A crisis in the Italian group's US subsidiary brought Marcolin's first-half results for this year down drastically, as the USA accounts for one-third of the group's total business. The difficulties set in some time ago and Marcolin reacted in 2001 by purchasing a major US distributor based in Miami, Creative Optics, whose integration is now complete. Yet Marcolin's US market share continued to shrink between in the 1st half of 2003, with sales down by 29.4 percent on a same-currency basis and the operating margin was negative.
The future of the US market is now in the hands of Antonio Bortuzzo, who in addition to his position as general manager was sent out on an emergency mission to sort out the subsidiary's problems. Bortuzzo's strategy is to cut overheads and focus on the lines with the best profit margins, which include the Kenneth Cole brand, for which Marcolin recently signed a 4-year licensing agreement limited to certain channels.
In the first 6 months of the year, Marcolin invoiced €84,525,000, which was down 5.7 percent year-on-year, but its total revenues in local currencies increased by 1 percent. Operating income before amortization (EBITDA) fell by a 22 percent to €7.7 million, or 9.1 percent of revenues, and pre-tax earnings collapsed, declining by 98 percent to €63,000 or 0.1 percent of turnover. Marcolin chose not to disclose net profits for the interim period, availing itself of an option granted by the Italian stock exchange watchdog authority.
Marcolin raised its sales on a number of markets outside the USA. Europe was up by 17.2 percent overall, with strong performance in Spain, the UK and Germany, particularly for the group's Dolce & Gabbana and Roberto Cavalli brands. In France, Cébé's revenues were up slightly, but higher production costs brought its EBITDA down compared with the first half of the previous year. Like in 2002, an upturn is forecast for the 2nd half of the year, where ski helmets, goggles and masks are a major component of its sales.
The Marcolin Spa parent company posted a 25 percent increase in first-half turnover to €46,484,000 with EBITDA up by a full 36 percent to over €8 million. But a sharp increase in financial costs, which were 13 times higher than in the 1st half of 2002, produced an overall loss for the 6-month period of €439,000. This increase in financial costs was less dramatic for the group as a whole ? they increased by 36 percent overall, to €2.8 million.