Press Releases
Bulgari Group: strong growth in the financial results of the first quarter 2007
- Turnover: 225.1 million Euro (+16.4% at comparable exchange rates)
- Gross margin: 65.0% (65.0% in the first quarter 2006)
- Operating profit: 26.3 million Euro (+20,4%)
- Net profit: 23.9 million Euro (+31.5%)
Rome, May 15th 2007 - The Board of Directors of Bulgari S.p.A. approved today the consolidated financial statements for the Bulgari Group’s first quarter 2007, which highlight a turnover of 225.1 million Euro increased by 16.4% at comparable exchange rates (+10.4% at current exchange rates) in comparison to the same period of last year. Operating profit and net profit increased by 20.4% and 31.5% respectively in comparison to the same period of 2006.
All the variations reported below are expressed at comparable exchange rates unless noted otherwise.
Revenues by product categories
The period January - March 2007 registered, once again, a particularly brilliant performance (+24.2% compared to the first quarter 2006) of jewellery – core business of the Company – also thanks to the growth registered by the high jewellery segment. The watch segment, whose 8.6% increase in the quarter must be compared to an high base (+13.2%) in the same quarter of last year, testified once again its potentialities, underlined by the double-digit sales performance registered in the directly owned stores. The expectations in this sector for the months to come are very promising, thanks to the great success of all the new products presented at the latest Basel Fair and, in particular, of the new collection of precious watches Assioma D. Perfumes sales – 43 million Euro in the quarter with a 32.0% increase – further confirmed the great success of this product category, thanks to the outstanding performance of Bulgari pour Femme, re-launched last year, and to the excellent results of all the other fragrances. The accessory segment, finally, registered an overall decrease (-11.3%) due to a contraction in third parties distribution and despite a robust growth in the directly owned stores. As a whole, the result of this category in the quarter must be partly attributed to an exceptionally high and challenging base in the same quarter of last year (+44.0%) and it has been negatively influenced by the weakness of the Japanese market and by a different timing in the deliveries of the Spring-Summer collection.
Revenues by geographical area
As far as geographical areas are concerned, the robust sales growth in Europe (+15.9%) has been very satisfying and must be compared to the already high base (+22.3%) of last year; the sales performance in Italy (+21.7% compared to 13.9% in the same quarter of last year) stands out as well. The sales in the United States registered an increase (+3.4%), despite the temporary closing for revamping of the Madison Avenue store in New York since January 2007. The re-opening of the Fifth Avenue flagship store in New York at the end of March will have its effect only starting from the second quarter of this year. As already extensively anticipated by the Company, Japan continued to slow down (-7.2%) thus confirming the general weakness of the luxury sector in this market, counterbalanced by the rest of Asia, which showed clear signs of vitality with an exuberant growth (+86.3%) reaching a percentage ratio on Company’s turnover almost equal to the one of Japan. The growth trend is uniform in all the countries where Bulgari operates in this region and the brilliant performance in the Chinese market is worth to be underlined. Middle East/Other, finally, registered a 7.8% increase at current exchange rates despite a high base in the first quarter of last year (+22.5% at current exchange rates).
Profit & Loss highlights
Gross margin in the quarter – from 132.4 million Euro in 2006 to 146.3 million Euro in 2007 (+10.4%) – was substantially stable in terms of percentage ratio on turnover (65.0% in 2007 like in 2006). This result is particularly positive considering the recent currency trend – with regard in particular to the dollar, the yen and, in the latest weeks, to the Swiss franc – which further worsened in comparison to the end of last year. As usual, the Company put in place hedging transactions on exchanges rates to cover currency fluctuations. Furthermore, the success of the actions aiming to reach production efficiencies contributed to protect the margin. Total operating costs went from 110.6 million Euro in the first quarter 2006 to 120.0 million Euro in the first quarter 2007 (+8.5%); within this group must be underlined the expected increase in advertising and promotional expenses (+5.5%; from 23.6 to 24.9 million Euro) with a 11.1% percentage ratio on the quarter’s revenues. Operating profit was 26.3 million Euro (+20.4% compared to 21.8 million Euro in the same quarter 2006) thus going, in terms of impact on net revenues, from 10.7% in 2006 to 11.7% in 2007. Net profit was 23.9 million euro compared to 18.2 million Euro of last year (+31.5%) with a 10.6% percentage ratio on turnover (8.9% in 2006), also benefiting from the hedging transactions previously mentioned.
