Press Releases
Bulgari Group: 2008 results affected by the downturn
 |
Turnover | 1,075.4 million Euro |
| (-0.9% at comparable exchange rates) | ||
|
Gross Margin | 691.3 million Euro |
| (-1.4% at 64.3%) | ||
|
Operating profit | 111.0 million Euro (-33.5%) |
|
Net Profit | 82.9 million Euro (-45.1%) |
|
Proposed dividend | 0.10 Euro per share |
| (-69% with a 36.3% payout) |
Rome, March 11th 2009 – The Board of Directors of Bulgari S.p.A. approved today the draft financial statement for the Company and the draft consolidated financial statements for the Group for the full year 2008.
All the variations reported below and related to the revenues are expressed at comparable exchange rates unless noted otherwise.
Bulgari Group’s consolidated turnover for
the full year 2008 reached 1,075.4 million Euro,
compared to 1,091.0 million Euro in 2007 (-0.9% at comparable
exchange rates and -1.4% at current exchange rates). Due to the
worsened macroeconomic conditions, which became very difficult in
the fourth quarter of the year, all product categories, with
the exception of perfumes (+13.9%), registered a sales decrease:
jewellery fell by 1.5% and watches and accessories by 10.9% and
4.1% respectively.
As far as geographical areas are concerned, Europe decreased
by 1.4% and Americas by 6.7% while Asia limited its fall to 1.2%:
as Japan declined 8.5%, in fact, the rest of Asia posted a 8.4%
growth. Middle East/Other registered a 9.1% increase at current
exchange rates. The number of Bulgari stores at 31 December 2008
was 263, of which 164 were directly owned stores.
Gross margin – which went from 701.4
million Euro in 2007 to 691.3 million Euro in 2008 (-1.4%) –
remained stable in 2008 in terms of percentage ratio on turnover
(64.3%), despite the unfavourable product mix.
The stability of the margin has been secured thanks to the
increasing vertical integration achieved by the Group, to the
successful measures adopted to increase production efficiency and
to the Euro depreciation in the last part of the year. It is also
worth underlining that in 2008 the Bulgari Group has raised selling
prices, in particular for jewels and watches, after the increase in
the prices of gold and other raw materials, and, in the fourth
quarter, has not reduced its selling prices or changed its discount
policy versus the final client and trade in order to protect the
integrity of the brand in the long term.
Operating costs, excluding advertising and
promotional activities, went from 415.0 million Euro in 2007 to
459.1 million Euro in 2008 (+10.6%). This increase must be
essentially ascribed to the Group’s programme for the
development of sales activities (flagship stores, emerging markets
and the direct distribution of perfumes) and production capacity
(the verticalisation in the watch segment), as confirmed by the
“amortization” (+24.9%) and “leases”
(+20.3%) items. It is worth underlining that a relevant part of
these investments started in the last quarter of 2007, thus
rendering the comparison base not totally homogenous. Moreover,
operating costs include some accruals in anticipation of current
and future restructuring plans as well as to cover different risks.
Excluding amortisation, leases and extraordinary accruals, the
other costs increase was 6.0% in the full year.
In the fourth quarter operating costs started to reflect efficiency
actions carried out in the last months and, excluding the items
mentioned above (amortization, leases and extraordinary accruals),
they increased only by 1.8%, thus registering a strong slowdown
compared to the first nine months of the year. Finally, stripping
the exchange rate effect, they even decreased by 7%.
Advertising and promotional activities reached 121.2 million Euro (+1.3%) with a 11.3% percentage ratio on turnover, substantially in line with 2007 (11.0%).
Operating profit, after the drastic and sudden sales shortage in the last quarter, was 111.0 million Euro, showing a 33.5% drop compared to 166.8 million Euro in the previous year, with a 10.3% percentage ratio on turnover (15.3% in 2007).
Net profit – equal to 82.9 million Euro compared to 150.9 in the previous year – registered a 45.1% decrease with a 7.7% percentage ratio on turnover (13.8% in 2007). This result has been significantly affected by the losses generated by hedging transactions on exchange rates which – due to the unexpected appreciation of the U.S. Dollar and the Yen against the Euro since last October – led to a negative result of 14.9 million Euro in the last quarter and of 4.7 million Euro in the full year.
In 2008, as forecast, the Company carried out a challenging investments plan, which implied an overall expense of 95.5 million Euro (-11.4% compared to 2007) aimed at increasing the existing production capacity, at a further expansion of the distribution network and at improving the information systems.
Financial net indebtedness of the Group as of 31.12.2008 was 304 million Euro compared to 141 million Euro as of 31.12.2007 and was influenced by the increase of the inventory from 587 million Euro at the end of 2007 to 730 million Euro at the end of 2008 (+24.3%), whose rotation strongly decreased because of the noticeable penalising effect of exchange rates and of the sudden sales contraction registered in the fourth quarter.
The Board of Directors has also approved the draft financial statement for the parent company Bulgari S.p.A., which highlighted a net profit of 57.8 million Euro (+12.5% compared to 51.4 million Euro in 2007). The parent company’s total revenues were 85.9 million Euro (86.1 million Euro in 2007).
Finally, the Board of Directors has also approved to propose the distribution of a unit dividend of 0.10 Euro compared to 0.32 Euro for the previous financial year by distributing the net profit of 2008. This proposal will be submitted to the approval of the Annual General Meeting (AGM) taking place next April 16th, 2009 11.00 am on first call and on April 21st, 2009 11.00 am on second call. The Board also approved to submit to the Annual Meeting the date of May 21st, 2009 for the dividend payment by clipping coupon n. 15 on May 18th, 2009.
