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May 11, 2009
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Eyewear maker Safilo Q1 slumps, difficult Q2 seen

By
Reuters
Published
May 11, 2009

MILAN, May 6 (Reuters) - Safilo's (SFLG.MI) first-quarter net profit slumped 87 percent, hit by the consumer slowdown, and the Italian eyewear maker said it expected a difficult second quarter before some possible improvements later in the year.


Safilo

Safilo, which makes glasses and sunglasses for designer brands such as Dior and Gucci, said in a statement on Wednesday net profit was 1.7 million euros ($2.26 million).

Net sales fell 11.7 percent to 287.9 million euros.

"A difficult second quarter may already be expected, while some improvements could become evident during the course of the second semester," it said.

In a slide presentation on its website, Safilo said there was still low visibility for the second quarter but April trading was better than March, with the U.S. and some European markets showing more resilience.

It said market conditions made it difficult to give an annual forecast, and management would provide quarterly updates.

Chief Executive Roberto Vedovotto added in the statement that 2009 "will certainly be a challenging year".

"But Safilo has the necessary tools to ensure, in the medium-long term, sustained growth through focusing on those areas which have traditionally represented the group's strengths," he said.

Safilo said it was carrying out cost-cutting actions and making selective investments, like revising its store opening plan for the year and "rationalising" store personnel.

Safilo's net debt reached 617.7 million euros, up from 570 million euros at the end of 2008, it said.

When asked about debt renegotiation, executives on a conference call with analysts said talks with main lenders were "clearly progressing ... and are at a mature stage" and that "lenders ... are extremely cooperative".

Vedovotto said last month that Safilo's main shareholder is continuing talks with mainly four private equity funds and a deal is hoped for before end-June.

Only 3T, which has around 39 percent of Safilo, has said the group was considering new funding to strengthen its capital base but no concrete plans had yet been made.

Safilo shares closed up 2.16 percent at 0.449 euro, before the results came out.

($1=.7510 Euro)

(Additional reporting by Cristina Carlevaro; editing by Elaine Hardcastle)

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