CHARENTON-LE-PONT, France, August 28 Essilor
CHARENTON-LE-PONT, France, August 28 /PRNewswire-FirstCall/ --
- A Solid First-Half Performance
- Net Profit Up 16.8% at Constant Exchange Rates
- Essilor Launches a Share Buyback Program
The Board of Directors of Essilor International, the world leader in
ophthalmic optics, has approved the financial statements for the six months
ended June 30, 2008.
EUR millions First-half 2008 First-half 2007 % change % change
at constant
exchange
rates
Revenue 1,520.2 1,476.9+2.9%+9.6%
Contribution margin 18.2% 18.1% --
Profit attributable198.3 181.9+9.0% +16.8%
to equity holders of
Essilor International
Basic earnings per 0.960.88(1) +8.1% +15.8%
share (in EUR)
(1) Adjusted for the two-for-one stock split on July 16, 2007
The highlights of the first half were:
- Growth (excluding the currency effect) of 9.6%
- Sustained business growth in North America, Latin America,
the ASEAN countries, China and India.
- Successful new products, notably the sixth-generation of
Transitions(R) variable-tint lenses and Crizal Avance(TM)
anti-reflective lenses with Scotchgard(TM) Protector.
- High profitability, with a contribution margin of 18.2% that
was slightly higher than the figure reported for full-year 2007.
- A 9% increase in profit attributable to equity holders of
Essilor International, for a net margin of 13%.
- An ongoing external growth strategy, with the acquisition of
13 companies representing approximately EUR70 million in full-year
revenue.
- The buyback of 1.7 million Essilor shares for a total of
EUR64.5 million, increasing treasury stock from 1.3% to 2.0%.
Highlights since the end of the first half
Ongoing external growth strategy
Since July 1, Essilor has acquired three new companies. In Germany, it
acquired Nika GmbH, a lens wholesaler with around EUR9 million in revenue. In
the United States, Essilor of America acquired a majority stake in
Optimatrix, a prescription laboratory based in Alabama with revenue of $4.6
million. In India, Essilor acquired the assets of Sankar & Co's ophthalmic
division, comprising five formerly franchised laboratories, which together
generate EUR0.9 million in revenue.
Launch of a specific program to buy back 3.3% of outstanding shares
In July, Essilor decided to introduce a share buyback program to offset
the dilutive impact of OCEANE bonds due in 2010 in the event that the
remaining bonds are converted into new or existing shares.
The program consists of purchasing 6.9 million shares, or 3.3% of the
capital. Financed by cash and routine borrowings, this investment will
increase the Company's gearing.
Launched in July 2008, the buyback will continue through the end of the
year and, if necessary, may extend into 2009.
In addition to this specific program, Essilor will continue to buy back
shares to reduce the dilutive impact of stock option and performance share
grants.
Outlook
In the second half, Essilor will pursue its strategy of deploying
valued-added products, developing in the international marketplace and
expanding through acquisitions. Full year performance is expected once again
to confirm Essilor's ability to drive steady growth in both revenue and
margins.
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A meeting with analysts will be held today at 10:00 a.m.
The meeting will be webcast live and recorded for later viewing at the
following address:
http://hosting.3sens.com/Essilor/20080828-379EA2FD/en
The presentation will be posted at the following address:
http://www.essilor.com/results-presentations
Regulatory Information
The interim report can be downloaded from the Company's website,
http://www.essilor.com, in the News > Publications section, or by clicking
on: http://www.essilor.com/reports#interim
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Next financial announcement:
Third-quarter revenue will be announced on Thursday, October 23, 2008.
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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, presbyopia
and astigmatism. Essilor operates worldwide through 15 production sites, 270
lens finishing laboratories and local distribution networks. The Essilor
share trades on the Euronext Paris market and is included in the CAC 40
index. Codes and symbols: ISIN: FR 0000121667; Reuters: ESSI.PA; Bloomberg:
EF.FP.
