United Colors of Benetton
United Colors of Benetton
 

07 Feb. 2012

BENETTON FAMILY MAKES PUBLIC OFFER

The Benetton Group has announced their intention to make a voluntary public purchase offer for all company shares. Their objective is the purchase of the entire share capital of the Benetton Group S.p.A. and the cancellation of share listings on the Mercato Telematico Azionario, which is managed by Borsa Italiana S.p.A. (Italian Stock Exchange).




The decision was made after the Benetton Group Board of Directors announced their preliminary 2011 results. The Benetton group registered Consolidated Revenues in line with the previous year's: €2,031 million (-0.4% currency neutral, -1.1% at current exchange rates) with further increases in the importance of emerging and high-growth markets (+10% currency neutral), which reached a total of 26%. The net income was about €70 million, due to large cost reductions and in a significant increase in raw material prices. Its net financial position as of December 31, 2011 was €550 million and €486 million as of December 31, 2010, comparatively.

The decision to buy the company's shares was taken in order to facilitate the management of the company and let it grow more competitively within today's difficult market. Such low net incomes were only registered in 1990 (the year closed with €68 million), when the turnover was half of what was registered in 2011.

Overall, the Group had positive results in 2011 and demonstrated the brand's capacity to react and cope with a macro-economic situation, which showed a continuous decline throughout the year, especially in Southern Europe. These results were also due to the contribution and continued support of the partner network and to the dynamic development of many countries, in particular outside of Europe, indicating the potential achievements within the Group’s sphere of operations under a less challenging macro-economic situation.

More specifically, the apparel segment achieved €1,912 million, as compared with €1,948 million in 2010 (-1.1% currency neutral), while the Textile segment saw an increase of €14 million in sales, reaching €119 million (+14%, at current exchange rates).

In the fourth quarter of 2011, total sales were €550 million, down by €5 million against the corresponding quarter of 2010, which was due entirely to the exchange impact. During the same quarter, direct sales on a like-for-like basis showed improvement from the preceding nine months, thus enabling a recovery after the difficult start to the Fall/Winter season experienced in September.

Examining revenue performance by geographical areas, positive contributions to the financial year were made by double-digit growth from Russia and ex-Soviet countries as well as continental Europe (especially Germany) and the UK market. This contrasted with a decrease in Greece, which showed partial improvement at the end of the year, and the marginal reductions in the Spanish and Italian markets. Overall, Europe reduced by 2% over the year.

All other geographical areas showed growth, with differentiated performances in the principal countries in which the Group operates. In the Americas (+6%), strong growth was confirmed in Mexico, where the UCB brand further strengthened its position. There was also strong overall growth in South American countries (+30%). In the USA and Canada there was a contraction (-12%) associated with the sales network restructuring, even though the results of comparable stores in the USA showed an encouraging upwards trend in the final quarter of the year. In Asia (+5%), almost all countries saw double-digit growth, including India and Korea +11% with ex-USSR Asiatic countries even exceeding 20%. In Greater China and all its constituents, there was a gratifying direct sales result on a like-for-like basis (+ 5%). Japan, on the other hand, was down due to the restructuring of the sales network and last year's natural disaster.

In this highly uncertain climate, the Group is working to define a plan of action for the coming year, aimed at maintaining the profitability and sustainability of the business by leveraging the extent of its geographical presence and the strength of the relationship with its commercial partners.

The key points of the plan so far are as follows: support by means of communication projects consistent with the objectives of each brand; continuous research to improve products and to offer the consumer a choice that responds to expectations in terms of quality and price; renewal of the sales network with emphasis on key countries and cities; and definition of geographical priorities in order to take maximum advantage of the greater dynamism of certain areas.

Following the announcement of the family's purchase offer they expect that Gianni Mion, right arm of Gilberto Benetton in managing the family holdings over the last 26 years, might leave his position. Vice-president Alessandro Benetton, the only member of the family's second generation with control, is expected to become the new president of the group. In 2011, Benetton was named Entrepreneur of the Year by Ernst and Young.
Maria Cristina Pavarini

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