CHARENTON-Le-PONT, France—The board of directors of EssilorLuxottica met on July 25, 2023 to approve the condensed consolidated interim financial statements for the six months ended June 30, 2023. Francesco Milleri, chairman and CEO, and Paul du Saillant, deputy CEO at EssilorLuxottica commented, “At the halfway point of 2023, we are proud of our performance, including strong top line growth and our ability to keep the pace on margins, both on track with our long-term outlook.

"Our innovation pipeline continues to run deep—in the past six months, we introduced Varilux XR lenses powered by AI, launched a design disruption with Ray-Ban Reverse and rolled out Stellest in additional markets. We have also delivered novelties at the heart of our house and licensed brands."

The executives said, "The back half of the year will be very dynamic, as we further expand our Ray-Ban Stories in partnership with Meta with more functionalities and we prepare to step into the hearing solutions market with groundbreaking technology. At the same time, we are on track to be carbon neutral in Europe in 2023.

"Our investment in talent and know-how continues to fuel all of our projects as we advance on embracing our common culture. Today, our skilled teams are operating in lock step to achieve our goals and giving us a solid foundation to continue building EssilorLuxottica successfully.”

In the second quarter of the year, EssilorLuxottica recorded strong growth of revenue, up 8.0 percent at constant exchange rates (+4.9 percent at current exchange rates) to €6,699 million, broadly keeping the pace of the first three months of the year, which were up 8.6 percent. In the first semester, the revenue grew 8.2 percent to €12,851 million. The Group’s top line growth continues to outpace the mid-single digit long term target, "proving that the integration journey is reflected in an acceleration of the business growth," the company said.

Revenue growth in the second quarter was spread across all the business areas, by region, category, channel and price point, with the exception of the sun retail in the U.S., which posted a negative performance on the back of a softening market demand. Overall North America remained positive, up 2.3 percent at constant exchange rates, but decelerated versus the first quarter.

At the opposite, EMEA gained further traction, up 10.6 percent at constant exchange rates, with both segments accelerating together, as a result of the open model strategy aimed at growing the overall market. Asia-Pacific stood out as the best performing region in the quarter, up 23.9 percent at constant exchange rates, thanks to the business rebound in Greater China (up over +50 percent), boosted by Stellest. Latin America rose 9.3 percent, sustained by both segments.

Both volume and price-mix sustained the revenue growth with the latter having a more pronounced impact on the results this quarter. In terms of product categories, the performance was driven by the optical side overall growing high-single digit at constant exchange rates, with optical frames, ophthalmic and contact lenses all delivering solid growth.

The instruments division posted strong growth in the period, up almost one fourth at constant exchange rates compared to last year. Sunglasses grew mid-single digit at constant exchange rates, dragged by a weak performance in North America but more than offset by a sound sun season elsewhere.

Within the branded lens portfolio, Varilux and Transitions delivered robust results, while Crizal and Eyezen accelerated into double-digit territory. Stellest continued to be the fastest growing product in the portfolio. As for branded frames, the leading global proprietary brands Ray-Ban and Oakley kept advancing firmly, while the regional brand Bolon jumped by an impressive two thirds on the reopening of its home market of China.

The licensed portfolio kept posting excellent results growing in the mid teens at constant exchange rates fuelled by all the major names and led by what the company said was a hugely successful Prada brand followed by a strong Armani and Ralph Lauren, proving that the luxury/branded segment remained healthy.

As for the Group’s profitability, the adjusted gross profit was €8,243 million in the first semester of the year, at 64.1 percent of revenue, 20 basis points lower than H1 2022 at constant exchange rates (30 basis points lower in current terms), with the rising cost of claims on the managed vision care more than offsetting the benefits of price/mix and manufacturing efficiencies.

The group’s operating expenses decreased from 46.1 percent of revenue in H1 2022 to 45.8 percent in the first semester of this year at constant exchange rates (45.9 percent in current terms), thanks to a diligent cost management that largely compensated the headwinds deriving from the inflationary trends in particular on the cost of labor.

The adjusted operating profit reached €2,347 million at 18.3 percent of revenue, increasing by 8.8 percent at constant exchange rates compared to H1 2022 (or 6.6 percent in current terms).

The adjusted Group net profit amounted to €1,655 million at 12.9 percent of revenue, increasing by 9.0 percent at constant exchange rates compared to H1 2022 (or 6.9 percent in current terms).

In the first half of the year, the group’s operating profit and net profit directly stemming from the IFRS consolidated financial statements amounted to €1,832 million and €1,361 million respectively. The consolidated free cash flow amounted to € 954 million, +5 percent versus prior year.

The company ended the period with €1.69 billion in cash and cash equivalents and a net debt of €10.06 billion compared to a net debt of €10.25 billion at the end of December 2022.

With regard to its sustainability journey with the Eyes on the Planet program, EssilorLuxottica is currently focused on ensuring that sustainability is fully embraced by its entire ecosystem including employees, suppliers, partners and customers, through concrete actions that support each of the program’s five strategic pillars: carbon, circularity, world sight, inclusion and ethics.

As for its carbon roadmap, the group is on track to reach carbon neutrality in its Scope 1 & 2 emissions (direct operations) by 2025, starting in Europe in 2023, with Italy and France already carbon neutral since the end of 2021.

For its long-term outlook, the company confirmed its target of mid-single-digit annual revenue growth from 2022 to 2026 at constant exchange rates (based on 2021 pro forma revenue) and expects to achieve an adjusted operating profit as a percentage of revenue in the range of 19 percent to 20 percent by the end of that period.