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Gross operating profit slightly down at Benetton Group
16 May '12
5 min read
Balance Sheet
Compared with March 31, 2011, working capital increased by € 142 million: in fact, trade receivables increased by € 74 million due to a slow down in cash receipts, especially in the Mediterranean area, and product inventories grew by € 47 million, largely due to the impact of increased raw material costs. Trade payables fell by € 33 million, due to the combined effects of longer terms of payment and lower purchase volumes.
In the first quarter, the Group made net investments of € 34 million, compared with € 27 million in the corresponding period of 2011. Most of these investments were for renewal of the stores network.
Net financial indebtedness was € 687 million compared with € 534 million at the end of March 2011, with an increase of € 139 million compared with December 31, 2011.
Outlook for the year
The New Year started with positive results in respect of direct sales in nearly all countries in which the Group operates. The very difficult economic situation, especially in the Group's principal markets, the recessionary situation in Southern Europe and the general difficulty of access to credit for small businesses, which represent the majority of Benetton Group customers, are still affecting sales to the wholesale channel.
Taking of orders for the 2012 Spring/Summer collections of the various Group brands has now ended, in line with expectations, with a slight downward trend compared with the comparative collections in the previous year. Based on the above considerations, it is expected that a similar trend could occur for the coming 2012 Fall/Winter collections.
The most recent data indicates some easing in the prices of raw materials, and of cotton in particular, with positive impacts on margins as from the second half of the year. The Group will continue to act with determination to achieve maximum efficiency of production processes and sourcing, and the optimization of costs relating to both the central structure and those associated with direct sales activities. As already stated, due mainly to pressure on revenues, an improvement in Operating Profit will not be possible and, due to the increased cost of indebtedness, Net Income may also fall slightly.
The net financial position is expected to improve, compared with the end of 2011.
Compared with March 31, 2011, working capital increased by € 142 million: in fact, trade receivables increased by € 74 million due to a slow down in cash receipts, especially in the Mediterranean area, and product inventories grew by € 47 million, largely due to the impact of increased raw material costs. Trade payables fell by € 33 million, due to the combined effects of longer terms of payment and lower purchase volumes.
In the first quarter, the Group made net investments of € 34 million, compared with € 27 million in the corresponding period of 2011. Most of these investments were for renewal of the stores network.
Net financial indebtedness was € 687 million compared with € 534 million at the end of March 2011, with an increase of € 139 million compared with December 31, 2011.
Outlook for the year
The New Year started with positive results in respect of direct sales in nearly all countries in which the Group operates. The very difficult economic situation, especially in the Group's principal markets, the recessionary situation in Southern Europe and the general difficulty of access to credit for small businesses, which represent the majority of Benetton Group customers, are still affecting sales to the wholesale channel.
Taking of orders for the 2012 Spring/Summer collections of the various Group brands has now ended, in line with expectations, with a slight downward trend compared with the comparative collections in the previous year. Based on the above considerations, it is expected that a similar trend could occur for the coming 2012 Fall/Winter collections.
The most recent data indicates some easing in the prices of raw materials, and of cotton in particular, with positive impacts on margins as from the second half of the year. The Group will continue to act with determination to achieve maximum efficiency of production processes and sourcing, and the optimization of costs relating to both the central structure and those associated with direct sales activities. As already stated, due mainly to pressure on revenues, an improvement in Operating Profit will not be possible and, due to the increased cost of indebtedness, Net Income may also fall slightly.
The net financial position is expected to improve, compared with the end of 2011.
Benetton Group
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