Essilor International (Paris:EI), the world leader in ophthalmic optics,
today announced that consolidated revenue for the three months ended
March 31, 2012 totaled €1,269.9 million, an increase of 21%, excluding
the currency effect, over the year-earlier period.
Consolidated revenue
The change in consolidation method applied to Nikon-Essilor and
Essilor Korea, which were fully consolidated as of January 1 and
February 1, 2012, respectively, contributed €24.8 million to
first-quarter revenue, thereby accounting for a 19.2% increase in
Asia-Pacific & Africa revenue, and a 2.4% increase in consolidated
revenue.
Commenting on these results, Hubert Sagnières, Chairman and Chief
Executive Officer of Essilor said: "Following on late-2011 trends,
Essilor reaped the benefits of growth initiatives undertaken in its
different markets, including the roll-out of new products. This
first-quarter performance, supported by vigorous global demand for
better visual health, demonstrates the effectiveness of our strategic
plans, their excellent execution and the efficiency of our R&D and
marketing programs, which represent core strengths to drive long-term
growth.
Despite the macroeconomic uncertainties in certain regions of the
world, this positive start to the year makes us confident that we will
achieve our full-year 2012 target of revenue growth of 12% to 15%,
excluding the currency effect."
Essilor's 8.5% like-for-like growth rate reflects strong momentum in all
of its host regions and divisions, particularly in the United States,
and the successful launches of new products such as Optifog™ and Crizal
UV®. Changes in the scope of consolidation increased revenue
by 12.5%, with bolt-on acquisitions accounting for 3.3% of
the increase and the 2011 strategic acquisitions of Shamir Optical and
Stylemark representing 6.7%. The remaining 2.4% improvement was
attributable to the Nikon-Essilor and Essilor Korea joint ventures,
which are now fully consolidated after being consolidated on a 50% basis
before. Lastly, the 2.6% positive currency effect was mainly due to the
rise in the US dollar and - to a lesser extent - the Chinese yuan and
the Australian dollar against the euro.
Performance by region and by division
Revenue from the Lenses and Optical Instruments division
increased by 8.5% like-for-like, a significant improvement over the
prior year.
In North America, business picked up considerably in the first
quarter. Sales to independent laboratories in the United States were
boosted by the launch of new products such as Crizal UV® and
by the success of value-added products, including progressive,
anti-reflective and variable-tint lenses. Sales to large chains were
very strong, led by two contracts signed with large local banners.
In Europe, the Lens business continued to improve, sustained by
the launch of new products such as the Optifog™ anti-fog lens. France
enjoyed robust growth, largely due to the strength of its multi-network
strategy. Business in the United Kingdom was lifted by the contract to
supply glasses to Boots Opticians. Germany returned to a satisfactory
performance level. In contrast, the Southern European countries
continued to feel the adverse effects of the difficult economic
situation.
In the Asia-Pacific & Africa region, very strong momentum was
maintained in fast-growing markets like India and China, where Essilor
continued to expand in the mid-range segment. The developed markets of
Japan and Australia also performed well during the period, partly due to
temporarily higher volumes.
In Latin America, Brazil turned in a satisfactory performance,
led by strong demand for high value-added products such as progressive
and anti-reflective lenses. After increasing its local manufacturing
capacity, Essilor continued to enjoy faster growth in Mexico, especially
in the anti-reflective lens segment.
The Equipment division had a very good quarter, led by strong
global demand for digital surfacing machines and by robust sales of
consumables.
Lastly, the Readers division returned to growth during the
period. Despite ongoing inventory drawdowns by some customers, sales
were sustained by a strong start to the season in the sunglass frame
segment and the ramp-up of the contract with a major retailer in the
United States. Flagship products Microvision™ and Lightspecs™, made
available in new versions during the year, continued to sell
successfully.
Significant first-quarter events and other transactions
During the quarter, eleven transactions representing annual revenue of
€52 million were signed. Eight of these transactions were carried out in
fast-growing markets in Latin America, the Mediterranean basin, the
Middle East and Asia.
In Mexico, Essilor acquired a majority interest in Crystal y
Plástico, a leading local player based in Guadalajara with revenue
of nearly €9 million. With two prescription laboratories and two
distribution and lens edging facilities in the country, Cristal y
Plástico will help Essilor to develop closer relations with local
opticians with the goal of distributing its value-added products more
quickly.
After acquiring interests in two prescription laboratories in Dubai and
Abu Dhabi, Essilor actively pursued its development in the Middle East
during the quarter. An agreement was signed with Magrabi Optical to
acquire a majority interest in its laboratory located in Jeddah, Saudi
Arabia, which has revenue of around €4.5 million. As a result, a
subsidiary - Essilor Saudi Arabia - has been created, signaling the
launch of operations in this high-potential country with 28 million
inhabitants. The transaction will be completed once it has been
officially registered with the Saudi authorities.
Essilor also broadened its coverage of Turkey through a new
acquisition. After entering into a partnership with Ipek Optik early
in the year, Essilor signed an agreement to acquire 51% of Opak,
an Istanbul-based prescription laboratory with annual revenue of €8
million. Already a distributor of Essilor lenses, Opak has a digital
surfacing laboratory and integrates Crizal technology.
In South Korea, Essilor Korea acquired an 80% stake in Incheon
Optical, an ophthalmic lens distributor with annual revenue of
approximately €3 million. The company is based in Incheon, the country's
third largest city.
In India, Essilor acquired a majority interest in Optics India,
a distributor of edging equipment for optical chains, prescription
laboratories and hospitals, with annual revenue of €0.7 million.
Positioned in the mid-range and entry-level segments, Optics India
rounds out Essilor's local offer.
Note that Essilor had previously announced the acquisition of Seeworld
in China and the signing of an agreement to acquire Sivo
in Tunisia.
In the United States, Essilor acquired a majority holding in Blue
Optical, a prescription laboratory based in Texas with annual
revenue of around USD 3.5 million.
In Canada, a majority interest was acquired in Imperial Eyewear,
an Ontario-based laboratory that generates annual revenue of roughly CAD
1 million. Imperial Eyewear specializes in sun lenses for wraparound
frames.
Lastly, in Australia, Essilor increased from 33% to 66% its stake
in Wallace Everett Lens Technology, a prescription laboratory
with annual revenue of approximately €3.2 million.
Acquisitions since April 1
As part of its strategy of expanding into new high-potential markets,
Essilor has recently set up operations in Eastern Africa. An agreement
has been signed to acquire a majority interest in Optic Kenya, a
prescription laboratory in Nairobi, Kenya. The transaction will
make it possible to provide this market of 40 million people with the
most advanced ophthalmic lens technologies.
Full consolidation of Nikon-Essilor and Essilor Korea
Following new governance arrangements between Essilor and its respective
partners, two joint ventures have been fully consolidated: Nikon-Essilor
as from January 1 and Essilor Korea as from February 1.
Share buybacks - Cash position
During the first quarter, Essilor purchased 1.78 million of its own
shares on the market, for a total of nearly €102 million. The purpose
was to offset the dilution resulting from the issuance of shares under
performance share and stock option plans reserved for employees and
senior executives.
These share buybacks, combined with normal seasonal fluctuations in the
business, led to a moderate increase in net debt, which stood at €541.5
million at March 31, 2012.
Outlook
Essilor confirms its full-year objectives of revenue growth of 12% to
15%, excluding the currency effect, and sustained high profitability
excluding strategic acquisitions.
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