Comunicato stampa : BENETTON GROUP

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Alla cortese attenzione della Redazione - Servizio Borsa / Finanza


 BENETTON GROUP


BENETTON GROUP : Board approves 2010 1st Half results
30/07/2010 13:17:00



2010 first half results approved by the Board of Directors

BENETTON GROUP, POSITIVE FIRST HALF YEAR

Revenues ?891 million (+1%, currency neutral -0.6%). Revenues stable in Italy, strong growth in Asia. Income from operations ?63 million (7.1% of revenues) Net income ?40 million (4.5% of revenues) Net financial position further improved, ?508 million. Commercial investments stable in first half, strong increase in the rest of the year.

Ponzano July 30, 2010 - The Benetton Group Board of Directors examined and approved the consolidated results for the first half of 2010.

Consolidated income statement

Group net revenues for the first half of 2010, characterised by continuing economic uncertainty in many countries of importance to the Group, reached ?891 million (+1% over the comparative half year, corresponding to ?9 million). Product mix contributed to this improvement, with a predominance of higher unit value categories; added to this was a positive trend against the euro of some important foreign currencies in the Group's geographical mix. Again this year, as in 2009, we have reaffirmed the policy of matching deliveries of the Fall/Winter collection with the seasonal requirements of the sales network, continuing an attentive policy of improved service to clients. Consequently, a large part of the deli veries of these collections will be despatched in the third quarter.

Group brands achieved good results in the half year, with growth of Sisley and the 012 and Sisley Young brands, while the UCB brand substantially maintained its position.

Geographically, in established markets, the slow-down in Greece and Spain was offset by a solid performance in Italy. Regarding emerging markets, whose proportion of total sales increased to 13%, the strong growth achieved in Mexico (+60% currency neutral) and in India is of special note.

Gross operating profit of ?425 million (47.7% of net revenues) was up (+?24 million) compared with ?401 million (45.5%) in the comparative half year, due to the decisive contribution of efficiencies achieved in manufacturing and sourcing.

The contribution margin was ?356 million (39.9% of revenues), compared with ?336 million (38.2%) in the corresponding period of 2009, up by ?20 million.

Due to the cost reduction action s launched during 2009, general expenses for the first six months of 2010 were maintained overall at the same level as in the comparative half year, even though there was an increase in advertising investments. There was, moreover, a further increase in non-recurring charges relating, among others, to the rationalisation program for directly operated stores, in particular in the USA.

As a result, operating profit (EBIT), was ?63 million, up compared with ?43 million in the corresponding period of 2009, with a percentage to revenues of 7.1%, compared with the previous 4.9%.

Improvements in financial management were associated primarily with the reduction in average indebtedness, containing interest expenses from ?12 million in the first half of 2009 to ?7 million in 2010, and the usual hedging operations to cover foreign exchange risks.

Net income, finally, was ?40 million (4.5% of revenues), compared with ?29 million (3.2%) in the corresponding period of 2009. This result was impacted by an increase in the average tax rate.

Consolidated financial situation

Compared with December 31, 2009, there was an increase in fixed assets (?23 million) as a result of the investment policy, further detailed below, and a reduction in working capital (?35 million) due to the improved payables/receivables position.

Compared with June 30, 2009, there was a significant reduction in working capital (?39 million), achieved through reduced inventories (?51 million) and higher trade payables (?21 million), in spite of higher receivables.

Net financial indebtedness at June 30, 2010 was ?508 million, down by ?48 million compared with December 31, 2009, underlining the strong cash generation in the first half year.

Summary of consolidated cash flows

Cash flow generated by operating activities totalled ?150 million, against ?145 million in the comparative period.

In the first half of 2010, the Group ma de net investments of ?54 million. To be noted, were ?44 million of commercial and real estate investments and ?6 million of investment in industrial activities.

Outlook for the year

The cost reduction actions, introduced last year, are having the desired effects and the general level of efficiency in the production area, together with the strength of the brands and the capillary sales network are supporting the strong improvement in results achieved in the first half year.

The 2nd half of 2010 will see, among other things, significant commercial investments, with the relaunch and creation of innovative spaces in the larger Flagship Stores, in cooperation with famous architects and the acquisition of strategic locations in emerging markets.

