UPDATE 1-Cashmere sweater maker Cucinelli to expand production

Mon Jan 7, 2013 12:26pm EST

* 2012 sales up 15 pct at 279 mln euros, above forecasts

* Plans to double Solomeo factory space by February 2014 (Adds comments from interview)

MILAN Jan 7 (Reuters) - Italian cashmere specialist Brunello Cucinelli plans to double its factory space by February next year, responding to strong demand for its chic sweaters that produced a jump in sales in 2012. Cucinelli, whose 1,200 euro cashmere jumpers are worn by Britain's Prince William and Hollywood stars, on Monday reported a 15 percent rise in preliminary 2012 sales to 279 million euros ($364 million).

This compared with an average estimate of 277 million euros by Thomson Reuters StarMine.

"I am very optimistic about 2013 because new markets are fascinated by our quality, our exclusivity," Cucinelli told Reuters.

Luxury goods makers in Europe have been able to shrug off a slowdown in their home markets because of demand from wealthy tourists from Asia and Russia.

"I think the worst for Italy is behind us," Cucinelli said, referring to the country's economic prospects. "We have gained credibility and we must be optimistic about the future."

The son of a farmer, Cucinelli is well-known for his unorthodox business style. At his factory in the medieval village of Solomeo, near Perugia in the central Umbria hills, staff do not punch a clock and can work flexible shifts. Cucinelli, who employs 780 staff, said he would hire more staff in line with the growth in business.

Analysts expect the company to report net profits of around 21 million euros in 2012, after cutting debt following a stock market listing last April.

Cucinelli said debt at the end of December dropped to 1 million euros from 48 million euros a year before.

The company's shares closed nearly 3 percent higher at 13.78 euros on Monday, nearly double the 7.75 euros at which it priced its 158-million-euro share sale last year.

Luxury goods groups in general have outperformed in 2012, helped by exposure to global tourist flows and pricing power, Citi analysts said in a report published on Friday.

The Citi analysts expect luxury market growth to moderate in 2013 after growing by an estimated 10 percent in 2012, with sales to be more equally spread across Asia, the United States and Europe.

($1 = 0.7666 euros) (Reporting by Antonella Ciancio and Sabina Suzzi. Editing by Stephen Jewkes and Jane Merriman)

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