Rome – The Board of Directors of Bulgari S.p.A. approved today the interim management statements for the Bulgari Group’s first quarter 2008, which highlight a turnover of 231.7 million Euro increased by 7.1% at comparable exchange rates (+3.0% at current exchange rates) in comparison to the same period of last year, which registered a 16.4% increase compared to 2006.

All the variations reported below are expressed at comparable exchange rates unless noted otherwise.

In a volatile and particularly unsettled macroeconomic environment, all product categories registered a growth trend, which is remarkably appreciable also in light of the very brilliant performance registered in the first quarter of last year.

In the period January – March 2008 jewellery reached a turnover of 94.4 million Euro (with a further 4.6% increase and compared to +24.2% registered in the previous year); watches increased by 6.7% at 60.2 million Euro; accessories rose 4.5% at 21.4 million Euro with a particularly brilliant performance in the directly owned stores. Perfumes, finally, registered a robust 15.5% growth to be compared to the already very high base (+32.2%) posted in the first quarter of last year.

As far as geographical areas are concerned, the volatility registered in varying form in the different markets influenced the performance of the single regions. Europe posted a 2.7% increase as a whole, despite a slowdown in the Italian market (-14.8% to be considered as occasional and to be compared to +21.7% in the same quarter of last year) and a negative performance in the United Kingdom, counterbalanced by the positive results in other countries and particularly in France and Germany. The United States showed an increase as well (+1.8%) while Asia continued to grow aggressively (+11.4% compared to +22.3% in the first quarter 2007). With regard to this area, the positive contribution of Japan (+1.6%) - despite continuing difficulties in the local market - has been significant, together with the spectacular performance of the rest of Asia (+22.8% to be compared to +86.3% in the first quarter 2007). Middle East/Other, finally, registered a double-digit growth in the quarter (+11.4% at current exchange rates).

Gross margin in the quarter – up from 145.4 million Euro in 2007 to 155.5 million Euro in 2008 (+7.0%) – rose significantly also in terms of percentage ratio on turnover (67.1% in the first quarter 2008 vs. 64.7% in the first quarter 2007). This improvement was due to the more favorable sales channel mix (privileging the directly owned stores), to the effects of the selling price increases introduced in 2007 and to the successful measures adopted to increase production efficiency. In addition, for the first time this item includes the economic effects of the hedging transactions on gold. Previous year figures were also restated for comparison purposes.

Total operating costs went from 119.6 million Euro in the first quarter 2007 to 133.7 million Euro in the first quarter 2008 (+11.8%): this increase, well within plans, is essentially due to the investment both in sales activities (flagship stores and emerging markets) and in production capacity (verticalisation in the watch segment), and anticipates the sales growth expected in the forthcoming months. Advertising and promotional activities remained substantially stable in terms of percentage ratio on turnover (11.2%).

Operating profit went from 25.9 million Euro in the first quarter 2007 to 21.9 million Euro in the first quarter 2008 and, in terms of percentage ratio on net revenues, from 11.5% in the last year to 9.4% in 2008.

Net profit, finally, was 22.8 million Euro compared to 23.9 million Euro in the first quarter 2007 and, as already occurred in the past, it benefited from the particularly positive effects of the hedging transactions on exchange rates. The percentage ratio on turnover in the quarter was 9.9% compared to 10.6% registered in the same quarter of last year.

Financial net indebtedness of the Group as of 31.03.2008 was 184.8 million Euro compared to 140.9 million Euro as of 31.12.2007. The increase must be ascribed in part to the seasonal nature of the business - since the stocks are normally built up in the first part of the year - and in part to the purchase of precious raw materials in order to support the planned growth in the jewellery segment and the upgrade of the product offer.

Francesco Trapani, Chief Executive Officer of the Bulgari Group, thus commented: “In a negative economic environment like the one which is currently characterizing the markets, the results reached by the Group in the first quarter are in line with the Company’s expectations as for the revenues, and even higher in terms of profits. In light of this, of the outstanding orders recorded at the Basel Fair, of the great care and commitment to further enhance the already high quality in all product categories and of the excellent performance in the emerging markets, I am confident in the sales trend for the forthcoming months and, in absence of a further deterioration of the economic environment, I can confirm for 2008 the guidance already given to the market of an increase in sales (at comparable exchange rates), in operating profit and in net profit between 8% and 12%”.

Courtesy: Bulgari SpA, Italy

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Posted by Naresh Koshti on 16 May, 2008 11:17:46 AM IST #