• Revenue Growth: Fourth quarter revenue up 9%, full year revenue up 6%.
• Stellest Performance: 60% growth in China for the full year.
• Adjusted Operating Margin: Increased by 50 basis points.
• Net Margin: Achieved double-digit net margin.
• Dividend: Proposed dividend of EUR3.95 per share.
• Ray-Ban Meta Sales: Over 2 million units sold since September 2023.
• Regional Revenue Growth: Latin America and Asia Pacific just below 10%, EMEA approximately 8%, North America 3% for full year 2024.
• Gross Margin: Expanded by 30 basis points at constant currency.
• Free Cash Flow: EUR2.4 billion for the full year 2024.
• Net Debt-to-EBITDA Ratio: 1.7.

• Warning! GuruFocus has detected 6 Warning Sign with IFCZF.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Essilorluxottica (ESLOF) reported a 9% revenue growth in Q4 and 6% for the full year 2024, driven by strong organic growth and new wearable categories.
• The company expanded its operating margin by 50 basis points, achieving double-digit net margin and strong free cash flow generation.
• Ray-Ban Meta glasses, launched in collaboration with Meta, sold over 2 million units since September 2023, indicating strong market acceptance.
• Essilorluxottica (ESLOF) is expanding its production capacity for Ray-Ban Meta to reach 10 million units annually by the end of next year.
• The company is making significant strides in the hearing aid market with the launch of Nuance Audio glasses, receiving FDA clearance in the US and CE certification in Europe.

Negative Points

• Essilorluxottica (ESLOF) faces inflationary pressures, particularly labor-driven, which could impact cost management.
• The Ray-Ban Meta product line is currently dilutive to margins due to the electronic component, although this is improving with scale.
• The company is dealing with potential headwinds from duties in China and Mexico, which could affect supply chain and costs.
• Essilorluxottica (ESLOF) is in the early stages of wearable technology, which involves significant investment and carries risks associated with new product categories.
• The company faces challenges in integrating new acquisitions like Supreme and Heidelberg, which could impact short-term financial performance.

Q & A Highlights

Q: What are the major headwinds EssilorLuxottica is facing regarding duties, and how are you planning to mitigate them? A: Stefano Grassi, CFO, explained that the major headwinds are from China and Mexico. The company has diversified its manufacturing plants for both frames and lenses, providing flexibility to mitigate these headwinds. Additionally, commercial actions, such as pricing adjustments, may be taken if necessary.

Q: Can you provide more details on the wearable technology and third-party brand partnerships? A: Francesco Milleri, CEO, stated that EssilorLuxottica is developing a wearable platform with evolving functions and capabilities. The company is open to integrating this platform with other brands in its portfolio and third-party brands. The goal is to provide a shared platform for digital services, which could become a significant business beyond just product sales.

Q: What is the timeline and strategy for launching Nuance Audio in the US, and how do you plan to manage the ramp-up and marketing investments? A: Francesco Milleri, CEO, expressed high expectations for Nuance Audio, with a strong initial consumer response. The ramp-up is underway, with products and trade materials being distributed. The company plans to focus on opinion leaders and direct consumer engagement for marketing, with investments in both sophisticated AI-driven features and simpler, standalone products.

Q: How does EssilorLuxottica view its role in smart glasses technology development, particularly in collaboration with Meta? A: Francesco Milleri, CEO, emphasized a collaborative approach with Meta, focusing on integrating technology with eyewear. EssilorLuxottica is investing in new technologies and hiring talent in audio and video to design its own platform, while also contributing to Meta's platform to enhance customer experience and business models.

Q: What are the economic implications of Ray-Ban Meta, and how do you foresee the evolution of wearable technology impacting the eyewear market? A: Francesco Milleri, CEO, and Stefano Grassi, CFO, explained that Ray-Ban Meta is currently dilutive due to its electronic components, but less so than previous models. The company anticipates that as the category expands with new models, brands, and functionalities, profitability will improve. The evolution of wearable technology is expected to be rapid, with significant advancements in features and applications, potentially transforming the eyewear market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.