(BFM Bourse) – The manufacturer of corrective lenses published like-for-like growth of 5.5% in the first quarter, in line with expectations. Analysts believe the group’s momentum could gain momentum in the coming months.
We sometimes tend to forget it, but EssilorLuxottica is one of the largest companies listed in Paris, and is even included in the ten largest capitalizations on the Paris market.
The group born from the merger between the French Essilor and the Italian Luxottica thus weighs 91.94 billion euros on the stock market. With the aeronautical equipment manufacturer Safran (88 billion), EssilorLuxottica constitutes one of the Parisian stocks most likely to cross the symbolic barrier of 100 billion euros in capitalization, recently surpassed by Air Liquide.
It will certainly not be for this Friday. EssilorLuxottica dropped 0.8% after revealing its activity for its first quarter.
The eyewear manufacturer, specialist in corrective lenses and owner of Ray-Ban, generated revenues of 6.335 billion euros from January to the end of March, reflecting growth of 3% in published data and 5.5% excluding currency effects.
According to Stifel, the market was expecting a slightly higher increase, at 5.8% on a comparable basis. Royal Bank of Canada considers that the “buy-sides”, to simplify investors, even expected growth of a little more than 6%.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
North America below expectations
“The pace of growth at constant exchange rates is only weakening slightly compared to the level slightly above 6% observed in the second half of 2023, despite a difficult basis for comparison (two-year growth at more than 20% in the first quarter of 2023 compared to only 15% for the whole of 2023), explains Oddo BHF.
By region, EssilorLuxottica sales were driven by “Europe-Middle East-Africa”, up 8.5% excluding currency effects, as well as by Asia-Pacific (+8.2% ). Conversely, North America dragged the whole down, with growth limited to 1.7% excluding currency effects. This increase is lower than consensus expectations, which expected growth of 4%, according to UBS.
However, analysts explain that growth is expected to accelerate in the coming months.
Stifel puts into perspective the somewhat weak start to the year in North America. This should not worry investors too much because an easier basis of comparison, pricing initiatives (across all regions and brands) and product launches (Gen S photochromic lenses in the United States ago two weeks, the license for Jimmy Choo glasses, Nuance audio solutions and Ray-Ban Meta connected glasses) will help the group in the future, underlines Stifel.
New products
Oddo BHF for its part highlights “the message about the United States”, from management which “clearly appears reassuring”. The company indicates that it “has observed a dynamic of improvement month after month in the first quarter in solar distribution (positive comparable growth in March at Sunglass Hut after two months in negative) which seems to have continued in April due to calendar effects close”, continues the design office.
“More generally, the group believes it will enter the second quarter in a favorable overall position in terms of its product portfolio with the introduction of the new generation of photochromic lenses (Transition Gen S) and in frames the launch of luxury brand collections ( Swarovski, Brunello Cucinelli, Ferrari, Jimmy Choo).
Bank of America thus sees “many reasons to expect stronger growth in the second quarter”. It cites the same reasons as other financial intermediaries: a more favorable basis of comparison, particularly in the United States, the impact of prices and new products, as well as the positive inflection in activity observed at Sunglass Hut.
Innovation as a driving force
The American bank also believes that innovation, at the heart of the group’s “equity story” (the story that a company tells the market to seduce it, Editor’s note), will continue.
She notes that the Stellest range of lenses, intended to correct children’s myopia, increased by 70% in the first quarter in China, demonstrating the success of the group’s lenses, while half of the population will be affected by myopia. ‘by 2050. And that the Nuance Audio range of hearing solutions, which will be launched in the second half of 2024 in the United States, “will open the door to an important, new and yet adjacent market in the field of hearing aids, thanks to a unique product.
The establishment considers that these new products will pave the way for others, allowing the group to improve its volumes and its mix (the distribution of sales across more expensive and more profitable products).
“We believe that the group’s structural growth outlook becomes more favorable thanks to dynamic management of the product portfolio and the creation of development opportunities in adjacent segments where the group is able to broaden its scope. “action”, adds Oddo BHF.
UBS, which has a “neutral” rating on the stock, is more measured. If activity should indeed accelerate in the second quarter, the bank fears that unfavorable impacts linked to exchange rates on emerging markets will lead the consensus to lower its expectations for operating income for the first half. Stifel is for its part to “keep” because it has doubts about the company’s operating margin objectives for 2026.
Julien Marion – ©2024 BFM Bourse
Are you following this action?
Receive all the information on ESSILORLUXOTTICA in real time: