MILAN — Safilo Group’s balanced portfolio of brands, channels and geographies helped the Italian eyewear company report a strong set of first-half results, leading chief executive officer Angelo Trocchia to be confident about reaching sales of around 1 billion euros in 2022, ahead of the target set out in the 2024 business plan. The sales goal can be achieved despite macro headwinds, inflationary pressures, COVID-19-related restrictions and the conflict in Ukraine, Trocchia said.
In the six months ended June 30, Safilo’s revenues totaled 570.9 million euros, up 11.8 percent compared to 510.7 million euros in the first half of 2021.
Excluding non-recurring costs, adjusted net profit amounted to 33.7 million euros compared with 4.4 million euros in the same period last year.
Adjusted earnings before interest, taxes, depreciation and amortization totaled 62.6 million euros, up 26.1 percent from the prior-year period, representing a margin of 11 percent on sales. As per the 2024 plan, Safilo expected an adjusted EBITDA margin of between 9 and 11 percent.
The group expects sales to grow midsingle digits at constant exchange rates in 2022, assuming a relatively stable economic environment for the rest of the year.
During a conference call with analysts at the end of trading in Milan on Wednesday, Trocchia touted the progression of the group’s strategy and underscored the recovery of the European market, its second largest region, which has become the group’s key revenue growth driver in the first half, rising 13.9 percent to 237.1 million euros.
Revenues in North America were up 7.7 percent to 258.7 million euros, though the region saw “a tougher economic environment” in the period, Trocchia said.
Sales across the Asia Pacific region were down 2.9 percent to 25.1 million euros, impacted by the COVID-19-related lockdowns in China.
Across the rest of the world, sales jumped 36.7 percent to 49.9 million euros, boosted by countries such as Brazil, Mexico and the Middle East.
“Our brands were our strongest assets: from our own Carrera and Polaroid, which continued to record strong double-digit growth rates, adding to the outstanding performance of Smith’s portfolio of sport and outdoor focused products, to our licensed brands Boss, Tommy Hilfiger, Kate Spade, David Beckham, Under Armour and Isabel Marant,” Trocchia said. “We are particularly proud of the strong demand for our new launches of Carolina Herrera, Chiara Ferragni and Dsquared2, all supporting our strategy for a more diversified and balanced license portfolio.”
Proprietary brands accounted for 40 percent of sales, said chief financial officer Gerd Graehsler, and Trocchia emphasized the “huge [growth] opportunity” Carrera offers to the group.
Trocchia underscored the importance of “reading the market signs, [to] cover different consumer needs and to be more flexible.”
A positive product and price mix offset ongoing inflationary pressures of logistics and energy costs, which allowed Safilo to continue to invest in marketing and advertising activities.
In the first half, sales of sunglasses bounced back, posting an organic growth of 13.9 percent at constant exchange rate thanks to a buoyant consumer demand in Europe, the Middle East and Latin America.
Prescription frames continued to grow, representing 38.9 percent of the group’s total business at the end of the first half, recording an organic growth of 5 percent at constant exchange rates, despite the very demanding comparison with the first half of 2021, when the product category soared by 19.8 percent year-over-year.
Trocchia and Graehsler trumpeted the strong business of helmets and goggles, which took the share of the group’s “other” product category to 9.6 percent of total business, climbing 33.6 percent at constant exchange rates, and leading the turnover of sports products to more than double from before the pandemic, in the first half of 2019.
Asked about potential M&A opportunities, Graehsler said that Safilo is “actively looking at the market” but that there are no specific discussions in place. An acquisition should be “a meaningful fit and not a big transformational” buy.
“We know what our potential targets are to reinforce our portfolio,” Trocchia said without elaborating.
In the first half, Safilo’s total online sales, consisting of its direct to consumer business and the group’s sales via internet pure players increased by 7 percent at constant exchange rates, representing 14.4 percent of revenues, compared with 13.6 percent in the first half of 2021.
Safilo continues to develop its business-to-business e-commerce platforms, including You&Safilo in Europe, whose revenues grew by around 12 percent in the first half.
As of June 30, the group’s net debt stood at 105.6 million euros compared with 94 million euros at the end of December.
Safilo last month, announced that it has joined The Fashion Pact. Graehsler said Safilo already produces 400 models made of recycled or sustainable materials.