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Essilor : First Half 2009 Results
An Excellent First Half:
- Contribution Margin Maintained at a High 18.2%
- A Further Increase in Basic Earnings per Share
- Sharp Rise in net Cash Flow
The Board of Directors of Essilor International, the world leader in
ophthalmic optics, has approved the financial statements for the six months
ended June 30, 2009.
EUR millions First-half 2009 First-half 2008 % Change
Revenue 1,663.4 1,520.2 +9.4%
Contribution margin 302.6 276.3 +9.5%
% of revenue 18.2 % 18.2 % -
Profit attributable to equity 202.4 198.3 +2.1%
holders of Essilor
International
Basic earnings per share (in 0.98 0.96 +2.4%
EUR)
The highlights of the first half were:
- The successful launch of new products in an overall
ophthalmic optics market that experienced slower growth. Among the
products were the Crizal Forte(R) anti-reflective lens, the Essilor
Transitions(R) variable-tint lens in Europe, the Xperio(TM) polarized
lens in the United States and the new Mr Blue(TM) edger.
- Sustained growth momentum in emerging markets, notably India,
South Korea, China, the ASEAN countries, Latin America, South Africa
and Russia.
- Strong operating profitability with a contribution margin (18.2%)
that returned to its all-time high of first-half 2008 (including
Satisloh) thanks to cost discipline across the organization.
- Profit attributable to equity holders of Essilor that remained
high at 12.2% of revenue and a further increase in earnings per share.
- An ongoing external growth strategy, with the acquisition of 11
companies around the world representing approximately EUR47 million in
full-year revenue.
- A sharp 12.5% increase in net cash flow and a solid balance
sheet.
Highlights since the end of the first half
Acquisitions
Following approval by UK competition authorities, Essilor completed its
acquisition of Wholesale Lens Corporation Limited, a Croydon-based wholesaler
of ophthalmic lenses that generated revenue of
As mentioned in the
Ongoing share buybacks
Since
------------------------
A meeting with analysts will be held today,
The meeting will be available live and recorded for later listening at:
http://hosting.3sens.com/Essilor/20090827-D516F570/en
The presentation will be webcast at:
http://www.essilor.com/results-presentations
Regulatory Information:
The interim financial report is available at http://www.essilor.com, by clicking on: http://www.essilor.com/reports#interim
------------------------
Next financial announcement:
Third-quarter revenue will be announced on Thursday, October 22, 2009.
-----------------------
Essilor International is the world leader in ophthalmic optical products, offering a wide range of lenses under the flagship Varilux(r), Crizal(r), Essilor(r) and Definity(r) brands to correct myopia, hyperopia, presbyopia and astigmatism. Essilor operates worldwide through 15 production sites, 293 lens finishing laboratories and local distribution networks.
The Essilor share trades on the NYSE Euronext Paris market and is included in the CAC 40 index.
Codes and symbols: ISIN: FR 0000121667; Reuters: ESSI.PA; Bloomberg:
EI:FP.
------------------------
MANAGEMENT REPORT
First-Half 2009
EUR millions First-half 2009 First-half 2008 % Change
Revenue 1,663.4 1,520.2 +9.4%
Contribution from 302.6 276.3 +9.5%
operations(1)
18.2% 18.2%
% of revenue
Operating profit 281.9 261.7 +7.7%
Profit attributable to 202.4 198.3 +2.1%
equity holders of Essilor
International
% of revenue 12.2% 13.0%
Basic earnings per share 0.98 0.96 +2.4%
(in EUR)
(1) Operating profit before compensation costs of share-based payments, restructuring costs, other income and expense, and goodwill impairment.
Revenue up 9.4% to
Essilor's consolidated revenue for the six months ended
The like-for-like decrease in first-half revenue included a decline of 1.0% in the first quarter and of 0.4% in the second, reflecting the following factors:
- The successful launch of value-added products around the
world, including the new Crizal Forte(R) anti-reflective lens, the
Essilor Transitions(R) VI variable-tint lens in Europe, the Xperio(TM)
polarized lens in the United States and the new MrBlue(TM) edger.
- Firm growth in entry-level products, where Essilor holds
strong positions.
- A disappointing first-quarter performance in Instruments.
Revenue by region
EUR millions H1 2009 H1 2008 % Change % Change Change in
(reported*) (like-for-like) scope of
Consolidation
Europe 665.1 693.5 -4.1% -4.4% +2.0%
North America 718.1 617.9 +16.2% -0.9% +4.3%
Asia-Pacific 170.1 146.8 +15.9% +13.5% +1.3%
Latin America 60.3 60.6 -0.5% +9.4% +0.7%
Laboratory
equipment [1] 49.8** 1.4*** n.a. n.a. n.a.
