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EssilorLuxottica Publish Q4 & Full Year 2023 Financial Results
The Board of Directors of EssilorLuxottica met on February 14, 2024 to approve the consolidated financial statements for the year ended December 31, 2023. These financial statements were audited by the Statutory Auditors whose audit report is in the process of being issued.
Francesco Milleri, Chairman and CEO, and Paul du Saillant, Deputy CEO at EssilorLuxottica
commented: “We’re proud to share these strong results with our stakeholders, delivering another year above 7% revenue growth, including an acceleration in Q4, with every one of our regions doing its part. Our profitability remained strong, with a record adjusted Group net profit close to 3 billion euros and free cash flow at 2.4 billion. It was also a year of major investments: growing new product categories, with Stellest in myopia and Ray-Ban Meta in wearables, adding beloved brands like Moncler and Jimmy Choo to our portfolio, leveraging artificial and business intelligence, expanding our operations footprint and reinforcing the retail presence globally. This will support the evolution of the Company and the transformation of the industry over the next decade.
“Moreover, Nuance Audio’s debut at CES created a resounding buzz around EssilorLuxottica and our disruptive proposition in the audio space that bridges two industries combining good vision and better hearing. We also progressed on our sustainability roadmap, Eyes on the Planet, reaching carbon neutrality in Europe and continuing our journey to connect our communities around the world with a common culture and shared values, growing our employee shareholders globally to almost 80,000.
“With all these positive results and momentum, we are confident that we will keep the pace and meet our long-term targets. After three years of strong results, the Board of Directors has unanimously agreed on the distribution of a dividend of Euro 3.95 per share.”
In 2023 EssilorLuxottica recorded its third consecutive year of revenue growth at constant exchange rates above 7%. The full year closed at +7.1% year over year, after +7.5% in 2022 versus 2021 and +7.4% in 2021 versus 2019. In terms of margins in 2023, the adjusted Operating Profit and the adjusted Group Net Profit grew respectively 7.7% and 9.4% at constant exchange rates in a year where the inflationary headwinds impacted various cost items and in particular the cost of labor.
While the Group’s integration journey is successfully moving ahead, the management’s focus on innovation remains at the heart of its identity and strategy. This is epitomized by the success of two new product categories EssilorLuxottica has been developing, namely myopia management lenses (in particular Stellest) and smart glasses (Ray-Ban Meta, launched in September 2023). On top of that, and even more ambitiously, EssilorLuxottica is also looking at the new promising field of hearing aids, with the new disruptive concept of Nuance Audio glasses, addressing the mild-to-moderate hearing loss.
The product was successfully presented at the CES in Las Vegas at the beginning of January 2024 and is up for the market launch in the second half of the year. In the course of 2023, EssilorLuxottica also launched the upgraded Varilux XR series, signed the agreement for new licenses with Jimmy Choo, Kodak (perpetual) and Moncler, and a co-branding agreement with Roger Federer for Oliver Peoples.
On the retail side, the Group renewed its licensing agreement for Target Optical stores and signed a joint-venture agreement with Chalhoub Group to develop the retail business in the GCC area.
Q4’2023 Results
In the fourth quarter of last year, the Group posted revenue of Euro 6,250 million, up 7.1% year-on-year at constant exchange rates (+2.4% in current terms), in acceleration versus the +5.2% of the third quarter of the year. The full year closed at Euro 25,395 million revenue, up 7.1% at constant exchange rates. All the four regions and the two segments contributed to such a performance, reflecting the well balanced and diversified revenue model of the Group.
At the geographical level, the developing regions were the best performing in the quarter, both AsiaPacific (+10.3% at constant exchange rates) and Latin America (+12.7%) up double digits, respectively driven by the key markets of China and Brazil. The mature areas also contributed with North America (+5.9%) nicely accelerating versus the third quarter, driven by both wholesale and retail, and EMEA (+6.4%) confirming the sound pace of the previous quarter in both segments. The full year mirrored this picture with Asia-Pacific (+14.3%) and Latin America (+9.9%) growing faster than EMEA (+8.2%) and North America (+4.2%).
In terms of operating segments, the revenue performance of the two divisions in the quarter at +8.1% in Professional Solutions and +6.1% in Direct to Consumer at constant exchange rates (+2.8% and +1.9% in current terms, respectively). On a full year basis, the performance followed a similar trend confirming a stable weight of the two divisions on the Group’s total revenue, 48% for Professional Solutions and 52% for Direct to Consumer. The brick-and-mortar comparable-store sales advanced by more than 5% in both the fourth quarter and the full year, with the optical business as the sole driver and sun just flat in both periods. E-commerce revenue closed just slightly positive in the quarter, in excess of Euro 1.65 billion in the full year (at 7% of the Group’s total revenue).
Full Year Results
As for products, all the categories were broadly aligned in terms of the full year revenue performance at constant exchange rates, with the only exception of just slightly positive Apparel-Footwear-Accessories (AFA). The business mix was confirmed with optical at approximately three-fourths and sun at approximately one-fourth of the Group’s total revenue. In brands, Crizal and Varilux led the way in lenses, paired with Stellest which more than doubled in revenue. Frames were driven by both house brands, with Ray-Ban in line with the overall growth of the Group also supported by Ray-Ban Meta and licenses up in the mid-teens driven by the Prada and Armani brand families.
In terms of profitability, the Group’s performance was temporarily more under pressure in 2023, due to surging inflation at the global economy level together with the major currency headwinds as well as the addition of costs to support the aforementioned new initiatives. The adjusted gross profit amounted to Euro 16,090 million in the full year, reaching 63.4% of revenue, 30 basis points lower than 2022 (or -20 basis points at constant exchange rates).
The adjusted operating profit reached Euro 4,178 million in the year, representing 16.5% of revenue, compared to 16.8% in 2022, a margin dilution of 30 basis points, while at constant exchange rates the margin expanded by 10 basis points to 16.9% of revenue.
The adjusted Group net profit amounted to Euro 2,946 million in the full year, representing 11.6% of revenue, compared to 11.7% in 2022, a margin dilution of 10 basis points, while at constant exchange rates the margin expanded by 20 basis points to 11.9% of revenue.
The Company ended the year with Euro 2.56 billion in cash and cash equivalents and a net debt of Euro 9.10 billion (including Euro 3.24 billion lease liabilities) compared to a net debt of Euro 10.25 billion at the end of December 2022.
Check back over EssilorLuxottica’s fiscal 2023:
