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Full Year 2008 Benetton Group Earnings Conference Call - Final.

Article Excerpt
OPERATOR: Good afternoon, ladies and gentlemen. Welcome to Benetton Group's conference call on 2008 financial results. The teleconference call and the Q&A will be recorded.

I would like to introduce the speakers for today's conference call, Mr. Gerolamo Caccia Dominioni, CEO; Mrs. Mara DiGiorgio, Head of Investor Relations; and Mr. Frederico Sartor, Head of Press and Communications. [This talk] is set approximately one hour of call exclusively dedicated to the financial market to the journalists.

Mrs. DiGiorgio, please go ahead.

MARA DI GIORGIO, IR, BENETTON GROUP: Thanks. Good afternoon, everybody. I want to go fast as I know that today is a day full of conference calls. So I will talk with my presentation on the full-year drivers and results and try to make it clear and short in order then to allow as much time as possible for your questions.

Let's go immediately to page and to line number two and let me begin with a snapshot. P&L results [confer] original from February 17 are in line with guidance, as we already said, at the top of the beginning of 2008. In a nutshell, topline showed a growth of 3.9% plus EUR79 million, driven by our prior performance, which increased by EUR74 or 3.8% with a meaningful positive impact from volume mix. The Style grew by EUR6 million also thanks to new commercial initiatives taken in the second part of the year.

Taking out the impact of exchange rates, negative EUR437 million sales line due to the strengthening of the euro against the dollar, South Korean won and British pound with positive revenues up of 5.7% with positive impact from growth acceleration in the key emerging markets which achieved approximately 17% growth currency netural as already announced.

Gross profit was up -- was EUR982 million, up EUR73 million or plus 180 basis points margin improvement thanks up to the apparel margin (inaudible) driven by volume mix, operational efficiencies EUR25 million due to the higher portion of merchandise sourced from (inaudible) in Tunisia and higher efficiency in the production planning.

EBIT maintained 11.9% margin on revenues including the [EUR57] million increase in ordinary G&A due to the consolidation of new operations in the retail sector, one-off costs related to new projects, and an [increase] in depreciation and positions. Below EBIT, financial targets increased by EUR12 million while negative currency impacted the results of currency hedging moved from minus 10 to minus 1. Tax rate was 26.5%, both in line with previous year, and net profit was EUR155 million or 7% on sales.

Now let me comment to this consolidated balance sheet, looking at slide number three. Net capital employed increased by EUR192 million as of December 2007. The increase was mainly due to the raise in working capital after EUR91 million, which we will detail in the next slide. And the increase of tangible and intangible fixed assets was EUR147 million, mainly reflecting EUR228 million in rough operating investments sustained during the year, minus EUR31 million in divestments at net book value and minus EUR100 million in depreciation and amortization.

Working capital, pleased to note that (inaudible) [restated]. We have decided to report strict commercial working capital excluding not only direct taxation, but also receivable and payables not closely related to the trade business are reclassified in other assets and liabilities which as you may see decreased in 2008 of EUR46 million, driven by a reduction in noncommercial receivables for fixed asset purchases and an increase in noncommercial papers.

The increase in net capital employed was a substantially financed by net financial position, which moved from EUR475 last year to EUR689 million in 2008 and total shareholder's equity, which decreased by USD22 million including net profits per generation, dividend payments, share buyback, and translation currencies difference.

Working capital, as far as working capital is concerned, moving to slide number four, that increased by EUR91 million, moving from EUR624 million in December 2007 to EUR715 million in December 2008. In detail, trade receivables grew by EUR101 million, driven by EUR40 million increase in whole savings net, higher receivables related to new commercial textile...

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