EssilorLuxottica has announced its first set of financial results as a merged entity, however, the company’s share price fell sharply due to apparent future governance concerns and the postponement of an investor day.
The company’s Board of Directors met on 7 March to approve the 2018 pro forma financial results, following the record euro 48 billion (AU$76.3 b) merger that brought together last October the world’s largest lens manufacturer and frame maker.
EssilorLuxottica reported euro 10.8 billion (AU$12.2 b) in net revenue for 2018. On an adjusted pro-forma basis, revenue for the year was euro 16.16 billion (AU$26.4 b), representing a 1.2% year-on-year decline.
According to the company, this represented 3.2% revenue growth at constant exchange rates, and that both the entities contributed to the result, MarketWatch reported.
Reported net profit was euro 1.16 billion (AU$1.84 b) compared with euro 1.04 (AU$1.65 b) the year before. On an adjusted pro-forma basis, net profit was euro 1.87 billion ($2.97 b), representing a 1.7% decline from 2017.Prior to the announcement, the French-listed company was trading at euro 108.55 (AU$172.59), however, the share price slipped to euro 100.60 (AU$159.95) on March 11 following the results.
According to euronews, the dip could be attributed to the company postponing an investor day to September 18, alongside concerns regarding the way the company will be governed in future, particularly from minority shareholders.Under the terms of the merger, Mr Leonardo Del Vecchio, founder and executive chairman of Luxottica, and Essilor CEO Mr Hubert Sagnieres will share leadership of the organisation for the first three years.
According to reports, the company has repeatedly claimed it would seek to appoint a new CEO by the end of 2020, but Luxottica had previously signalled Del Vecchio was hoping to propose Luxottica CEO Francesco Milleri as leader of the new company.
“Although Del Vecchio appeared to back-pedal on this during a shareholder meeting in November last year, there has been speculation about a power struggle behind the scenes,” euronews reported.
Commenting on the financial results, Del Vecchio said: “We are proud to present strong Luxottica and Essilor combined results. The contribution of Luxottica is significant: net sales, profitability and free cash flow all show positive growth, excluding the exchange rate effect.
“Today, Luxottica is well organised and energised for its future as part of EssilorLuxottica. We come to the integration process in the best possible way, bringing with us the most beloved brands, excellent operations capabilities and a digitised business inside and out.”
Sagnieres said Essilor delivered strong business growth at all its divisions in 2018 and surpassed its growth targets, while continuing to work on numerous innovations that will benefit the entire ophthalmic optics and eyewear industries.