(*) Currency effect: +4.1%. (**) The figure excludes Satisloh sales to
Essilor, which totaled
Eleven acquisitions in the first half
During the first half, Essilor acquired or increased its holding in
eleven companies. Together, they represent additional full-year revenue of
- In the United States, Essilor of America added three
laboratories to its network: Barnett & Ramel ($10.8 million in
revenue), McLeod ($10 million) and Abba Optical $2.2 million).
- In Poland, Essilor raised its stake in JZO, the ophthalmic
optics market leader, to 51% from 10% previously.
- In Australia, Essilor completed four acquisitions
representing an aggregate EUR3.6 million in full-year revenue. Equity
interests were acquired in three prescription laboratories-Prescription
Glass Pty Ltd, Precision Optics Pty Ltd and Wallace Everett Lens
Technology Pty Ltd-and a 50% stake was acquired in Sunix Computer
Consultants, a leading developer of optometric practice management
systems.
- In India, Essilor raised its interest in GKB Rx Lens Private
Ltd to 60% from 10%.
- In Brazil, Essilor acquired a majority stake in Technopark,
a joint venture with a local partner that combines the business
operations of two prescription laboratories (EUR10 million in revenue).
- In Canada, Nikon Optical Canada, a Nikon-Essilor subsidiary,
increased its stake in the TechCite prescription laboratory from 50 to
100%.
Gross margin up 7.3% to
Gross margin (revenue less cost of sales, expressed as a percentage of revenue) stood at 56.0%, compared with 57.0% in first-half 2008. The decrease results mainly from the dilutive impact of acquisitions, in particular Satisloh.
Operating expenses up 6.3% to
Operating expenses in the first half accounted for 37.8% of consolidated
revenue, versus 38.9% in the prior-year period, when they amounted to
- R&D and engineering costs of EUR74.9 million (net of a
EUR4.9 million tax credit), representing 4.5% of consolidated revenue,
down very slightly from 4.7% in the first six months of 2008.
- Selling and distribution costs of EUR353.4 million (21.2% of
revenue compared with 21.7% in the previous-year period).
- Other operating expenses of EUR199.8 million (12.0% of
revenue versus 12.5% in first-half 2008).
Contribution from operations up 9.5% to
The contribution margin stood at 18.2% of revenue, on a par with first-half 2008's record high and up from 17.9% for full-year 2008. This performance reflects the Company's ability to integrate acquisitions, to drive further productivity gains and to diligently manage its operating expenses in a slowing market.
Operating profit up 7.7% to
"Other income and expenses from operations" and "Gains and losses on
asset disposals" together represented a net expense of
Operating profit represented 17.0% of consolidated revenue.
Finance costs and other financial income and expenses: net expense of
Finance costs and other financial income and expenses represented a net
expense of
Profit attributable to equity holders of Essilor International up 2.1% to
Net profit totaled EUR207.1 million, an increase of 2.8%. It comprised:
- Income tax expense of EUR80.1 million. The 29.0% effective
tax rate compared with a 29.4% rate for first-half 2008. The decline
was mainly due to Satisloh's tax rate, which is lower than the Company
average.
- The share of profit from associates-VisionWeb, Sperian
Protection and Transitions-which amounted to EUR10.7 million, versus
EUR14.7 million in first-half 2008. Transitions' earnings were up
slightly at EUR9.8 million (from EUR9.6 million in first-half 2008)
while Sperian Protection's earnings were sharply lower at EUR0.9
million (compared with EUR5.1 million).
Profit attributable to equity holders of the parent was 2.1% higher, at
Inventories
Inventories amounted to
Investments
Capital expenditure net of divestments totaled
Cash Flow Statement
EUR millions
Net cash from operations 273 Capital expenditure net of
the proceeds from asset
sales 72
Proceeds from employee share Change in WCR and
issue 16 provisions 102
Change in net debt 99 Dividends 138
Financial investments net
of disposals 61
Effect of changes in
exchange rates and in the
scope of consolidation 15
Net debt increased by
Related party transactions / Risks and contingencies
In first-half 2009, the nature of transactions with companies consolidated by the proportionate or equity method was not significantly different from the description in the 2008 Registration Document. Similarly, risks and contingencies to which the Company is exposed in the months ahead are generally in line with the analysis presented in Chapter 4 of the Registration Document.
Outlook
In the second half of the year, Essilor will continue to grow the business, leveraging the quality of its products and its services to opticians, backed by an acquisitions strategy that extends across all regions. The Company will also pursue its efforts to maintain a high operating margin. Over the full year, Essilor expects to strengthen its presence in all markets.
(1)Application of IFRS 8 - Operating Segments has resulted in the creation of the "Laboratory Equipment" business segment, which includes the machines, consumables and replacement parts sold by Satisloh and Delamare to prescription laboratories. The change has not has a material impact on revenue from the operating regions, which consolidate all of the other sales (primarily of ophthalmic lenses and optical instruments).
------------------------------
Investor Relations and Financial Communications
Veronique Gillet - Sebastien Leroy
Phone: +33-1-49-77-42-16
http://www.essilor.com
---------------------------------
SOURCE Essilor