Balance Sheet highlights
Financial net indebtedness of the Group as of 31.03.2007 was 80.6 million Euro compared to 46.9 million Euro as of 31.12.2006. This increase is due partially to the seasonal nature of the business, since the stocks are normally built up in the first part of the year, and partially to the purchase in advance of precious raw materials in order to seize interesting opportunities. Inventory, in fact, increased by 12.2% compared to the end of March 2006 (from 530 million Euro to 595 million Euro).
Francesco Trapani, Chief Financial Officer of the Bulgari Group, thus commented: “The very positive results registered in this first quarter confirm that the Company is successfully pursuing its objectives through focussed and effective strategies and that the Bulgari design and high quality have been winning once again. Furthermore, I would like to underline the outstanding performance of jewellery - and of the high jewellery in particular – which has always represented the heart of our company identity and the source of our creative impulse. The trend of the quarter, in conclusion, drives me to a cautious optimism and therefore I can confirm – in absence of extraordinary events – the guidance of an increase in sales (at comparable exchange rates) and in net profit in a range between 8% and 12% for the full year 2007.”
Bulgari is one of the global players on the luxury market. In 2006 the Group posted a turnover of 1,010.4 million Euro. With a market capitalization of about 3,362 million Euro (as of 14.05.2007), Bulgari relies on a stores network in the most exclusive shopping areas in the world and on selected distributors. As of 31st March 2007 the total number of Bulgari monobrand stores was 227, of which 133 were directly owned stores. Bulgari has a product portfolio that ranges from jewels and watches to accessories and perfumes. The Group is controlled by the Bulgari family, holding about 52.0% of the share capital. The remaining 48.0% is floating on the Milan Stock Exchange.
BULGARI GROUP
| EUR M. | Q1 07 | Q1 06 | DELTA Q1 2007/Q1 2006 |
|---|---|---|---|
| REVENUES | 225.1 | 203.9 | 10.4% |
| EBIT | 26.3 | 21.8 | 20.4% |
| EBIT On Sales | 11.7% | 10.7% | |
| NET PROFIT | 23.9 | 18.2 | 31.5% |
| NET PROFIT On Sales | 10.6% | 8.9% |
BULGARI GROUP – REVENUES BY PRODUCT CATEGORY – Q1 2007
| FIRST QUARTER 2007 |
DELTA Q1 2007/Q1 2006 |
|||
|---|---|---|---|---|
| PRODUCT CATEGORY | EUR M. | % ON REVENUES | REPORTED | AT COMPARABLE EXCHANGE RATES |
| Jewels | 94.0 | 41.8% | 18.2% | 24.2% |
| Watches | 58.5 | 26.0% | 0.3% | 8.6% |
| Accessories | 21.1 | 9.4% | -17.1% | -11.3% |
| Other (incl. FR royalties) | 1.7 | 0.7% | 10.1% | - |
| JWA Division | 175.3 | 77.9% | 6.3% | 12.6% |
| PARFUM Division | 43.0 | 19.1% | 27.2% | 32.0% |
| OTHER | 6.8 | 3.0% | 31.1% | - |
| TOTAL | 225.1 | 100% | 10.4% | 16.4% |
BULGARI GROUP – REVENUES BY GEOGRAPHICAL AREA – Q1 2007
| FIRST QUARTER 2007 | DELTA Q1 2007/Q1 2006 | |||
|---|---|---|---|---|
| GEOGRAPHICAL AREA | EUR M. | % ON REVENUES | REPORTED | AT COMPARABLE EXCHANGE RATES |
| EUROPE | 84.4 | 37.5% | 15.9% | - |
| Of which Italy | 30.0 | 13.3% | 21.7% | - |
| AMERICAS | 33.7 | 15.0% | -3.7% | 3.4% |
| ASIA | 93.5 | 41.5% | 12.0% | 22.3% |
| Of which Japan | 48.6 | 12.6% | -16.1% | -7.2% |
| Of which rest of Asia | 44.9 | 19.9% | 75.6% | 86.3% |
| MIDDLE EAST/OTHER | 13.5 | 6.0% | 7.8% | - |
| TOTAL | 225.1 | 100.0% | 10.4% | 16.4% |
Source: Bulgari S.p.A. – Not audited results.
For further information
| Media relations | Analysts / investors relations |
| Paolo Piantella | Renata Casaro |
| Corporate Financial Press Office Director | Investor Relations Director |
| tel. +39 06 68 810 593 | tel. +39 06 68 810 467 |
| e-mail paolo.piantella@bulgari.com | e-mail renata.casaro@bulgari.com |
| www.bulgari.com | http://ir.bulgari.com |