By  on September 13, 2005

MILAN — Higher financial costs linked to a new bond issue pushed IT Holding into the red for the first half of the year.

For the six months ended June 30, IT Holding posted a net loss of 10.8 million euros, or $13.9 million, compared with a profit of 12.1 million euros, or $14.9 million, a year earlier. Revenue for the period fell 9.4 percent to 317.1 million euros, or $407.9 million. Dollar figures are converted at average exchange.

"I'm satisfied with the first-half results we've achieved in the context of a market that is still difficult," IT Holding president and chief executive officer Tonino Perna said in a statement. "These are results that confirm that it was strategically correct to focus on business areas — like accessories — with high profitability."

IT Holding said last year's disposal of its eyewear unit and exchange rates hurt first-half revenue. The company said sales would have grown 4.6 percent excluding these two factors.

The company warned that full-year sales will drop 4.2 percent to 680 million euros, or $843.2 million, as its licensing portfolio and business areas change. But it also noted that profit margins will improve. IT Holding said earnings before interest, taxes, depreciation and amortization will come in at about 16 percent of revenue, or 108.8 million euros, or $134.9 million. EBITDA in 2004 was 75.4 million euros, or $92.7 million.

Earnings before interest and taxes rose 82.4 percent to 18.6 million euros, or $24 million. Expenses related to bond issues caused financial costs to swell to 21.3 million euros, or $27.5 million. As of June 30, financial debts had decreased to 357.8 million euros, or $461.6 million, from 402.2 million euros, or $494.7 million, the year before.

On the sales front, IT Holding noted that sales at Gianfranco Ferré rose 5.3 percent to 51.3 million euros, or $66 million, while profits at the house "more than doubled" from the year earlier.

Accessories were another growth area. IT Holding said sales advanced 52.1 percent to 43.5 million euros, or $56.1 million, while gross operating profit at the division increased 46.8 percent to 10.8 million euros, or $13.9 million.

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