Group is worldwide leader in the premium eyewear sector and maintains a leadership position in the prescription, sunglasses , fashion and sports eyewear sectors.
Present on the international market through exclusive distributors and 30 subsidiaries in primary markets (U.S.A., Europe and Far East), Safilo distributes proprietary branded collections Safilo, Carrera, Smith, Oxydo, Blue Bay, as well as licensed branded collections, including Alexander McQueen, Balenciaga, Bottega Veneta, Boss by Hugo Boss, Boucheron, Diesel, 55DSL, Dior, Emporio Armani, Giorgio Armani, Gucci, Hugo by Hugo Boss, Imatra, Jimmy Choo, Marc Jacobs, Marc by Marc Jacobs, Max Mara, Max&Co., Oliver, Pierre Cardin, Stella McCartney, Valentino and Yves Saint Laurent. In addition, the following collections are exclusively for the American market: Fossil, Juicy Couture, Nine West, Kate Spade, Saks Fifth Avenue, Liz Claiborne, J.Lo by Jennifer Lopez, A/X Armani Exchange and Banana Republic.


This press release is also available in the website www.safilo.com

For further information:
Safilo Investor Relations

Barbara Ferrante
+39 049 6985766
www.safilo.com/ir

Safilo press office
Nicoletta Chinello
ph. +39 049.69.85.379

Community consulenza nella comunicazione
ph. +39 0422.416.111 - 02.89.40.42.31
Auro Palomba – Mob. +39 335.71.78.637
Giuliano Pasini - Mob. +39 335.60.85.019
Marco Rubino – Mob. +39 335.65.09.552

Last update: 23/07/2010, 15:07


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