Bulgari reports an 18% rise in first-quarter profits

Italian jeweler Bulgari posted a jump of more than 18% in first-quarter net profit, despite largely flat sales, and said strong orders pointed to a recovery at its high-margin watch business, Reuters reports.

Operating profit rose a forecast-beating 16.7% to $22.34 million, or 11.8% of sales, up from 10.1% of sales in the same period a year ago.

Bulgari said net profit for the quarter came to $16.16 million.

Sales at the jeweler totaled $192 million, largely flat against the same period a year ago, as a recovery in U.S. and Japanese sales compensated for the impact of the strong euro and weaker revenues from Europe.

Noting currency fluctuations, sales rose 6%.

“The only exception to our performance is Europe, where we know the negative figure is caused by lack of tourism and by retailers which, waiting for the Basel show, delayed shipments,” Ernesto Greco, Bulgari chief financial officer, reportedly told analysts during a conference call.

Greco reportedly said the group had received strong orders at the April Basel watch and jewelry fair.

“The performance was extremely good. And when I say extremely good, I mean double-digit growth,” he reportedly said, adding that the impact of Basel sales would be felt mainly in the third quarter.

The watch sector—which accounts for just under a third of Bulgari’s sales—is recovering from the economic and political uncertainty of the past few years, Reuters reports.

Sales at Bulgari’s watch business, slipped 6.1% quarter-on-quarter, but edged 0.5% higher on constant exchange rates.

“In the coming months, we should see an improvement in the watch sector,” Greco said.

Sales of Bulgari’s jewelry climbed 7.6%, while perfumes ticked 2.9% higher.

Earlier this week Bulgari said it had forged a joint venture with Israeli diamond producer Leviev Group to create jewelry.

Greco reportedly said the group planned to bring a string of new products onto the market in 2004 and said Bulgari saw first-quarter advertising spending rise 14% on a year ago.

Bulgari CEO Francesco Trapani confirmed the group’s forecast of “high single-digit” percentage sales growth for the full year.