Marcolin improved its pre-tax profit margin to 7,832 million lire (e4m-$3.8m) or 12 percent of sales in the 1st quarter ended March 31, as compared to a margin of only 8.2 percent for all of the past year. Sales increased by 46 percent to 65,744 million lire (e34m-$32m) from the same period a year ago, but on comparable structures, without including the acquisition of Cébé in mid-1999, they would have risen by 12 percent.
Comparable profit figures are not available, as Marcolin went public only in mid-1999, and Italian stockmarket authorities have only now begun to require quarterly income statements. As compared to all of 1999, the group's gross profit increased from 15.4 to 17.3 percent of sales. The operating margin after amortizations grew from 8.6 to 11.9 percent, in spite of the amortization of Cébé's goodwill.
The results are better than expected, considering that Marcolin had previously warned investors about a certain pressure on margins from the introduction of the euro, yet management cautions that this performance may not necessarily hold on for all of 2000. A sales increase is still expected for the whole year thanks to Cébé and the introduction of the new Roberto Cavalli, Mossimo Vision and Fornarina lines of frames.
Like in the past year, the Spanish and English market continued to record strong growth. Overall, the European sales subsidiaries contributed 46 percent of the total revenues. The US subsidiary did not fare too well, in spite of major promotions.
First-quarter sales were boosted by the consolidation of Cébé from last Aug. 1. The French sports eyewear firm contributed a pre-tax profit of about 860 million lire on sales of 13 billion lire in the 1st quarter, but here again, no comparable figures are available for the year-ago period. As Cébé specializes in plastic injection moulded frames, Marcolin is using its French factory now also for its own fabrications, resulting is certain gains in terms of costs and flexibility. Marcolin is going to manufacture some metal frames for Cébé, and it will distribute the French brand in some key markets. Cébé continues to work through its own sales subsidiary in Italy, addressing mainly the sporting goods stores, but Marcolin is helping to put the brand also into the optical and sunwear stores. Marcolin may sell Cébé through its own subsidiary in Germany, but no final decision has yet been taken on that market.
The group's management is investigating the feasibility of direct sales for all or most of its brands in important additional markets, particularly in the Far East. The staff of Marcolin's Hong Kong office is being boosted. Cébé maintains its own sales offices in Japan and Hong Kong for the moment.
Efforts will be deployed this year to centralize logistics and to improve management processes in the US sales subsidiary. Meanwhile, Stefano Colombo, chief financial officer of Marcolin, has left the company to become one of the joint chief executives of Telekom Austria. Interestingly, Safilo lost a few weeks ago its own CFO, Giancarlo Maragon, who has joined an internet company in Milan.