Marginal growth in Benetton Group H1 revenues

29 Jul '11

5 min read

Finally, net income was €30 million (3.3% of revenues), compared with €40 million (4.5%) in the corresponding period of 2010.

Balance Sheet
Compared with December 31, 2010, there was an increase in capital employed totalling €27 million, due mainly to the increase in working capital (€62 million) resulting from an increase in inventories, only partially offset by higher trade payables and reduced trade receivables, and a reduction in fixed assets.

Compared with June 30, 2010, there was a similar increase of €61 million in working capital, due to an increase in trade receivables associated with both the large sales increase in high growth countries (Russia), and the new business model adopted in India, as well the slowdown in cash collections in the Mediterranean area. The increase in inventories, driven in part by higher material costs and in part by a changed purchasing time-table, was offset by a corresponding increase in trade payables.

Financial indebtedness at June 30, 2011 was €543 million, up €57 million compared with December 31, 2010 and up €35 million compared with June 30, 2010.

Summary of consolidated cash flows
Cash flow generated by operating activities totalled €40 million, compared with €150 million in the comparative period.

In the 1st half of 2011, the Group made net investments of €51 million. These included €27 million of commercial and real estate investments and €5 million for manufacturing activities.

Outlook for the year
2011 has, to date, been in line with expectations: orders for the Spring/Summer collection showed a more moderate slowdown compared with recent collections, and Fall/Winter 2011 confirmed indications of a return to growth. Also in the second part of the year, the contribution of the more recently developed countries will be fundamental to maintain Group revenues, due to continued weakness of demand in the Mediterranean area.

The strong increase in material costs, especially of cotton and wool, has caused significant erosion of commercial margins and is set to continue in coming months. The Group will continue to concentrate on containing general expenses and, even with non-recurring expenses at a lower level than last year, operating margins are expected to be below 2010 levels.

Actions already taken, others planned and Group financial strength enable the continuation of an investment policy to strengthen our world-wide commercial presence.

Benetton Group

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