Tabacchi against competitive devaluation of the dollar
In an interview with Monthly Finanza e Mercati, Vittorio Tabacchi, president of Safilo, talked again about the super-euro and the negative effects of competitive devaluation of the dollar, a strategy that the US government is adopting to support the domestic economy and which has not been opposed by the Central European Bank.
'A United Europe is an illusion, we do not make monetary policies, we let others do it for us', Tabacchi stated when expressing his concern about the loss of competitiveness for European companies caused by fluctuations in the exchange market.
A good part of Safilo's billings do in fact come from outside Europe and exchange competition has left its mark: in the first nine months of 2003 North America represented 37% of Safilo's market, but during the same period this year the figure fell by two points, despite the increase in sales of eyewear (+53%). The downturn is even more obvious for the third quarter of 2004, when billings dropped by 8.4% against 2003, whereas at constant exchange rates they would have increased by 2%.
Safilo has tried to absorb this disadvantage by keeping prices the same, reducing margins in dollar-zone markets, and at the same time 'deciding to purchase certain products outside the euro zone'. The facility at Traun in Austria has been closed and production transferred to Slovenia; production at the lower end of the scale has been concentrated in China, but using Asian markets for supplies can only go so far.
'We make top-of-the-range eyewear', Tabacchi explained, 'and our more prestigious collections are strictly Made in Italy' (45% of the total).
With the end of a poor 2003 and despite exchange rates, this year the group has been able to improve billings (713 million euros, +6%) and accounts at September 30 show that the incidence of gross operating margin on net sales has returned to over 15%. The aim for 2004 is to break even, 'but I don't know if we'll manage it, even though the situation is definitely improving. The next financial year will yield results', Tabacchi concluded.
