Safilo's management is confident of obtaining better results in the current fiscal year than it did in the year 2000, when it reached a net profit of almost 50 million euros on sales of e685.5 million. However, order volumes are shrinking due to the economic crisis in the USA, which generates about 40 percent of Safilo's revenues. The market is softening also in Europe, which represents 45 percent of turnover.

According to analysts, if the situation continues to deteriorate, Safilo may delay any further major reorganization of the company's equity, which is falling gradually into the hands of Vittorio Tabacchi and his immediate family. The recent settlement of a dispute between LVMH and Pinault-Printemps-Redoute over their equity stakes in Gucci Group could have hastened an investment by Gucci in Safilo, and some observers have raised the possibility of a return by Safilo to the stock exchange at a later date to help the Tabacchis to pay down their debt, but both scenarios appear more remote at this stage because of the uncertain market outlook, particularly in the luxury sector.

The Tabacchis will probably wait a little longer to sell back any of their shares. Only about 7 percent of Safilo's equity is still floating on the stock exchange, and most of it is said to be in the hands of a couple of institutional investors. Their compulsory redemption is imminent.

In the first 6 months of this year, Safilo's revenues rose by a strong 38.4 percent to e486.7 million, but they would have risen by only 31.4 percent without the appreciation of the US dollar. Furthermore, the turnover got a one-time boost of about e35 million by the fact that Safilo's new European distribution center had reached cruising speed, allowing the company to execute deliveries that had been delayed by testing and start-up procedures.

The group's gross profit increased by 37.4 percent in the first half. Operating income grew by 40.2 percent to 16.3 percent of revenues. The net profit was up 57.2 percent to e41.1 million, growing from 7.4 to 8.4 percent of sales. The group's cash flow increased by a healthy 45.3 percent to e58.9 million. Bank debt rose in the 6-month period by e23 million to e152.1 million.

In terms of volumes, Safilo sold a total of 12.2 million pairs of frames in the first 6 months, or 24.5 percent more than in the same period of one year ago. In geographical terms, sales in Italy grew by 53.6 percent to 19 percent of total sales, thanks in part to the new logistical set-up. Sales in other European countries were up 47.4 percent to 26 percent of sales. US sales grew by 25.4 percent.