Essilor Reports Modest Gains for First-Half 2013

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CHARENTON-LE-PONT, France— Essilor International (Reuters: ESSI.PA) reported revenue of €2,576 million for the six months ended June 30, 2013, an increase of 1.8 percent, or 1.2 percent on a like-for-like basis. Overall, Essilor posted revenue growth of 3.7 percent at constant exchange rates in the first half of 2013. The company said its performance was adversely affected by high prior-year comparatives and an unfavorable operating environment, while noting that profitability improved considerably, with a contribution margin of 18.3 percent.

“Our first-half results reflect Essilor’s ability to implement operations worldwide while maintaining high margins,” remarked Hubert Sagnières, chairman and CEO of Essilor, based here. “The Company’s profitability improved thanks to new products and manufacturing efficiency, despite the impact on sales growth of high prior-year comparatives."

During the first half, in a sluggish overall economic environment, Essilor rolled out new products region by region and strengthened its geographical presence through new partnerships. The company noted the ramp-up of new products such the Varilux S progressive lens series and the growth of its Xperio polarized lens line increase demand across all regions and divisions helped to drive stronger sales throughout the period.

Essilor’s lenses and optical instruments division generated €2,296.3 million in revenue for the first half of 2013, up 1.3 percent like-for-like. In North America, revenue rose 0.2 percent like-for-like, to €914.8 million. Essilor said the impact of the eye care market’s sound fundamentals was partially obscured by delays in commercially rolling out the Varilux S series progressive lens and by high prior-year comparatives related to the contract to supply LensCrafters with one-hour anti-reflective coating solutions. Business picked up in the second quarter, thanks in part to the advertising campaign for the Xperio range of polarized lenses. Sales to independent laboratories were lifted by a strong marketing drive and a favorable product mix.

Essilor said revenues for its equipment division totaled €92.3 million, a decrease of 3.4 percent, or 1.0 percent like-for-like, due to comparison with a strong first-half 2012, which was boosted by exceptional machine sales. When adjusted for these sales, business was up for the period, led by demand for coating machines, notably in North America. By the end of the period, a deep backlog had been rebuilt, in particular due to the successful launch of an automated On-Block Manufacturing in-line production system by its Satisloh business unit.

Essilor reported that its readers division generated revenue of €187.1 million, up 0.7 percent, or 2.0 percent like-for-like. The performance in non-prescription reading glasses was driven by product line refreshes and the ramp-up of business with a number of key accounts, despite sluggish retail sales in the U.S., according to Essilor. Sunglasses sales were adversely impacted by high prior-year comparatives due to exceptionally sunny weather in first-half 2012. Essilor noted that the integration of the Stylemark sunglass business is now nearly completed and synergies are being developed faster than expected.