(PRESS RELEASE) CHARENTON-LE-PONT, FRANCE — The Board of Directors of EssilorLuxottica met on July 28, 2022 to approve the condensed consolidated interim financial statements for the six months ended June 30, 2022. The Statutory Auditors have performed a limited review of these financial statements. Their report is in the process of being issued.
Francesco Milleri, chairman and CEO, and Paul du Saillant, deputy CEO at EssilorLuxottica commented: “We’re pleased to report a strong first half of 2022, with sound growth in all regions and a substantial increase of our operating margin. Our performance, particularly in a challenging environment, reflects the strength of our open network model, our willingness to push the boundaries of innovation and the skills and energy of our people. This benefits all our stakeholders, starting with our customers.
At the same time, we paved the way for our long-term growth boosted by key projects and partnerships as well as the GrandVision integration, which is already bringing benefits.
We launched the OneSight EssilorLuxottica Foundation to maximize our impact, an important step in achieving our goal to eradicate poor vision in the world in a generation.
As we look ahead, we will continue to carry out the vision of our Chairman Leonardo Del Vecchio, whose leadership and values remain an inspiration to all of us.”
Financial & Operational highlights
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Due to the structure of 2021 consolidated interim statement of profit or loss, which does not include GrandVision’s results nor any of the effects resulting from the combination accounting, management deemed relevant to comment the Group’s performance of the first semester 2022 versus the pro forma4 information of the first semester 2021. That pro forma4 information has been prepared for illustrative purposes only and with the aim to provide meaningful comparative information.
The Management Report attached to this press release also includes measures directly stemming from the IFRS consolidated financial statements.
The second quarter of this year compares to the quarter that marked a sharp acceleration of the business last year. In 2021, comparable3 revenue grew versus 2019 at constant exchange rates by 0.8% in the first quarter, then 8.3% in the second and 10.1% in the second half of the year. Compared to such a challenging starting base, and in the context of a progressive deterioration of the macroeconomic environment, in particular in the key regions of North America and EMEA, paired with COVID-related constraints in China, the second quarter of this year delivered a sound performance in revenue, with all the regions positive. Moreover, the first half of the year registered a strong expansion of the operating margin.
In the second quarter, total comparable3 revenue amounted to Euro 6,387 million, up 7.0% versus the second quarter of 2021 at constant exchange rates. North America kept positive (+2.4% at constant exchange rates) but decelerated compared to the first quarter of this year, due to deteriorating business conditions in the US as well as a tougher comparison base (comparable3 revenue up 16.2% in the second quarter 2021 vs 2019 at constant exchange rates). At the opposite, EMEA continued to strongly bounce back (+12.4% at constant exchange rates), also thanks to an easier comparable base (comparable3 revenue up 3.8% last year at constant exchange rates). Asia-Pacific remained slightly positive (+1.7% at constant exchange rates), despite new restrictions affecting the Chinese business, while Latin America accelerated further (+23.9% at constant exchange rates), with a strong Brazil. All the main countries were positive in the second quarter, with the only exception of China and Russia.
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In terms of the operating segments of the Company, the Direct to Consumer grew by 8.5% at constant exchange rates, outpacing Professional Solutions which advanced by 5.5%. The retail brick-and-mortar comparable-store sales5 nicely progressed in the second quarter, up 7% for the whole EssilorLuxottica’s perimeter, with GrandVision’s banners growing at the same pace. The e-commerce business was flat at constant exchange rates in the second quarter of the year, at around 7% of the total revenue in the three and six months, with EyeBuyDirect.com as the top performer among the main platforms.
In terms of product categories, vision care represented approximately 70% of total revenue in the second quarter. Prescription lenses steadily progressed at mid-single digit at constant exchange rates, while sunglasses continued to grow double digits. In optical, contact lenses continued to grow double digits, while in the non-optical part of the business Apparel, Footwear & Accessories (AFA) rose by 25% at constant exchange rates.
EssilorLuxottica’s renowned brand portfolio strongly supported the results. On the frame side, the luxury brands kept up the strong trend of the previous quarters and Ray-Ban and Oakley progressed healthily. On the lens side, Varilux and Crizal were the best performers followed by Transitions and Eyezen. Stellest continued to expand materially despite the lockdowns in its most important market of China.
The Company was able to translate the revenue growth into substantial margin expansion, leveraging its vertically integrated business model and successfully absorbing the inflationary pressures on most of the main cost items.
The Group’s adjusted2 gross profit amounted to Euro 7,729 million in the half of the year, reaching 64.4% of revenue, 30 basis points higher than pro forma4 H1 2021 (or 40 basis points at constant exchange rates).
The Group’s adjusted2 operating profit reached Euro 2,202 million in the first six months of the year, representing 18.4% of revenue, compared to 17.4% in pro forma4 H1 2021, an increase of approximately 100 basis points (or 80 basis points at constant exchange rates).
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The Group’s adjusted2 net profit amounted to Euro 1,548 million in the first semester, increasing by 18.6% at constant exchange rates compared to pro forma4 H1 2021, accounting this year for 12.9% of revenue.
The operating profit and the Group’s net profit directly stemming from the IFRS consolidated financial statements amounted to Euro 1,711 million and Euro 1,174 million, respectively, for the first semester of 2022.
EssilorLuxottica recorded sound cash generation, with the consolidated free cash flow6 reaching Euro 906 million in the first six months of the year.
The Company ended the first semester with Euro 3.7 billion in cash and cash equivalents and a net debt7 of Euro 10.4 billion (including Euro 3.2 billion lease liabilities) compared to a net debt of Euro 9.7 billion at the end of December 2021.
