- A Solid First Quarter, With Revenue Up 7.8%
Essilor International, the world leader in ophthalmic optics, today announced that consolidated revenue for the three months ended March 31, 2010 rose by 7.8% to EUR905.8 million, in line with stated objectives.
Revenue was up 2.5% like-for-like, led by sharply higher sales in emerging markets and a gradual upturn in business in mature markets. Eyecare professionals responded favorably to the launch of new products like the Varilux Physio(R) 2.0 lens, personalized lenses integrating Eyecode(TM) technology in Europe and Crizal Forte lenses worldwide. Unit sales rose, led by the implementation of the mid-range product strategy.
Changes in the scope of consolidation accounted for 5.1% of reported growth, of which 2.9% for so-called "organic" acquisitions of prescription laboratories and distributors and 2.2% for the acquisition of FGX International.
The currency effect was almost neutral, at 0.2%. The decline in the US dollar against the euro was offset by a rise in other currencies, in particular the Brazilian real, the Canadian dollar and the Australian dollar.
Consolidated revenue EUR millions Q1 2010 Q1 2009 % Change % Change Contribution (reported) (like-for-like) from acquisitions TOTAL 905.8 840.3 +7.8% +2.5% +5.1% Optical lenses 863.9 815.9 +5.9% +2.7% +4.0% and instruments Europe 345.3 330.0 +4.6% +0.7% +3.2% North America 375.6 372.5 +0.9% +2.1% +2.6% Asia-Pacific & 103.1 85.6 +20.4% +8.5% +3.3% Africa Latin America 39.9 27.8 +43.6% +15.3% +5.9% Laboratory 23.6 24.4 -3.4% -3.4% 0% equipment FGX 18.3 - - - - International Currency effect: +0.2% Business by region
In Europe, business overall continues to improve each quarter, although performance and trends vary from one country to another. Sales increased in France thanks to a solid improvement in the lens business and strong demand for instruments. Belgium saw a return to growth, as did Eastern Europe, led by Poland. Demand was stable in the United Kingdom, while conditions remained difficult in certain Scandinavian countries, the Netherlands and Spain.
In North America, business was sustained by a sharp increase in unit sales, especially in the United States where all distribution networks contributed to growth.
In Asia, growth was very strong in emerging markets, particularly India, the ASEAN countries and China. In Australia, sales to independent eyecare professionals trended upwards, while in Japan demand remained sluggish.
In Latin America, business improved in all countries. In Brazil, sales of premium and mid-range products continued to rise.
Equipment sales to prescription lens laboratories started to pick up during the quarter with order intake rising substantially, especially in emerging markets.
Significant first-quarter events and other transactions
Acquisitions
Essilor pursued its strategy of organic acquisitions, carrying out seven new transactions.
- During the quarter, majority interests were acquired in ILT Danyang in China, Ghanada Opticals in the United Arab Emirates and Eyebiz in Australia. All of these transactions had been previously announced. Following the successful launch in the United States of an online sales service for eyecare professionals, Essilor of America announced the acquisition of a majority stake in Frames for America, which operates the FramesDirect.com website and generates annual revenue of approximately $10 million.
- Since April 1, three new transactions have been carried out: - In the United States, Essilor acquired Hawkins, a Kansas-based prescription laboratory with $4.5 million in revenue. - In Taiwan, a majority stake was acquired in SMJ, a prescription laboratory and distributor with EUR1.6 million in revenue, which will extend Essilor's local offering. - In the Equipment Division, the Company acquired a 60% interest in DAC Vision, one of the world's leading manufacturers of consumable supplies for surfacing, coating and mounting lenses. With operations in Europe and the United States, 65 employees and annual revenue of around EUR30 million, DAC Vision will continue to be led by its current management team. This partnership should enable Essilor to extend the product offerings delivered by the Satisloh and Delamare networks, for the benefit of customers.
Since the beginning of the year, Essilor has also made two strategic acquisitions: FGX International, the North American leader in non-prescription reading glasses with $259 million in 2009 revenue, and California-based Signet Armorlite, one of the largest independent manufacturers of ophthalmic lenses and the exclusive producer of Kodak-brand lenses, with 2009 revenue of approximately $115 million.
Other transactions
Essilor also announced its support for Cinven Investment Fund's tender offer for Sperian Protection, in which Essilor holds a 15.05% stake. A long-time shareholder in Sperian Protection, Essilor has pledged to support the company in this new phase of its development, alongside a recognized financial partner.
Share buybacks - Cash position
Since January, Essilor has purchased 1.76 million of its own shares on the market, for a total of about EUR79 million. These share buybacks are intended to offset potential dilution from the conversion of outstanding OCEANE bonds and from shares issued as part of employee share-based payment plans. Due to the FGX acquisition, share buybacks and seasonal fluctuations in business, net debt amounted to EUR360 million at March 31, implying gearing of some 12%.
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