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Marcolin Profits Drop

Lackluster sales in Europe hurt the company's profitability and sales in the first nine months of 2012.

MILAN — Lackluster sales in Europe hurt Marcolin SpA’s profitability and sales in the first nine months of 2012. In the period ended Sept. 30, net profit dropped 32.4 percent to 11.7 million euros, or $15 million, from 17.3 million euros, or $24.2 million, in the same period last year.

Revenues decreased 3.6 percent to 162.5 million euros, or $208 million, from 168.6 million euros, or $236 million.

Chief executive officer and general manager Giovanni Zoppas highlighted the “medium-term investments” in the expansion of the U.S. and the Far East regions. “The satisfactory results achieved in those areas confirm our expectations of the group’s future growth,” said Zoppas.

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In the nine months, sales were up 14 percent in the U.S. and 4.9 percent in Asia, led by Japan, China, Indonesia and Korea. The rest-of-world area showed a 3.7 percent gain, boosted by the Arab Emirates, South America and Canada. Europe posted a 14.5 percent drop, hit by those countries that were more affected by weak internal demand, particularly in the Mediterranean area.

The company — which produces and distributes eyewear collections for a number of brands, including Tom Ford, Balenciaga, DSquared2, Roberto Cavalli and Swarovski, along with its house labels Marcolin and Web Eyewear — has opened a new showroom in Hong Kong and has been investing in Asia in resources, sales and marketing. It is also strengthening its sales division in Brazil.

“In this challenging scenario, 2012 promises to be a year of substantial consolidation of the results obtained up to now, given the positive signs in terms of sales made and orders placed in October,” concluded Zoppas.

In the nine months, earnings before interest, taxes, depreciation and amortization (EBITDA) dropped to 20.1 million euros, or $25.7 million, from 26.8 million euros, or $37.5 million.

Dollar amounts have been converted at average exchange rates for the periods to which they refer.
Costs associated with the renewal of licenses weighed on net debt, which, as of Sept. 30,  stood at 16.7 million euros, or $21.4 million, compared with 9.4 million euros, or $13.1 million, at the end of September last year.

On Monday, Marcolin’s board evaluated a number of licenses in light of the change in control of the firm. In October, European private equity firm Pai Partners agreed to acquire a majority stake in Marcolin for 207 million euros, or $281.4 million at current exchange. The European private equity firm will acquire 78.4 percent of the Italian eyewear manufacturer through Cristallo SpA, a company indirectly controlled by some funds managed by Pai Partners. The transaction, which is to be finalized in late November, was inked between the private equity company and brothers Diego and Andrea Della Valle, who invested in the eyewear company in 2004 and currently hold a 40.6 percent stake; the Marcolin family, owner of 30.6 percent of the company, and Italian entrepreneur Antonio Abete with 10 percent. Pai Partners plans to pay Marcolin 4.25 euros, or $5.77, a share, and then launch a voluntary tender offer for the remaining shares at the same price in order to delist the company. The Della Valle brothers, the Marcolin family and Abete will continue to be investors in Marcolin by taking a total of a 15 percent stake in Cristallo.

Marcolin’s board has decided to extend the Tod’s license and reduce the guaranteed minimum royalties, and to transform the Hogan license into a supply agreement. For these changes, Marcolin will pay the licensor an amount to compensate for the discontinuations as shall be agreed, and all is expected to be finalized within the next two weeks. The future of the other licenses will be reviewed after the deal with Pai Partners is finalized.

 

Marcolin shares on Monday rose 0.19 percent to 4.21 euros, or $5.72 at current exchange.