Ponzano May 11, 2009 - h. 01:40 p.m. CET. The Benetton Group Board of Directors examined and approved the consolidated results for the first quarter of 2009.
The reference market in the first quarter of 2009 was influenced by the cooling in demand, in a context of general weakness in the world economy and unfavourable euro exchange rate trends with the currencies of emerging countries, in particular the Korean won, the Indian rupee the Turkish lira and the rouble. In this situation, Group net revenue performance in the period was appreciable, reaching 449 million euro, down by 2% at constant exchange rates (-3.4% at current exchange rates).
Sales in established markets were down by 2.7% at constant
exchange rates in the first three months of the year, substantially
maintaining their level in the Mediterranean area in spite of the
Spanish market slowdown.
Emerging markets grew, at constant exchange rates, by 2.0%. India,
in particular, showed increased growth, there was a slowdown in
performance in the Russian area, also associated with the fall in
value of the local currency, while Turkey showed some growth.
The UCB adult brand and the children’s collections confirmed their good performance in the quarter, accounting for 52% and 30%, respectively, of total sales.
As already announced on more than one occasion, the Group is continuing with its programme to improve service to its clients, an increasingly critical factor in the current market downturn. In this sense, a reorganization of the sourcing, production and shipment schedule for the 2009 Fall/Winter collection has been planned, delaying the initial seasonal deliveries by a month, and therefore out of the second quarter. On the one hand, this will have a temporary impact on sales in the second quarter of 2009, over and above normal market trends, which will be fully recovered in the third quarter of the year, and, on the other hand, it will improve management of logistic costs.
Ongoing actions relating to the supply chain, which are generating improvements in terms of efficiency and effectiveness, have made it possible to contain the reduction of the gross operating profit to revenues ratio, which was 45.5% compared with 46.1% in the first quarter of 2008, influenced by the slight reduction in volumes and the continued negative exchange impact.
The contribution margin was 171 million euro, against 179 million in the comparative period of the previous year, and 38.1% of revenues.
Operating profit was 25 million euro and 5.5% of revenues, compared with 10.2% in the first quarter of 2008. However, it must be taken into account that the start of the previously announced reorganization plan generated non-recurring costs in the quarter, while the comparative quarter in 2008 included extraordinary income relating to the sale of a real estate asset (Villa Loredan). Net of the extraordinary items which affected the first quarters of 2009 and 2008 in opposite ways, the normalized operating result for the quarter just closed would be 29 million euro (6.4% of revenues) against 41 million in the first quarter of 2008 (9.0%).
EBITDA in the first quarter of the year was 50 million euro (11.1% of revenues) against 65 million (14.0%) in the first quarter of 2008.
Net income was 18 million euro compared with 29 million in the first quarter of 2008. Normalized net income would be 21 million euro in the first quarter of 2009 against 25 million in the same period of the previous year.
Compared with March 31, 2008, working capital increased
by 113 million euro, due to the combined effects of:
In the first quarter, Group net investments were 50
million euro compared with 77 million in the corresponding period
of 2008. Investment was predominantly for the commercial network,
33 million euro, both in established markets, such as Italy, France
and Spain, and in strategic markets like Russia, ex Soviet
countries and India.
Production investment related mainly to the increase in production
capacity in the manufacturing facilities in Istria (Croatia) and
Romania.
Net financial indebtedness was 763 million euro compared with 565 million at March 31, 2008, with an increase of 74 million euro compared with December 31, 2008. The seasonal increase in indebtedness in the quarter was therefore less than that in the two previous reference periods.
