Essilor Reports Solid First Half Results

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CHARENTON-LE-PONT, France— Essilor International (Reuters: ESSI.PA) reported solid results for the six months ended June 30, 2012. Revenue amounted to €2,530.5 million, an increase of 22.8 percent; like-for-like growth combined with bolt-on acquisitions stood at 9.4 percent. Like-for-like growth in first-half revenue came to 6.6 percent, which included increases of 8.5 percent in the first quarter and 4.8 percent in the second.

Essilor said an 11.7 percent increase in the contribution to growth from acquisitions consisted of a 2.8 percent from bolt-on acquisitions, 6.4 percent from the strategic acquisitions of Shamir and Stylemark and 2.5 percent from the impact of the change in the method of consolidation for the Nikon-Essilor and Essilor Korea joint venture, both of which are now fully consolidated. Essilor generated revenue growth of 18.3 percent, excluding the currency effect; contribution from operations stood at 17.9 percent of revenue, including strategic acquisitions.

Commenting on the results, Hubert Sagnières, Essilor’s chairman and CEO, said: “In the first half, Essilor reaped the benefits of its growth strategy, which focuses on delivering innovative products and expanding in high-growth markets. The solid improvement in the company’s results demonstrates once again the validity of its value-creation model in a market that is experiencing structural growth. In an overall second-half economic environment that is less buoyant, the determination of Essilor’s teams to deploy our strategic plan worldwide and the launch of the new generation of Varilux S series progressive lenses bolster our confidence that we will meet our full-year objectives.”

During a conference call with financial analysts, Sagnières noted that Essilor plans to continue its acquisition strategy, including acquisitions of “small labs” and other companies of strategic importance to Essilor’s supply chain.

Essilor cited several factors which drove growth during the first half in both developed and fast-growing countries, including the successful launch of new products, including the Crizal UV anti-reflective lens, and a strong increase in unit sales worldwide, resulting in market share gains.

Essilor lenses and optical equipment division saw like-for-like growth of 7.1 percent, a high level that reflects market share gains around the world. In North America, where like-for-like growth amounted to 6.4 percent, business was up sharply in the first half. In the U.S., all distribution channels contributed to the improvement in the product mix and faster growth, according to Essilor. Sales to independent optometrists rose, led by the success of Varilux progressive lenses, Transitions variable-tint lenses and, above all, Crizal anti-reflective lenses. With optics chains, Essilor said it benefited from the ramp-up of lens and technology supply contracts. The contact lens distribution business also enjoyed a very good start to the year, Essilor reported.

Based on its first half and despite lingering economic uncertainty, Essilor confirmed its full-year objectives of revenue growth of 12 percent to 15 percent, excluding the currency, and sustained high contribution margin excluding strategic acquisitions.

In the second quarter, Essilor reported that revenue rose by 22.1 percent to €1,260.6 million. Like-for-like, the increase was 4.8 percent, led by the lenses and optical equipment business. The 10.9 percent increase in the contribution to growth from acquisitions consisted of 2.3 percent from bolt-on acquisitions, 6.1 percent from Shamir and Stylemark, and the remaining 2.5 percent from the change in the method of consolidation for Nikon-Essilor and Essilor Korea. The currency effect was a positive 6.4 percent.