Marcolin approves September 30 quarterly report
The Board of Directors of Marcolin SpA approved the Marcolin Group Report at September 30, 2005, compiled in compliance with the international accounting principles (Ias/Ifrs).
Compared to the same period last year, the Group's billings from sales were 10.1 million euros lower or, in percentage, the downturn was 7.9% (4.3% at constant exchange rates). The drop in billings is mainly due to the loss of sales from the Dolce & Gabbana Eyewear lines (-10% in billings compared to September 30, 2004), D&G Dolce & Gabbana Eyewear (-15%) and a falloff in the Cébé line (-25%).
However, the trend is decidedly positive for the Roberto Cavalli Eyewear line (+26%), Montblanc (+10%) and, on the American market, for Kenneth Cole, whose sales rose thanks to the extension of the distribution license for vision glasses to the opticians channel in 2005.
As far as the Dolce & Gabbana lines are concerned, the drop in sales is mainly linked to events connected with the transfer of the license to the Luxottica Group. This came about in the main world markets on October 1, 2005 (although the contract remains in Marcolin's name until December 31, 2005, for some geographical areas).
The analysis of sales by geographical area confirms the trend that had already begun on June 30, and highlights the reduction in billings in Europe (-13.3%) and in Italy (-6.8%), geographical areas in which there is a higher concentration of sales of Dolce & Gabbana and Cébé lines.
The billings trend by product line shows that the Cébé sports lines have decreased by 25% (equal to 3.1 million euros), mainly due to a general contraction of the French market (the reference market for Cébé products) in the sport-sun segment, in addition to the less favorable than expected acceptance of the new product lines presented. Given the negative results, reorganization of the Cébé subsidiary is underway and has led to the closing down of certain production departments. As a consequence, external sources of supply have had to be used and the effects of this will be felt in financial year 2006.
Ebitda stands at 1.2 million euros (equal to 1% of billings), compared to the 13.6 million euros (10.6% of billings) achieved during the first nine months of 2004. Ebit for the period is negative at 4.5 million euros (positive at 7 million euros at September 30, 2004).
The contraction of the above economic indicators at Group level is mainly due to:
- lower margins for sales of Dolce &Gabbana lines;
- the consequent percentage increase in fixed costs due to the reduction in the Group's overall billings, despite the reduction interventions already underway;
- the start up costs for the production of the new collections, specifically those for the Tom Ford and Just Cavalli lines;
- difficulties encountered with the Cébé line.
The period ended September 30 has a negative result of 7.9 million euros after allocations for taxes of 1.4 million euros (positive at 0.4 million euros at September 30, 2004, net of taxes of 4.2 million euros).
The net financial position is 44.7 million euros, substantially unchanged compared to December 31, 2004 (44.5 million euros) and the same period 2004 (44.4 million euros).
Important events that occurred after the close of the quarter and forecast management changes:
- the new Tom Ford and Just Cavalli collections were presented and were highly praised by the operators in the sector;
- with reference to the Cébé line, the problems with billings and margins encountered during the first nine months of the year are expected to remain but will be slightly off set by the billings expected at the end of the year for seasonal sales;
- with regard to costs, the management of the parent company, Marcolin SpA, is studying a series of initiatives aimed at redefining the Group's complex organizational and corporate structure, which will allow a significant reduction in management costs and, as a consequence, the reduction in incidence;
- a negative result for the first quarter of the financial year is also expected, although it will be inferior than the result recorded for the third quarter.
After the Board Meeting, General Manager Antonio Bortuzzo stated: 'The management of the new policy focuses on the development of new and important licenses and on the rationalization of production and distribution costs in order to achieve great results in the next years: a Group that is efficient, streamlined, with excellent product quality, a portfolio of strong brands that are known worldwide and do not overlap. The necessary and immediate Group rationalization interventions are counterbalanced by the excellent way in which the new brands have been accepted by operators and by the media at the launch stage'.
