Essilor.com

Stability, profitability, accountability

 

Essilor’s global leadership is built on solid principles

 

The market

Steady growth of 3 to 4% a year
The worldwide ophthalmic lens market in which Essilor operates enjoys significant growth potential in terms of both volumes and value.

Volumes
The potential for volume growth is considerable, led by:
• A growing population.
• An ageing population.
• A low penetration rate. Although an estimated 65% of the world’s population (4 billion people) need corrective eyewear, only 26% have glasses.

Value
Market growth is being driven by a general trend of replacing old glasses with more sophisticated lenses that integrate high value-added technological innovations.

 

Find out more about the global ophthalmic lens market

 

 

Essilor’s strategy and positioning

Excellent visibility
Focused on a single business—corrective lenses—Essilor’s strategy is based on:
• Innovating and creating a large number of new products.
• Holding forefront positions in all countries, thanks to a carefully managed acquisition strategy and a commitment to serving all markets.

This strategy is strongly rooted in a service culture that provides vital support for eyecare professionals—Essilor’s partners.

It is designed to enable the Company to:
• Outgrow the market.
• Remain No. 1 worldwide.
• Maintain its technological lead.
• Drive steady earnings growth.

Combining growth and profitability
Between 1997 and 2007, Essilor’s sales grew at an average rate of 7.3% per year, including 5.8% average organic growth.
Profitability continued to improve throughout this period, with the contribution margin reaching 18.1% in 2007. In that year, the dividend payout rate stood at 35% of consolidated net profit.

 

See historical financial information on growth, profitability and dividend payouts

 

Remain the industry leader worldwide
With operations in more than 100 countries, Essilor is the world leader in ophthalmic lenses. Its portfolio of prestigious brands such as Varilux® and Crizal® have become global benchmarks, and with the industry’s broadest array of products and services, Essilor is able to serve all markets.

Maintain technological leadership in its industry
The research and development budget amounts to nearly 5% of revenue, the highest percentage in the ophthalmic lens industry. The number of inventions patented each year has grown steadily to 75 in 2007. At the end of 2007, the group held title to 590 patent families representing a total of about 4,200 individual patents and pending patents in France and abroad. Half of Essilor’s revenue is generated by products introduced within the last five years.

 

 

Financial and stock fundamentals

 

A solid balance sheet…
Essilor’s growth in recent years has been supported by its increasingly solid financial position, which has given the Company considerable flexibility to finance future development.
At December 31, 2007, net cash to equity stood at 12%

…sustained by a business that generates significant cash flow
Cash flow represents a significant, recurring source of financing. In 2007, free cash flow amounted to €262 million after financing capital expenditure and the increase in working capital requirement.

Free cash flow (in € millions):


Determined according to IFRS since 2005


A relatively non-cyclical stock
The ophthalmic lens industry is relatively unaffected by economic cycles. Over the long term, the corrective lens market has enjoyed steady growth of around 3 to 4% a year.

A CAC 40 stock
The Essilor share’s inclusion in the CAC 40 index since January 2005 has enhanced its visibility among international investors and improved its liquidity.

A 100% free float
The Company’s free float is comprised of all outstanding shares.

 

 

A responsible company

 

A commitment to the environment
Although Essilor’s environmental footprint is limited, because of the nature of the business, the Company has long been committed to a voluntary sustainable development process to accurately determine the impact of its activities on the environment.

 

See the 2006 sustainable development report

 

A commitment to social responsibility
Essilor has always integrated the principles of sustainable development into its strategy.
There is even an ethical aspect to the products manufactured by Essilor, since corrective lenses provide wearers with enhanced vision and therefore a better quality of life.

 

Read about the initiatives undertaken by Essilor in the sustainable development report 

Fully involved employees
More than 8% of Essilor shares are held by employees. This strong, responsible employee shareholder base constitutes a powerful force that ensures the Company’s long-term performance, strategic alignment and operating excellence. Around the world, employee shareholders are represented and led by an independent, non-profit organization: Valoptec Association.

A principled, independent corporate governance system
Essilor complies with best corporate governance practices
In the application of its internal rules, Essilor abides by the principles of corporate governance presented in the AFEP/MEDEF report published in October 2003. A Directors’ Charter was also adopted by the Board in November 2003. The provisions of the Market Abuse Directive and new requirements for corporate officers to disclose any trading in the Company’s share are also scrupulously respected.

The Board of Directors works closely with the three Committees of the Board (Audit Committee, Strategy Committee and Remuneration Committee).

The 17-member Executive Committee is made up of the heads of the main corporate and operating units. It is responsible for applying the Company’s strategic vision and ensuring operating efficiency.

 

See the Chairman’s report on corporate governance and internal control procedures.