EssilorLuxottica : Press releases PDF 0.74MB

EssilorLuxottica's fourth-quarter and full-year 2021 results

Accelerating in the fourth quarter, above margin guidance

Targeting 19-20% margin in 2026

EssilorLuxottica including GrandVision (year-on-year change at constant currency1):

• Reported Group revenue1 up 20% in FY versus 2019 and 40% versus 2020
• Comparable revenue1,3 up 11% in Q4 and 7.4% in FY versus 2019
• Best quarter of the year with all regions exceeding pre-pandemic revenue1,3
• Double-digitgrowth1,3 in North and Latin America versus 2019, sunglasses accelerating
• E-commercerevenue4 crossing Euro 1.5 billion in FY, +62%1,3 versus 2019 in both Q4 and FY
• Adjusted2 operating profit pro forma4 as a percentage of revenue at 16.1% in FY
• Free cash flow6 at Euro 2.8 billion
• Dividend proposed at Euro 2.51 per share, in cash or shares

Long-TermOutlook (at constant currency1):

• Annual revenue growth 2022-26 at mid-single digit
• Adjusted2 operating profit as a percentage of revenue at 19-20% in 2026

Charenton-le-Pont, France (March 11, 2022 - 7:00 am) - The Board of Directors of EssilorLuxottica met on March 10, 2022 to approve the consolidated financial statements for the year ended December 31, 2021. These financial statements were audited by the Statutory Auditors whose certification report is in the process of being issued.

Francesco Milleri and Paul du Saillant, CEO and Deputy CEO of EssilorLuxottica, said: "Our thoughts go out to all those affected by the tragedy unfolding in Ukraine. At this difficult time, the safety of our people remains our priority and we are providing all the support possible to our affected teams in the region.

Looking at our financial results, 2021 has been an extraordinary year for EssilorLuxottica. In the face of a continuously challenging environment, we managed to grow our sales and profits beyond pre- pandemic levels, meeting our guidance on sales and exceeding it on operating margin. In 2022, we continue to move full speed ahead, thanks to the trust of our customers and partners, and the commitment of our teams, now including our 39,000 GrandVision employees as part of our family. Our innovations and brands, like Stellest, Ray-Ban Stories and Transitions XTRActive, as well as still top- performer Oakley, are paving the way for a new generation of life-changing products, while launching entirely new categories that will benefit the whole industry.

As we build EssilorLuxottica at the heart of our industry, we continue to grow as a socially conscious company. Sustainability remains front and center as we reach carbon neutrality in our two historic home countries Italy and France and work towards the next set of milestones. The future we're building is a future for everyone - the talent, technology and tenacity we have in this moment is very powerful and we will do great things with it."

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Operational & Financial highlights

Because of the acquisition of GrandVision, the Company's performance in 2021 includes GrandVision's results only of the second half of the year therefore affecting the comparability versus prior periods. Accordingly, management deemed relevant to present the performance of the Company on a pro forma4 basis as well as excluding GrandVision contribution (see tables below).

Highlights and comments for the fourth quarter and full year 2021 are provided versus the same periods of 2019. The comparison with the performance of 2020 is presented in the excerpt from the Management Report attached to this press release, which also includes measures directly stemming from the IFRS consolidated financial statements, i.e. Group revenue of Euro 19,820 million and an operating profit of Euro 2,326 million.

Pro forma4 Adjusted2 Statement of Profit or Loss, 2021

Euro millions	EssilorLuxottica	GrandVision*	Eliminations	EssilorLuxottica
	ex-GrandVision		& PF adj.	pro forma
Revenue	17,851	3,902	(256)	21,498
Gross Profit	10,866	2,817	(55)	13,628
% of revenue	60.9%	72.2%		63.4%
Operating Profit	3,027	476	(33)	3,471
% of revenue	17.0%	12.2%		16.1%
Group Net Profit	2,060	283	(23)	2,319
% of revenue	11.5%	7.2%		10.8%

• Presented excluding the contribution of the businesses disposed / to be disposed according to the remedies agreed with antitrust authorities in the context of the GV Combination.

