MILAN — Bulgari’s first-half net profit plunged 53.2 percent as it trimmed full-year targets and warned there won’t be a significant recovery in business until next year.

Against the backdrop of a marked decline in tourism and weak sales at third-party retailers, net profit for the six months ended June 30 fell to $22.2 million from $47.3 million the year before. Sales contracted 5.7 percent to $332.2 million from $352.4 million the year earlier. Earnings before interest and taxes dropped slightly less, to $32.4 million from $60.6 million.

While chief executive Francesco Trapani said the results were in line with company expectations and noted the difficult comparisons with last year’s strong first half, he was bearish on the full year.

"I believe that a more evident recovery of the business can be realistically expected only during 2003," he said in a written statement.

Trapani backtracked on full-year forecasts, saying 2002 sales and profits should come at a "similar level" to those of 2001. In July, he said profits should grow by 10 to 11 percent and revenues should advance by 5 percent. Even the July estimate fell short of some analyst expectations for 20 percent profit growth.

"The numbers are bad," said Chiara Tirloni, an analyst with UBS Warburg. "Their [full-year] guidance is too aggressive for me given the first-half results. Will this be the worst news? That’s the most difficult question to answer I think."

Bulgari said it managed to cut costs and boost efficiencies. It reduced advertising and promotion expenditures to $33 million from $40.9 million. Overall operating expenses decreased to $170.9 million from $171.9 million, but they had "a strong upward trend in the past," the company said.

Watches remained Bulgari’s weakest category, with sales dropping 21 percent, although Bulgari stressed that the situation had improved in the second quarter. Watch revenue in the second quarter fell by 13.6 percent compared with a 29.2 percent slide in the first three months of the year. Sales weren’t specified by category.

Bulgari has a tough time competing with more established brands like Cartier and Patek Philippe in an already depressed market for timepieces.Elsewhere, jewelry sales rose by 2 percent while turnover from perfumes grew by 20 percent.

Sales were weakest in the Far East, shedding 19 percent. In Italy and the Americas, revenue dropped by 9 percent and 15 percent, respectively. Things fared better in Europe excluding Italy, where sales rose 5 percent. Revenue in the Mideast and elsewhere in the world also rose by 5 percent. Sales in Japan were flat.

Bulgari said inventory levels fell to $521.5 million from $547 million as of March 30 and $558.8 million one year ago. Retailers’ unsold Bulgari watches had become a concern for some analysts.

Net debt fell to $263.2 million against the $295.6 million at the end of March and $280.9 million at the end of June last year.

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