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Benetton sees continuous growth in emerging markets
Nov '10
The Benetton Group Board of Directors examined and approved the consolidated results for the first nine months of 2010.

• Revenues: €1,498 million (+0.5%, net of foreign exchange impact -1.5%).
• Continued growth in emerging markets, especially in Asia.
• Income from operations: €141 million (9.4% of revenues).
• Net income: €85 million (5.7% of revenues).
• Net financial position further improved at €645 million.
• Commercial investments up, with important renewal of European flagship stores.
• Price increase of raw materials expected, with negative impact on 2010 full year results.

Consolidated income statement
Group net revenues for the first nine months of 2010, characterised by continuing economic uncertainty in the most important markets for our brands, reached €1,498 million (+0.5% over the comparative period, equivalent to €7 million), due to the impact of commercial policies implemented to support the sales network, and as a result of the revaluation against the Euro of the currencies of some emerging countries, totaling €29 million (Korean won, Indian rupee, Turkish lira and the yen). Apparel segment revenues were €1,418 million, up by €5 million (0.3%) compared with the first nine months of 2009. Textile segment revenues were €80 million compared with €78 million in the comparative period (+2.6%).

Geographically, in established markets, the slow-down in Greece and, to a lesser extent, in Spain and Italy, was offset by sustained sales levels in the rest of Europe. In emerging markets, whose proportion of total sales increased to 14% (12% in the first nine months of 2009), all the main markets performed well, with particularly strong growth in Mexico (+36% currency neutral), India and Russia.

Gross operating income of €696 million (46.5% of net revenues) was up (+€16 million) compared with €680 million (45.6%) in the comparative nine months, due to the decisive contribution of efficiencies achieved in manufacturing and procurement.

The contribution margin reached €583 million (38.9% of revenues), compared with €571 million (38.3%) in the corresponding period of 2009, increasing by €12 million.

Due to the cost reduction actions initiated during the last year, general expenses in the first nine months of 2010 were substantially maintained in line with the level of the comparative nine months, even though advertising and promotional investments increased. Non-recurring expenses also further increased, in part associated with previously reported reorganization programmes for the sales network in some foreign markets and for the textile manufacturing segment.

As a result, operating profit (EBIT) was €141 million, up compared with €134 million in the corresponding period of 2009, with a percentage on revenues of 9.4%, compared with the previous 9.0%.

Improvements in financial charges were associated, in particular, with the reduction in average indebtedness and with the continuing favourable interest rates, which kept financial expenses down; these moved from €17 million in the first nine months of 2009 to €15 million in 2010. The usual exchange rate hedging operations also contributed positively to the result.

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