By  on February 25, 2008

MILAN — Italy's Safilo Group SpA on Friday said earnings leaped by more than a third in 2007, although it forecast more moderate gains this year.

The eyewear company, which has licenses with Armani, Dior, Gucci and Valentino, among others, said net profits for the 12 months ended Dec. 31 grew 36.2 percent to 51 million euros, or $69.9 million at average exchange, while sales gained 6.1 percent to 1.19 billion euros, or $1.63 billion.

Net profits in the fourth quarter reached 12 million euros, or $17.4 million, compared with 8 million euros, or $10.3 million, in the same period in 2006, while sales edged up 2.9 percent.

"Altogether, 2007 was a year of growth, above all if we exclude the negative impact of the depreciation of the dollar," Safilo president Vittorio Tabacchi said, adding that the exchange rate had penalized sales by 4 percent overall and by nearly 5 percent in the last quarter.

Earnings before interest, taxes, depreciation and amortization for the full year rose almost 8 percent to 175 million euros, or $240 million.

The profit hike likely will lead to a "considerable" dividend increase, Tabacchi said.

Looking to this year, the company forecast an increase in turnover of between 4 and 5 percent, assuming an average euro-dollar exchange rate of 1.47, and that net profits would likely hover around 4.5 to 5 percent of sales, thanks in part to an expected improvement in the tax rate.

Tabacchi added that, despite competition in the sector, notably from Italian rival Luxottica Group SpA, and the complex economic environment, "we believe that this context can represent an opportunity."

Safilo said it expects growth this year to remain high in the Asia-Pacific region, where it posted a 15.7 percent gain in sales last year, and that Europe, its biggest market, should deliver a moderate increase, depending on the fallout from a likely slowdown in the American economy.

In 2007, sales in Europe reached 570.6 million euros, or $782.1 million, up almost 10 percent on the previous year. Sales in the Americas were roughly flat.

Tabacchi said that, while the company would continue to focus on wholesale channels, which generate about 94 percent of its business, the group also would develop its fledgling retail arm, where sales increased 64 percent last year, following the recent acquisition of store chains Sunglass Island in Mexico and Just Spectacles in Australia. Safilo also owns the Solstice and Loop Vision chains in the U.S. and Spain, respectively.Safilo released the preliminary results after the end of trading on the Milan Stock Exchange on Friday. The company's stock closed down 1.2 percent to 2.01 euros, or $2.96 at current exchange.

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