Essilor Cites Currency Impact on First Quarter 2018 Revenues

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CHARENTON-LE-PONT, France—Essilor (Reuters: ESSI.PA) reported Friday that consolidated revenue for the first quarter ending March 31, 2018 fell 5.8 percent from year ago to €1,825 million. The company, which is awaiting approval from regulatory authorities in China for its merger with Luxottica, attributed the decrease to a negative currency effect that primarily reflects the euro’s appreciation against the U.S. dollar as well as against the Brazilian real, Canadian dollar and Chinese yuan. Essilor’s revenue rose 3.8 percent in constant currency, or 3.2 percent on a like-for-like basis.

The like-for-like growth reflected a 2.9 percent rise in sales at the lenses and optical instruments division, driven by new products, instruments and e-commerce; a strong first three months for Essilor’s sunglasses and readers business, where sales were up 6.6 percent; a 3.1 percent decrease in the company’s equipment division, and 0.6 percent consolidation scope effect reflected contributions from acquisitions completed in 2017.

Hubert Sagnieres, Essilor chairman and CEO said, “Everyone at Essilor continued to execute our growth strategy during the first quarter in order to achieve our goal of eradicating poor vision around the globe. After this sound start to the year, notably thanks to good performances in sunwear and e-commerce, we are confident that we will meet our full-year targets as the rollout of new products gathers pace over the next few months. Moreover, the combination with Luxottica will create new and exciting opportunities for consumers and the optical industry in the short and long term.”

Essilor’s lenses and optical instruments division posted like-for-like revenue growth of 2.9 percent in the first quarter, which included growth of 11.4 percent for the e-commerce businesses. Like-for-like revenue growth was 3.4 percent in North America. The core U.S. lens business grew faster than the overall region while sales in Canada declined slightly, Essilor said.

In the U.S., despite a temporary slowdown in areas affected by adverse weather, Essilor said demand for its flagship corrective lens brands was strong throughout the quarter. This notably benefited the “Ultimate Lens Package,” a sales promotion tailored to progressive and single-vision lens wearers, launched during the latter part of 2017.

Growth in the first quarter was again supported by the ongoing rollout of strategic initiatives focused on independent eyecare professionals, including alliances (Vision Source, PERC/IVA and Opti-Port) and business solutions (Essilor Experts). Essilor said its key account business continued to experience strong demand for innovative lens offerings, such as blue-light-filtering technology, and integrated supply chain solutions while benefitting from exposure to faster growing retail groups. Contact lens distribution activities also contributed to growth during the quarter, the company noted.

In North America, revenue increased at sunglass maker FGX International on the back of the new contracts won in 2017 and good sell-through demand for sunglasses and readers in stores, Essilor reported. Costa also had a good quarter, with positive momentum in the independent optician channel both for sun and optical lines, prescription lens sales and brand expansion more than offsetting lackluster results in sports stores.

Essilor said that despite the 3.1 percent drop in sales at its equipment division, business continued to be buoyed in North America and Europe by sales of the VFT-Orbit 2 digital generator and Multi-Flex polisher, and by strong interest in the design of complete prescription laboratories.