Luxottica Group 1Q 2014 Results Presentation

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  • 1. Q Mil A il 29 2014 1Q 2014 results Milan, April 29, 2014

2. FORWARD LOOKING STATEMENTS Certain statements in this investor presentation 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 t bilit t th ff t f t i l b l i diti b i fl t ti i hto, our ability to manage the effect of uncertain global economic conditions on our business, fluctuations in exchange rates, our ability to successfully acquire new businesses and integrate their operations, our ability to predict future economic conditions and changes in consumer preferences, our ability to successfully introduce and market new products, our ability to maintain an efficient distribution network, our ability to achieve and manage growth, our ability to negotiate and maintain favorable license arrangements, the availability of correction alternatives to prescription eyeglasses, changes in local conditions, our ability to protect our proprietary rights, our ability to maintain our relationships with host stores, any failure of our information technology, inventory and other asset risk, credit risk on our accounts, insurance risks, changes in tax laws, as well as other political, economic, legal and technological factors and other risks and uncertainties described in our filings with the US 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. This investor presentation contains measures that were not prepared in accordance with IAS/IFRS. For a reconciliation of non-IAS/IFRS measures used in these materials, see the Companys press release titled Luxottica: solid and balanced growth in the first quarter of 2014 dated April 29, 2014, available on the companys website www luxottica com under the Investors tabcompany s website www.luxottica.com under the Investors tab. 3. DELIVERING SOLID SALES 4 2% t t t f+4.2% at constant forex(1) Wholesale sales +7.9% at constant forex(1) Strong growth in Europe Solid North America S d i d 2Q d f li Sound consumer environment and 2Q order portfolio in emerging markets Retail comps(2) +1.9% Sunglass Hut net sales up by 11% at constant forex(1)forex(1) Robust contribution from emerging markets North America challenged by weather: LensCrafters 1Q 2014 results 3 comps(2) -1.8% 4. DELIVERING ON OPERATING LEVERAGE Solid Group operating leverage: +60bps at constant forex(1) Wholesale profitability up by 90bps at constant forex(1) Retail margin: +20bps at constant forex(1) despite a softer North America performancedespite a softer North America performance Net debt/EBITDA(3): 1.0x(3) Strong free cash flow(3) generation Good control of working capital: -21 days 1Q 2014 results 4 g p y 5. 1Q 2014 GROUP SALES LED BY EUROPE AND EMERGING MARKETS Europe +9%(1) North America +1% Emerging markets +10%(1) US$ Retail comps(2): flatWholesale: +7% 5 For additional disclosures regarding information in this presentation, please see Notes to the presentation in the Appendix. Sales performance includes wholesale and retail. 1Q 2014 results 6. REVENUE ROADMAP BY GEOGRAPHY North America (1) Western Europe Emerging markets +19% +16-20% holesale +9% +7% +7-9% flat +4-6%+7% +7% Wh Optical AustraliaNorth America Emerging markets 1Q 2013 1Q 2014 2014E flat 1Q 2013 1Q 2014 2014E 1Q 2013 1Q 2014 2014E ail(2) Optical AustraliaNorth America Emerging markets +3-6% +10% +13% +13-16% +8% +5-7% +15 Reta +3% +flat 1Q 2013 1Q 2014 2014E 1Q 2013 1Q 2014 2014E +2% 1Q 2013 1Q 2014 2014E 6 For additional disclosures regarding information in this presentation, please see Notes to the presentation in the Appendix 1Q 2014 results 7. 1Q 2014 NORTH AMERICA H h i t t k it t ll i J & F b t di d i A ilHarsh winter took its toll in January & February, trending upward in April Building on wholesales sound momentum: +7.0% in US$ 1Q14 retail flat comps(2), improving since April 1Q14 retail flat comps(2), improving since April A solid start to the year at Sunglass Hut: 1Q comps(2) +3.3%, accelerating to double-digits in April Good conversion rate at LensCrafters did not offset a decrease in traffic, primarily driven by older consumers suffering from colder temperaturessuffering from colder temperatures - Gaining traction after adverse weather: 1Q comps(2) -1.8%, turning positive in April at approx. +2% 1Q 2014 results 7 8. LENSCRAFTERS O j t d t t iOn a journey towards a more contemporary customer experience Confirming 2014 outlook Comps(2) between +1% and +3% Continuous focus on improving profitability Moving forward with a focused action plan Already in place: CRM and marketing plans, engagement of field management To be implemented by June: new store segmentation, new product assortment strategies, new entry price segment 1Q 2014 results 8 9. 