Continued Strong Cash Flow Generation at Euro 207 million for the quarterShareholders Approve the Payment of a Dividend of Euro 0.22 per Share
Oct. 29, 2009 (PR Newswire) -- MILAN, Oct. 29 /PRNewswire-FirstCall/ -- The Board of Directors of Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), a global leader in the design, manufacturing and distribution of fashion, luxury and sports eyewear, approved today its consolidated financial results for the third quarter and nine-month period ended September 30, 2009, in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and with International Financial Reporting Standards (IFRS).
Third quarter 2009(1) - U.S. GAAP
---------------------
(in millions of euros) 3Q09 3Q08 % change
Sales 1,223.3 1,212.0 +0.9% (down 1.4% at constant
exchange rates)
EBITDA(2) 214.0 258.6 -17.3%
Operating income 143.7 195.1 -26.4%
Net income 83.1 104.6 -20.6%
Earnings per share
(euros) 0.18 0.23 -20.7%
- Before trademark
amortization(2) 0.21 0.25 -14.5%
-------------------- ---- ---- ----
Nine months of 2009(1) - U.S. GAAP
----------------------
(in millions of euros) 9M09 9M08 % change
Sales 3,937.2 3,965.1 -0.7% (down 5.6% at constant
exchange rates)
EBITDA(2) 720.9 828.6 -13.0%
Operating income 506.3 632.3 -19.9%
Net income 279.2 340.9 -18.1%
Earnings per share
(euros) 0.61 0.75 -18.2%
- Before trademark
amortization(2) 0.70 0.82 -15.1%
-------------------- ---- ---- -----
Performance overview for the third quarter of 2009
The third quarter saw a further stabilization in the international markets, though in an environment that continued to be challenging. Several countries have shown encouraging signs of a return to growth. In the coming months, it will become clearer whether this recovery in demand is sustainable in the long-term.
In Europe in particular, the market saw a second consecutive quarter of improvement, with encouraging signs of recovery coming from Italy, Spain, Germany and France. The North American market found some stability. Overall, emerging markets did not show signs of a slowdown in growth.
Andrea Guerra, CEO of Luxottica Group, commented: "Now that we are approaching the end of a year as demanding as 2009, we believe that the worst is behind us. Flexibility, speed, the ongoing search for new solutions and a continued focus on the balance sheet have enabled Luxottica to post positive results even in a period as difficult as what we experienced. For the second consecutive quarter Luxottica saw growth in sales and, most importantly, for the first nine months of the year results are much in line with last year. Additionally, we achieved strong cash flow generation, of Euro 207 million for the quarter. Today we are optimistic about the future. We are working to make sure that 2010 is again a normal year, in which we enjoy growth in sales, a solid improvement in profitability, greater than the growth in sales, as well as strong free cash flow generation and deleveraging."
Consolidated results
For the third quarter, consolidated net sales rose to Euro 1,223.3 million, from Euro 1,212.0 million for the same period in 2008 (up by 0.9% at current exchange rates, down by 1.4% at constant exchange rates).
In terms of operating performance, consolidated EBITDA(2) for the third quarter was Euro 214.0 million, compared with Euro 258.6 million for the same period last year, reflecting a decline of 17.3%. Consolidated EBITDA margin(2) for the quarter was 17.5%, compared with 21.3% for last year's third quarter.
Consolidated operating income for the quarter was Euro 143.7 million, compared with Euro 195.1 million for the same period the previous year (reflecting a decline by 26.4%). Consolidated operating margin for the quarter was 11.7%, compared with 16.1% for the same period last year. It should also be noted that the third quarter of 2008 was the most profitable quarter of 2008, with particularly strong results from the retail division. In fact, results of the third quarter of 2008 reflected non-recurring items of Euro 29 million in income, which included income from insurance proceeds and a reduction of non-cash stock compensation expenses due to the performance grants. Excluding these non-recurring items, the decline in operating profitability would have been by only 200 bps.
Consolidated net income for the third quarter was Euro 83.1 million, compared with Euro 104.6 million for the same period last year and reflecting a decline of 20.6%. Earnings per share (EPS) for the quarter were Euro 0.18 (at an average Euro/US Dollar exchange rate of 1:1.43), reflecting a decrease of 20.7% from the comparable quarter last year. Considering EPS in euros before trademark amortization(2) however, the year-over-year decrease would have been limited to 14.5%.
