Essilor and Luxottica report quarterly earnings before merger
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Essilor and Luxottica report quarterly earnings before merger

French lens maker Essilor and Italian glasses magnate Luxottica are awaiting their final go-ahead from Chinese regulators. However, the companies aren’t worried about getting the green light. According to Luxottica CEO Francesco Milleri, that permission is expected to come through in the next few weeks, and may come with just “minor restrictions”. While the countdown continues, the companies released first quarter earnings.

Luxottica’s share price has trended up over the last 5 days

graph 0205 essilor

SOURCE: Yahoo Finance

Taken together, the two groups saw a sales rise of 1.04% for the quarter, measured against the same period in the previous year. However, unfavourable currency effects from the strong euro saw this fall to -8.4% on a reported basis.

A strong euro makes products more expensive for overseas buyers, and it also impacts the translation of revenue back into Essilor and Luxottica’s local currency. Despite this, and the impact of poor weather during the quarter on Luxottica’s sunglasses business, Essilor’s chairman and chief executive, Hubert Sagnières, remains confident. He made the following statement about the near future:

“After this sound start to the year, notably thanks to good performances in sunwear and e-commerce, we are confident that we will meet our full-year targets as the rollout of new products gathers pace over the next few months.”

Once Chinese approval is forthcoming, Essilor and Luxottica will merge into a titan of the eyewear world, with growth driven by the middle classes (high end sunglasses) and an ageing population (which will require corrective lenses due to the natural ageing of their eyes).

Disclosure

Dominion holds Essilor and Luxottica in its Global Trends Luxury Fund.


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