Essilor - First-Half 2008 Revenue

Tag : Optical Distribution Frame

Essilor International, the world leader in ophthalmic optics, todayannounced consolidated revenue of EUR1,520.3 million for the six months ended June 30, 2008, representing a reported2.9% increase on first half 2007.

Like-for-like growth was 5.4%, in line with trend rates, whilegrowth excluding the currency effect was maintained at a strong9.6%, lifted by the Company's sustained acquisitions drive (4.2%).This robust performance in a challenging economic environmentdemonstrates the solid strength of the Company's growth model,built around innovation and acquisitions-led expansion.

As a result, Essilor confirms that the first half will see afurther increase in earnings, with operating margin held firm at2007 levels.

First-half like-for-like growth reflected a gain of 6.2% in thefirst quarter, followed by 4.6%(1) in the second. Note that theyear-earlier basis of comparison was high, with like-for-likegrowth of 8.4% in the first-half and of 8.9% in the second quarteralone.

Of the 4.2% in growth from changes in the scope of consolidation,2.9% came from acquisitions made in 2007, led by OOGP, KBco andILT. Consolidation of companies acquired since the beginning of2008 (except Satisloh) added 1.3 point of external growth.

As in the first quarter, the currency effect, which totalled anegative 6.6% over the half, was primarily due to the fall in theUS dollar against the euro (down 13.7% over the period) and to alesser extent to the decline in the British pound (down 13.4%against the euro). The 3.2% slide in the Canadian dollar and thesharp 18.7% drop in the Korean won, both against the euro, alsoweighed on reported revenue for the half.

Revenue by region

InEurope, growth was dampened both by an unfavorable comparisonwith first-half 2007, when revenue rose 8.4% on the launch ofVarilux Physio(R) and Anateo(R), and by the generally weakereconomy. A strong performance in Germany andthe Netherlandscontrasted with slower growth in theUnited Kingdom,Spain andItaly,while positions were maintained inFrance.

Inthe United States, the slowdown at certain optical chains wasoffset by robust growth at independent eyecare professionals, amongwhom the Company continued to widen its market share. This enabledEssilor of America to report 7.4% like-for-like growth for thehalf. Business was also satisfactory inCanada.

Performance varied by country in theAsia-Pacific region, withgrowth remaining very strong in the ASEAN countries,India andSouthKorea, but slowing inChina in the second quarter. After aparticularly difficult beginning of the year, business inAustraliaandNew Zealand is starting to recover, especially in theindependent eyecare professionals segment. In Japan, Essilor iscontinuing to gain market share from the competition in a flatmarket.

All of the country organizations inLatin America reported excellentresults for the period, despite the very high prior-yearcomparatives. Operations inArgentina andMexico were especiallydynamic, with growth of around 30%.

Highlights of the quarter - Acquisitions

In June, Essilor announced the acquisition upon fulfillment ofcertain conditions precedent of Satisloh, the world's leadingsupplier of prescription laboratory equipment ( EUR161 million in revenue in 2007). The purchase has not slowed the Company'sstrong external growth dynamic, led by a steady stream of small,geographically targeted acquisitions. Indeed, Essilor has recentlycarried out five such transactions inEurope,the United StatesandAsia.

InGermany, a majority interest has been acquired in Nika GmbH, alens wholesaler that is the country's exclusive distributor ofNikon products. Based in Winningen (Rhineland-Palatinate), thecompany has revenues of roughly EUR9 million . Its purchase is designed to strengthen the close fit betweenEssilor's German distributor networks.

Inthe United States, the prescription laboratory network has beenfurther strengthened by Essilor of America's acquisition ofmajority stakes inDeschutes (based inOregon andIdaho, with revenuesof $2.7 million ) and Optimatrix (based inAlabama, with revenues of $4.6 million ).

InMalaysia, Essilor has acquired the country's leading independentlaboratory Frame N' Lenses. With revenues of EUR2 million and a local market share of 5%, the new subsidiary will improvethe Company's control over the local distribution of itsentry-level products. InIndia, Essilor has acquired the assets ofSankar & Co's ophthalmic division, comprising five formerlyfranchised laboratories in the Coimbatore region, which togethergenerate EUR0.9 million in revenues. In particular, the new unit will develop a Crizal(R)anti-reflective lens center.

Essilor International is the world leader in ophthalmic opticalproducts, offering a wide range of lenses under the flagshipVarilux(R), Crizal(R), Essilor(R) and Definity(R) brands to correctmyopia, hyperopia, presbyopia and astigmatism. Essilor operatesworldwide through 15 production sites, 270 lens finishinglaboratories and local distribution networks. The Essilor sharetrades on the Euronext Paris market and is included in the CAC 40index.