Red day for Safilo which in the middle of the day lost 21,6% to 1,256 euro. The markets have received badly the new industrial plan which provides for 700 redundancies in Italy as early as next year and announces that the loss of the luxury licenses with Lvmh it will involve an industrial restructuring "which responds promptly to the new production scenario that the company will soon find itself having to manage". In fact, starting from 2021, Safilo will lose around 200 million in revenues deriving from licenses with the French company which has chosen to produce its eyewear through Thelios, the joint-venture that Lvmh has with Marcolin, an Italian eyewear group. A paradox if one considers that only yesterday, December 10, Safilo's share gained 10% following the early renewal of the licensing agreement for the Marc Jacobs branded collections of sunglasses and eyeglasses.
To disappoint investors also contributed estimates for 2020. Indeed, Safilo has foreseen to close 2019 with net sales of continuing operations substantially stable compared to 2018, while it cut its estimates on revenues for next year and provided lower-than-expected investment estimates.
If the Equita analysts underline that there are no news for 2019, the focus is on next year: for 2020, in fact, the group now expects net revenues between 960 million and one billion euros, compared to the target between 1 and 1,02 billion communicated on August 2, 2018, and an adjusted Ebitda margin) at approximately 6% of sales, while the previous target was set between 8% and 10%.
Net sales are expected to be around one billion euros in 2024, with an annual growth rate of between 5% and 1% over the 2 years. The adjusted Ebitda margin is expected between 9% and 11% of sales in 2024, while the net financial position should be positive by the end of the plan.
At the announcement of cuts of 700 employees – about 400 at the Longarone site, about fifty at the Padua site and 250 at Martignacco have announced a strike for December 13th: ""from today a campaign of meetings will be launched in all the workplaces of the Group, where together with the workers further initiatives to be adopted will be decided, which lead to the maximum protection of all the workers employed in Safilo while maintaining the socio-economic conditions of the affected territories".
“While acknowledging an important difficult situation that puts the survival of Safilo at risk, we would like to reiterate that it is not possible that it is always the workers who pay the bill for inadequate choices and strategies adopted by the company; therefore, we have asked to block any procedure, to start a discussion on the general situation of the Group to identify tools and actions to protect workers made redundant, involving all the competent institutions including ministries”, concludes the union statement.
The plan includes Fendi's (expected) expiry from July 2021. "It is therefore a plan based on a reasonable scenario/perimeter", underlined the Equita analysts. Capex is expected to be around 30 million in 2020 and 20 million in 2024: “We expected at least 40-50 million capex per year. 2% capex/sales seems too optimistic,” concluded the analysts.
This is dramatic news for the area, especially in the Belluno area, the official headquarters of the eyewear company. The mayor of Longarone and president of the Province of Belluno, Roberto Padrin, told Corriere del Veneto: “Hard blow to the Belluno industry, although we were all quite aware of the situation. In Longarone, a process will begin with trade associations, trade unions and the Ministry for Economic Development”.
Although the stock has rallied sharply in recent days following the announcement of thepurchase of 70% of Blenders Eyewear, a US eyewear company specializing in e-commerce, and the renewal of the licensing agreement with Marc Jacobs to 2026, Piazza Affari was merciless in the face of the changes envisaged in the plan.
