Safilo losses worsen in 2017
today Mar 14, 2018
Safilo's financial statement for 2017 shows a marked decline both in sales and profitability. The Italian eyewear group, controlled by Dutch investment fund HAL, was severely affected by the negative impact of losing some of the brands in its portfolio. Safilo recently published its annual results for last year, confirming a slump in revenue, which fell to €1.047 billion (-16.4% compared to 2016), and posting losses for the third consecutive year.
Safilo, the world's second largest eyeglasses manufacturer, last year suffered a net loss of €251.6 million, compared to a loss of €142.1 million in 2016 and one of €52.7 million in 2015. The losses are explained by a series of exceptional factors, including the devaluation for the launch of the group's operations in Asia, and non-current restructuring charges, the group has stated.
Exceptional factors aside, the adjusted net loss was €47.1 million. EBITDA was also down, falling from €89.9 million in 2016 to €25.9 million a year later. Adjusted EBITDA went from €88.8 million in 2016 to €41.1 million in 2017. In consideration of these results, the board of directors decided not to pay dividends for the 2017 financial year.
"2017 was a complex year for Safilo, one during which we had to deal with the transformation of the Gucci licence into a supply contract, and with difficulties in the deployment of the new IT system for the running of our distribution hub in Padua, Italy, with consequences in terms of service levels and order opportunities. These events had a significant impact on the group's economic and financial results," said Safilo's Executive President Eugenio Razelli in a press release.
He was nevertheless optimistic and said that "2018 [will be] a new start for Safilo,"with Angelo Trocchia (formerly at Unilever) taking charge of the group from 1st April. Trocchia will succeed Luisa Delgado, who has left after five years at the eyewear manufacturer's helm, a period during which the licences for Gucci and other labels belonging to luxury group Kering were terminated.
From 1st January, the Gucci licence, worth nearly €350 million per year, has turned into a four-year production contract. In addition, there was also the loss of the licence for Céline, a brand owned by the LVMH group. The latter set up a joint-venture company, Thelios, with another Italian manufacturer, Marcolin. LVMH owns a 51% stake in Thelios, which will produce the Céline eyewear collection. The Dior licence, renewed until 2020, could also eventually be at risk for Safilo, as would the one for Fendi.
At constant exchange rates, Safilo expects sales for the regular brands in its portfolio, in other words those which remain part of the group, "to continue to grow in 2018, compensating for the termination of the Céline licence." Safilo is also counting on a revival in mature markets and on renewed sales growth in emerging countries.
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