Eyewear group EssilorLuxottica has discovered fraudulent money transfers at a plant in Thailand, which could hit 2019 results by as much as 190 million euros ($213 million).
The news comes as the group formed from the 2017 merger of French lens maker Essilor and Italian glasses company Luxottica conducts a shake-up to unite the supply chains of both companies and reorganise senior management.
The 2017 deal was presented as a “merger of equals” but developed into a row between Luxottica’s founder Leonardo Del Vecchio and Essilor Chief Executive Hubert Sagnieres.
The group has said it aims to appoint a new CEO by the end of 2020, though an activist hedge fund owned by billionaire investor Daniel Loeb has urged the company to “accelerate leadership transitions”.
EssilorLuxottica, known for brands including Oakley and Ray-Ban, said on Monday that its Essilor International business recently discovered fraudulent financial activity in Thailand and that employees suspected of involvement had been sacked.
Shares in the group were down 2.8 percent at 1544 GMT.
“Essilor International filed complaints in Thailand and in other jurisdictions and mobilised all available internal and external resources to put an immediate end to these fraudulent activities and implement remedial actions,” the company said.
EssilorLuxottica added that the negative impact from the Thailand fraud would be recorded in its 2019 operating results.
Luca Solca, a senior research analyst at Bernstein, said that Monday’s news is likely to provoke further investor pressure for speedy post-merger integration.
“Management indicate that the fraud was organised by Essilor’s local management via cash payments to fictitious suppliers in a relatively short amount of time,” Solca added.
