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The group's Ebitda gross revenue also dropped to 311 million euros from 332 million euros in 2009 -- a fall of 6.3 percent.
Turnover was up slightly by 0.2 percent at 2.053 billion euros, with sales in emerging markets making up for falls in Europe.
"The strong growth in costs, especially of raw materials, will lead to a significant and progressive erosion of margins during the year," Benetton said.
"The Group has identified further actions, also of an extraordinary nature, to contain the effect on operating profit," it added without giving details.
Benetton said it would be paying a dividend of 0.25 euro -- higher than the dividend of 0.23 euro paid out in 2009.
On the Milan stock exchange, where the benchmark index was down 3.73 percent, Benetton shares were down 3.93 percent at 4.74 euros.