Essilor : First Half 2009 Revenue
In a generally sluggish ophthalmic optics market, Essilor primarilyrelied on new product launches to sustain its lens sales. Market shareincreased worldwide, led by the Company's extensive product portfolio, strongdistribution networks and targeted acquisitions dynamic.
In light of these factors, Essilor is confident in its ability tomaintain first-half 2009 operating margin on a par with full-year 2008.
Improving performance in the second quarter: the like-for-like decreasein first-half revenue included a decline of 1.0% in the first quarter and of0.4%(2) in the second.
The strong 6% growth from changes in the scope of consolidation primarilyreflects a 3.2% increase from the consolidation of Satisloh and a 2.8%contribution from companies acquired in second-half 2008 and first-half 2009.
The 4.1% positive currency effect was mainly due to the US dollar's 15.4%gain against the euro during the period. On the downside, reported revenuewas reduced by the declines against the euro in the British pound (down12.4%), the Brazilian real (down 10.9%) and the Korean won (down 15.1%).
Revenue by region and business
Growth in Europe was impacted by the highly unfavorable economy,especially in the United Kingdom, Spain and the Netherlands. Operations inGermany and France demonstrated firmer resistance, thanks to theirmulti-network strategy. New contract wins and successful businessrelationships helped to drive strong growth in Russia, Finland, Austria andSwitzerland. Instrument sales returned to growth late in the first half,after falling sharply early in the year due to delays in delivering the newMr Blue(TM) edger.
In North America, business with optometrists and independent laboratoriesremained robust in the United States, while operations in Canada have begunto improve.
Operations in the Asia-Pacific region had a good first-half, with Indiaand South Korea reporting an excellent performance, followed by China andmost of the ASEAN countries. Growth was also strong in Australia,particularly in the independent eyecare professionals segment. The onlyexception was in Japan, where Nikon-Essilor nevertheless increased its shareof a still depressed market.
In Latin America, growth slowed for the period, partly due to thecomparison with the 17.6% gain reported in first-half 2008. However, businessin Brazil and Latin America benefited from an improved product mix.
Laboratory equipment sales continued to suffer as prescriptionlaboratories pushed back purchases of antireflective coating units andsurfacing machines. Nevertheless, Satisloh's ability to align its productoffering with current conditions enabled it to gain new market share over theperiod.
Highlights of the quarter - Acquisitions
During the second quarter, Essilor acquired three new prescriptionlaboratories in the United States, ABBA Optical, Barnett & Ramel Optical andMcLeod Optical, which have aggregate revenue of $22 million. In Canada,Nikon-Essilor subsidiary Nikon Optical Canada raised its stake inprescription laboratory TechCite from 50% to 100%.
In June, Essilor also completed the acquisition, subject to certainconditions precedent, of WLC, a UK-based wholesaler-distributor with nearlyEUR12 million in revenue.
The Company announced five other acquisitions (De Ceunynck in Belgium,Amico in the Middle East and Apex Optical, Vision Pointe Optical andOptiSource International in the United States), which will be consolidated inthe second-half.
Since the beginning of the year, Essilor has completed 14 acquisitions,which will bring in around EUR64 million in full-year revenue.
As part of the program set up to offset potential dilution from theconversion of outstanding OCEANE bonds, Essilor purchased 459,280 of its ownshares on the open market during the second quarter. Since the beginning ofthe year, the program has involved the purchase of 679,698 shares for a totalof EUR20.2 million.
(*) Of which 3.4% due to the currency effect - (**) Satisloh was not partof the Group in second-quarter 2008.
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, presbyopiaand astigmatism. Essilor operates worldwide through 15 production sites, 293lens finishing laboratories and local distribution networks.
The Essilor share trades on the NYSE Euronext Paris market and isincluded in the CAC 40 index.
Codes and symbols: (ISIN: FR 0000121667; Reuters: ESSI.PA; Bloomberg:EF:FP).
(1) Application of IFRS 8 - Operating Segments has resulted in thecreation of the "Laboratory Equipment" business segment, which includes themachines, consumables and replacement parts sold by Satisloh and Delamare toprescription laboratories. The change has not had a material impact onrevenue from the operating regions, which consolidate all of the other sales(primarily of ophthalmic lenses and optical instruments).
(2) Second-quarter revenue is analyzed in more detail in the appendix,page 3.- Strong Growth in First-Half Revenue, up 9.4% - Operating Margin Holds Firm
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