Financial overview
ListenFiscal year 2009 was a pivotal year that saw Luxottica grow stronger, thanks to the proven effectiveness of its integrated business model, and report positive financial and operating results that improved steadily throughout the year.
For 2009, consolidated net sales held above the five-billion-Euro mark: Euro 5,086.7 million when adjusted for the additional week of sales(1)
(-1.3% at current exchange rates and -3.8% at constant exchange rates(2), when compared with sales for the previous year, which were the highest in the Group’s history).
After gradually and steadily improving throughout the year, net sales for the fourth quarter reached Euro 1,149.4 million, reflecting an improvement by 2.1% at constant exchange rates(2) and when adjusted for the additional week of sales(1).
In particular, the final two months of the year saw encouraging signs of growth and were particularly positive for Luxottica. In November and December, in fact, consolidated sales were up by 4.7% over the same period the previous year, at constant exchange rates and adjusting for the additional week of sales(1). Thanks to these results, Luxottica’s sales performance for the fourth quarter was the best of the year at constant exchange rates.
Turning to operating performance, adjusted EBITDA(1), (3) for the full year totaled Euro 873.9 million, reflecting a decline by 11.1% from Euro 982.8 million posted for 2008. Adjusted EBITDA margin(1), (3) for the year also decreased, to 17.2% compared with 19.1% for 2008. As a result, adjusted operating income(1), (3) for 2009 decreased to Euro 588.0 million, compared with Euro 710.6 million for the previous year (-17.3%), with the adjusted operating margin(1), (3) declining to 11.6% from 13.8% for 2008. For the fourth quarter of 2009, adjusted operating income(1), (3) totaled Euro 81.7 million (Euro 107.3 million for the same period the previous year, resulting in a year-over-year decline of 23.9%). Adjusted operating margin(1) for the quarter was 7.1%, compared with 9.0% for the fourth quarter of 2008.
Adjusted net income(1), (3) for the full year totaled Euro 317.9 million (Euro 369.7 million for 2008, reflecting a year-over-year decline by 14.0%), at an average Euro/US dollar exchange rate of 1.3947.
By carefully controlling working capital and despite dividend payments in the final quarter of the year that totaled Euro 100.8 million, the Group continued to generate a strong free cash flow(3) in the fourth quarter of 2009, reaching a record Euro 691 million for all of 2009. As a result, net debt(3) decreased further, falling to Euro 2,339 million at December 31, 2009 (compared with net debt of Euro 2,950 million at December 31, 2008), and the ratio of net debt to EBITDA(3) improved to 2.7X (compared with 2.9X at December 31, 2008).
(1)In 2008, the fiscal year for the Retail Division in North America included 53 weeks; in 2009, the fiscal year for the Retail Division in Asia Pacific, Greater China and South Africa included 53 weeks. In order to allow a comparison between homogeneous data, the adjusted data takes into account the fact that, in the fourth quarter of 2009, the Retail Division in North America incurred non-recurring charges of €7 million, that, in 2008, the Group recognized a nonrecurring loss of €22.8 million (€15.3 million, net of tax effect) related to the sale in 2008 of a note we received as part of the sale of the Things Remembered retail chain in September 2006 and that, in the third quarter of 2008, the Group recognized a non-recurring gain of €29.0 million (€19.1 million, net of tax effect) related to income from insurance proceeds, reduction of non-cash stock compensation expenses and trademark amortization reversal.
(2)Operating measures that assume constant exchange rates between the fourth quarter of 2009 and the fourth quarter of 2008 and between fiscal year 2009 and fiscal year 2008 are calculated using the average exchange rates for the respective three and twelve-month periods ended December 31, 2008, which were €1=US$1.3180 and €1=US$1.4707, respectively.
(3)Adjusted operating income, adjusted operating margin, adjusted net income, EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow, net debt and the ratio of net debt to EBITDA are all non-U.S. GAAP measures.
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (*)
| In thousands of Euro (1) | 2009 | 2008(2) |
|---|---|---|
| (Euro 000) | ||
| NET SALES | 5,094,318 | 5,201,611 |
| COST OF SALES | (1,768,436) | (1,751,251) |
| GROSS PROFIT | 3,325,882 | 3,450,360 |
| OPERATING EXPENSES: | ||
| Selling and advertising | (2,005,737) | (2,008,791) |
| Royalties | (100,623) | (115,639) |
| General and administrative | (555,664) | (504,426) |
| Trademark amortization | (80,657) | (71,742) |
| Total | (2,742,680) | (2,700,597) |
| INCOME FROM OPERATIONS | 583,202 | 749,763 |
| OTHER INCOME (EXPENSE): | ||
| Interest expense | (91,571) | (135,267) |
| Interest income | 6,887 | 13,265 |
| Other - net | (4,235) | (37,890) |
| Other expense - net | (88,919) | (159,892) |
| INCOME BEFORE PROVISION FOR INCOME TAXES |
494,283 | 589,870 |
| PROVISION FOR INCOME TAXES | (167,417) | (194,657) |
| NET INCOME | 326,866 | 395,213 |
| Net income attributable to noncontrolling interest |
(12,105) | (15,492) |
| NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP SHAREHOLDERS |
314,762 | 379,722 |
| BASIC EARNINGS PER SHARE (ADS) | ||
| Basic | 0.69 | 0.83 |
| Diluited | 0.69 | 0.83 |
| WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES | ||
| Basic | 457,270,491 | 456,563,502 |
| Diluted | 457,942,618 | 457,717,044 |
Notes:
(*) In accordance with US GAAP. See notes to the consolidated financial statements
(1) Except earnings per share (ADS), which are expressed in Euro
(2) Certain figures from 2008 have been reclassified to conform to the 2009 presentation
For additional disclosure regarding non-US GAAP measures see referring presentations: 2010, 2009.