Thanks to tight controls over working capital, the Group posted strong cash flow generation for the quarter. In fact, for the quarter free cash flow(2) reached Euro 207 million. This result, together with the favorable impact of exchange rate fluctuations, contributed to a meaningful reduction in consolidated net debt(2) at September 30, 2009 to Euro 2,414.1 million, from Euro 2,627.3 million at June 30, 2009 and Euro 2,949.5 million at December 31, 2008. As a result, the net debt/EBITDA ratio(2) improved to 2.66X, from 2.76X at June 30, 2009 and 2.90X at December 31, 2008.
Wholesale Division
The positive reception by the markets of new collections, in particular Ray-Ban Tech and Oakley's Jawbone, together with the ongoing success of the STARS program and substantially the end of inventory reductions by clients in many markets, enabled the Group to post sales results for the quarter in line with last year's performance. Wholesale sales for the quarter were Euro 429.8 million, compared with Euro 429.5 million for last year's same period (down by 0.1% at current exchange rates, by 0.3% at constant exchange rates).
When looking at sales by geography, during the quarter Luxottica enjoyed a positive performance in Europe and emerging markets. In North America, sales were substantially in line with the previous year, while in Japan and Eastern Europe the trend remained negative.
Operating income for the Wholesale Division for the quarter was Euro 62.0 million (a decrease of 11.4% from operating income of Euro 70.0 million for the comparable quarter last year). Operating margin for the quarter was 14.4%, compared with 16.3% for the third quarter of 2008.
Retail Division
Retail sales for the quarter rose to Euro 793.8 million, from Euro 782.2 million for the comparable quarter last year (up by 1.5% at current exchange rates, down by 2.1% at constant exchange rates). Operating income for the quarter was Euro 114.0 million, compared with Euro 138.3 million for the same quarter last year reflecting a decline of 17.6%. As a result, operating margin for the Division for the quarter was 14.4%, compared with 17.7% for the same quarter last year.
In terms of comparable sales(3) performance, the prescription segment in North America saw a slight decline by 1.7% despite particularly good results at Sears Optical and Target Optical (+16%, combined) and an appreciable recovery by Pearle Vision (now +0.3%).
Comparable sales(3) performance for the quarter in the Asia-Pacific region was substantially stable year-over-year.
Sunglass Hut, the sun specialty chain with a global presence, posted overall comparable sales(3) for the quarter down year-over-year by 5.6%, with very positive performance in Australia and New Zealand, South Africa and the UK, but a negative performance again in North America though continuing to improve.
Results for the third quarter and the nine months of 2009 will be discussed today in a conference call with the financial community starting at 6 PM CET. The audio portion and related presentation will be available to all via live webcast at www.luxottica.com.
Today's Ordinary Meeting of Shareholders approved a cash dividend payment of Euro 0.22 per ordinary share. The total dividend payment will thus be over Euro 100 million. Based on the timetable established by Borsa Italiana, the dividend will be paid to holders of ordinary shares on November 26, 2009 (ex-dividend date of November 23, 2009). Deutsche Bank Trust Company Americas, the Depositary Bank of Luxottica Group's ordinary shares represented by American Depositary Receipts (ADRs), will pay the dividend in U.S. dollars to ADR holders on December 4, 2009 at the Euro/U.S. dollar exchange rate as of November 27, 2009. The ex-dividend date for holders of both ordinary shares and ADRs will be November 23, 2009.
The Meeting also approved a new authorization to buy back and subsequently dispose of up to a maximum of 18,500,000 ordinary shares in the Company, currently representing 3.99% of the share capital, for a maximum value of Euro 370 million. The authorization for this buyback is valid for a period of 18 months.
Lastly, the Meeting approved the appointment of Giorgio Silva as an alternate statutory auditor following the premature passing of Mario Magenes.
The officer responsible for preparing the company's financial reports, Enrico Cavatorta, declares that, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, the accounting information contained in this press release corresponds to the document results, books and accounting records.
www.luxottica.com
Notes to the press release
(1) All comparisons, including percentage changes, are between the three or nine-month periods ended September 30, 2009 and 2008, respectively, as indicated, in accordance with U.S. GAAP.
(2) EBITDA, EBITDA margin, free cash flow, net debt, the ratio of net debt to EBITDA and EPS before trademark amortization are all non-U.S. GAAP measures. For additional disclosure regarding such measures, please refer to the tables attached.