All company efforts are therefore focussed on creating the right conditions for the resumption of growth, also with the support offered to the Asian markets, accompanied by an unchanged and continuing commitmen t to greater efficiency.

However, new orders taken for the Fall/Winter collection demonstrate continuing weakness in the economies of markets historically of greater relevance to the Group.

Expected trends in the second part of 2010 confirm estimates for the current full year of a slight reduction in operating margins compared with 2009 levels, in the presence of significant non-recurring costs of an amount similar to the previous year, a greater cost of borrowing due to the loan arranged in June to replace the expired loan and, as already mentioned, a slight increase in the average tax rate.

Benetton Group consolidated results

Consolidated statement of income

< TD align=right> 39.9 
(millions of Euro) 
1st half 
1st half 
Change 
Full year 
  2010    2009        2009   
                 
Revenues  891  100.0  882  100.0  1.0  2,049  100.0 
                 
Materials and subcontracted work  400  44.9  408  46.2  (8)  (1.9)  969  47.3 
Payroll and related costs  41  4.6  45  5.1  (4)  (8.0)  84  4.1 
Industrial depreciation and amortization  0.8  0.9  (8.1)  15  0.8 
Other manufacturing costs  17&nb sp; 2.0  20  2.3  (3)  (14.3)  38  1.8 
Cost of sales  466  52.3  481  54.5  (15)  (3.1)  1,106  54.0 
                 
Gross operating profit  425  47.7  401  45.5  24  6.0  943  46.0 
                 
Distribution and transport  33  3.7  30  3.3  11.3  63  3.1 
Sales commissions  36  4.1  35  4.0  3.5  87  4.2 
                 
Contribution margin  356  336  38.2  20  5.8  793  38.7 
                 
Payroll and related costs  87  9.7  87  9.9  (0.9)  169  8.2 
Advertising and promotion   30  3.3  28  3.1  2&nb sp; 7.0  53  2.6 
Depreciation and amortization  43  4.8  43  4.9  (0.6)  88  4.3 
Other expenses and income  133  15.0  135  15.4  (2)  (1.0)  277  13.6 
- of which non-recurring expenses/(income)  12  1.4  11  1.2  16.1  23  1.1 
General and operating expenses   293  32.8  293  33.3  (0.2)  587  28.7 
- of wh ich non-recurring expenses/(income)  12  1.4  11  1.2  16.1  23  1.1 
                 
Operating profit (*)  63  7.1  43  4.9  20  46.4  206  10.0 
                 
Share of income/(losses) of associated companies  0.2  (2)  (92.8)  0.1 
Financial (expenses)/income  (7)  (0.8)  (12)  (1.4)  (38 .0)  (20)  (0.9) 
Net foreign currency hedging (losses)/gains and exchange differences  1.0  0.5  n.s.  (2)  (0.1) 
                 
Income before taxes  65  7.3  37  4.2  28  74.0  186  9.1 
                 
Income taxes  30  3.3  11  1.2  19  n.s.  68  3.3 
                 
Net income for the period  35  4.0  26  3.0  33.7  118  5.8 
attributable to:                 
- Shareholders of the Parent Company  40  4.5  29  3.2  11  38.9  122&nbs p; 5.9 
- Minority interests  (5)  (0.5)  (3)  (0.2)  (2)  99.2  (4)  (0.1) 


(*) Trading profit was 75 million, representing 8.5% of revenues (54 million in first half 2009, representing 6.1% of revenues, and 229 million in 2009 representing 11.1% of revenues).

Balance sheet and financial position highlights

(millions of Euro) 
06.30.2010 
12.31.2009 
Change 
06.30.2009 
Change 
Working capital  623  658  (35)  662  (39) 
- trade receivables  709  791  (82)  673  36 
- inventories  375  301  74  426  (51) 
- trade payables  (455)  (404)  (51)  (434)  (21) 
- other receivables/(payables) (A)  (6)  (30)  24  (3)  (3) 
< font SIZE=1 FACE=Verdana, Arial, Helvetica, sans-serif>            
Assets held for sale  10 
Property, plant and equipment and intangible assets (B)  1,311  1,288  23  1,325  (14) 
Non-current financial assets (C)  25  25  25 
Other assets/(liabilities) (D)  20  36  (16)  18 
Net capital employed  1,989  2,012  (23)  2,036  (47) 
           