Benetton Group consolidated results
(unaudited)
| (millions of Euro) | 1st quarter 2009 |
% |
1st quarter 2008 |
% |
Change |
% |
Full year 2008 |
% |
|---|---|---|---|---|---|---|---|---|
|
Revenues |
449 |
100.0 |
465 |
100.0 |
(16) |
(3.4) |
2,128 |
100.0 |
|
Materials and subcontracted work |
207 |
46.1 |
214 |
45.9 |
(7) |
(3.1) |
997 |
46.9 |
|
Payroll and related costs |
23 |
5.1 |
22 |
4.8 |
1 |
1.2 |
88 |
4.2 |
|
Industrial depreciation and
amortization |
4 |
0.9 |
4 |
0.9 |
- |
1.9 |
16 |
0.8 |
|
Other manufacturing costs |
10 |
2.4 |
11 |
2.3 |
(1) |
0.8 |
45 |
2.0 |
|
Cost of sales |
244 |
54.5 |
251 |
53.9 |
(7) |
(2.5) |
1,146 |
53.9 |
|
Gross operating profit |
205 |
45.5 |
214 |
46.1 |
(9) |
(4.5) |
982 |
46.1 |
|
Distribution and transport |
15 |
3.3 |
15 |
3.2 |
- |
(0.4) |
66 |
3.0 |
|
Sales commissions |
19 |
4.1 |
20 |
4.3 |
(1) |
(6.1) |
89 |
4.2 |
|
Contribution margin |
171 |
38.1 |
179 |
38.6 |
(8) |
(4.6) |
827 |
38.9 |
|
Payroll and related costs |
43 |
9.6 |
41 |
8.8 |
2 |
5.5 |
168 |
7.9 |
|
Advertising and promotion |
15 |
3.4 |
18 |
3.9 |
(3) |
(15.1) |
61 |
2.9 |
|
Depreciation and amortization |
21 |
4.6 |
20 |
4.3 |
1 |
4.3 |
84 |
3.9 |
|
Other expenses and income - of which non-recurring expenses/(income) |
67 4 |
15.0 1.0 |
53 (6) |
11.4 (1.2) |
14 10 |
26.5 n.s. |
260 (1) |
12.3 n.s. |
|
General and operating expenses - of which non-recurring expenses/(income) |
146 4 |
32.6 1.0 |
132 (6) |
28.4 (1.2) |
14 10 |
11.0 n.s. |
573 (1) |
27.0 n.s. |
|
Operating profit(*) |
25 |
5.5 |
47 |
10.2 |
(22) |
(48.2) |
254 |
11.9 |
|
Financial (expenses)/income |
(6) |
(1.4) |
(8) |
(1.6) |
2 |
(19.0) |
(41) |
(1.9) |
|
Net foreign currency hedging (losses)/gains and
exchange differences |
2 |
0.5 |
(2) |
(0.5) |
4 |
n.s. |
(1) |
n.s. |
|
Income before taxes |
21 |
4.6 |
37 |
8.1 |
(16) |
(45.4) |
212 |
10.0 |
|
Income taxes |
6 |
1.2 |
10 |
2.2 |
(4) |
(48.9) |
56 |
2.7 |
|
Net income from continuing
operations |
15 |
3.4 |
27 |
5.9 |
(12) |
(44.1) |
156 |
7.3 |
|
Net income from discontinued
operations |
- |
- |
- |
- |
- |
- |
1 |
0.1 |
|
Net income for the period attributable to: - shareholders of the Parent Company - minority interests |
15 18 (3) |
3.4 4.1 (0.7) |
27 29 (2) |
5.9 6.3 (0.4) |
(12) (11) (1) |
(44.2) (37.4) 57.9 |
157 155 2 |
7.4 7.3 0.1 |
(*) Operating profit, before non-recurring items, amounts to 29 million, corresponding to 6.4% of revenues (41 million in first quarter 2008, representing 9.0% of revenues, and 254 million in 2008 with a margin of 11.9%).
Management has decided to present working capital in the strict sense of the term, meaning that direct taxes and receivables and payables not relating to working capital have now been excluded, also in keeping with requests from the financial community. As a result, the following items have been reclassified from "Other receivables/(payables)" to "Other assets/(liabilities)" for the periods before December 31, 2008: deferred tax assets and liabilities, receivables due from the tax authorities for direct taxes, receivables/payables due from/to holding companies in relation to the group tax election and payables representing the valuation of put options held by minority shareholders.
| (millions of Euro) | 03.31.2009 | 12.31.2008 | Change | 03.31.2008 |
|---|---|---|---|---|
| Working capital | 794 | 715 | 79 | 681 |
| - trade receivables | 790 | 787 | 3 | 713 |
| - inventories | 346 | 359 | (13) | 328 |
| - trade payables | (341) | (414) | 73 | (347) |
| - other receivables/(payables) (A) | (1) | (17) | 16 | (13) |
| Assets/(liabilities) held for sale | 1 | 1 | - | 29 |
| Property, plant and equipment and intangible assets (B) | 1,322 | 1,309 | 13 | 1,215 |
| Non-current financial assets (C) | 29 | 32 | (3) | 25 |
| Other assets/(liabilities) (D) | 16 | 24 | (8) | 37 |
| Net capital employed | 2,162 | 2,081 | 81 | 1,987 |
| Net financial indebtedness (E) | 763 | 689 | 74 | 565 |
| Total shareholders’ equity | 1,399 | 1,392 | 7 | 1,422 |
(A) Other receivables/(payables)
include VAT receivables and payables, sundry receivables and
payables, trade receivables and payables from/to Group companies,
accruals and deferrals, payables to social security institutions
and employees, receivables and payables for fixed asset purchases
etc.
