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Safilo Profits Up 12%

Organic business and the addition of the Polaroid brand helped the company compensate the phasing out of the Giorgio Armani Group’s licenses.

Eyewear from Safilo.

MILAN — Organic business and the addition of the Polaroid brand helped Safilo Group SpA compensate the phasing out of the Giorgio Armani Group’s licenses in the first quarter of the year, contributing to growing profitability and revenues.

In the three months ended March 31, the Italian eyewear maker posted a 12.1 percent increase in net profit, which reached 13.4 million euros, or $17.7 million, compared with 12 million euros, or $15.7 million, in the corresponding period the year before.

Revenues gained 2.9 percent to 297 million euros, or $392 million.

Dollar amounts have been converted at average exchange for the periods to which they refer.

Safilo produces and distributes eyewear for luxury labels including Dior, Gucci, Marc Jacobs, Bottega Veneta and Saint Laurent, in addition to its own Safilo and Carrera brands.

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“We started 2013 with positive results, ending the first quarter with a significant increase in our organic business,” said chief executive officer Roberto Vedovotto. “This was driven by the double-digit sales growth of the go-forward brands coupled with the strengthening of the overall performance in our key markets. On top of this, we were able to manage effectively the final exit of the Armani licenses, improving Safilo’s economic and capital structure with no impact at the top-line level.

“In a still-volatile market, we are glad with the results we are achieving, testifying to the strength of our long term strategy.”

Earnings before interest, taxes, depreciation and amortization rose 7.5 percent to 34.7 million euros, or $45.8 million.

Operating profit totaled 25.7 million euros, or $34 million, up 11.4 percent compared with the same period the previous year.

Despite the difficult economy in Europe, sales in the region were up 8.3 percent to 128.2 million euros, or $169.2 million.

In the period, Safilo continued to achieve double-digit sales growth in the emerging markets of the area, with Russia increasing organically around 18 percent.

Sales in the U.S. gained 1 percent, reaching 101.2 million euros, or $133.6 million.

Safilo said the organic performance of the North American area “proved to be one of the strongest among the mature markets.”

The company said “the year started positively also in the Asian markets, where go-forward brands were up double digits” even though total sales were down 5.9 percent to 46 million euros, or $60.7 million.

“The progression recorded by the organic business has allowed the group a good absorption of the sales and marketing costs, which slightly increased in the quarter compared to the same period in 2012 due to growth and expansion projects on the strategic licensed and Safilo brands,” said Safilo. The firm singled out China, Hong Kong and Japan, as well as Singapore and Malaysia, and the travel retail channel as showing “the most significant progress.”

Investments in the quarter totaled 4.7 million euros, or $6.2 million, and were mainly related to regular industrial maintenance and renewal activities.

As of March 31, Safilo reduced its net debt, which stood at 220.4 million euros, or $291 million, compared with 243.2 million euros, or $318.6 million, at the end of March 2012.