GFT: ONGOING OPERATIONS BETTER DESPITE DROP IN NET

MILAN — Net profit at GFT SpA in the first half fell 42.8 percent, as sales gained 4.9 percent. But, on the basis of continuing operations, the firm pointed to a significant improvement in net.
Net profit in the six months for the Turin-based maker of designer apparel came to $15.9 million (27.3 billion lire) on sales of $421.7 million (724.5 billion lire). A year earlier, net income was 47.7 billion lire and sales were 690.4 billion lire.
The results were announced by GFT’s owner, HPI, the industrial holding company that also owns sportswear manufacturer Fila and has recently signed a letter of intent to acquire the Valentino fashion house. GFT produces men’s and women’s diffusion collections for Valentino. HPI said that preliminary due diligence for the Valentino deal was under way.
Despite the decline in overall net, HPI noted that net income on the basis of continuing operations improved significantly.
The company took into consideration the capital gain of 20.9 billion lire in 1996 on the sale of the Baumler group, a German apparel firm.
It also took into consideration the 14.9 billion lire — or $8.7 million — of losses due to exchange rate factors in the most recent half.
Exports rose to 81.7 percent in the latest half from 77 percent.
North America is still GFT’s most important export market, representing 52.1 percent of sales, up from 46.1 percent last year, according to HPI.
GFT’s operating profit declined to $27.3 million (46.9 billion lire) from 55.3 billion a year earlier “due exclusively to the group’s policy of hedging the exchange risk on sales in foreign currency.” At comparable rates, operating profitability would have been 9.4 percent in the first half, against 8.3 percent in the first half of 1996, the statement said.
GFT’s net debt in the half was cut by $26.4 million (45.7 billion lire) to $107.6 million (184.9 billion lire).
HPI also said that Giuseppe Bencini, former general director of Pirelli Tires, has been appointed chairman of GFT.
He succeeds Paolo Sabbatini, who will remain managing director of Gemina, a financial unit of Fiat, which also controls HPI.
Angelo Barozzi continues as managing director of GFT.

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