Essilor: Buoyant Market, Clear Strategy,Strong Revenue and Earnings Growth

Thu Feb 28, 2013 12:30am EST

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* Revenue up 19.1%
* Contribution Margin at 17.9%, Including Strategic Acquisitions1
* Strong Demand for the New Crizal® UV and Varilux® S Series Lenses
* Ramp-up in the Mid-Range Segment and in Fast-Growing Countries
* Signature of 24 Partnerships and Successful Integration of Stylemark

CHARENTON-LE-PONT, France--(Business Wire)--
Regulatory News: 

The Board of Directors of Essilor International (Paris:EI) met yesterday to
approve the 2012 financial statements. These financial statements have been
audited and the auditors are currently preparing their report.

 Key figures                                                                           
                                                                                       
 € millions                                         2012         2011         Change   
 Revenue                                            4,989        4,190        + 19.1%  
 Contribution from operations                       894          748          + 19.5%  
 (% of revenue)                                     17.9%        17.9%        -        
 Operating profit                                   832          683          + 21.8%  
 Profit attributable to Group equity holders        584          506          + 15.5%  
 Earnings per share (in €)                          2.80         2.44         + 14.7%  
 Free cash flow2                                    597          463          + 28.9%  
                                                                                       


Commenting on these results, Hubert Sagnières, Chairman and Chief Executive
Officer, said: 

"In light of these robust 2012 results, Essilor is looking to the future with
confidence and enthusiasm, inspired by the importance of its corporate mission
to improve vision worldwide, for all and wherever they are. Of the 4.2 billion
people worldwide who have a vision problem, 2.5 billion don`t have corrective
eyewear yet. Essilor is deploying a powerful strategy based on innovation,
partnerships and development in the mid-range segment and in fast-growing
markets. With our many strengths, we are confident in our ability to deliver in
2013 another year of revenue growth and high operating margins."

Highlights

In 2012, revenue increased by 8.0% including like-for-like growth and organic
acquisitions, while contribution margin held firm at 17.9% of revenue including
strategic acquisitions. These performances exceeded the average annual targets
announced by the Company at the start of the year. 

Highlights of the year included:

* Continued innovation, with the launch of 232 new products spanning all market
segments. 
* Success of the new Crizal® UV anti-reflective lens and Varilux® S series
progressive lens. 
* Ongoing implementation of the acquisition and partnership program, with 24
partnership agreements signed during the year, including 14 in fast-growing
markets, representing full-year revenues of €171 million. 
* Penetration of five new high-potential geographic markets. 
* Successful integration of Stylemark into FGX International, the North American
leader in non-prescription glasses. 
* Continuous optimization of the Company`s manufacturing resources.

Dividend

At the Annual General Meeting of Shareholders on May 16, 2013, the Board of
Directors will recommend paying a dividend of €0.88 per share. The dividend will
be paid as from June 4, 2013. 

Outlook

The ophthalmic optics market is continuing to experience structural growth, led
by global demographic trends, changing lifestyles and the rapid growth of middle
classes, particularly in fast-growing countries. The market remains highly
fragmented and penetration rates are still low - of the 4.2 billion people
worldwide with a vision problem, 2.5 billion do not have corrective eyewear yet.


In 2013, despite an uncertain economic environment, these factors will help to
sustain demand for vision correction in all regions of the world and will allow
the Group to continue its value creation strategy. As a result, Essilor is
confident in its ability to deliver another year of revenue growth and high
operating margins. 

1 Shamir in Lenses and Optical Instruments and Stylemark in Readers
2 Net cash from operating activities less change in working capital requirements
and less net capital expenditure 

