MILAN — Due to higher raw materials costs and sluggish sales in southern European markets, Benetton Group reported a 16.4 percent decline in net profits to 102 million euros, or $134.6 million, in 2010 from 122 million euros, or $169.6 million, a year earlier.

Consolidated revenues as of Dec. 31 stood at 2.05 billion euros, or $2.71 billion, inching up 0.2 percent compared with 2.05 billion euros, or $2.7 billion, the year before. Dollar figures are converted at average exchange rates for the periods to which they refer.

Benetton said the results reflected “the difficult economic situation in the year just ended in some of the group’s most important reference markets, and the commitment to development in areas with the greatest growth opportunities.”

Geographically, sales in Europe dropped 3.3 percent. “Challenging conditions experienced in Greece, and to a lesser extent also in Spain and Italy, contrasted with the satisfying progress achieved in Russia, which registered double-digit growth, and many of its bordering countries, as well as the good support generated by the central European area,” said Benetton in January. Revenues in the Americas were up 5.3 percent, led by a 32.5 percent growth in Mexico. Sales rose 3.8 percent in Asia, and 4 percent in the rest of the world.

Benetton managed to reduce its debt, which as of Dec. 31 stood at 486 million euros, or $641.5 million, down from 556 million euros, or $772.8 million from the same period in 2009 despite the higher costs associated with the new loan agreement signed in June of last year.

As for 2011, the Italian manufacturer predicts difficulties for margins throughout the year especially due to higher raw materials costs, but has indicated it will focus on development projects, cost optimization and increasing efficiency to offset these hurdles.

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