Marginal growth in Benetton Group H1 revenues
The Benetton Group Board of Directors examined and approved the consolidated results for the first half of 2011.
Consolidated income statement
Group net revenues for the first half of 2011, impacted by a very difficult economic situation in Mediterranean countries of greatest importance to the Group, reached €906 million (+1.7% over the comparative half year, corresponding to €15 million).
All geographical areas contributed to the positive result: the modest growth in Europe (+1.2% currency neutral) was in fact accompanied by growth in Asia (+4.7%) and in the Americas (+4.5%). Countries showing the highest growth in the half year compared with the same period of 2010 were: Russia (+39%) now the Group's fourth largest market in Europe, South Korea (+11%) and Turkey (+6%) in Asia, and Mexico (+18%) in the Americas. On the whole, results in Italy (+1%) and Spain (+4%) were also satisfying, while Greece suffered (-21%) due to the internal economic recession.
Orders for the Spring/Summer collection closed slightly down, while order collection for the coming Fall/Winter has started well, indicating a reassuring reversal of the trend. Direct sales for the second quarter of 2011, with a slightly improved result in comparable stores, also indicate a reversal of the trend compared with the first part of the year.
Group brands achieved good results in the half year, with growth for UCB and for UCB Children/Sisley Young, while the Sisley brand, with a greater geographical presence in the Mediterranean area, suffered a reduction.
Gross operating profit of €403 million (44.4% of net revenues) was down (-€22 million) compared with €425 million (47.7%) in the comparative half year, due to the strong increases in raw material costs (cotton and wool), severely impacting product cost for the Fall/Winter season in particular.
The contribution margin was €332 million (36.6% of revenues), compared with €356 million (39.9%) in the corresponding period of 2010, down by €24 million, due also to the impact of an increase of €2 million in other variable costs (commissions and royalties).
In the half year just ended, through continued control of General and Administrative expenses as well as direct sales channel costs, an important reduction of €9 million was achieved against the equivalent half year, endorsing the results of actions taken over a long period. There were also further reductions, as expected, in non-recurring expenses.
As a result, operating profit (EBIT) was €58 million, down compared with €63 million in the corresponding period of 2010, with a percentage to revenues of 6.4%, compared with the previous 7.1%.
Within financial management, there was a reduction in average indebtedness, which limited the increase in financial expenses resulting from the increase in interest costs. Overall, borrowing costs increased by €2 million, while the effect of foreign currency hedging operations was €6 million negative in the first half of 2011, compared with a profit of over €9 million generated in the same period of 2010.