Schiphol, the Netherlands - 31 October 2018. GrandVision N.V. publishes Nine Months and Third Quarter 2018 results
Nine Months and Third Quarter 2018 highlights
In 3Q18, revenue growth of 13.3% at constant exchange rates with comparable growth of 5.1%, driven by a particularly strong performance in the G4 and Americas & Asia segments
Revenue in 9M18 grew by 12.3% at constant exchange rates. Comparable growth was 3.6%
Adj. EBITDA (i.e. EBITDA before non-recurring items) increased by 8.6% at constant exchange rates in 9M18. The adj. EBITDA margin declined by 45 bps to 15.9% mainly due to the dilutive effect of acquisitions
In 3Q18, adj. EBITDA grew by 9.7% at constant exchange rates with an adj. EBITDA margin decline of 57 bps to 16.5%
GrandVision booked a non-cash goodwill impairment charge of €19 million, reflecting the continued low EBITDA margin of the Italian business
The store base increased to 7,041 stores from 7,002 in June 2018, in line with our network optimization strategy, as openings of more than 250 new stores were partially offset by store closings.
Dial-in details for the analyst call at 9:00 am CET are available at the end of this press release.
Stephan Borchert, GrandVision's CEO said: "During the third quarter, GrandVision achieved its highest quarterly
comparable growth performance in more than 3 years, driven by strong sales in the G4 and Americas & Asia segments.
One of the key priorities of driving growth and value creation is to strengthen our digital business, and to become a real
leader in optical e-commerce. I am glad to report that online appointment bookings increased by more than 80% and
that we achieved an e-commerce sales growth of over 60% during the first nine months.
Our strategy of turning customers into fans, and providing a fully transparent value proposition works particularly well
in markets characterized by customers who are equally price conscious and quality focused. This, for example,
enabled us to deliver a successful commercial campaign in Germany, which helped us to not only accelerate market
share gains but also to drive revenue growth and EBITDA margin expansion. Despite these positive developments,
EBITDA margins in the G4 continued to be negatively impacted by the margin dilutive effect of the recently acquired
Tesco Opticians business and its integration costs.
In the Other Europe segment, we saw strong comparable growth particularly in Eastern Europe, which grew by nearly
10% and helped offset some weakness in Southern Europe, particularly Italy.
Although we have made some progress in Italy, the business performance, and especially the EBITDA margin, remains
still below our expectations. Following this year's impairment test, we have booked a non-cash impairment charge of
€19 million, reflecting the slower profitability growth of the business against earlier projections. With a new
management team on board, we are confident that we now have the right people and approach to improve revenue
and margins and are looking forward to expanding our leadership position in this highly fragmented market.
Finally, we are pleased with the progress we have made in the Americas & Asia segment, particularly in Argentina,
Mexico, Turkey and the United States resulting in a strong margin improvement. Overall, the segment's EBITDA more
than doubled from €11 million last year to €24 million during the first nine months, despite significant currency
headwinds, especially in Turkey."
Outlook and medium-term objectives
GrandVision reconfirmed the following medium-term objectives at its Capital Markets Day on 20 September 2018:
• Medium-term average revenue growth target of at least 5% at constant exchange rates maintained, which includes
on average at least 3% comparable growth, at least 1% contribution from store openings and at least 1%
contribution from small acquisitions
• An increase of medium and large M&A to deliver additional revenue growth, while maintaining financial discipline
• Adjusted EBITDA growth in line with total revenue growth as organic margin expansion will continue to be offset by
segment mix and the initially dilutive impact of acquisitions
• Capital expenditure to remain at 4-6% of revenue
• Dividend payout ratio to remain at 25-50% with the intention to increase dividend per share over time.
For 2018, GrandVision expects improved revenue and adjusted EBITDA growth. Revenue growth is expected to benefit
from comparable growth and the addition of the Visilab and Tesco Opticians businesses, leading to high single digit
revenue growth for the full year.
Adjusted EBITDA growth of high single digits will be supported by lower integration costs in the United States and the
continued implementation of our global capabilities and efficiencies, despite integration costs in the United Kingdom.
For the fourth quarter, we continue to expect a strong comparable growth performance in line with the first nine
months, driven by 1.5 additional selling days, and lower prior year comparables.
Group financial review
Revenue increased by 12.3% at constant exchange rates to €2,822 million in 9M18 (€2,579 million in 9M17) or 9.4%
at reported rates, including a negative foreign exchange rate impact of 2.8% or €73 million on revenue growth, mainly
impacting the Americas and Asia segment. Acquisitions, primarily Visilab in Switzerland and Tesco Opticians in the
United Kingdom, contributed 7.8% to revenue growth. Organic revenue growth of 4.5% was primarily driven by
comparable growth of 3.6% (2.6% in 9M17). All three segments and product categories delivered revenue and
In 3Q18, revenue grew by 13.3% at constant exchange rates or 10.5% at reported rates. Comparable growth
accelerated to 5.1%, driven by a strong performance in the G4 with 4.8% growth, 2.6% in the Other Europe segment
and 11.5% in the Americas and Asia segment.
Adjusted EBITDA (i.e. EBITDA before non-recurring items) increased by 8.6% at constant exchange rates to
€449 million in 9M18 (€422 million in 9M17) or 6.4% at reported rates.
The adjusted EBITDA margin decreased by 45 bps to 15.9% in 9M18 (16.4% in 9M17) as margin improvements in the
Other Europe and Americas & Asia segments were offset by a margin decline of 230 bps in the G4 segment, which was
impacted by the dilutive effect of the Tesco Opticians acquisition as well as transitional investments in overheads in
In 3Q18, adjusted EBITDA grew by 9.7% at constant exchange rates or 6.8% at reported rates, leading to an adjusted
EBITDA margin decline of 57 bps to 16.5%. Adjusted EBITDA growth and margin contraction was impacted by the
dilutive effect of the Tesco Opticians acquisition and integration costs in the UK as well as higher overheads in the
Benelux, which offset operating leverage benefits from higher comparable growth.
The operating result increased by 6.5% from €252 million in 9M17 to €268 million in 9M18 mainly driven by higher
adjusted EBITDA. A reconciliation from adjusted EBITDA to earnings before taxes is presented in table below.
in millions of EUR 9M18 9M17
Adjusted EBITDA 449 422
Non-recurring items - 14 - 11
EBITDA 435 412
Depreciation and amortization of software - 111 - 99
EBITA 324 312
Amortization and impairments - 55 - 61
Operating result 268 252
Non-recurring items of -€14 million in 9M18 (-€11 million in 9M17) are mainly related to restructuring, legal and VAT
Depreciation and amortization of software increased from -€99 million in 9M17 to -€111 million in 9M18 driven by the
expansion of the business through acquisitions at the end of 2017.
Amortization and impairments of -€55 million (-€61 million in 9M17) includes a goodwill impairment charge of
€19 million, in line with IFRS accounting guidelines, reflecting the lower profitability of the Italian business.
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