– Growth picking up for Lenses & Optical Instruments excluding the impact of natural disasters
– New products and ecommerce delivering good results
– Full-year objectives confirmed
Charenton-le-Pont, France (October 24, 2017 – 6:30 a.m.) – Essilor International, the world leader in ophthalmic optics, today announced that consolidated revenue for the nine months ended September 30, 2017 totaled €5,661 million, representing an increase of 6.6% in constant currency.
Nine-Month 2017 Consolidated Revenue up 6.7%
“Despite adverse economic and climate effects, Essilor remains focused on its mission of improving lives by improving sight. We are constantly delivering ever better visual health solutions, for instance the new Varilux® X series™ progressive lens, our ecommerce activities, and the inclusive business models deployed throughout the world. Essilor intends to build on the momentum of the third quarter between now and the end of this year while also making major strides in its proposed combination with Luxottica, creating the optimal conditions for a new chapter in its history to begin in 2018,” said Hubert Sagnières, Chairman and Chief Executive Officer of Essilor.
Constant currency growth (like-for-like plus acquisitions) reached 6.6%, fueled by:
- A 2.5% like-for-like increase in consolidated revenue, reflecting good results at the Lenses & Optical Instruments and Equipment divisions since the beginning of the year, but also a slight contraction in sales for Sunglasses & Readers.
- A 4.1% positive contribution from changes in the scope of consolidation, primarily reflecting the acquisitions made in 2016.
Since the beginning of the year, the currency effect on revenue has become neutral (+0.1%). The currency impact had been highly positive in the first quarter, but has gradually diminished due to euro appreciation against the Company’s main invoicing currencies (US dollar, British pound, yen, Chinese yuan, etc.) in recent months.
Third-Quarter 2017 Consolidated Revenue up 1.7%
Third-Quarter Revenue by Region and Division
Revenue excluding currency effects rose 5.9% in the third quarter of 2017, to €1,752 million. Like-for-like growth was 2.5%, as in the first half. However, the growth rate was negatively impacted by a series of natural disasters – including Hurricanes Harvey and Irma, which swept through the Southern United States and the Caribbean, as well as the earthquake that struck Mexico – along with the negative effects of tax reform in India. It is estimated that these events, which primarily affected the “Lenses & Optical Instruments” and “Sunglasses & Readers” businesses, reduced the Company’s growth by more than 50 basis points during the quarter.
Lenses & Optical Instruments
The Lenses & Optical Instruments division posted like-for-like1 revenue growth of 3.1% in the third quarter. Looking beyond the aforementioned one-off factors, the division’s underlying growth accelerated sharply relative to the second quarter (+2.5%).
In North America, revenue increased by 2.3% like for like1, despite natural disasters impacting the United States at the end of August and beginning of September.
The core US lens business grew steadily and reflected continued improvement in underlying performance, notwithstanding a lackluster market. Key strategic initiatives in Alliances (Vision Source, PERC/IVA and Optiport) and business solutions continued to support performance, including the ongoing deployment of new offers for members of the alliance service platforms across independent eyecare professionals. The Company also saw encouraging early signs from the launch of its “Ultimate Lens Package” with independent eyecare professionals – comprised of the Varilux® X series™ lens and Crizal Sapphire® 360° UV and Transitions® Signature® VII added-value products for progressive wearers and the Eyezen™+ lens and Crizal Sapphire® 360° UV and Transitions® Signature® VII added-value products for single vision wearers. In its key account business, Essilor experienced robust demand for innovative lens offerings in addition to increased exposure to fast-growing retail groups. Contact lens distribution activities continued to perform well during the quarter.
Growth was moderate in Canada, while online sales continued to power ahead.
In Europe, like-for-like1 growth picked up (+3.0%) thanks to the core lens business and the success of the ecommerce sites. The rapid rollout of the Varilux® X series™ progressive lens, now marketed across all countries in the region, together with volume growth for Transitions® photochromic lenses, fueled strong sales to opticians. Eastern Europe, Russia and Italy delivered the best results on the back of an improved product mix. France returned to growth, and the momentum remained solid in Portugal and Scandinavia. Results in the United Kingdom and Germany were more mixed.