EXTRACT FROM THE MANAGEMENT REPORT

REVENUE UP 19.1%

                                                                                                                            
 Consolidated Revenue by Operating Segment and by Region                                                                    
                                                                                                                            
 € millions                              2012           2011           Change             Change             Contribution   
                                                                       (reported)         (like-for-         from           
                                                                                          like)              acquisitions   
 Lenses and Optical Instruments          4,445.2        3,795.8        + 17.1%            + 5.3%             + 7.4%         
 North Americaa                          1,735.9        1,503.1        + 15.5%            + 4.0%             + 2.9%         
 Europe                                  1,558.7        1,471.2        + 5.9%             + 2.6%             + 2.5%         
 Asia-Pacific/Middle East/Africab        828.6          551.2          + 50.3%            + 12.3%            + 30.9%        
 Latin Americaa                          322.0          270.3          + 19.2%            + 13.0%            + 12.1%        
 Equipment                               199.2          184.6          + 7.9%             + 1.4%             + 0.5%         
 Readers                                 344.4          209.1          + 64.7%            + 5.9%             + 50.4%        
 TOTAL                                   4,988.8        4,189.5        + 19.1%            + 5.2%             + 9.3%         
 (a)Mexico, representing revenue of €15.9 million in 2011, is now included in the Latin America region.                     
 (b)The full consolidation of Nikon-Essilor and Essilor Korea (previously consolidated on a 50% basis) added €101.3 million to 
 2012 revenue, representing a 2.4% impact reported under "Contribution from acquisitions".                                  
                                                                                                                            


In 2012, consolidated revenue totaled €4,988.8 million, an increase of 19.1%
over the previous year.

* Like-for-like revenue growth was 5.2%.The increase reflected vibrant sales by
the Lenses and Optical Instruments business across all regions and the good
performance of the Readers business. 
* Acquisitions lifted revenue by 9.3%. The inclusion of Shamir Optical`s
first-half revenue and the impact of consolidating StyleMark from January 1,
2012 added 4.1%, the partnerships and bolt-on acquisitions signed in 2011 and
2012 contributed 2.8% and the consolidation of Nikon-Essilor and Essilor Korea
on a 100% basis (versus 50% previously) contributed 2.4%. 
* The currency effect was a positive 4.6%, reflecting primarily the US dollar`s
appreciation against the euro, but also the appreciation of the Canadian and
Australian dollars, the British pound and the Chinese yuan. Conversely, the
depreciation of the Brazilian real had a negative impact on revenue.

Activity by region and by division

LENSES AND OPTICAL INSTRUMENTS

North America

Essilor had an excellent year in North America. Revenue was up 4.0%
like-for-like, lifted by the combined impact of successful product launches,
favorable market conditions and initiatives undertaken in prior years. 

In the United States, revenue grew 5.0% like-for-like. Growth was led by
value-added products, with independent eyecare professionals enthusiastically
welcoming the deployment of Crizal® UV throughout the entire Crizal® range.
Coinciding with the Crizal® advertising campaign that began in 2012, Crizal®
UV's launch drove a sharp rise in volumes together with better differentiation
and a positive price effect. The new Varilux® S series was introduced in the
United States in the second half, along with the Definity 3 progressive lens. 

Concerning distribution channels, 2012 saw very strong activity levels with the
major optical chains. The contract for the supply of anti-reflective solutions
signed with one of the country`s leading chains, LensCrafters, was renewed and
extended, and a new lens supply contract was signed with another major national
chain. 

Sales via eyeglass and contact lens distributors grew at a healthy rate. 

In Canada, the success of the multi-network distribution strategy helped to
offset a mixed performance by Nikon Essilor in the independent optician segment
and the decision by a major national chain to in-source part of its lens
production. 

Europe

Revenue in Europe grew 2.6% like-for-like, despite a challenging economic
environment particularly in Southern Europe. Activity was strong during the
first three quarters. However the fourth quarter growth rate was adversely
affected by the high basis of comparison in the same period of 2011, which saw
the ramp up of a major supply contract in the United Kingdom, and a sales uplift
due to the production problems experienced by a major competitor. The negative
impact of high prior year comparatives was nonetheless partly offset by strong
initial sales of the new Crizal® UV lenses launched in the second quarter and
the Varilux® S series introduced in stages as from September. 

The business in France continued to perform well, thanks to the group`s own
marketing efforts that included extending the distribution networks,
successfully launching new products such as Varilux® S series, optimizing BBGR`s
positioning with national chains and leveraging the appeal of Shamir products in
certain regions. Revenues were up strongly in the United Kingdom, lifted by the
full-year impact of a supply contract with a leading optical chain, Boots
Opticians, and solid sales to independent opticians. In Central Europe, Northern
Europe and Eastern Europe, revenue grew modestly, reflecting differing
situations from one country to another. In Germany, Essilor performed well in
the optical chain segment and demonstrated good potential in the independent
optician segment. Revenue in Benelux and Southern Europe was affected by
difficult local economic environments. Nonetheless, the business in Spain
benefited from a very significant increase in BBGR's penetration rate with a
national optical chain. 

