Bulgari net profits drop 53% in first-half of 2002

Bulgari S.p.A, the international Italian luxury goods group, has announced sizeable decreases in revenues, operating and net profits for the first half of 2001.

The Group posted a turnover of 338.3 million Euros ($331.1 million), a 5.7% drop compared to the first half of 2001.

During the same period of time Bulgari posted an operating profit of 33 million Euros ($32.3 million), a 46.5% decline and a net profit of 22.6 million Euros ($22.1 million), a 53.2% fall from the previous half year.

The interim six-month report was released Sept. 13 by the Bulgari’s board of directors. It blamed the “negative economic conjuncture, the strong decline in tourism and a decrease of retailers’ sales [which] had a strong impact on first half results,” making it difficult to reach the records set by the company in 2001.

Bulgari’s watch business -representing 35% its business – posted the weakest showing, with a 21% fall in sales for the six months. However, noted the company, the year’s second quarter “witnessed an improvement” in watch sales volume.”

Jewelry, providing 39% of Bulgari’s business, rose 2% in sales for the first six months of 2001 (compared to a 36% increase in the first half of 2001).

The Americas, which provide about one-sixth of Bulgari’s business, revenues were down 15% for the first half of the year (compared to a 6% gin in 2001). Only Europe (excluding Italy) and the Middle East showed any sales growth, both 5%.

However, the results are “ basically in line with the Group’s plans prepared at the beginning of 2002,” said the Bulgari report.

On the plus side, overall operating expenses, which had risen in recent years, decreased slightly, from 175 million Euros ($171.3 million) to 174 million Euros ($170.3 million), thanks to a cost cutting and efficiency improvement program implemented at the end of 2001, and reduction of advertising and promotion investments. Net indebtedness and the inventory amount also decreased in the first half of 2002.

”I’m satisfied with the first half results which are in line with our plans,” said Francesco Trapani, CEO of the Bulgari Group, in view of the current “negative” economic situation and “the difficult comparison” with the company’s record results in 2001. Even so, he noted, the first half sales results were up 25% over the same period two years ago, in 2000. Other “positive elements,” he said, included a successful cost control and efficiency improvement program and a better use of the invested capital.

“Despite the uncertainty of the economic and political environment and thanks to the sales results during the summer,” Trapani expects the full year’s sales and profits will be on “a similar level of sales and profits [to those] obtained in 2001.” Even so, he added, “a more evident recovery of the business can be realistically expected only during 2003.”