1Q 2014 EUROPE C fi i t tConfirming strong momentum Steady start to the year across all markets Continental Europe: +11%(1) Double-digit wholesale sales growth in Germany, UK and Nordics Mediterranean Europe: +7% Spain: nine consecutive months of positive wholesale sales and strong comps at Sunglass Hutsales and strong comps at Sunglass Hut Italy: positive sales benefiting from a contemporary distribution model 1Q 2014 results 9 10. 1Q 2014 EMERGING MARKETS Solid wholesale underlying growth, backed by a strong portfolio of orders for 2Qportfolio of orders for 2Q Strong sell-in in 4Q13, 1Q14 deliveries brought forward St ti l t il f Strong optical retail performance LensCrafters in China: double-digit growth in comps for the third consecutive year driven by sun - Store openings on track: +23 stores vs. 1Q13 High-single digit comps growth at GMO in Latam Strong Sunglass Hut performance in Brazil, Mexico and South Africa 1Q 2014 results 10 11. 1Q 2014 SALES PERFORMANCE C h d i d tiCurrency headwinds continue 1 2 % At constant forex(1) +4 2% -1.2 % +4.2% Wholesale at constant forex(1) +7.9% Retail compsRetail comps(2) +1.9% 11 For additional disclosures regarding information in this presentation, please see Notes to the presentation in the Appendix 1Q 2014 results 12. CURRENCY EVOLUTION 1H 2013 2H 2013 1Q 2014 vs. Euro US Dollar -1.2% -5.1% -3.6% Australian Dollar -3.0% -15.8% -16.8% Brazilian Real -9.5% -15.0% -18.7% Chinese Renminbi +0 8% -2 2% -1 6%Chinese Renminbi +0.8% -2.2% -1.6% Japanese Yen -17.6% -24.0% -13.5% 121Q 2014 results 13. CURRENCY IMPACT vs previous period 1H 2013 2H 2013 1Q 2014 vs. previous period 1H 2013 2H 2013 1Q 2014 Impact on net sales 1 8% 7 1% 5 4%Impact on net sales -1.8% -7.1% -5.4% Impact on operating margin -30bps -90bps -60bps 131Q 2014 results 14. STRONG OPERATING LEVERAGE AT CONSTANT FOREX 1Q 2014 Group ( mn) 1Q 2014 Wholesale ( mn)p ( ) 14.7% 14.7% +60bps @ c.fx.(1) 188 194 +90bps @ c.fx.(1) 24.1% 24.1% 275 270 1Q 2013 1Q 2014 1Q 2014 Retail ( mn) 132 124 +20bps @ c.fx.(1) 12.2% 12.0% 1Q 2013 1Q 2014 132 124 1Q 2013 1Q 2014 @ c (1) For additional disclosures regarding information in this presentation, please see Notes on the presentation in the Appendix 1Q 2014 results 14 15. NET INCOME AND EPS 1Q 2014 Group ( mn) 1Q 2014 EPS ( cents)p ( ) 159 157 34 33 8.5% 8.5% +50bps @ c.fx(1) -2.0% 159 157 $ 34 33 1Q 2013 1Q 2014 1Q 2014 EPS (US$ cents) 45 45 +1.7% 1Q 2013 1Q 2014 1Q 2013 1Q 2014 1Q 2014 results 15 For additional disclosures regarding information in this presentation, please see Notes on the presentation in the Appendix 16. DEBT OVERVIEW Net debt/EBITDA(3) flat @ 1.0x: Further reduction of net debt 1,461 1,429 Net debt(3) ( mn) Acquisition of Glasses.com , FY 2013 1Q 2014 Strong free cash flow(3) generation in 1Q Good control of working capital Capex increase from 69 million to 81 million 4 60 Free cash flow(3) ( mn) p days Operating working capital ( mn) 1Q 2013 1Q 2014 DSO -4 DSI -17 DPO flat -245 -217 1Q 2013 1Q 2014 161Q 2014 results For additional disclosures regarding information in this presentation, please see Notes on the presentation in the Appendix 17. 2014 RULE OF THUMB % growth vs. 1Q13 (@ constant forex(1)) HIGH SINGLE-DIGITSALES GROWTH +4% 2x SALES GROWTHOPERATING INCOME +8% 2x SALES GROWTHNET INCOME +10% 0.75xNET DEBT/ EBITDA(3) 1.0x 171Q 2014 results For additional disclosures regarding information in this presentation, please see Notes on the presentation in the Appendix 18. SHAPING THE INDUSTRY 2014 t i2014 new entries Glasses.com Unique virtual 3D try-on technology to create an enhanced optical online experience Google Glasses Strategic partnership to develop innovative iconic wearable devices Michael Kors A new and exclusive 10-year license agreement 1Q 2014 results 18 A new and exclusive 10 year license agreement 19. OPTIMISM AHEAD: ENTERING 2Q WITH SOLID TRADING ENVIRONMENT Positive sales momentum continues Ongoing adverse impact from currencies, expected to ease in 2H Portfolio of orders up double-digits Excellent reception of new sun collections Retail building momentum Retail, building momentum North America: April accelerating vs. 1Q 1Q 2014 results 19 20. OneSight is expanding sustainable models to provide access to affordable vision care in underserved communities worldwide. Since 1988, OneSight has engaged thousands of skilled volunteers across Luxottica and other industry partners to hand-deliver the gift of sight to 8.6 million people in 40 countries.y p g g p p Q1 2014 RESULTS Vision care programs OneSight helped 240,000 people through 10 vision clinics and community outreach programs Research foundation Awarded research grants totaling $209,500 to organizations focused on diabetic eye diseases Sustainable development initiatives OneSight Brings Sustainable Access to Vision Care to New York City Students Sustainable development initiatives In 2014 OneSight is expanding models to provide sustainable access to affordable vision care. Building on the success of the vision center in Farafenni, The Gambia, a country in West Africa that previously had 1 optometrist to serve 1.8 million people, OneSight will open 3 more vision centers and a central manufacturing lab. To date, nearly 4,000 Gambians in Farafenni have received an eye exam. The new centers in Bansang, 1.1 million children are part of the New York City public school system. Forty percent of families in the district are living below the poverty line and one in 20 students is homeless For many access to vision carelab. To date, nearly 4,000 Gambians in Farafenni have received an eye exam. The new centers in Bansang, Kanifang and Brikama will reach thousands more. OneSight is also replicating the school-based model in the United States based on the success of the vision center at Oyler School in Cincinnati, Ohio. This fall OneSight will open two new vision centers in New York City. The vision centers will be located in Brooklyn and the Bronx and are estimated to serve nearly 5,000 students annually. homeless. For many, access to vision care services is impossible. For students like DJ, a fifth grader at PS 188 in Brooklyn, the new OneSight vision center means an opportunity to see and learn their best. 2014 Sustainable Vision Center OneSight 20 21. Sistemare la foto APPENDIX 21 APPENDIX Appendix 22. NOTES ON THE PRESENTATION 1 Figures at constant exchange rates are calculated using the average exchange rates in effect during the corresponding period of the previous year. Please refer t th M j i t bl i th l titl d 3 Net debt/EBITDA, net debt/adjusted EBITDA, net debt, EBITDA, adjusted EBITDA, adjusted operating income, adjusted operating margin, dj t d t i dj t d i hto the Major currencies table in the press release titled Luxottica: solid and balanced growth in the first quarter of 2014 dated April 29, 2014 available at the www.luxottica.com website under the Investors tab. adjusted net income, adjusted earnings per share and free cash flow are not measures in accordance with IAS/IFRS. For additional disclosure, see the press release titled Luxottica: solid and balanced 2 Comparable store sales reflect 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 press release titled Luxottica: solid and balanced growth in the first quarter of 2014 dated April 29, 2014 available at the www.luxottica.com website under the Investors tab. 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. 4 Excluding non-recurring items 5 Equals interest income minus interest expenses 6 Equals extraordinary income minus extraordinaryq y y expenses 7 Net debt figures are calculated using the average exchange rates used to calculate EBITDA figures Appendix 22 23. SALES BREAKDOWN WHOLESALE SALES BREAKDOWN FOR 1Q 2014RETAIL COMPARABLE STORE SALES(2) FOR 1Q 2014 Optical North America Wholesale sales: +8%(1) (S l b kd b i 1Q 2014) Optical North America LensCrafters -1.8% 38%10% (Sales breakdown by region, 1Q 2014)(1) RoW Western Europe Licensed brands +2.2% 26% Emerging markets Optical Australia/New Zealand +2.1% Sunglass Hut worldwide +5.9% 26% North America YoY changes by region 1Q 2014Sunglass Hut worldwide 5.9% Group retail +1.9% Western Europe +7% North America +7% Emerging markets +7% YoY changes by region, 1Q 2014(1) 23 Emerging markets 7% RoW +15% Appendix 24. DEBT OVERVIEW 1Q 20131Q 2013 1Q 20141Q 2014 Dec. 31, 2013 Dec. 31, 2013 March. 31, 2014 March. 31, 2014 EBITDA(3) 365 360 working capital (254) (182) Net US$ debt(3) (518) (587) (69) Net debt(3) (1,086) (1,003) 83 Capex (69) (81) Operating cash flow 42 97 Translation adj. 1 1 = US$ 1.3791 1.3788 Net debt () (1 461) (1 429) 32 Financial charges(5) (24) (23) Taxes paid (14) (15) Net debt ()(3) (1,461) (1,429) 32 Net debt/adj. EBITDA(3)(4) 1.0x 1.0x Net debt/adj Extraordinary charges(6) (0) 1 Free cash flow(3) 4 60 Net debt/adj. EBITDA excluding exchange rate effect 1.0x 1.0x Appendix 24 4 60 effect(3)(4)(7) 25. INVESTOR RELATIONS TEAM Alessandra Senici Tel. +39 (02) 8633 - 4662 alessandra senici@luxottica com Upcoming events July 24 2Q 2014 results alessandra.senici@luxottica.com Nicoletta Russo Tel. +39 (02) 8633 - 4718 nicoletta russo@luxottica com October 29 3Q 2014 results http://www.luxottica.com/en/company/investors/financial-calendar nicoletta.russo@luxottica.com Elena Dimichino Tel. +39 (02) 8633 - 4038 l di i hi @l ttielena.dimichino@luxottica.com Elisa Cattaruzza Tel. +39 (02) 8633 - 4870 elisa.cattaruzza@luxottica.com www.luxottica.com Contacts 25 26. SOCIAL MEDIA CONTACTS http://www.luxottica.com pinterest.com/Luxotticagrou...