Safilo posts strong improvement in sales and profitability

Image: Blenders Eyewear, Facebook In the second quarter of 2021, Safilo’s net sales of 259.4 million euros increased 137.1 percent at constant exchange rates and 126.6 percent at current exchange rates. The company said in a statement that the significant year-on-year rebound translated into a sequential top line acceleration of 9.4 percent at constant exchange rates and 4.3 percent at current exchange rates compared to Q2 2019. Commenting on the trading update, Angelo Trocchia, Safilo chief executive officer, said: “We are very pleased that the second quarter continued the solid sales and profitability momentum of the first three months of the year, allowing us to close the first half of 2021 with a significant year on year rebound and well above H1 2019, growing 7.7 percent at constant exchange rates on the top line and 20.5 percent at the adjusted EBITDA level.” Safilo’s Q2 performance across geographies The organic sales performance by the group’s comparable brands was up high-single digits at constant exchange rates versus Q2 2019. In Q2 2021, the group’s online business reported strong growth of 64 percent, reaching 14.4 percent of the group’s total net sales. The company’s net sales in North America totaled 121 million euros, up 198.9 percent at constant exchange rates and 174.6 percent at current exchange rates. Compared to Q2 2019, Safilo’s net sales in the region were up 60.3 percent at constant exchange and rose 41.8 percent in Q1 2021 vs Q1 2019. Net sales in Europe reached 106.7 million euros, recording a rebound of 87.5 percent at constant exchange and 86.5 percent at current exchange rates. This positive performance, Safilo said, was on the other hand still not sufficient to allow the region to return to pre-pandemic levels and to fully compensate for the sizable terminated business in the base period. Compared to Q2 2019, Safilo’s net sales in Europe were down 11.4 percent at constant exchange rates, although improving compared to the first quarter. Net sales in Asia Pacific equaled 12.9 million euros, recording growth of 49.6 percent at constant exchange and 46.4 percent at current exchange rates. The business in the region instead declined by 48.5 percent at constant exchange rates in comparison with Q2 2019, which was a record quarter in APAC in particular for the travel retail business. Net sales in the rest of the world equaled 18.7 million euros, recording growth of 340.4 percent at constant exchange rates and 330.3 percent at current exchange rates. Compared to Q2 2019, net sales in the region increased by 4.9 percent at constant exchange rates, with both Middle Eastern and Latin American markets contributing to the positive sales performance. Safilo posts strong growth in profitability Second quarter gross profit rose to 135.6 million euros compared with 39.2 million euros recorded in Q2 2020 and in line with the gross profit of 135.9 million euros recorded in Q2 2019. Gross margin reached 52.3 percent, compared to 34.2 percent in Q2 2020 and 54.7 percent in Q2 2019. On an adjusted basis, gross profit equaled 139.4 million euros and a margin of 53.7 percent. EBITDA rose to 37.7 million euros compared to the EBITDA loss of 42 million euros recorded in Q2 2020, and posting an increase of 116.6 percent compared to the profit of 17.4 million euros reported in Q2 2019. The company’s EBITDA margin increased to 14.5 percent compared to 36.7 percent in Q2 2020 and 7 percent in Q2 2019. Second quarter adjusted EBITDA equaled 23.8 million euros compared to the adjusted EBITDA loss of 34.1 million euros in Q2 2020 and posting an increase of 12.2 percent compared to the adjusted EBITDA profit of 21.2 million euros reported in Q2 2019. Adjusted EBITDA margin increased to 9.2 percent compared to negative 29.8 percent in Q2 2020 and was 70 basis points higher than the 8.5 percent adjusted EBITDA margin recorded in Q2 2019. Safilo’s H1 net sales improve 59.9 percent In the first half of 2021, Safilo’s net sales totaled 510.7 million, posting a rebound of 59.9 percent at constant exchange rates and 52.2 percent at current exchange rates. Compared to the first half of 2019, total net sales recorded an increase of 7.7 percent at constant exchange rates and 3 percent at current exchange rates, with strong sales momentum throughout the first two quarters consistently driven by the rebound in growth experienced in the US and in China, and by some of the group’s key strategic drivers. In H1 2021, Safilo’s total online sales reached 13.6 percent of the group’s total business, from 11 percent in H1 2020 and 3.8 percent in H1 2019. The company’s first half gross profit stood at 262.2 million euros, recording a significant increase of 76.5 percent compared to H1 2020, and a 1.5 percent decline compared to the gross profit in H1 2019. The gross margin was 51.3 percent compared to 44.3 percent in H1 2020 and 53.7 percent in H1 2019. On an adjusted basis, gross profit equalled 270.6 million euros and a margin on sales of 53 percent. EBITDA increased to 51 million euros from the loss of 38.6 million euros in H1 2020 and an increase of 40.8 percent compared to the EBITDA of 36.3 million euros recorded in H1 2019. EBITDA margin increased to 10 percent compared to negative 11.5 percent in H1 2020 and 7.3 percent in H1 2019. H1 2021 adjusted EBITDA equaled 49.7 million euros compared to the adjusted loss of 28.3 million euros in H1 2020 and posting an increase of 20.5 percent compared to the adjusted EBITDA of 41.2 million euros in H1 2019. The adjusted EBITDA margin increased to 9.7 percent compared to negative 8.4 percent in H1 2020 and was 140 basis-points higher compared to the 8.3 percent adjusted EBITDA margin recorded in H1 2019. Operating result was back to a profit of 22.3 million euros, while operating margin stood at 4.4 percent of sales. Adjusted operating result equalled 24.7 million euros compared to the adjusted loss of 55.2 million euros in H1 2020 and an increase of 85.5 percent compared to the adjusted operating profit of 13.3 million euros in H1 2019. The adjusted operating margin stood at 4.8 percent of sales from negative 16.4 percent in H1 2020, improving 210 basis-points compared to the 2.7 percent in H1 2019. Group net result equalled a profit of 2 million euros, compared to the net losses of 74.8 million euros and 246.9 million euros recorded in H1 2020 and H1 2019 respectively. H1 2021 adjusted group net result equalled a profit of 4.4 million euros compared to the adjusted net loss of 63.7 million euros recorded in H1 2020 and registering a decline of 48.5 percent compared to the adjusted net profit of 8.5 million euros posted in H1 2019. Based on the better than expected H1 2021 performance and the continuation of positive trends into the beginning of the third quarter, Safilo now expects the group’s full year 2021 net sales above 2019 levels, up mid-single digits at constant exchange rates. Adjusted EBITDA for the year is also forecasted to surpass 2019 levels.
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