After Safilo released weaker-than-expected second-quarter results, some financial analysts cut their forecasts for the full year.
In the second quarter of 2020, Safilo registered a 54.0 percent decrease in sales to €114.5 million as a consequence of coronavirus-related lockdowns and travel restrictions. Thanks to a mid-single digit growth rate posted in January and February, Safilo limited the drop in first-half sales at 32.3 percent to €335.6 million. The company warned that it could suffer a moderate decline in sales in the third quarter despite a rebound in July.
An adjusted basis, Ebitda was a negative €34.1 million in the second quarter compared with a positive €21.2 million a year earlier. In the first half it was a negative €28.3 million against a positive €41.2 million. Safilo did not provide a quarterly bottom line, but in the first half the adjusted net loss was €63.7 million against a €8.5 million profit.
The company believes that it can return to a positive Ebitda in the third quarter if the sales trend is “supportive” as cost cutting will not be sufficient.
The Italian broker Equita trimmed its 2020 sales forecast by 4 percent to €764 million and now expects a negative Ebitda of €8 million compared with previous prediction of a positive €2 million. In the second half, it anticipates a positive Ebitda of about €20 million. It also shaved its 2021 sales forecast by 4 percent to €801 million and its Ebitda estimate to €46 million. It pointed out that its 2021 forecasts are “very challenging” especially in terms of Ebitda due to the loss of Dior license at the end of this year. It believes that Dior could represent some €100 million in sales for Safilo in 2020.
Equita also anticipates that Safilo will be loss-making and have a negative free cash flow over the next three years to 2022.
The investment bank Banca Akros cut its 2020 sales forecast for Safilo to €781 million from €835 million and now expects a negative adjusted Ebitda of €11.4 million against a previous estimate of a €34 million profit.
But, the brokerage Kepler Cheuvreux said that it has maintained its forecasts for the full year because of the “good news” regarding the sales rebound in July.