Safilo losses worsen in FY 2016

Safilo closed its fiscal year 2016 with declining sales and revenues. The Italian eyewear manufacturer controlled by Dutch investment fund Hal has reported a revenue of €1.25 billion, down 2% compared to 2015. In the press release announcing the publication of its annual results, the group emphasized how its performance was affected negatively by the exit of several brands from its portfolio.

Safilo's financial losses increased in 2016, after first hitting the red in the previous year. In the latest fiscal year the group suffered in fact losses for €142.1 million, while a year earlier they amounted to €52.7 million.

The losses were caused by a series of exceptional factors adding up to €157.5 million. They include the devaluation for the launch of the group's operations in Asia, and non-current restructuring charges, the group stated.

Given this context, Safilo has published adjusted results which exclude these exceptional factors: its adjusted net income then becomes €15.4 million, compared to €6.9 million in 2015, and adjusted EBITDA is €88.8 million, compared to €102.4 million a year earlier (-13.3%).

It is worth noting that in 2016 the eyewear manufacturer nearly halved its liabilities, down from €89.9 million in 2015 to €48.4 last year.

Kering's 2014 decision to terminate its licence contracts with Safilo, including the profitable Gucci licence which the eyewear manufacturer operated for 20 years, continues to have a negative impact on Safilo's results. From 1st January, the Gucci licence worth nearly €350 million per year has turned into a four-year production contract.

This is why Safilo is keen to highlight the performance of its continuity brands, those which have been regularly featured in the group's portfolio. In 2016 their sales grew by 3.6% at constant exchange rates. "In 2016 Safilo enjoyed growth in sales and profitability for the regular brands in its portfolio, and we tried to handle as satisfactorily as possible the shortfall in Gucci [sales] at the tail end of the licence [agreement]," underlined CEO Luisa Delgado, who noted that Safilo's own labels "have yet to show their potential."

The group also lamented a series of recent logistics problems, which have affected product deliveries. In the first half of 2017, Safilo's senior management expects a further shortfall in sales, forecasted to turn out between 15% and 20% below the same period last year.

The eyewear manufacturer's woes were mirrored by its stock market performance, as Safilo shares lost about 4% at close of business in Milan on Thursday 16th March.

Safilo losses worsen in FY 2016

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