Luxottica's board of directors is proposing to the general assembly a doubling in its dividend payments on its results for 2014, which show an increase of 18.4 percent in the reported attributable net profit to €642.6 million. On an adjusted basis, it increased by 11.4 percent to €687.4 million.

Under the proposal, shareholders would receive an extraordinary dividend of €0.72 per share on top of an ordinary dividend in the same amount. The overall dividend payment of €1.44 represents a 122 percent increase from the €0.65 ordinary dividend paid for the previous year. The payout would amount to €687 million, corresponding to the entire adjusted 2014 net profits.

The group's free cash flow reached a record level of €802 million in 2014, against €648 million a year earlier. Luxottica continued to deleverage its debt, cutting it down to €1,013 million at the end of 2014 from €1,461 million a year earlier, with the debt/adjusted Ebitda ratio falling to 0.6 times from 1.0 times.

The company will also ask shareholders to approve a program to buy back up to 10 million shares, representing 2.08 percent of its share capital. The program will last a maximum of 18 months and the shares will be used to finance potential acquisitions or stock granting schemes. The board also assigned 498,778 shares to 39 beneficiaries under a 2012-2014 Performance Share Plan.

The adjusted data published for 2014 eliminate changes in a reinsurance agreement reached at EyeMed, the group's U.S.-based vision care insurance, with its new underwriter Fidelity Security Life. The group claims that the new arrangement reduces its risk exposure, while negatively affecting its revenues by €46.6 million for the full year. They also exclude expenses relating to incentive payments of €20 million as well as the €30.3 million impact on net income of tax audits made for the 2008, 2009, 2010 and 2011 financial years.

Last year, Luxottica booked a 4.6 percent increase in sales to €7,652 million. At constant currency rates, the top line grew by 6.1 percent. Adjusted revenues grew by 5.3 percent in euros and by 6.7 percent on a currency-neutral basis to €7,699 million.

The reported operating profit rose by 9.7 percent to €1,158 million. Adjusted operating income increased by 10.6 percent to €1,778 million, with the adjusted operating margin rising to 15.3 percent from 14.6 percent in 2013. The adjusted operating margin widened to 22.7 percent from 22.0 percent for the wholesale business and increased to 14.1 percent from 13.5 percent for the company's own retail operations.

Luxottica Group Consolidated Income Statement

(Euros' 000, Year ended Dec. 31)

 

2014

2013

%
Change

NET SALES

7,652,317

7,312,611

4.6

Cost of Sales

2,574,685

2,524,006

2.0

Selling Expenses

2,352,294

2,241,841

4.9

Royalties

149,952

144,588

3.7

Advertising Expenses

511,153

479,878

6.5

G&A

906,620

866,624

4.6

Other Expense - Net

97,532

99,308

-1.8

Pre-Tax

1,060,080

956,366

10.8

Tax

414,066

407,505

1.6

Minority Interest

3,417

4,165

-18.0

NET

646,014

548,861

17.7

Euro/Share (diluted)

1.35

1.15

17.4

For 2015, Luxottica anticipates adjusted sales to rise by a mid to high-single digit rate in terms of local currencies. Operating and net income are forecast to rise at twice the pace of the top line, while the net debt/Ebitda ratio would stay put at 0.6 times.

Noting that 55 percent of its revenues were denominated in dollars last year, against 53 percent of its costs, the group expects its results to benefit from the appreciation of the U.S. dollar against other currencies.

In 2014, the group's investments amounted to €419 million, or 5.5 percent of sales. The company spent 53 percent of that in maintenance and 47 percent in growth initiatives.

Luxottica plans to keep investment spending at 5.5 percent of sales, but 52 percent will go to fuel growth and 48 percent to “maintenance.” Financial analysts predict that Luxottica's sales will approach €8.8 billion in 2015 and that its net profit will surge beyond €830 million.