Combining the sales results of Essilor International and of Luxottica on a pro forma basis for the first quarter ended on March 31, the new EssilorLuxottica group (Essilux) painted a generally positive picture of its situation across the world, with the possible exception of North America, and came out with an optimistic forecast for the full financial year.
The group's sales increased by 7.5 percent to €4,210 million in the quarter, and they went up by 3.7 percent on a comparable basis, with increases of 4.3 percent for Essilor and 3.2 percent for Luxottica. Currencies had a positive effect of 3.8 percentage points on the total turnover. Acquisitions contributed 1.0 percentage points to Essilor's reported growth of 7.6 percent, and they will contribute more as the year progresses, especially in the second half of 2019. Luxottica performed particularly well at the retail level.
The management is confident that the group's sales growth will reach a level of between 3 percent and 5.5 percent for the full financial year. Essilux didn't comment on its bottom line for the quarter, but the management is predicting that the adjusted operating profit will increase at a rate of between 0.8 and 1.2 times revenues. The adjusted net profit should grow 1 to 1.5 times faster than sales.
The management declined to comment at this stage on the contribution that will come from the synergies between Essilor and Luxottica. It listed some of the 20 “priority work streams” that the two companies' teams are focusing on at this stage of the integration process. Besides leveraging the group's extensive (online and offline) retail network to optimize the penetration of their respective products, it is working on a “complete pair” model for prescription frames and sunglasses through common R&D projects.
The two teams are intent on cross-selling their respective products at the wholesale level to offer better product assortments, service levels and logistics to key accounts and independent retailers. The management said they have already started to sit at the same table with key accounts in the U.S., which now represents about half of the group's total turnover.
Essilor and Luxottica are also trying to optimize the supply chain by leveraging their best technologies, enhancing efficiencies in sourcing and procurement. They are intent on growing the market through better awareness and access to visions solutions in certain geographies.