SOLA International expects to post a 30 percent increase in net adjusted income to $48-50 million for the financial year ending next March 31, in spite of a likely drop in the 3rd quarter. For the six months ended Sept. 30, the company has reported net income of $22.0 million, adjusted to exclude restructuring costs and currency effects on debt estinguishment, as compared to $15.0 million in the year-ago period. Sales increased by 6.0 percent to $331.4 million and were up by 2.0 percent on a currency-neutral basis.
In the 2nd quarter, SOLA had adjusted net income of $11.5 million, up from $7.5 million. On a reported basis, the group's net profit increased to $9.2 million from $6.7 million The gross margin remained virtually unchanged at 39.3 percent. After restructuring costs of $2.6 million, operating income (Ebit) declined to $18.3 million, as compared to $20.6 million, but the recent refinancing of the group lowered its interest charges considerably. The restructuring measures included the layoff of 12 employees in Ireland and 40 in Belgium.
Net sales increased by 4.8 percent to $166.2 million in the quarter, with a 0.4 percent increase on a constant currency basis. They would have grown more without big drops in demand from the German market and from the big Wal-Mart chain in the USA. North American sales were down by 2.3 percent. European sales, which reached $67.4 million, rose by 1.7 percent in terms of local currencies and they would have increased by 5.4 percent excluding Germany.
The management stresses that currency-neutral sales to chain retailers around the world rose by 4 percent in the quarter but would have risen by 10 percent excluding Wal-Mart. SOLA is also benefiting more and more from the financial performance of its growing network of prescription labs, whose sales grew by 7 percent to $61 million excluding the latest acquisitions.
SOLA has just announced the takeover of two more laboratories in the USA with annual sales of about $10.8 million for $2.6 million in cash and $1.2 million in assumption of debt. Controlled by Vision Systems, they are located in Atlanta and Petersburg, Virginia. Last month, SOLA had indicated that it had budgeted investments of between $25 million and $50 million for the acquisition of labs before next spring.