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EssilorLuxottica Publish Q2 & First Half Fiscal 2023 Results

• Group’s revenue up 8.0% in Q2 and 8.2% in H1 at constant exchange rates
• EMEA double-digit up in Q2, China rebounding strongly, North America positive
• Retail in EMEA as a key driver, with the integration accelerating
• Stellest more than doubling in H1, Varilux XR successfully launched and Ray-Ban Reverse delivering disruptive design and technology
• Adjusted operating profits margin at 18.5% at constant exchange rates, +10bps vs H1 2022
• Free cash flow at Euro 954 million in H1

Francesco Milleri, Chairman and CEO, and Paul du Saillant, Deputy CEO at EssilorLuxottica
commented: “At the halfway point of 2023, we are proud of our performance, including strong top line growth and our ability to keep the pace on margins, both on track with our long-term outlook. Our innovation pipeline continues to run deep – in the past six months, we introduced Varilux XR lenses powered by AI, launched a design disruption with Ray-Ban Reverse and rolled out Stellest in additional markets. We have also delivered novelties at the heart of our house and licensed brands. The back half of the year will be very dynamic, as we further expand our Ray-Ban Stories in partnership with Meta with more functionalities and we prepare to step into the hearing solutions market with a groundbreaking technology. At the same time, we are on track to be carbon neutral in Europe in 2023. Our investment in talent and know-how continues to fuel all of our projects as we advance on embracing our common culture. Today, our skilled teams are operating in lock step to achieve our goals and giving us a solid foundation to continue building EssilorLuxottica successfully.”

Q2 2023 results

In the second quarter of the year, EssilorLuxottica recorded strong growth of revenue, up 8.0% at constant exchange rates (+4.9% at current exchange rates) to Euro 6,699 million, broadly keeping the pace of the first three months of the year, which were up 8.6%. In the first semester, the revenue grew 8.2% to Euro 12,851 million. The Group’s top line growth continues to outpace the mid-single digit longterm target, proving that the integration journey is reflected in an acceleration of the business growth.

Q2 results by region

Revenue growth in the second quarter was spread across all the business areas, by region, category, channel and price point, with the exception of the sun retail in the US, which posted a negative performance on the back of a softening market demand. Overall North America remained positive, up 2.3% at constant exchange rates, but decelerated versus the first quarter. At the opposite, EMEA gained further traction, up 10.6% at constant exchange rates, with both segments accelerating together, as a result of the open model strategy aimed at growing the overall market. Asia-Pacific stood out as the best performing region in the quarter, up 23.9% at constant exchange rates, thanks to the business rebound in Greater China (>+50%), boosted by Stellest. Latin America rose 9.3%, sustained by both segments.

Q2 results by segment

Both volume and price-mix sustained the revenue growth with the latter having a more pronounced impact on the results this quarter. In terms of product categories, the performance was driven by the 4/9 optical side overall growing high-single digit at constant exchange rates, with optical frames, ophthalmic and contact lenses all delivering solid growth.

Sunglasses grew midsingle digit at constant exchange rates dragged by a weak performance in North America but more than offset by a sound sun season elsewhere. Within the branded lens portfolio, Varilux and Transitions delivered robust results, while Crizal and Eyezen accelerated into double-digit territory. Stellest continued to be the fastest growing product in the portfolio. As for branded frames, the leading global proprietary brands Ray-Ban and Oakley kept advancing firmly, while the regional brand Bolon jumped by an impressive two thirds on the reopening of its home market of China.

First Half 2023 results

As for the Group’s profitability, the adjusted gross profit was Euro 8,243 million in the first semester of the year, at 64.1% of revenue, 20 basis points lower than H1 2022 at constant exchange rates (30 basis points lower in current terms), with the rising cost of claims on the managed vision care more than offsetting the benefits of price/mix and manufacturing efficiencies.

The Group’s operating expenses decreased from 46.1% of revenue in H1 2022 to 45.8% in the first semester of this year at constant exchange rates (45.9% in current terms), thanks to a diligent cost management that largely compensated the headwinds deriving from the inflationary trends in particular on the cost of labor.

The adjusted operating profit reached Euro 2,347 million at 18.3% of revenue, increasing by 8.8% at constant exchange rates compared to H1 2022 (or 6.6% in current terms).

The adjusted Group net profit amounted to Euro 1,655 million at 12.9% of revenue, increasing by 9.0% at constant exchange rates compared to H1 2022 (or 6.9% in current terms).

In the first half of the year, the Group’s operating profit and net profit directly stemming from the IFRS consolidated financial statements amounted to Euro 1,832 million and Euro 1,361 million respectively.

The consolidated free cash flow amounted to Euro 954 million, +5% versus prior year.

The Company ended the period with Euro 1.69 billion in cash and cash equivalents and a net debt of Euro 10.06 billion (including Euro 3.18 billion lease liabilities) compared to a net debt of Euro 10.25 billion at the end of December 2022.

Read back over EssilorLuxottica’s 2023 Q1 results.

The full Q2 & H1 release can be read here.