Asian travel retail restrains Safilo growth in first half of 2016

Safilo has expressed concern over its sales performance in the critical Asian travel retail market, which the company described as a “key restrainer” in the first half of 2016.

Sales of the brands that the group will operate ‘going forward’ in Asia (across all channels) declined -14.4% in the first half. On a global basis the performance was encouraging, with a +5.3% year-on-year increase recorded. Sales of these brands were strong in Europe (+11.8%) and in the group’s core business in North America (+2.0%), with momentum picking up in the second quarter (+18.6% and +3.1% respectively).

Safilo’s brand portfolio going forward recorded a +9% sales increase in the second quarter, at constant exchange rates.

When taking into account brand relationships that are coming to an end, the company’s net sales declined -3.5% to €651.1 million at current exchange rates and -2.1% at constant currencies in the first half. The second quarter saw a total net sales decline of -0.3% to €349.5 million at current exchange rates but +2.0% growth at constant exchange rates.

The company reported an adjusted net profit of €22.9 million in the first half of 2016, representing a +130.6% increase. The result is inflated because of a positive impact from net financial charges, Safilo noted.

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Safilo financial results for the first half of 2016

Safilo also said adjusted EBITDA was down -7.0% to €58.3 million. The adjusted EBITDA margin of 8.9% was 40 basis points lower than the 9.3% posted in the first half of 2015, primarily due to lower sales.

Adjusted operating profit decreased -12.8% to €37.5 million.

In the first half of 2016, the company’s gross profit declined -3.7% to €394.6 million. Its gross profit margin of 60.6% of sales was largely in line with the same period in 2015. In the second quarter of the year, gross profit margin stood at 60.2% of sales compared to 60.9% in the second quarter of 2015.

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Safilo financial results for the second quarter of 2016

“In the first six months, our going forward brands portfolio made good progress, growing by +5.3% at constant exchange rates, thanks to the broad based positive trends across the different market segments in which we are active. In the second quarter, we achieved sales acceleration, recovering a considerable part of the first quarter performance driven by the service shortfalls that had prevented us to fully leverage the sales opportunities of our order book,” said Safilo CEO Luisa Delgado.

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Safilo net sales by geographic area in the first half of 2016
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