• Q1 net profit EUR10m, versus EUR19m
  • Net revenues down 5.5% to EUR428m
  • Downbeat on prospects for full fiscal year

Italian fashion business Benetton saw its first quarter net profit nearly halved as revenues were cut by 5.5% and margins were hit by higher raw materials costs.

However, the company was boosted by a 6.1% increase in comparable direct revenues, thanks to emerging market growth from Russia, Mexico, Korea and India.

But the rest of Latin America, China and Turkey experienced revenue decline, Benetton added.

There was growth in continental Europe and modest growth in the US, the company said, but southern Europe, including the Italian domestic market, declined.

“The first quarter of 2012 ended in line with our expectations, with an unsatisfactory result, again influenced by the high cost increases – especially for raw materials – which characterised the closing months of 2011,” said Biagio Chiarolanza, CEO for operations, foreign business units and finance.

“We know that the repositioning will not be easy and the first quarter results confirm that.

“Nonetheless, the process is under way and will continue with determination, even though, with the economic crisis affecting the principal markets for our products, a rapid recovery cannot be expected.”

Benetton said continuing pressure on revenues meant that an improvement to operating profit “will not be possible” this year, with further falls to net income possible as the costs of indebtedness increase.