Like-for-like1 sales growth of 5.7% in Asia/Pacific/Middle East/Africa was driven by a high single-digit increase in fast-growing countries, which more than offset a slight dip in the developed countries of the region. Sales in China were buoyed by mid-range product lines, new Eyezen™ Lite lenses and online sales. South Korea delivered strong results thanks to progressive and photochromic lenses. In Southeast Asia, strong sales of progressive lenses and Crizal® and Transitions® products once again drove solid gains. Sales growth in Turkey accelerated, thanks in part to a low comparison base. Business remained brisk in Africa, while trends in the Middle East were more mixed. Tax reform in India had a disruptive effect on mid-range product sales and distribution. Challenging market conditions in Taiwan and Hong Kong persisted.
In Latin America, sales rose 1.4% on a like-for-like1 basis, representing an improvement compared to the second quarter (-5.1%). Though the economic climate in Brazil remained challenging, gradually normalizing business levels were evidenced by a return to volume growth for Varilux® progressive lenses, relieving a significant portion of the downward pressure on sales. However, supply chain disruptions caused by the earthquake in Mexico fully offset a sharp rise in sales during July and August. All other countries in the region saw robust gains, with Argentina leading the way.
Revenue at the ecommerce businesses rose 15% like-for-like1, in line with the first half. In North America, sales were boosted by strong results for EyeBuyDirect™ and a return to growth for Clearly™ in the United States and Canada. Growth in Europe was fueled by the successful business models of Vision Direct™ for contact lenses and Glasses Direct™ for prescription glasses. The e-commerce sites in India (coolwinks.com) and China (coastalvision.cn) continued to increase in scale.
Sunglasses & Readers
Sunglasses & Readers revenue was up 0.2% like-for-like1 in the third quarter. Growth improved over H1 levels when excluding the impact of natural disasters, which mainly impacted Costa.
Costa experienced significant disruption from natural disasters affecting its core regions, especially Florida as well as the Caribbean. Despite this, the business continued to grow, notably through ecommerce, optical frames and regional expansion.
FGX continued to reinforce its presence in key accounts and build a pipeline of future growth opportunities.
In China, Xiamen Yarui Optical (Bolon™/Molsion™/Prosun™) benefited from a solid sales dynamic in ecommerce, international, and Bolon™ stores during the third quarter. In addition, the company continues its action plan in order to optimize the inventory levels of sunglasses at wholesalers and eyecare professionals. A return to sustainable growth is expected in 2018. Photosynthesis Group, acquired last year, continued to perform well.
Sales at the Equipment division declined by 9.4% like-for-like1, primarily due to the postponement of deliveries for digital generators and polishers in the US, where sales of coating machines and consumables held up well. Business conditions in Latin America remained challenging. In Europe and Asia, sales were once again boosted by the new generation of the VFT-Orbit 2™ digital generator and Multi-FLEXTM polisher, along with the many investments made in new production capacity. Trends in the division’s order book and future growth opportunities support a positive outlook for the coming months.
Acquisitions and Partnerships
Since the beginning of the year, Essilor has pursued its strategy of forging local partnerships by acquiring majority interests in nine companies representing aggregate full-year revenue of around €87 million.
During the third quarter, the Company expanded its coverage in Africa by taking over the optical businesses of CFE, which distributes optical products (ophthalmic lenses, frames and instruments) to opticians in Central and West African countries and generates annual revenue of approximately €2.5 million. These businesses have been housed in a new fully-owned Essilor subsidiary called CFE Optique.
Over the rest of 2017, Essilor will continue to roll out its innovations and expand its businesses. The Company intends to deliver constant currency revenue growth of between 6% and 7% over the full year, including like-for-like1 growth of around 3%. The adjusted3 contribution from operations² is expected to be close to 18.5% of revenue.
A conference call in English will be held today at 10:00 a.m. CEST.
The meeting will be available live and may also be heard later at:
Forthcoming investor event
The 2017 annual results will be released on March 1st, 2018.
- Like-for-like growth: Growth at constant scope and exchange rates. See definition provided in Note 2.3 to the consolidated financial statements in the 2016 Registration Document.
- Contribution from operations: Revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses).
- Adjusted in 2017 for expenses accounted for in the financial statements in the context of the proposed combination with Luxottica.
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Tel.: +33 (0)1 49 77 45 02
Tel.: +33 (0)1 49 77 45 02