MILAN — Safilo Group SpA on Wednesday said it more than doubled its net profit last year as the group generated free cash flow in 2016. The Italian eyewear company said first-quarter sales results will be impacted by deliveries out of its Padova warehouse.In a statement after the close of trading in Milan, where Safilo is listed, the company said its full-year 2016 net profit, adjusted for nonrecurring items, more than doubled to 15.4 million euros, or $17 million, from $6.9 million euros, or $7.58 million, reported in the full-year 2015.Due in large part to compensation payments from Kering, Safilo said it generated free cash flow of 44.7 million euros, or $49.5 million, which helped slash the group’s net debt to 48.4 million euros from 89.9 million euros in 2015. Safilo said the second of the three compensation payments of 30 million euros, or $33.2 million, from Kering was received in December 2016.The Gucci license ended in December, two years earlier than planned and that represented some 15 percent of the group’s revenues from the start of the year through the third quarter.Dollar amounts have been converted at average exchange for the periods to which they refer.“We managed the Gucci decline as well as possible in its final license period, and implemented further savings and business transformation initiatives,” said Safilo chief executive officer Luisa Delgado.While profits rose, sales contracted 2 percent due mainly to the double-digit decline of Gucci in its last year as a Safilo licensed brand, as well as poor performance of key brands in its "Going Forward Portfolio" post-Gucci, including Carrera. Polaroid, it said, suffered at the end of the year due to environmental issues.Safilo said net sales in 2016 were 1.25 billion euros, or $1.35 billion, down 2 percent (or 1.2 percent at constant currencies).Smith, its biggest brand, had a positive year.The Italy-based eyewear company will continue to build its brand portfolio. Safilo signed agreements with Moschino and Love Moschino, as well as Rag & Bone. The company renewed its licenses with Jimmy Choo, Max Mara and Dior, while Celine will exit by the end of the year.In geographic terms, the company reported a steep 22.3 percent drop in full-year sales in the Asia-Pacific region, which represents more than 9 percent of total group turnover. Sales in North America, which represents more than 40 percent of group turnover, decreased just over 4 percent, the company said. Europe — the group’s largest market, representing just shy of 43 percent of total turnover — reported sales growth of 7.1 percent while “Rest of World” sales increased just over 4 percent. All figures are at constant currencies.First-quarter sales have already been impacted by complications relating to its new warehouse system in Padova."Those [complications] are impacting our 2017 first quarter Going Forward Portfolio warehouse deliveries” the group said, adding that net sales in the first quarter of 2017 are expected to decline by an estimated 15 to 20 percent versus the first quarter of 2016.Safilo said it is working on recovering deliveries in the second quarter.More details will be given during a presentation for analysts and investors scheduled for Thursday morning. That will be available via Webcast.
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