MILAN — Italian eyewear maker Marcolin Group said Tuesday that first-half net profits dropped as the financial crisis in Europe led to a decline in total sales.
The company reported that first-half net profits totaled 12.6 million euros, or $16.4 million, down 20.5 percent on the year-earlier period. Revenues — hit by a 15 percent decline in sales in Europe, the group’s largest market, and by the expiration of the Ferrari and John Galliano licenses — were 2.7 percent lower, at 121.5 million euros, or $157.7 million.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
The company — which produces eyewear for brands including Tom Ford, Diesel, Roberto Cavalli and Swarovski, as well as house brands Marcolin and Web Eyewear — also reported a slight decrease in operating profits. Earnings before interest, taxes, depreciation and amortization came in at 20.7 million euros, or $26.9 million, down 12.8 percent, and represented about 17 percent of sales, compared with 19 percent of sales in the year-ago period. The company said profitability in the period was also affected by “the different sales mix achieved,” with a higher proportion of revenues coming from distributors with lower profit margins and a “more marked reduction in turnover in the European market, where the group operates through direct branches, which generate higher margin.”
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Profitability was also impacted as some licenses failed to perform as expected, leading to a greater impact on the cost of sales, the company said.
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Commenting on the results, the company pointed out: “Noting the seasonality effect, which is a feature of the sector in which the Marcolin Group operates…it would be incorrect to project the first-half results into the second half in the same proportion.”
Giovanni Zoppas, Marcolin’s managing director and chief executive officer, said: “The company’s investments and focus on the areas of the world that are growing (U.S. and Far East) and the positive results achieved there so far confirm our expectations that the group will continue to expand in the future.
“In this context, 2012 promises to be a year of substantial consolidation of the results achieved so far.”
Aside from Europe, which represents 48.5 percent of sales, all other geographic markets put in positive sales growth, with the U.S. — the group’s second largest market — showing a particularly strong 20 percent jump to 29.8 million euros, or $38.7 million, “helped by the positive effect of exchange rates,” Marcolin said. Sales in Asia, which represent 11.7 percent of total group revenues, jumped 12 percent, while rest of the world revenues increased by 2 percent.
The first half saw an improvement in the company’s debt situation, with net debt down to 3.8 million euros, or $4.9 million, compared with 5.7 million euros, or $7.4 million, a year ago.
Marcolin noted the “positive performance” of the Diesel line, launched during the last quarter of 2011.
The slowdown in Europe weighed particularly on the group’s second-quarter results. In the three months to June 30, net income came in at 5.3 million euros, or $6.8 million, compared to 8 million euros, or $10.3 million, in the same period of 2011 as sales dropped 4.9 percent to 58 million euros, or $74.5 million.