Luxottica Earmarks More Than $1.6 Billion to Speed Up Expansion

MILAN, Italy — Luxottica Group SpA will seek to accelerate growth by investing more than 1.5 billion euros ($1.63 billion) over the next three years after the Ray-Ban maker's sales and earnings reached record levels in 2015.

The spending on digital, product development and expansion into new markets will help boost currency-neutral revenue by 5 percent to 6 percent this year and at a “mid-to-high single-digit” rate in 2017 and 2018, the Milan-based company said Tuesday. Net income will grow at least 1.5 times the pace of sales, it said.

Demand for eyewear is expanding in emerging markets with more than 2.3 billion people in Asia, Africa and Latin America needing optical frames, according to estimates by Exane BNP Paribas. The scale of the opportunity and changes such as Gucci- owner Kering SA building its own eyewear operations had led to calls for Luxottica to make its own prescription lenses, with analysts including Exane's Luca Solca saying a merger with France's Essilor International SA would make sense.

The company’s mergers & acquisitions team is “hyperactive” and Luxottica is “always in a buying mood,” Massimo Vian, chief executive officer for product and operations, said in an interview. “We continue to review options, mostly on the distribution side.”

Carl Zeiss

Carl Zeiss AG, a German maker of optical instruments, is among possible takeover targets, Il Sole 24 Ore reported last month. Talks aren’t taking place with Carl Zeiss, though “we have a close relation with them,” Vian said, adding that in future he expects the worlds of frames and lenses to converge.

Luxottica’s sales in first two months of 2016 were “positive, in line with our guidance, in a economic context that conversely is showing signs of volatility,” Vian said.

Adjusted 2015 sales reached 9.01 billion euros, climbing 5.5 percent excluding currency shifts, Luxottica said in the statement, which was released after European markets closed. Adjusted net income rose 24 percent to 854 million euros.

By Andrew Roberts and Daniele Lepido; editors: Matthew Boyle and Paul Jarvis.