(3) Comparable store sales reflects the change in sales from one period to another that, for comparison purposes, includes in the calculation only stores open in the more recent period that also were open during the comparable prior period, and applies to both periods the average exchange rate for the prior period and the same geographic area.
Luxottica Group S.p.A.
Luxottica Group is a leader in premium fashion, luxury and sports eyewear, with over 6,150 optical and sun retail stores in North America, Asia-Pacific, China, South Africa and Europe and a strong and well balanced brand portfolio. Luxottica's key house brands include Ray-Ban, the best known sun eyewear brand in the world, Oakley, Vogue, Persol, Oliver Peoples, Arnette and REVO, while license brands include Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Salvatore Ferragamo, Tiffany and Versace. In addition to a global wholesale network covering 130 countries, the Group manages leading retail brands such as LensCrafters and Pearle Vision in North America, OPSM and Laubman & Pank in Australasia, LensCrafters in Greater China and Sunglass Hut globally. The Group's products are designed and manufactured in six Italy-based manufacturing plants, two wholly-owned plants in China and a sports sunglass production facility in the U.S. In 2008, Luxottica Group posted consolidated net sales of Euro 5.2 billion. Additional information on the Group is available at www.luxottica.com.
Safe Harbor Statement
Certain statements in this press release may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those which are anticipated. Such risks and uncertainties include, but are not limited to, the ability to manage the effect of the poor current global economic conditions on our business, the ability to successfully acquire new businesses and integrate their operations, the ability to predict future economic conditions and changes in consumer preferences, the ability to successfully introduce and market new products, the ability to maintain an efficient distribution network, the ability to achieve and manage growth, the ability to negotiate and maintain favorable license arrangements, the availability of correction alternatives to prescription eyeglasses, fluctuations in exchange rates, as well as other political, economic and technological factors and other risks and uncertainties described in our filings with the U.S. Securities and Exchange Commission. These forward-looking statements are made as of the date hereof, and we do not assume any obligation to update them.
- FINANCIAL TABLES TO FOLLOW -
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE THREE-MONTH PERIODS ENDED
SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008
KEY FIGURES IN THOUSANDS OF EURO (3)
--------------------------------------
2009 2008 % Change
NET SALES 1,223,272 1,211,992 0.9%
NET INCOME 83,103 104,612 -20.6%
BASIC EARNINGS PER SHARE (ADS)(2): 0.18 0.23 -20.7%
EPS PRE-TRADEMARK AMORTIZATION (2)(4): 0.21 0.25 -14.5%
KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)
--------------------------------------------------
2009 2008 % Change
NET SALES 1,749,646 1,824,652 -4.1%
NET INCOME 118,862 157,493 -24.5%
BASIC EARNINGS PER SHARE (ADS) (2): 0.26 0.34 -24.6%
EPS PRE-TRADEMARK AMORTIZATION (2)(4): 0.30 0.37 -18.8%
Notes: 2009 2008
(1) Average exchange rate
(in U.S. Dollars per Euro) 1.4303 1.5055
(2) Weighted average number of
outstanding shares 457,214,454 456,613,794
(3) Except earnings per share (ADS),
which are expressed in Euro and
U.S. Dollars, respectively
(4) EPS before trademark amortization
is not a US-GAAP measure. For
additional disclosure regarding
non-US GAAP measures and a
reconciliation to US GAAP measures,
see the tables attached.
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008
KEY FIGURES IN THOUSANDS OF EURO (3)
-------------------------------------
2009 2008 % Change
NET SALES 3,937,233 3,965,136 -0.7%
NET INCOME 279,180 340,897 -18.1%
BASIC EARNINGS PER SHARE (ADS) (2): 0.61 0.75 -18.2%
EPS PRE-TRADEMARK AMORTIZATION (2)(4): 0.70 0.82 -15.1%
KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)
-------------------------------------------------
2009 2008 % Change
NET SALES 5,379,048 6,034,540 -10.9%
NET INCOME 381,416 518,811 -26.5%
BASIC EARNINGS PER SHARE (ADS)(2): 0.83 1.14 -26.6%
EPS PRE-TRADEMARK AMORTIZATION (2)(4): 0.95 1.25 -23.8%
Notes: 2009 2008
(1) Average exchange rate
(in U.S. Dollars per Euro) 1.3662 1.5219
(2) Weighted average number of
outstanding shares 457,108,193 456,478,572
(3) Except earnings per share (ADS),
which are expressed in Euro and
U.S. Dollars, respectively
(4) EPS before trademark amortization is
not a US-GAAP measure.