The Board of Directors of Bulgari S.p.A. examined and approved
the Annual Report on Corporate Governance and the adherence to the
Code of Conduct for Listed Companies for FY 2008.
The Board of Directors also resolved to put to the vote of the
Shareholders at their next meeting the renewal of the authorisation
to buy and sell the Company’s own shares, in accordance with
the requirements of Art. 144-bis of the Consob Regulation for
Issuers. This authorization has been requested to stabilise the
stock price, to create the Company's own portfolio which may be
used to service the issuance of convertible bonds or warrants or to
allow a reduction of the share capital, if any, through
cancellation of such shares. The authorization has been requested
for the purchase and/or sale of a maximum amount of 30.000.000 own
shares. The authorisation is requested for a maximum period of 18
months from the date of the shareholders meeting which will decide
to authorise said purchase and/or sale. The corresponding minimum
and maximum purchase and/or sale price shall not be less than Euro
1.5 and shall not exceed Euro 10 each. As of today, the Company
does not have an own portfolio.
Francesco Trapani, Chief Executive Officer
of the Bulgari Group, thus commented:
“Notwithstanding the more cautious attitude on investing
and spending in effect since the start of 2008 to face the
progressive worsening of the economic conditions, the drastic and
sudden sales shortage occurred during the last quarter as a
consequence of the financial crisis and the collapse of the
worldwide Stock Exchanges has very negatively affected the full
year results.
2009 will be a very difficult year as well and our commitment will
be focussed – in addition to new product launches in all
product categories – on managing the cost base even more
rigorously to make the Group more and more efficient. Finally, we
will carry out a more attentive control of the inventory to make it
cash neutral and a further reduction of the investments.
With regard to the dividend, in light of the current environment,
still characterised by high uncertainty and volatility, we believe
wise and cautious to propose to the AGM a reduction of the payout,
while keeping it at a generous level (36.3%).
We are therefore committed to tackle the upcoming months with the
firmness and the determination required, without compromising the
quality of our products and of the client service, and capitalising
on the prestige of a brand which during 125 years – and
facing equally challenging situations in the past – has been
able to always evolve, becoming one of the main players in the
worldwide luxury market”.
| EUR M. | 2008 | 2007 |
|---|---|---|
| REVENUES | 1075.4 | 1091.0 |
| EBIT | 111.0 | 166.8 |
| EBIT % ON REVENUES | 10.3% | 15.3% |
| NET PROFIT | 82.9 | 150.9 |
| NET % ON REVENUES | 7.7% | 13.8% |
BULGARI GROUP – REVENUES BY PRODUCT CATEGORY – FY 08
| REVENUES BY PRODUCT CATEGORY |
FY 2008 | FY 08/ FY 07 | FY 07/ FY 06 | |||
|---|---|---|---|---|---|---|
| EUR M. |
% On Revenues |
% REPORTED |
% COMP. FX. | % REPORTED |
% REPORTED | |
| Jewels | 448.4 | 41.7% | -2.5% | -1.3% | 14.4% | 20.0% |
| Watches | 263.7 | 24.5% | -10.6% | -11.0% | 2.0% | 8.2% |
| Accessories | 83.1 | 7.7% | -1.5% | -4.1% | -5.1% | 1.2% |
| Other (incl. FR royalties) | 7.4 | 0.7% | -2.1% | - | 1.5% | - |
| JWA Division | 802.6 | 74.6% | -5.2% | -5.0% | 7.5% | 13.5% |
| PARFUM Division | 248.4 | 23.1% | 12.0% | 13.9% | 11.0% | 15.4% |
| OTHER | 24.4 | 2.3% | 8.2% | - | 4.7% | - |
| TOTAL | 1075.4 | 100% | -1.4% | -0.9% | 8.2% | 13.6% |
BULGARI GROUP – REVENUES BY GEO AREA FY 2008
| REVENUES BY GEO AREA |
FY 2008 | FY 08/ FY 07 | FY 07/ FY 06 | |||
|---|---|---|---|---|---|---|
| EUR M. |
% On Revenues |
% REPORTED |
% COMP. FX. | % REPORTED | % COMP. FX. | |
| EUROPE | 421.7 | 39.2% | -1.3% | - | 10.2% | - |
| of which Italy | 125.6 | 11.7% | -11.2% | - | 7.6% | - |
| AMERICAS | 154.4 | 14.4% | -12.5% | -6.7% | 12.1% | 21.0% |
| ASIA | 436.0 | 40.5% | 1.6% | -1.2% | 5.6% | 14.8% |
| of which Japan | 229.2 | 21.3% | -1.1% | -8.5% | -9.7% | -0.9% |
| of which Rest of Asia | 206.8 | 19.2% | 4.7% | 8.4% | 31.9% | 41.2% |
| MIDDLE EAST/OTHER | 63.3 | 5.9% | 9.1% | - | 1.5% | - |
| TOTAL | 1075.4 | 100% | -1.4% | -0.9% | 8.2% | 13.6% |
Source: Bulgari S.p.A. – Not audited preliminary results.
The manager responsible for preparing the company’s financial reports, Alberto Nathansohn, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release faithfully represent the Company financial results, as well as its books and accounting records.
For further information
| Media Relations Paolo Piantella Corporate Financial Press Office Director tel. +39 06 68 810 593 e-mail paolo.piantella@bulgari.com www.bulgari.com |
Analysts / investors
relations Renata Casaro Investor Relations Director tel. +39 06 68 810 467 e-mail renata.casaro@bulgari.com http://ir.bulgari.com http://ir.mobi.bulgari.com |