Net debt (E)  508  556  (48)  678  (170) 
Total shareholders' equity  1,481  1,456  25  1,358  123 


(A) Other receivables/(payables) include VAT receivables and payables, sundry receivables and payables, non-trade receivables and payables from/to Group companies, accruals and deferrals, payables to social security institutions and employees, receivables and payables for fixed asset purchases etc.(B) Property, plant and equipment and intangible assets include all categories of assets net of the related accumulated depreciation, amortization, and impairment losses. (C) Non-current financial assets include unconsolidated investments and guarantee deposits paid and received. (D) Other assets /(liabilities) include retirement benefit obligations, provisions for legal and tax risks, the provision for sales agent indemnities, other provisions, current tax receivables and liabilities, receivables and payables due from/to holding companies in relation to the group tax election, deferred tax assets also in relation to the company reorganization carried out in 2003, deferred tax liabilities and payables for put options.(E) Net debt includes cash and cash equivalents and all short and medium/long-term financial assets and liabilities.

Financial position

(millions of Euro) 
06.30.2010 
12.31.2009 
Change 
06.30.2009 
Cash and banks  169  135  34  111 
A Liquid assets  169  135  34  111 
         
B Current financial receivables  50  18  32  20 
         
Financial payables, bank loans and lease financing  (81)  (312)  231  (412) 
C Current financial payables  (81)  (312)  231  (412) 
         
D = A+B+C Current financial indebtedness  138  (159)  297  (281) 
         
E Non-current financial receivables 
         
Medium/long-term loans  (650)  (401)  (249)  (402) 
Lease financing  (1)  (1) 
F Non-current financial payables  (651)  (402)  (249)  (402) 
         
G = E+F Non-current financial indebtedness  (646)  (397)  (249)  (397) 
         
H = D+G Net debt  (508)  (556)  48  (678) 


Cash flow statement

(millions of Euro) 
1st half 
1st half 
  2010  2009 
     
Cash flow from operating activities before changes in working capital  130  107&n bsp;
Cash flow provided by changes in working capital  31  56 
Interest (paid)/received and exchange differences  (9) 
Payment of taxes  (11)  (9) 
Cash flow provided by operating activities  150  145 
     
Net operating investments/Capex  (47)  (71) 
Non-current financial assets  (7)  (9) 
Cash flow used by investing activities  (54)  (80) 
Free cash flow  96  65 
     
Cash flow used by financing activities of which:     
- payment of dividends  (41)  (50) 
- purchase of treasury shares  (3) 
- net change in other sources of finance  (24)  (23) 
Cash flow used by financing activities  (65)  (76) 
Net increase/(decrease) in cash and cash equivalents  31  (11) 


Alternative performance indicators

In addition to the standard financial indicators required by IFRS, this press release also contains a number of alternative performance indicators for the purposes of allowing a better appreciation of the Group's financial and economic results. These indicators must not, however, be treated as replacing the standard ones required by IFRS.

The following table shows how EBITDA and ordinary EBITDA are made up.

Key operating data (millions of Euro) 
1st half 
1st half 
Change 
Full year 
  2010  2009    2009 
         
A Operating profit  63  43  20  206 
B - of which non-recurring expenses/(income)  12  11  23 
C Depreciation and amortization  51  51  103 
D Other non-monetary costs (net impairment/(reversals))  4  ; 21 
E - of which non-recurring  21 
F = A+C+D EBITDA  118&nbs p; 96  22  330 
G = F+B-E Ordinary EBITDA   126  105  21  332 


Declaration by the manager responsible for preparing the company's financial reports

The manager responsible for preparing the company's financial reports, Alb erto Nathansohn, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

Disclaimer

This document contains forward-looking statements relating to future events and operating, economic and financial results of the Benetton Group. By their nature such forecasts contain an element of risk and uncertainty because they depend on the occurrence of future events and developments. The actual results may differ, even significantly, from those announced for a number of reasons.

For further information and contacts:

Investor Relations

+39 0422517773

www.benettongroup.com/investors

www.benettonir.mobi



The appendixes relating to the press release are available on:

168978_66_5S38_HuginComunicatoStampa1H2010eng.doc

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