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Press Releases

31 Mar 1999

Strong results for the Bulgari Group Turnover net profit 12

Rome, March 31st 1999

The Board of Directors of Bulgari S.p.A. approved today the consolidated financial statements as of 31 December 1998, showing a consolidated net profit of ITL85.3bn (Euro44.1m) with an increase of 12% compared to ITL76.1bn (Euro39.3m) in 1997. In 1998 the Bulgari Group posted a net consolidated turnover of ITL707.3bn (*) (Euro365.3million), up 23% from ITL573.6bn (Euro 296.2 million) in 1997. Exchange rates had no significant impact.

Consolidated operating profit amounted to ITL103.5bn (Euro53.5m) compared to ITL97.3bn (Euro50.2m) the previous year. Operating margin was at 14.6% from 17.0% in 1997 and was negatively influenced by a significant increase in communication expenditures whose incidence on total revenues reached 13.7% from 11.1%. Among these investments it is worth mentioning the launch of the Aluminium watch and the Bvlgari Black and Salvatore Ferragamo pour Femme fragrances and the international roll-out of the leather goods. In addition the operating profit was penalised by costs related to the replacement of information technology procedures in sight of the year 2000 and by various other activities aiming at strengthening the organisation structure.

Sales increased in all main markets. Growth was particularly strong in America (+35%), in Italy (+33%) and in Japan (+32%) despite all financial turbulence involving the latter.

These results derived from the expansion of the product range and the distribution network. At the end of 1998 the number of Bulgari stores had grown to 78 while the network of authorised watch retailers has risen to over 300 (almost half of them distribute also jewellery) and perfume doors to over 8,000 units.

During 1998 investments in tangible fixed assets reached ITL35.2bn against ITL31.1bln in 1997, mainly due to the opening and refurbishing of Bvlgari stores and offices for administrative and production purposes. During 1998 investments in intangible fixed assets amounted to ITL 10.8 billion (no change from previous year) mainly related to the purchase and implementation of software procedures.

Net cash at December 1998 was equal to ITL13.7bn compared to ITL91.6bn of the previous year. The decrease can be attributed to a higher net working capital amount (equal to ITL101.4bn), to the total investments (ITL46bn) and to the distribution of dividends (ITL20.7bn).

Francesco Trapani, CEO of the Bulgari Group commented: 'We are satisfied with the results obtained in 1998. The potential of the Bvlgari brand, has been confirmed by the strong results in those markets hit by strong financial turbulence, as well as by the outstanding reception of our new products in all categories. Significant communication investments, new store openings and the reinforcement of the organisational structure have been, and will continue to be, functional to the pursuit of our global expansion strategy, which we will continue to manage with great attention and with a long term perspective.'

In 1999 the Group plans to open at least 15 new Bvlgari stores and to further increase the number of watch retailers and perfume doors. In addition the number of authorised retailers selling jewellery and accessories will continue to gradually expand.

The Board of Directors has also approved the financial statements of the parent company Bulgari S.p.A. closing with a net profit of ITL41.5bn (ITL22.1bn in 1997). Total net revenues (consisting almost entirely of royalties paid by subsidiaries and franchisees for the use of the Bvlgari trademark) were up 31% to ITL60.0bn from ITL45.8 in 1997.

Finally the Board of Directors has approved the distribution of a dividend of ITL80 (Euro 0.0413) per share compared to ITL72 (Euro 0.0372) last year. The accounts will be submitted to the approval of the next Annual General Meeting taking place in Rome on April, 30th on first call and on May, 5th on second call.
(*) including clearing transactions.

Source: Bulgari spa

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