Essilor Luxottica

Good morning and good afternoon, everybody. This is Giorgio Iannella from the IR team. Thank you for joining Esiro Luxottica full year 2023 results management call. The group's chairman and CEO, Francesco Milleri, the deputy CEO, Paul Dusayan, and the CFO, Stefano Grassi, will walk you through the business and financial highlights of last year. After their presentations, there will be a 30-minute Q&A session. If you want to make a question, please press star followed by five. We kindly ask you to limit your questions to a maximum of two. With that, I hand over to Francesco.

Good morning and good afternoon to everybody. Thanks for joining us. Today, I am glad to present a Silor Luxottica Sound Financial Result of 2023 and give an update on our key strategic initiative and vision. 2023 has been another record year for the group in terms of its financial performance, which makes us particularly proud in the context of a more challenging microeconomic and geopolitical environment throughout the entire year. We advanced fast on our integration journey, while delivering the richest pipeline of innovation ever. at the same time increasing our earnings and cash flows. This gave us the confidence to propose a dividend 22% higher than the previous year. Group's total revenue reached 25.4 billion euros, growing at the sound pace of 7.1% at constant exchange rate. third consecutive year above 7%. This reflects the deep diversification of our revenue mix while balanced across geographies, trade channels, product categories and price segments. Innovation played a key role across all the activities, including lenses, luxury brands, and wearables. The successful integration of Grand Vision drove the comp sales growth at 9%, laying the groundwork for the future expansion of the businesses. The group adjusted operating profit near 4.2 billion euro, reaching 16.9% margin at constant exchange rates, 10 basis points higher than 2022, despite the substantial impact of the cost inflation and the investment for the future. All of that was more than offset by the business growth, diversification and the operating synergies and efficiencies. Investments were related to a number of new projects, including Salesforce expansion, store remodeling, innovative lenses such as Stellest and Varilux XR. New licensed brands, Ray-Ban Metal Launch, as the most advanced solution in smart glasses, and the pre-launch campaign of Nuance Audio, our disruptive proposition in the hearing aids space. Our vision is essentially centered around the idea that eyeglasses will be more and more equipped and empowered by technology. as a new platform that can offer a wider range of digital functions, from good vision and good hearing to online connectivity. At the same time, our business model is evolving towards digitalization across all the segments of the value chain, to the benefit of the whole industry. We have developed a number of digital tools to empower our sales force, wholesale partners, retail stores and online platforms. We have extended the application of analytics, big data and artificial intelligence to reshape the future of the entire industry. Three initiatives stand out as a part of our innovation journey. VisionX, Ryban Meta, and Nuance. Managed by the new group division Helix, VisionX is an integrated data-driven ecosystem for eye care practitioners. a digital suite offering all the services related to the practice activities, from ordering and booking to teleoptometry and managed vision care, aimed at changing the entire optical store experience. Second generation of our wearables, Rayman Meta, has been a great success since its launch. leveraging its new and improved functionalities. The new product offers, for the first time ever, live streaming and meta-artificial intelligence built-in, on top of higher quality cameras and better audio systems. It represents a simple access to fully leveraged meta-AI capabilities, a gateway to the future. Talking about Nuance Audio, I am pleased to say that the product was presented at CES in Las Vegas at the beginning of January, receiving a huge deal of attention from the audience on-site and online. Feedbacks were overall extremely positive, from both hearing aid experts as well as people affected by target hearing loss. Investors and analysts are testing the product in trade fairs and at our Tortone Experience Center in Milan, giving us the same positive comments. You are all invited to test it. Nuance Audio is up for launch in the US OTC market in the second half of this year. To make the most of it, we are partnering with all the relevant players, including audiologists, opticians, traditional hearing aids operators, with the aim of merging the two industries of optical and hearing, serving both the wholesale and retail channels since the beginning. In conclusion, few words on our sustainability program, in particular on carbon roadmap. Essilor Luxottica fully achieved the carbon neutrality target for its scope 1 and 2 emissions in Europe, already met in Italy and France. The group is now setting the stage to become carbon neutral globally by 2025. as it continues to improve energy efficiency across facilities and increase the use of renewable energy. Furthermore, the group committed to setting near-term emission reduction targets according to the science-based targets initiatives, reinforcing its effort of addressing climate change. That's what the Board, I'm honored to chair, achieved, delivering excellent results over its entire three-year mandate in terms of new group integration, business model evolution, and quality of its financial results, with adjusted earnings increased by around 50% in the period. M&A activity remains constantly active and well-focused and it will accelerate in the next years. The new board will be appointed during the next AGM at the end of April and the Nomination and Compensation Committee has proposed to confirm all the current board members. With that, I hand over to Paul, who will drive you through some operational highlights. Thank you.