(B) Property, plant and equipment and intangible assets
include all categories of assets net of the related accumulated
depreciation, amortization, and impairment losses.
(C) Non-current financial assets include unconsolidated
investments and guarantee deposits paid and received.
(D) Other assets/(liabilities) include retirement
benefit obligations, provisions for legal and tax risks, the
provision for sales agent indemnities, other provisions, current
tax receivables and liabilities, receivables and payables due
from/to holding companies in relation to the group tax election,
deferred tax assets also in relation to the company reorganization
carried out in 2003, deferred tax liabilities and payables for put
options.
(E) Net financial indebtedness includes cash and cash
equivalents and all short and medium/long-term financial assets and
liabilities.
| (millions of Euro) | 03.31.2009 | 12.31.2008 | Change | 03.31.2008 |
|---|---|---|---|---|
| Cash and banks | 70 | 132 | (62) | 88 |
| A Liquid assets | 70 | 132 | (62) | 88 |
| B Current financial receivables | 33 | 37 | (4) | 35 |
| Financial payables, bank loans and lease financing | (470) | (462) | (8) | (291) |
| C Current financial payables | (470) | (462) | (8) | (291) |
| D = A+B+C Current financial indebtedness | (367) | (293) | (74) | (168) |
| E Non-current financial receivables | 4 | 5 | (1) | 5 |
| Medium/long-term loans | (400) | (400) | - | (400) |
| Lease financing | - | (1) | 1 | (2) |
| F Non-current financial payables | (400) | (401) | 1 | (402) |
| G = E+F Non-current financial indebtedness | (396) | (396) | - | (397) |
| H = D+G Net financial indebtedness | (763) | (689) | (74) | (565) |
| (millions of Euro) | 1st quarter 2009 | 1st quarter 2008 |
|---|---|---|
| Cash flow from operating activities before changes in working capital | 55 | 66 |
| Cash flow used by changes in working capital | (77) | (61) |
| Interest (paid)/received and exchange differences | (5) | (12) |
| Payment of taxes | (4) | - |
| Cash flow used by operating activities | (31) | (7) |
| Net operating investments/Capex | (41) | (64) |
| Non-current financial assets | (9) | (13) |
| Cash flow used by investing activities | (50) | (77) |
| Free cash flow | (81) | (84) |
| Cash flow provided/(used) by financing activities of which: | ||
| - payment of dividends | (1) | (1) |
| - purchase of treasury shares | (3) | - |
| - net change in other sources of finance | 23 | 38 |
| Cash flow provided by financing activities | 19 | 37 |
| Net decrease in cash and cash equivalents | (62) | (47) |
In addition to the standard financial indicators
required by IFRS, this press release also contains a number of
alternative performance indicators for the purposes of allowing a
better appreciation of the Group's financial and economic results.
These indicators must not, however, be treated as replacing the
standard ones required by IFRS.
The following table shows how EBITDA and ordinary EBITDA are made
up.
| Key operating data (millions of Euro) |
1st quarter 2009 | 1st quarter 2008 | Change | Full year 2008 |
|---|---|---|---|---|
| A Operating profit | 25 | 47 | (22) | 254 |
| B - of which non-recurring expences/(income) | 4 | (6) | 10 | (1) |
| C Depreciation and amortization | 25 | 24 | 1 | 100 |
| D Other non-monetary costs (net impairment/(reversals)) |
- |
(6) |
6 |
- |
| E - of which non-recurring | - | (6) | 6 | - |
| F = A+C+D EBITDA | 50 | 65 | (15) | 354 |
| G = F+B-E Ordinary EBITDA | 54 | 65 | (11) | 353 |
Declaration by the manager responsible for the preparation of
company accounting documents - Appointment of Alberto
Nathansohn
The manager responsible for the preparation of company
accounting documents, Lorenzo Zago, declares, in accordance with
paragraph 2 of article 154b of the Tax Consolidation Act that the
accounting information included in this press release corresponds
with the documentary results, books and accounting records.
After the approval of the First Quarter 2009 results, the Board of
Directors, during today’s meeting, assigned to the CFO
Alberto Nathansohn the position as manager charged with the
preparing the Company’s financial reports.
Disclaimer
This document contains forward looking statements, specifically
in the section entitled “Outlook for the year”,
relating to future events and operating, economic and financial
results of the Benetton Group. By their nature, such forecasts
contain an element of risk and uncertainty, because they depend on
the occurence of future events and developments. The actual results
may differ significantly from those announced for a number of
reasons.
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