Luxottica: net profit for 2006 will rise by 24%

Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), international leader in the eyewear sector, reports the consolidated results achieved in the second quarter and during the first six months in 2006, according to U.S. GAAP accounting principles.

Below the main data :

Second quarter 20061
Billings: €1,294.8 million (+13.0%)
Retail billings: €907.1 million (+7.6%); sales with the same number of stores, exchanges and consolidation perimeter
2: +6.4%
Wholesale billings: €486.4 million (+32.1%)

Operating profit: €217.4 million (+31.2%); operating margin: 16.8%
Retail operating profit: €126.1 million (+25.3%); retail operating margin: 13.9%
Wholesale operating profit: €135.2 million (+49.7%); wholesale operating margin: 27.8%

Net profit: €121.2 million (+33.1%); net margin: 9.4%

Earnings per share or ADS profit: €0.27 (US$ 0.34 for ADS)

First six months in 2006

Billings: €2,556.8 million (+17.1%)
Retail billings: €1,798.0 million (+12.4%); sales with the same number of stores, exchanges and consolidation perimeter 2: +7.3%
Wholesale turnover: €942.0 million (+35.5%)

Operating profit: €408.9 million (+35.3%); operating margin: 16.0%
Retail operating profit: €238.3 million (+34.5%); retail operating margin: 13.3%
Wholesale operating margin: €253.6 million (+50.9%); wholesale operating margin: 26.9%
Net profit: €224.5 million (+34.1%); net margin: 8.8%

Earnings per share or ADS profit: €0.50 (US$ 0.61 per ADS)

Andrea Guerra, Managing Director of the Luxottica Group, stated: 'The results of the first six months in 2006 have been extremely positive in all geographical areas, both in the wholesale and retail sectors. We are growing very much more than the sector itself by means of our brands' steadily improving penetration. The semester's operating profit has hence increased by 35.3%, with operating margin increased from 13.8% to 16.0%'.

'In these first six months our business has shown signs of a strength, which we deem significant both in view of the second part of the year and in the long term.
Concerning the retail segment, improvements in the loss and profit account of all Pearle Vision ranges show that the new business model is the right one. For the fifth consecutive quarter Sunglass Hut has achieved consistent sales that are undergoing a double digit growth, thus witnessing the fact that the chain's focus on fashion is attracting the desired client profile. LensCrafters, which also focuses on premium products and fashion, besides very high service standards, is generating highly encouraging results, also through the new format's performance. Concerning wholesale business, both luxury brands and its own brands - the latter are drawn by Ray-Ban's 2 performance - are experiencing a considerable growth. Lastly, besides the strong growth of leading markets, we have witnessed an even higher growth in emerging markets. Hence we believe that the current year's results will be better than forecasts reported early in the year. Today we estimate that the net profit can grow by 24% compared to 2005. We also expect the growth to continue even beyond 2006 with the many opportunities that already exist in our business and which we are already exploiting.'

Assuming a 1.2444 Euro/Dollar exchange rate for the entire year - consistent with the average exchange rate in 2005 - Luxottica Group expects to achieve earnings per share between €0.93 and €0.94 (between US$ 1.16 and US$ 1.17) for the financial year 2006.

Andrea Guerra concluded: 'I am very pleased that the cash generation has once again been a crucial factor in the quarter performance with a cash flow of €150 million prior to the payment of dividends and acquisitions.
I think that the strong cash generation is further evidence of our business' strength.'

On 30 June 2006 the Group's net financial position was equal to €1,505.2 million (compared to €1,457.4 million on 31 March 2006), which marks a remarkable improvement, compared to 30 June 2005.

The second quarter was record-breaking for the wholesale business.
Against sales to third parties - a key indicator of wholesale business performance- which mark a 27.1% growth, the operating margin has increased from 24.5% to 27.8%, consistently with the historical peaks reached by the Group. The main drivers of this performance have been: the strength and better penetration of the Group's luxury and fashion brands, especially Bvlgari, Chanel, Dolce & Gabbana, Prada and Versace; another very strong quarter for Ray-Ban with an over 20% increase in sales; and, steadily strengthening relations with leading clients throughout the whole world through product quality and services offered.

The retail division has also reported results that are considerably growing, especially in North America where the overall performance and growth rates of homogeneous sales were once again higher than those recorded by the retail sector.
In detail, LensCrafters' trimester was excellent and Sunglass Hut's homogeneous sales have increased beyond 11%. At the same time Pearle Vision's results have improved for the third consecutive semester with a rise in homogeneous sales and further improvements concerning profitability. The eyewear sector steadily attracts business in Pacific Asia. Overall, the retail business' profitability has shifted from 11.9% to 13.9% in the quarter and from 11.1% to 13.3% in the semester.

Group results include the financial impact of stock options amounting to €11 million in the quarter and to €21 million in the semester, as a result of the application of the SFAS 123 (R). This impact was not present in 2005.

Luxottica Group's consolidated results for the second quarter and for the first six months of 2006 have been approved by the Board of Directors.