MILAN — Safilo Group shares fell 7.8 percent to 1.46 euros in midmorning trading on Friday following the release of preliminary 2022 revenues and the news that the Italian eyewear company “has given the management a mandate to explore alternative solutions for the Longarone plant.” Shares further dipped during the day, closing down 8.74 percent to 1.45 euros.
Reporting sales that surpassed the benchmark of 1 billion euros in 2022, up 11.1 percent compared with 2021, Safilo in a statement said that the decision was made “with regards to the ongoing strategic analyses and taking into consideration the evolution of the product portfolio, the economic context, the competitive dynamics and a persistent production overcapacity.”
Almost 500 employees are based at the storied Longarone site, in Italy’s Veneto region, one of the key eyewear manufacturing hubs.
However, the board underscored the “importance of the Santa Maria di Sala and Bergamo production sites, of the Padua logistic center, and the company’s creative capabilities.”
Details about the future of the Longarone plant will be disclosed in the coming weeks, Safilo noted.
At constant exchange rates, revenues in the 12 months ended Dec. 31 rose 4.2 percent.
The gains were driven by Safilo’s proprietary brands, in particular Smith, Carrera and Polaroid, as well as by the licensed business, which comprises eyewear collections for Tommy Hilfiger, Hugo Boss, David Beckham, Under Armour, Isabel Marant and Moschino, among others. The licenses of Carolina Herrera, Chiara Ferragni and Dsquared2 were introduced last year, adding significant new business.
On a preliminary basis, adjusted earnings before interest, taxes, depreciation and amortization, excluding non-recurring items, amounted to around 101 million euros, and a margin on sales of approximately 9.4 percent.
While slightly below management’s expectations, 2022 adjusted EBITDA represented an increase of around 24 percent compared to 81.5 million euros in 2021, and to a margin improvement of 100 basis points.
In 2022, Europe remained the key growth driver for the group, which also reported a surging business in Turkey and Poland. Sales in Europe grew 12.3 percent to 424.9 million euros, representing 39.5 percent of the total.
During the year, the North American market benefited from the strengthening of the dollar against the euro, closing up 6.8 percent to 497.7 million euros, and accounting for 46.2 percent of the total. At constant exchange rates, sales in that zone were down 4.7 percent.
Sales in Asia-Pacific increased 9.8 percent to 57.7 million euros.
Revenues in the rest of the world area was up 33.1 percent to 96.4 million euros.
As of Dec. 31, net debt stood at 113 million euros, compared with 115.4 million euros reported at the end of September 2022, and compared with 94 million euros recorded at the end of 2021.
Full annual results will be approved by the board on March 9, during which the group will also approve its medium-term economic and financial targets. A capital markets day will be held in Milan on March 10.