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Gross operating profit slightly down at Benetton Group
16
May '12
The Benetton Group Board of Directors examined and approved the consolidated results for the first quarter of 2012.

Revenue performance by geographic area, brand and collection
Group net revenues in the first quarter of the year were € 428 million, down in line with expectations compared with the same period of 2011 (-5.5% at current exchange rates and -5.7% currency neutral). However, direct sales performance was positive on a like-for-like basis, with 6.1% growth compared with the same period of the previous year, to which is added a further increase following the take over of some stores previously managed by partners.

Developing and high growth markets confirmed the positive trend of recent quarters, with growth in Russia, Mexico, Korea and India. However, the rest of Latin America, China and Turkey were down.

Traditional western markets showed growth in continental Europe, partly due to the positive direct sales results, and modest growth in the USA. However, Southern European countries were down, including the Italian domestic market, still influenced by recessionary economic conditions. There was a total fall in revenues in these markets of 7.9% at current exchange rates and 8.4% currency neutral.

Overall, taking of orders for the Spring/Summer collections is closing with a reduction of around 3% compared with Spring/Summer 2011.

Income performance
The Benetton Group CEO for Operations, foreign Business Units and Finance, Biagio Chiarolanza declared: “The first quarter of 2012 ended in line with our expectations, with an unsatisfactory result, again influenced by the high cost increases – especially for raw materials – which characterised the closing months of 2011.

“We know that the repositioning will not be easy and the first quarter results confirm that. Nonetheless, the process is underway and will continue with determination, even though, with the economic crisis affecting the principal markets for our products, a rapid recovery cannot be expected.”

Gross operating profit for the quarter was € 188 million (€ 203 million in the corresponding period of 2011), equivalent to 44.0% of revenues (44.7% in the comparative period). The reduction was attributable to the already mentioned increases in raw material costs, particularly cotton and wool, which resulted in a corresponding increase in cost of sales.

The contribution margin was € 155 million, against € 167 million in the reference period, and was 36.1% of sales.

Operating profit was € 12 million (€ 34 million in 2011), 2.8% of revenues compared with 7.5%, impacted by a large reduction in structural costs, which was offset by a cost increase of direct sales, following the take over of stores previously operated by third parties, and reduction in some extraordinary income. Non-recurring costs associated with the recently finalised Public Purchase Offer were also taken into account in the quarter.
The results of foreign currency hedging were positive in the quarter, and the average tax rate was slightly lower than in the past. As a result, net income was € 10 million, equivalent to 2.4% of revenues (€ 19 million in the first quarter of 2011, equivalent to 4.3% of revenues).

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