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Management Report
First-Half 2008
EUR millionsFirst-half 2008 First-half 2007 % change
Revenue 1,520.2 1,476.9 +2.9%
Contribution from 276.3 267.3 +3.4%
operations (1)
18.2% 18.1%
% of revenue
Operating profit 261.7 253.2 +3.4%
Profit attributable to198.3 181.9 +9.0%
equity holders of Essilor
International
% of revenue 13.0% 12.3%
Basic earnings per share 0.960.88(2) +8.1%
(in EUR)
(1) Operating profit before share-based payments, restructuring costs and
other non-recurring items, and goodwill impairment.
(2) Adjusted for the two-for-one stock split on July 16, 2007.
Revenue up 2.9% to EUR1,520.2 million
Essilor's consolidated revenue for the six months ended June 30, 2008
rose by 5.4% like-for-like and 9.6% excluding the currency effect. Changes in
the scope of consolidation boosted revenue by 4.2%, reflecting the
contributions of the businesses acquired in 2007 and in the first half of
2008. The currency effect was a negative 6.6%, which reduced reported growth
to 2.9%.
Organic growth in revenue was led by:
- Very strong demand in North America, South America and most
countries in Asia.
- The successful launch of the sixth-generation of
Transitions(R) variable-tint lenses as well as the Crizal Avance(TM)
anti-reflective lenses with Scotchgard(TM) Protector.
- A sharp increase in sales of medium and high-index lenses,
especially in 1.6 high-index material.
Revenue by region
EUR millions First-half First-half% change % change
2008 2007 (reported) (like-for-like)
Europe 697.1675.7+3.2% +2.7%
North America 625.4622.4+0.5% +7.0%
Asia-Pacific 137.1128.7+6.5% +6.9%
Latin America 60.6 50.1 +21.0%+17.6%
Thirteen acquisitions in the first half
Essilor acquired 13 companies or their assets during the first half.
Together, they represent additional full-year revenue of EUR70 million for a
total investment of EUR75.7 million.
- In Europe, Essilor acquired all outstanding shares in Italy's Galileo
(EUR13 million in revenue) and Bulgaria's Optymal (EUR1 million), and
also acquired a majority stake in Netherlands-based O'Max (EUR3
million).
- In the United States, Essilor of America added six
laboratories to its network: Interstate ($26 million in revenue),
Empire ($23 million) Advance ($6 million), Future TN, ($3 million),
Deschutes ($3 million) and Rainbow in Puerto Rico ($3 million).
Nikon-Essilor also acquired a minority holding in Encore Optics.
- In Canada, Essilor acquired a majority interest in Westlab
(C$4 million in revenue).
- In Asia, Essilor acquired Malaysia's Frame N Lenses (EUR2
million in revenue) and India's Rx 20/20 (EUR1 million).
In June, Essilor also announced the acquisition of Satisloh, the world's
leading supplier of prescription laboratory equipment, with EUR161 million in
2007 revenue. The agreement is subject to certain conditions precedent.
Gross margin up 1.4% to EUR867 million
Gross margin (revenue less cost of goods sold, expressed as a percentage
of revenue) stood at 57.0%, compared with 57.9% in first-half 2007. The
decline was mainly due to the dilutive impact of acquisitions-particularly
OOGP (contact lens distribution), KBco (polarized lens distribution) and ILT
(ophthalmic lens distribution), all of which were acquired in 2007-whose
margins are structurally lower than the rest of the Company.
Operating expenses up 0.5% to EUR590.7 million
Operating expenses were virtually stable in the first half and accounted
for 38.9% of consolidated revenue, versus 39.8% in the prior-year period,
when they amounted to EUR587.5 million.
Operating expenses comprised:
- R&D and engineering costs of EUR71.3 million (net of a
EUR5.4 million tax credit), representing 4.7% of consolidated revenue,
the same as in first-half 2007.
- Selling and distribution costs of EUR329.2 million (21.7% of
revenue compared with 22.1% in the previous-year period).
- Other operating expenses of EUR190.3 million (12.5% of
revenue versus 13.0% in first-half 2007).
The Company continued to invest in research and development and
maintained its marketing and sales efforts, while stabilizing overall
spending.