Adjusted2 Statement of Profit or Loss, excluding GrandVision

Euro millions	2021	2019*	Change at	Change at
			constant	current
			exchange	exchange
			rates1	rates
Revenue	17,851	17,390	+8.0%	+2.7%
Gross Profit	10,866	10,675	+7.7%	+1.8%
% of revenue	60.9%	61.4%
Operating Profit	3,027	2,812	+16.9%	+7.6%
% of revenue	17.0%	16.2%
Group Net Profit	2,060	1,938	+16.1%	+6.3%
% of revenue	11.5%	11.1%

• Some reclassifications between cost of sales and operating expenses have been realized to ensure consistency with the current period presentation. Those reclassifications do not affect the operating profit presented for the twelve-month period ended on December 31, 2019.

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Euro millions	2021	2019	Change	Change
			at constant	at current
			exchange rates1	exchange rates
Professional Solutions	10,399	10,460	4.9%	-0.6%
Direct to Consumer	11,099	10,521	9.8%	5.5%
EssilorLuxottica COMPARABLE3 REVENUE	21,498	20,981	7.4%	2.5%
Euro millions	Q4 2021	Q4 2019	Change	Change
			at constant	at current
			exchange rates1	exchange rates
Professional Solutions	2,678	2,625	6.8%	2.0%
Direct to Consumer	2,901	2,600	15.2%	11.6%
EssilorLuxottica COMPARABLE3 REVENUE	5,579	5,226	11.0%	6.8%

Euro millions	2021	2019*	Change	Change
			at constant	at current
			exchange rates1	exchange rates
North America	9,868	9,220	12.7%	7.0%
EMEA	7,953	7,828	3.7%	1.6%
Asia-Pacific	2,542	2,616	-1.6%	-2.8%
Latin America	1,136	1,317	10.4%	-13.8%
EssilorLuxottica COMPARABLE3 REVENUE	21,498	20,981	7.4%	2.5%

* The geographical breakdown of revenue for 2019 has been aligned to the geographical areas identified for 2021 disclosure.

Euro millions	Q4 2021	Q4 2019*	Change	Change
			at constant	at current
			exchange rates1	exchange rates
North America	2,528	2,285	13.9%	10.6%
EMEA	1,987	1,885	8.2%	5.4%
Asia-Pacific	706	691	1.4%	2.1%
Latin America	359	364	25.1%	-1.3%
EssilorLuxottica COMPARABLE3 REVENUE	5,579	5,226	11.0%	6.8%

* The geographical breakdown of revenue for 2019 has been aligned to the geographical areas identified for 2021 disclosure.

The fourth quarter represented the culmination of the Company's extraordinary recovery in 2021, where each quarter beat the previous one in terms of comparable3 revenue growth. Rising COVID-19 vaccination levels, the underlying favorable macro-economic environment and the Company's focus on the smooth execution of its value proposition in both channels underpinned the rampant growth trajectory. A slight headwind from the Omicron variant in December did not alter the positive results.

In the fourth quarter, total comparable3 revenue amounted to Euro 5,579 million, up 11.0% versus the fourth quarter of 2019 at constant exchange rates1, with all regions exceeding pre-pandemic levels.

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North and Latin America led the way, growing by 13.9% and 25.1% respectively. The US, the Company's biggest market, once again registered strong results and Brazil accelerated nicely into the double-digit territory. EMEA, which now represents 37% of total revenue due to the consolidation of GrandVision, advanced by 8.2% with the UK and Italy at the forefront, while France deteriorated slightly in the second half of the year, with the footfall still below normal levels. Asia-Pacific crossed into positive territory with sales increasing by 1.4%, thanks to the recovery of Australia lifting COVID-19-related restrictions and a solid Mainland China.

The acquisition of GrandVision aligned the weight of the two divisions of the Company with both now representing roughly 50% of revenue. During the fourth quarter, the Direct to Consumer grew by 15.2% at constant exchange rates1, its best quarter of the year, outpacing Professional Solutions, which progressed steadily at 6.8%.

Thanks to GrandVision, the optical category gained additional importance and now represents approximately 75% of the Group's revenue. It continued on its sound growth journey with a visible acceleration in sales of prescription lenses compared to the first half of the year. The sun category had a very strong quarter outpacing the growth of the optical category for the first time since the beginning of the COVID-19 crisis.

Brands were at the heart of the Group's performance with strong results in value-added lenses, Crizal, Transitions, Eyezen and Varilux as well as Stellest growing progressively in its key market of China. In the frames business, Oakley, Ray-Ban and the luxury licensed brands proved to be the key to success.

The e-commerce channel expanded by 62% at constant exchange rates1, slightly exceeding the Euro 1,500 million threshold in the full year and representing 7% of the Company's total revenue. All the main platforms - Ray-Ban.com, Oakley.com, SunglassHut.com and EyeBuyDirect.com - drove the performance.

