MILAN — Bulgari reported a 17.6 percent jump in 2004 net profit as chief executive officer Francesco Trapani warned that a strong euro would force the jeweler to boost retail pricing.
Net profit for the 12 months ended Dec. 31 rose almost 18 percent to 108.3 million euros, or $134.3 million, from 92.1 million euros, or $104.1 million, the year before. Full-year revenue, released in January, grew 9 percent to 827.7 million euros, or $1.03 billion. Bulgari said sales gained 12.1 percent, stripping out the negative effects of currency exchange rates.
Dollar figures are converted from the euro at the average exchange rates for the period to which they refer.
Trapani told WWD that he is optimistic about 2005. He said that barring any extraordinary market developments, full-year sales will grow 10 to 12 percent at constant exchange rates and profit will increase at an even higher rate.
“The figures we have from the first months of the year are very encouraging,’’ Trapani said.
The ceo also said Bulgari will have to lift retail prices in the U.S. and Japan over the next few weeks to protect margins from a strong euro to dollar and yen exchange. He estimated retail prices would go up 3 to 4 percent globally to account for price boosts in those two markets.
Operating profit advanced 14.8 percent to 134.2 million euros, or $166.41 million. Bulgari said it managed to protect margins because most costs increased at proportionally lower rates than that of revenue growth.
A lower tax rate and a tax refund of 2.8 million euros, or $3.5 million, also boosted Bulgari’s bottom line. The tax rate for 2004 dropped to 10.5 percent of pretax earnings from 15.4 percent a year earlier.
Operating costs, excluding advertising and promotion expenses, advanced 7.4 percent to 297.2 million euros, or $368.5 million. Promotion and advertising expenses grew 19.5 percent to 96.4 million euros, or $119.5 million, as Bulgari launched new products such as the Astrale jewelry line, the Ergon watch collection and the Blu Notte fragrance.
Non-operating costs, including financial charges, losses on exchange rates and start-up expenses for the Hotel Bulgari project, grew 64.5 percent to 13 million euros, or $16.1 million.
Sales figures, in line with preliminary numbers released earlier this year, showed double-digit jumps for the Americas and Japan and slower growth in Italy and the rest of Europe on weak tourist flows.
In particular, sales in the Americas gained 12.9 percent to 122.8 million euros, or $152.3 million, while those in Japan grew 24.1 percent to 206.5 million euros, or $256.1 million. Revenue from Italy advanced 3 percent to 108.7 million euros, or $134.8 million, and was flat from the rest of Europe at 189.6 million euros, or $235.1 million.
Sales in the Far East, excluding Japan, rose 2.7 percent to 146.5 million euros, or $181.7 million, while those in the Middle East and other countries grew 15.7 percent to 53.6 million euros, or $66.5 million.