Thank you, Francesco. I'm delighted to be with you today for our full year 2023 results. Before we dive into our operational highlights, I would like to highlight the progress made together with the one-site Essilor Luxottica Foundation on our journey to address uncorrected poor vision and bring better sight to everyone, everywhere. Over the last 10 years, we have provided permanent access to vision care to over 700 million people by training local entrepreneurs to perform eye exam and dispense eyeglasses in underserved communities. Through these actions, around 72 million people are wearing eyeglasses provided by Essilon Luxottica. What an important step forward in the pursuit of our mission. Let's now look at what we have achieved at the heart of our business and more specifically on our product, brands, supply chain, and our colleagues to complement what you heard from Francesco. In 2023, we continued to deploy a large innovation pipeline from the one-of-a-kind next-generation Reban Meta smart glasses to the new Varilux XR personalized progressive lens powered by artificial intelligence, the disruptive design of Reban Rivers, the debut of the brilliant Swarovski collection, the signing of the Montclair license agreement, and a very rich delivery throughout the year of novelties in our house and license brands. So much has been accomplished. 2024 will also be rich in products and brand activities. Two days ago, the Transition Academy took place in Florida, gathering 1,300 attendees for the unveiling of the latest transition lens generation, Transition Gen S. This product will feature a new exciting color palette. It will switch from clear to dark in only seconds and offer an astonishing speed of feedback. Transition Gen S will be launched from April in the US and key countries in Europe and soon after in the rest of the world. Since November, We have introduced at the Essilor Luxe Tica Days and in our showrooms around the world the first ever collection for our new licenses and collaborations. Just think about it, Brunello Cucinelli, Ferrari, Jimmy Shaw and Roger Federer collaboration with all these people. Stunning new styles that will be out in the spring. In addition, the Paris Olympic Games are coming this summer, and we are launching new dedicated collections for our team au clé athletes who are in the starting blocks. We will host them at the au clé pavilion in the Palais Brognard. We are also advancing effectively in our fight against myopia in children, building a comprehensive ecosystem leveraging data, science, lenses, contact lenses, frames, and instruments. Our revolutionary STELEST lens is now available in 35 countries across Asia, Europe, and Latin America. As you will remember, it has been granted Breakthrough Device designation by the US FDA. and we have just been granted the status also for diffusion optic technology spectacle lenses of sight glass vision. On the supply chain side, as part of our strategy, we continue to develop capacity and flexibility worldwide. In 2023, we opened new state-of-the-art manufacturing sites in Thailand and Mexico. facility of ryong thailand is one of the largest of the group it is a fully integrated campus with frame and lens production lab service and distribution center under one roof it will support the growth of europe and the further expansion of the asian markets on top of this we have built two new locations in Mexico, an integrated site in Tijuana and a land mass production facility in Chihuahua. Both are key in guaranteeing additional capacity and state-of-the-art service for the U.S. and Mexico. The Laboratory of Excellence, situated south of Paris, will be our flagship land laboratory. It is starting operation as we speak and will ramp up throughout the year. It represents a cornerstone in our strategy to provide local proximity at the heart of each country to deliver high level of service and implement the complete PER models. In line with our sustainability roadmap, these new facilities are designed to obtain the LEED Gold certification. Our fully integrated supply chain, as we have shared often with you, is more and more bringing together lands, frames and labs under one roof to further expand our complete pair capabilities, provide capacity and efficiencies for the growth and diversifying our footprint in close connection with our key markets. Looking at our go-to-market organization, Stefano will shortly take you through the performance of our business and you will see the solid results that our focus teams in professional solution and direct-to-consumer have achieved at the heart of each market. And this brings me to our colleagues. We are so grateful to all our teams working so hard to make our company better every day. Their talent and passion are allowing us to consistently execute our strategy in each domain. A sign of their engagement is the success of our employee shareholding plans, with now 77,000 colleagues across 86 countries having a financial stake in the company. What a sign of alignment! In 2023, we also further strengthen our one company culture, designing our new core values with the input of more than 100,000 colleagues worldwide. In 2024 and beyond, we will continue our exciting and dynamic journey together with all our stakeholders. The operational initiative we are deploying will keep fueling quality growth and continuously strengthen the company. With this, I hand over to Stefano.