MILAN — Italy’s Benetton Group SpA said net profit for the third quarter dropped 33 percent to 31 million euros, or $44 million, from 46 million euros, or $59.3 million in the year-ago period, as high raw material costs and a decrease in revenues impacted the bottom line.
The group’s chief executive officer for operations, Biagio Chiarolanza, said the company faces a “very critical” situation in its main reference markets. Operating profit for 2011 “will be in line with forecasts, lower than in the last financial year,” he noted.
Revenues in the three months ended Sept. 30 fell 5.1 percent to 575 million euros, or $816.5 million, compared with 606 million euros, or $781.74 million, a year earlier, as sales in the company’s traditional markets of Western Europe contracted, and after “rationalization of the stores network” in the U.S. and Japan.
However, “development of new markets continues in an encouraging way,” the company said, citing “excellent results” in Mexico, India and Russia during the first nine months of the year.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
The company said that, while pressure on raw material costs has eased in the last few months, prices remain “well above the historic average and will therefore continue to impact on margins in coming quarters.”
Chiarolanza noted that the fourth quarter started “in an environment of growing uncertainty in established markets, which are the countries of greatest importance in our portfolio. Margins remain under pressure, and robust control of costs is a priority in order to defend profitability, in line with what has been done in recent years.”