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Net revenues grow by just 4.3% at Benetton Group
Nov '08
The Benetton Group Board of Directors, meeting today and chaired by Luciano Benetton, examined and approved the consolidated results for the first nine months of 2008.

Group net revenues for the first nine months of 2008 grew to 1,534 million euro (+4.3%), consistent with the full year revenue forecast previously announced; this increase, after eliminating exchange impacts (currency neutral) and on a like for like basis, was equivalent to 6.3%.

Growth in the nine months was determined, in particular, by enrichment of the offer with higher value product categories and by the significant increase in the number of items sold. Growth was partially attenuated by the appreciation of the euro against major foreign currencies, in particular the Korean won, the US dollar, the Indian rupee and the British pound.

Gross operating profit reported a margin of 46.2% of revenues compared with 43.7% in the first nine months of 2007, with an increase of 66 million euro. This increase was principally influenced by the combined effect of the increase in volumes and the ever more efficient management of the supply chain and sourcing activities, in a context of constant attention to product quality.

The contribution margin increased by 58 million to 597 million euro, rising to 38.9% of revenues from 36.6%, including a slight increase in variable costs associated in particular with the cost of oil and transport.

The most significant elements in the period which impacted on general and administrative expenses (+42 million euro) were:

•consolidation of direct control of the business, particularly in the US market;
•costs associated with projects to improve the supply chain, to simplify collection structure and to analyze the development of competitive structure in strategic markets;
•higher depreciation and amortization associated with the
implementation of significant IT investments in previous periods, in particular the development of SAP as well as commercial investments which became operative during the year.

Operating profit grew by 16 million to 182 million euro, with a percentage of revenues of 11.9% compared with 11.3% in the first nine months of 2007. EBITDA increased by 17 million to 249 million euro, equivalent to 16.3% of revenues, against 15.8% in the comparative period. As a result of increases in average financial indebtedness and interest rates, and appreciation of the euro against the principal currencies, financial expenses and currency hedging increased by 8 million euro.

Net income, of 109 million euro, grew by 6.3%. Capital employed increased by 327 million euro compared with December 31, 2007; this was mainly driven by the cyclical movement in working capital and the net increase in tangible, intangible and financial assets. Working capital registered a modest increase (+18 million euro compared with September 30, 2007). Net financial indebtedness was 814 million euro compared with 650 million at September 30, 2007.

Since May 2008 the Group has proceeded with the repurchase of Company shares for an amount of 52 million euro (at September 30, 2008); in accordance with international accounting principles, the figure has been reported in shareholders' equity. Cash flow used by operating activities improved by around 36 million euro compared with the corresponding period in 2007.

Benetton Group

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