Marcolin Announces Q3 and First Nine Months 2012 Results

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LONGARONE, Italy—The board of directors of Marcolin S.p.A. (MCL.MI) released the approved results of the Marcolin Group for the third quarter and first nine months ended Sept. 30, 2012.

Sales revenues for the quarter were €41.0 million, compared to €43.4 million for the third quarter of 2011, a decrease of 6.0 percent. The net result is a loss of €0.9 million (against a profit of €1.4 million for third quarter 2011). The third-quarter 2012 results are affected by the seasonal factors typical of this period of the year, with slower sales and consequently lower margins due to less absorption of overheads, according to the company.

The group reported net sales of €162.5 million for the first nine months of 2012, against €168.6 million for the same period of 2011, a decrease of 3.6 percent, attributed to a slow European market despite other geographic segments performing well. In the U.S., sales for the nine months 2012 reached €41.2 million versus €36.2 million in 2011, for an increase of 14.0 percent. The Americas and the Far East represent strategic markets for the group because of the recent growth in these areas and the types of the goods sought by the consumers there, prevalently with fashion and luxury brands, which the Marcolin Group is specialized, the company said.

The net profit for the first nine months is €11.7 million, compared to €17.3 million for the first nine months of 2011. The net financial position is indebtedness of €16.7 million, against indebtedness of €9.4 million at Sept. 30, 2011. Compared to Dec. 31, 2011, the net financial indebtedness rose by €13.2 million due to less cash flows generated by operating activities, including the payment of costs incurred to renew licenses amounting to €9 million, part of which (€5 million) was paid during July, according to the company.

“During the period we made medium-term investments focused on expanding markets such as the U.S.A. and the Far East,” said Giovanni Zoppas, CEO and general manager of Marcolin S.p.A. “The satisfactory results achieved in those areas confirm our expectations of the group's future growth. In this challenging scenario, 2012 promises to be a year of substantial consolidation of the results obtained up to now, given the positive signs in terms of sales made and orders placed in October.”

During the meeting, the board of directors also reviewed some license agreements to verify: (1) the opportuneness of revising their terms and conditions, and (2) the effects of the forecast change in shareholder control due to the planned acquisition of 78.93 percent of the share capital of Marcolin S.p.A. by PAI Partners, a leading European private equity firm, reported by VMail on Oct. 15, 2012.

With respect to the first matter, pursuant to discussions in progress to revise the agreements as best serves its needs, the company is stipulating with Tod’s S.p.A.: (1) to extend the Tod’s license and reduce the guaranteed minimum royalties, and (2) to transform the Hogan license into a supply agreement. For these changes, Marcolin will pay the licensor an amount to compensate for the discontinuations as shall be agreed. The agreements—whose terms and conditions shall be disclosed to the market by publication of the information document required by Consob for transactions with related parties—are expected to be stipulated within the next two weeks, upon obtaining the opinion of the Related Parties Commission.

Concerning the second matter (effects of the forecast transaction on licenses in progress), the board of directors has acknowledged that agreements with all the licensors entitled to withdraw from the license agreements in the event of a change of control have been reached for continuance of the agreements, even if the transaction should take place (and thus control of the company would be acquired by the PAI fund). These agreements are subject to the effective change of control and, in some cases, to approval by the Marcolin board of revisions to specific contractual provisions.

The requested changes will be reviewed by Marcolin’s board of directors after the transaction is finalized.