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EssilorLuxottica shares fall after eyewear group delays investor day

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EssilorLuxottica shares fall after eyewear group delays investor day
FILE PHOTO: Sunglasses from Ray Ban, a Luxottica owned brand, are on display at an optician shop in Hanau, Germany, March 18, 2016. REUTERS/Kai Pfaffenbach/File Photo   -   Copyright  Kai Pfaffenbach(Reuters)
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PARIS (Reuters) – EssilorLuxottica pledged to deliver on synergies and forecast stronger revenues this year, although its shares fell on lingering concerns over governance and the postponement of a long-awaited investor day.

The company, formed by France’s Essilor and Italy’s Luxottica, was reporting results for the first time as a combined entity since the announcement of a 46 billion euros(39.35 billion pounds)merger two years ago aimed at creating a new world leader in eyewear.

EssilorLuxottica predicted sales growth of 3.5-5 percent this year at constant exchange rates, and confirmed it was planning annual synergies of up to 600 million euros within five years through better products, logistics and savings.

An investor day destined to lay out its strategy and details on the synergies was, however, pushed back to September 18 after initially being expected to take place this spring.

The Paris-listed shares of EssilorLuxottica were down 3.4 percent to 104.95 euros by 0823 GMT.

“Strategic and business integration matters, along with governance topics, are being considered and worked upon by the management teams,” the group said a statement.

While praised by many investors as a smart strategic move, the tie-up has so far failed to convince on governance, and some minority shareholders have publicly voiced their concerns.

Under the terms of the merger, Leonardo Del Vecchio, founder and executive chairman of Luxottica, and Essilor CEO Hubert Sagnieres are sharing powers for the first three years.

The company has repeatedly said it would look for a new CEO to be appointed by the end of 2020 but Luxottica had previously signalled Del Vecchio was hoping to propose Luxottica Chief Executive Francesco Milleri as CEO of the new merged group.

Although Del Vecchio appeared to back-pedal on this during a shareholder meeting in November last year, there has been speculation about a power struggle behind the scenes.

Revenues of EssilorLuxottica were up 3.2 percent last year at 16.16 billion euros at constant exchange rates while net profit came in at 1.9 billion euros, down 1.7 percent on what the company said was an “adjusted basis.”

Analysts were on average expecting net profits of 1.6 billion and revenue of 15 billion according to Refinitiv data.

(Reporting by Matthias Blamont; Editing by Sudip Kar-Gupta)

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