During 2021, EssilorLuxottica continued to bring new innovations to the market, with ground-breaking products such as Ray-Ban Stories, along with cutting-edge vision correction and protection solutions. Among key newness in optical, the Stellest lenses, rolled out to France and Italy, stood out as an excellent solution for slowing the progression of myopia in children. The launch of Transitions XTRActive new generation and polarized lenses and Vision-S 700, the state-of-the-art immersive refraction station, showed further strength in the Company's innovation pipeline.

The Company was able to translate the revenue growth into substantial margin expansion, leveraging on its vertically integrated business model and deploying effective cost control measures especially on the selling and general and administrative side. In the second part of the year, the Company released some important investments focused on the digitalization of the business, growing the awareness of its flagship brands as well as supporting its new initiatives, such as Ray-Ban Stories.

Excluding GrandVision, the Group posted an adjusted2 operating profit of Euro 3,027 million in the full year, representing 17.5% of revenue at constant exchange rates1 compared to 16.2% in 2019, an increase of approximately 130 basis points - above the guidance, based on a revenue growth in line with the targets.

On a pro forma4 basis, as if the GrandVision acquisition had occurred on January 1, 2021, the Group's adjusted2 operating profit amounted to Euro 3,471 million in the full year, representing 16.1% of revenue.

Excluding GrandVision, the Group adjusted2 net profit significantly increased by 16.1% at constant exchange rates1 compared to 2019 (+6.3% at current exchange rates). On a pro forma4 basis, the Group adjusted2 net profit amounted to Euro 2,319 million in the full year, accounting for 10.8% of revenue.

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EssilorLuxottica recorded strong cash generation, with the consolidated free cash flow6 reaching Euro 2.8 billion in the full year (including the contribution of GrandVision in the second half of the year).

The Company ended the year with Euro 3.3 billion in cash and cash equivalents and a net debt7 of Euro

9.7 billion (including lease liabilities) compared to a net debt7 of Euro 3.0 billion at the end of 2020. In addition, the Company has undrawn committed credit facilities of Euro 2.8 billion as of December 31, 2021.

Long-Term Outlook

The Company confirms its target of mid-single-digit annual revenue growth from 2022 to 2026 (at constant exchange rates1) and expects to achieve an adjusted2 operating profit as a percentage of revenue in the range of 19-20% at the end of the period.

Dividend

The Board of Directors will recommend that shareholders, at the Annual Meeting to be held on May 25, 2022, approve the payment of a dividend of Euro 2.51 per share. Shareholders will be offered the option of receiving their dividend in cash or in newly issued shares (scrip dividend). The ex-date will be May 30, 2022 and the dividend will be paid - or the shares issued - as from June 21, 2022.

Buyback

At present the Company holds 2.9 million of its own shares, having bought 1.5 million shares as part of the buy-back program launched on February 1, 2022 and terminating on February 8, 2022.

Mission & Sustainability

As we continue our integration journey, EssilorLuxottica is also working on harmonizing, consolidating and better coordinating all its philanthropic and advocacy actions globally. This will help us achieve better focus, alignment and maximize our social impact as we progress towards achieving the ambition of eliminating poor vision in a generation.

In 2021, EssilorLuxottica continued to pursue its Mission to help people "see more and be more". The year was marked by the Company's announcement on July 30, 2021 of its comprehensive CSR program "Eyes on the Planet", founded on five key pillars: carbon, circularity, world sight, ethics and inclusion.

While working on its goal to reach carbon neutrality in its direct operations (Scope 1 and 2 emissions) worldwide by 2025 and in Europe by 2023, the Company was able to achieve this target in France and Italy already in 2021. The main drivers have been responsible energy consumption, its constant monitoring and the investment in renewable energy - with a focus on self-production. Following the deployment of the last two photovoltaic systems in Agordo and Sedico (Italy) manufacturing sites, the Company more than quadrupled the quota of self-generated clean energy in Italy between 2015 and 2021. The carbon emission reduction plan also includes purchasing renewable energy or Energy Attribute Certificates (EAC) for electricity consumption. In 2021, 75% and 95% of the electricity used by EssilorLuxottica's sites in France and Italy, respectively, came from renewable energy providers with EAC. The residual emissions of the Company's activities in Italy and France are compensated by two

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