How would you characterize Essilor’s performance in 2011?
Hubert Sagnières — 2011 was a very good year for Essilor, with sales up 9.7% excluding the currency effect, and up 7.3% excluding the currency impact and strategic acquisitions – at the high end of our target for the year. This growth was well balanced between developed markets and high growth markets. The profitability of the Group remained at a high level with a contribution margin of 17.9%. We achieved this good performance by pursuing our strategy of innovation in products and services and accelerating our acquisition strategy to strengthen our presence in the fast growing markets.
Did the difficult economic situation impact your business?
Hubert Sagnières — We are in a market where the need for good vision is growing everywhere in the world. In the mature markets, aging populations increase the number of presbyopic people and there is strong consumer demand for lenses with high added value such as anti-reflective coatings or anti-fog properties. In the fast growing markets, the increasing purchasing power of the middle classes gives us good growth potential. So, despite the economic and financial difficulties of 2011, Essilor continued on its growth path and demonstrated the strength of its strategy and its ability to withstand fluctuations in our economic environment.
You said that accelerating in the fast growing markets was an important challenge for you in 2011. How would you evaluate your progress?
Hubert Sagnières — — In 2009 our sales in the fast growing markets were only 11% of the Group’s sales. In 2011 this rose to 14.3% with sales of over 600 million euros. In 2011 we developed 20 partnerships in these countries, in particular with the market leaders in India, Brazil and Russia, and we started doing business in new countries such as Morocco, Colombia, Turkey and the Dominican Republic. In these markets our ambition is to grow our sales from 600 million euros to 1.5 billion euros in 2015.
You made two strategic acquisitions during the year with Shamir and Stylemark. How do these fit into your strategy?
Hubert Sagnières — We completed the acquisition of 50% of Shamir Optical on 1st July. Shamir is a fast growing industry player with innovative products and technologies. This acquisition is perfectly in line with our strategy to expand our offer in the mid-range segment. At the end of the year our subsidiary FGX International completed the acquisition of Stylemark, one of the foremost designers and distributers of non-prescription reading glasses and sunglasses. Through this acquisition FGX International will add new customers, build stronger relationships with existing customers and enter the fast growing department store segment.
What is the role of innovation in your strategy and what were the main innovations of the year?
Hubert Sagnières — Innovation remains the key driver of our strategy and one of the cornerstones of the relationship with our customers. 45% of our sales are derived from products that we have brought to market in the last three years. In 2011 we launched Optifog, a new category of anti fogging lenses. These lenses represent a major technological breakthrough in response to high consumer demand which, until now, could not be met. This innovation was well received in the marketplace and contributed to our strong performance at the end of the year. At the beginning of 2012 we introduced another major innovation with Crizal UV. These lenses offer the most advanced protection against the everyday dangers of UV rays and bring this category of lenses to the forefront of eye health protection.
Society today demands that companies are increasingly responsible in the way they do business. What does Essilor do in this area?
Hubert Sagnières — Providing better visual health to as many people in the world as possible is both an ambition and a responsibility for Essilor and occupies all of our teams on a daily basis. Today it is estimated that 2.5 billion people in the world need a visual correction but do not have one. If this situation continues, by 2030 this number could increase to 3.5 billion people. Poor vision has extremely important consequences, both for the individual and for the community. Today 810 million schoolchildren have problems at school due to uncorrected vision. What starts at school continues in the workplace: the loss of productivity in American companies due to poor vision of their employees could be as much as 22 billion dollars per year. By the same token, healthcare costs rise through the increased dependency of elderly people and higher risks of falls and fractures or car accidents. To contribute to improving poor vision, Essilor undertakes many initiatives to diagnose and provide eyeglasses such as the vans that travel around India and provide glasses for less than five dollars, the Essilor Vision Foundation that provided 9,000 pairs of glasses to children in the United States last year, or the kiosks set up in 24 Chinese cities. We are committed to continuing and expanding these initiatives to improve vision in the world, and to contribute to the economic and social development of communities as well as to the personal development of individuals.
How do you see the year 2012?
Hubert Sagnières — Essilor is beginning 2012 in a stronger position and we are confident. We have an important new product programme, major contracts with the optical chains and strong growth potential in our two most recent activities, readers and equipment. But, above all, we have 50,000 employees mobilized around our mission of improving the vision of the 4.2 billion people in the world who need a visual correction. Through their energy, their passion and their talents Essilor will continue to grow.
The Board of Directors recently appointed you as Chairman and CEO of Essilor. What message would you like to send as we begin this year?
Hubert Sagnières — I would first like to thank the Board for its confidence. I want especially to thank Xavier Fontanet who has devoted twenty years to the Group’s growth and international development and to spreading its values as an ethical, responsible company that is innovative on all fronts. These are values to which I strongly adhere and which I will continue to promote in order to maintain the confidence of our employees, our customers, our partners and our shareholders. Our mission, which is to give access to better vision to the maximum number of people across the globe, will continue to drive our growth. We will pursue this mission thanks to our high quality products and services, backed by a constant focus on innovation, rigorous production standards and enthusiastic, committed teams that work closely with eye care professionals.