Contribution from operations up 3.4% to EUR276.3 million
As a percentage of revenue, contribution from operations stood at 18.2%,
slightly above the full-year contribution of 18.1% in 2007. This record high
reflects Essilor's ability to integrate acquisitions, continue driving
productivity gains and manage operating costs in a challenging economic
environment.
Operating profit up 3.4% to EUR261.7 million
"Other income and expenses from operations" and "Gains and losses on
asset disposals" together represented a net expense of EUR14.6 million
(compared with EUR14.1 million in first-half 2007), of which EUR12.3 million
in compensation costs on employee stock ownership plans, stock option plans
and performance share grants. Operating profit represented 17.2% of
consolidated revenue.
EUR2.9 million in finance costs and other financial income and expenses,
net
Finance costs and other financial income and expenses amounted to a net
income of EUR2.9 million, a sharp improvement over the EUR5.5 million expense
recorded in first-half 2007. This performance reflected the increase in the
Company's net cash and cash equivalents compared with June 30, 2007, as well
as net exchange gains and fair value adjustments to financial instruments.
Profit attributable to equity holders of Essilor International up 9% to
EUR198.3 million
Net profit totaled EUR201.4 million, an increase of 9.6%. It comprised:
- Income tax expense of EUR77.9 million. The 29.4% effective
tax rate compared with a 32.0% rate for first-half 2007. The
improvement was driven by a lower average tax rate in Europe and
business growth in Asia, where the rate is below the Company average.
- The share of profit from associates-VisionWeb, Sperian
Protection and Transitions-which amounted to EUR14.7 million, versus
EUR15.3 million in first-half 2007. Earnings from Transitions declined
slightly to EUR9.6 million, from EUR10.1 million for the prior-year
period, because of a strongly negative currency effect and the
concentration of marketing costs in the first half related to the
launch of the sixth generation of variable-tint lenses in North
America.
Profit attributable to equity holders of the parent was 9.0% higher, at
EUR198.3 million. Earnings per share rose by 8.1% to EUR0.96.
Inventories and work in progress
Inventories amounted to EUR400 million at June 30, 2008, compared with
394 million at December 31, 2007, a 1.5% increase. The like-for-like increase
was 4.3%, below the rate of revenue growth.
Investments
Capital expenditure net of divestments totaled EUR95 million or 6.2% of
consolidated revenue. Financial investments net of disposals amounted to
EUR140.2 million. Of this amount, acquisitions accounted for EUR75.7 million,
while buybacks of Essilor shares accounted for EUR64.5 million.
Cash Flow Statement
EUR millions
Net cash from operations 275 Capital expenditure 95
net of the proceeds
from asset sales
Proceeds from employee share 22 Change in WCR and92
issue provisions
Net decrease in cash and 150 Dividends 129
cash equivalents
Effect of changes in9 Financial investments 140
exchange rates and in the net of the proceeds
scope of consolidation from disposals
Net cash and cash equivalents declined to EUR109.4 million, from EUR259.6
million at year-end 2007 as the Company' high profitability and robust
performance enabled it to pursue an ambitious program of industrial and
financial investment and to increase dividends. Net cash and cash equivalents
were also affected by the seasonal impact of annual discount payments to
customers, which are generally concentrated in the first half.
Related party transactions / Risks and contingencies
In first-half 2008, the nature of transactions with companies
consolidated by the proportionate or equity method was not significantly
different from the description in the 2007 Registration Document.
Similarly, risks and contingencies to which the Company is exposed in the
months ahead are generally in line with the analysis presented in Chapter 4
of the Registration Document.
Outlook
In the second half, Essilor will pursue its strategy of deploying
valued-added products, developing in the international marketplace and
expanding through acquisitions. Full year performance is expected once again
to confirm Essilor's ability to drive steady growth in both revenue and
margins.
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Investor Relations and Financial Communications
Veronique Gillet - Sebastien Leroy
Phone: +33(0)1-49-77-42-16
http://www.essilor.com
SOURCE Essilor
