Jul 31, 2008
Luxottica H1 net falls, forex and slowdown bite
Jul 31, 2008
By Marie-Louise Gumuchian
MILAN (Reuters) - Italy's Luxottica, the world's biggest eyewear maker, said net income fell 16.5 percent in the first half of the year as a strong euro, a U.S. consumer slowdown and one-time charges weighed.
Luxottica, whose brands include Ray-Ban and Prada, said in a statement net income was 236.3 million euros ($369.1 million). First-half revenue rose 4.8 percent to 2.753 billion euros.
The group, which has a strong U.S. presence, said it was on track to meet full-year targets. It forecast sales of 5.6 billion to 5.75 billion euros for this year and earnings of 1.11 to 1.14 euros a share.
"They were a tough six months," Chief Executive Andrea Guerra told analysts on a conference call. "We're on track to meet the full-year outlook."
Investors are looking at luxury goods makers for signs of cooling demand amid an economic downturn. Some luxury groups have felt the impact of weaker sales but said they expect results to hold up as long as the economic climate does not worsen.
Luxottica said Ray-Ban and Oakley, which some athletes will wear at the Beijing Olympics next month, posted a strong quarter, while luxury brands showed signs of weakness.
It said conditions were tough in North America, which was beginning to see a slight improvement in the third quarter, while there was steady growth in emerging markets.
Guerra said July had been better.
"(Luxottica) will continue to operate conservatively in the second half to protect profits in (a) tough environment," Luxottica said in a slide presentation.
It said one-time charges linked to Oakley's buy last year would total 20 million euros.
For the quarter, sales rose 2.1 percent to 1.354 billion euros. Luxottica last month said it expected mid-single digit growth in second-quarter sales at current exchange rates.
Luxottica expects a more normalised business for the second half of the year and is looking for new retail projects.
A tough economic climate and weak dollar also took their toll on competitor Safilo .
Safilo on Wednesday said first-half net profit fell more than a third and cut its forecast for sales growth for the year to around 4 percent at constant exchange rates from a previous forecast of 7 percent to 8 percent.
Luxottica shares closed down 4.43 percent at 15.73 euros before the results came out.
(Editing by Steve Orlofsky)
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