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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  EssilorLuxottica    EL   FR0000121667

ESSILORLUXOTTICA

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Ray Bans maker Essilorluxottica sees growing demand, for glasses driving sales, profits to 2023

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09/25/2019 | 10:19am EST
FILE PHOTO: Sunglasses from Ray-Ban are on display at an optician shop in Hanau

PARIS (Reuters) - Growing demand for vision correction should boost sales of Ray Bans and other eyeglasses, EssilorLuxottica said on Wednesday, with profits also driven by cost cuts of up to 600 millions euros (£527.71 million) a year from 2022 following the merger of French lenses specialist Essilor and Italian spectacles maker Luxottica.

PARIS (Reuters) - Growing demand for vision correction should boost sales of Ray Bans and other eyeglasses, EssilorLuxottica said on Wednesday, with profits also driven by cost cuts of up to 600 millions euros (£527.71 million) a year from 2022 following the merger of French lenses specialist Essilor and Italian spectacles maker Luxottica.

EssilorLuxottica is targeting mid-single digit sales growth at constant exchange rates for the next five years, it said in a presentation on the company website ahead of an investor day in London.

Investors and analysts including an activist U.S. hedge fund have been keen to learn how the company will achieve synergies and organise senior management after leadership battles hampered the 48 billion euro merger.

Adjusted net profit, which strips out acquisitions and other costs, would be equivalent to 1 to 1.5 times sales growth, the company said. In 2018, sales at EssilorLuxottica were up 3.2% at 16.1 billion euros.

EssilorLuxottica said it was "on track to achieve synergy targets", putting forward some 160 dedicated projects involving more than 800 employees out of a global workforce of more than 150,000.

Supply chains of both companies are to be united while the network of laboratories are reshaped to improve efficiency. The company is also searching hire a CEO by 2020.

Synergies were at the core of the 48 billion euro merger of Essilor, known for its Varilux lenses, and Luxottica - the owner of brands such as Ray-Ban, Oakley or Persol.

The deal was presented in 2017 as a "merger of equals." But the combination derailed into a row between Luxottica's founder Leonardo Del Vecchio and Essilor's Chief Executive Officer Hubert Sagnieres.

The sides reached a truce in May but the company still needs to find a new CEO. It has set a deadline for coming up with a name by the end of 2020, and must prove it can deliver on financial goals.

Another challenge lies ahead as the company signalled its intention in July to buy Dutch opticians group GrandVision for up to 7.2 billion euros in cash, a transaction expected to close by mid 2021.

Unhappy shareholders who argue that the corporate integration of Essilor and Luxottica is undermined by a "crisis of governance" could also voice concern in the months to come.

Reuters reported in August that Third Point, a U.S. hedge fund with some $15 billion in assets and known for pushing changes at companies where it invests money, had built a stake in EssilorLuxottica.

(Reporting by Matthias Blamont; Editing by David Gregorio)

Stocks mentioned in the article
ChangeLast1st jan.
ESSILORLUXOTTICA -0.14% 139 Real-time Quote.2.36%
GRANDVISION -0.14% 27.72 Delayed Quote.1.09%
PERSOL HOLDINGS CO.,LTD. 0.59% 2053 End-of-day quote.0.24%
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Financials (EUR)
Sales 2019 17 382 M
EBIT 2019 2 768 M
Net income 2019 1 978 M
Debt 2019 2 248 M
Yield 2019 1,53%
P/E ratio 2019 31,2x
P/E ratio 2020 29,6x
EV / Sales2019 3,62x
EV / Sales2020 3,39x
Capitalization 60 677 M
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Technical analysis trends ESSILORLUXOTTICA
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 140,19  €
Last Close Price 139,00  €
Spread / Highest target 19,6%
Spread / Average Target 0,86%
Spread / Lowest Target -28,1%
EPS Revisions
Managers
NameTitle
Leonardo del Vecchio Executive Chairman & Chief Executive Officer
Laurent Vacherot President, Co-COO & Non-Independent Director
Paul du Saillant Co-Chief Operating Officer
Jean Carrier-Guillomet Co-Chief Operating Officer
Hilary Halper Chief Financial Officer
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