EssilorLuxottica in sharp decline on the Paris Stock Exchange following the publication of the first aggregated accounts following the merger which took place last October. The shares opened down 4,19% to 104,3 euros and continued the session in the red by 5,15% to 103,2 euros.
We recall that last March 5, Luxottica left the Milan Stock Exchange. Obligatory step after the public offer launched by Essilor which registered 93,3% participation. In December 2018, the second window closed in which the threshold required for the delisting was exceeded, reaching 97,5%.
Individually, in 2018 Luxottica reported consolidated revenues of 8,9 billion euros (+1,5% at constant exchange rates and -2,8% at current exchange rates) and net profit on an adjusted basis down 2% to 951 million (+6,7 % above one billion at constant exchange rates". "In the second half of the year, sales boasted an acceleration compared to the first six months of the year", recalls the company in a note which also underlines that the 2017 profit benefited of the Patent Box and the impact of the American tax reform.
In 2018, margins stood at over 10%, while the company's free cash flow amounted to 923 million.
For Essilor on the other hand, revenues amounted to 7,459 billion (+4,6% on a like-for-like basis) “also counting the 5,7% growth in the fourth quarter. A result well above the initial objective of achieving homogeneous growth of around 4%”, reads the note.
At the aggregate level, the EssiorLuxottica group can count on pro-forma revenues up 3,2% at constant exchange rates to 16,16 billion (-1,2% at current exchange rates), while adjusted pro forma operating profit reached 2,572 billion (+1,2% at constant exchange rates), with an operating margin stable at 15,9%. Pro forma adjusted net profit instead fell by 1,7% to 1,871 billion.
“We are proud to present the combined results of Luxottica and Essilor. Luxottica's contribution is significant: net sales, profitability and free cash flow show positive growth excluding the currency effect,” said Executive Chairman of EssilorLuxottica, Leonardo Del Vecchio.
“Today – continues the manager – Luxottica is well organized and stimulated for its future of EssilorLuxottica. We come to the integration process in the best possible way".
The board of directors has decided to propose to the shareholders' meeting a dividend of €2,04 per share.
For 2019, EssiloLuxottica expects revenue growth of 3,5-5% at constant exchange rates; adjusted operating profit up 0,8-1,2 times sales growth; a growth in adjusted net profit equal to 1-1,5 times that of sales.
The Italian-French company also confirms that in the coming years the group will register synergies in revenues and costs, expected in the range of 400-600 million as an impact each year on operating profit over the next 5 years. In detail, revenue synergies are estimated at around 200-300 million, while cost synergies are expected in the range of 220-300 million and will derive from supply chain optimization as well as cost savings for greater rationalisation.