Asia-Pacific/Middle East/Africa

Revenue in the Asia-Pacific/Middle East/Africa region was up by a strong 12.3%
like-for-like, reflecting increased momentum in fast-growing markets and firm
sales in the region`s developed markets. Varilux® and Crizal® enjoyed vibrant
demand throughout the region. 

In China, sales of mid-range products continued to expand very rapidly, helped
by the good positioning of the Company`s partners. Wanxin`s distribution of
Kodak® lenses in the domestic market delivered very good results, while premium
lens sales continued to be lifted by Varilux® and Crizal® lenses. 

In India, strong gains were recorded in all market segments, thanks to new
products and sustained efforts to expand coverage of the customer base. All of
the Company`s partners turned in very good performances. 

In Indonesia and the Asean countries, revenue continued to grow at a rapid pace
and the product mix improved. 

Operations in Japan had a good year, even before taking into account the
positive effect of the change in the competitive environment. In particular, the
group increased its sales to two optical chains. 

In Australia/New Zealand, the network of independent eyecare professionals
performed very well. In the optical chain segment, the Eyebiz partnership
improved product mix. 

During 2012, the Company also entered several countries for the first time (Sri
Lanka, Tunisia and Togo). 

Latin America

In a less favorable economic environment than in 2011, Essilor reported revenue
up 13.0% like-for-like. 

In Brazil, Essilor continued to deploy its multi-network strategy. Leveraging
partnerships with independent laboratories to speed distribution of value-added
lenses, the Company secured a rapid increase in sales of progressive lenses,
anti-reflective coatings and photochromic lenses. In particular, anti-reflective
coating centers were deployed at two partner laboratories. The Crizal® UV lens
was launched in Brazil`s major cities at the end of the year. 

It was another year of very strong growth in Mexico, where Essilor continued to
take advantage of the opportunities created by the under-penetration of the main
value-added lens categories. The Varilux® progressive lens and Crizal®
anti-reflective lens ranges increased their market shares. A new laboratory was
opened in Mexico City to improve service quality, while the signature of a major
partnership agreement with an independent distributor, Crystal y Plastico, will
allow the Company to deepen its geographic coverage and strengthen its position
in the mid-range segment. 

In Colombia, a marketing subsidiary was set up during the year to speed
deployment of the Company`s various brands. After a good start to the year in
Argentina, performance was affected by slower economic growth and import
restrictions. 

Instruments

The Instruments Division experienced a limited decline in business during 2012,
in a particularly tight market environment in Europe which accounts for a
significant proportion of its revenue. 

Essilor strengthened its overall positions in the edging tool segment, but
performances were uneven depending on the country. In Europe, the fall-off in
sales concerned Southern Europe, particularly Italy and Spain, and Central
Europe. In France, sales were higher, helped by the ongoing success of the Mr.
Orange® edger. Outside Europe, the Division performed well in the United States,
Canada, Asia and Brazil. 

The growing number of opticians choosing to install optometric equipment helped
to drive expansion in this segment of the European market. Essilor`s revamped
product line-up contributed to market share gains among independent opticians
and stronger positions with the optical chains. 

Lastly, during 2012, Essilor began marketing its M`Eye Fit® range of measuring
tools that are designed as aids for the sale of individualized lenses by eyecare
professionals. The Company has considerably strengthened its position in the
measuring device segment by acquiring a majority stake in Interactive Visuel
System (IVS), a global leader in technological sales support solutions for
opticians. IVS`s products include the Visioffice measuring column that allows
eyecare professionals to dispense premium lenses in the Varilux® range. 

EQUIPMENT

The Equipment Division reported a 1.4% increase in like-for-like revenue despite
high prior-year comparatives and a less favorable climate for capital
expenditure. This good performance reflects ongoing laboratory investment in
digital surfacing machines, primarily in the United States and Latin America, as
well as firm demand in the Consumables division. Satisloh`s overall volumes were
also lifted by the extension of a contract to supply one-hour anti-reflective
lens machines to LensCrafters, a large optical chain in the United States. 

The Division`s capacity for innovation enabled it to selectively increase market
share via a more flexible deployment of its technological solutions, a more
global services network and the introduction of new business models. Satisloh
launched the Box-Coater 1200-MPX, a high-output anti-reflective lens machine for
mass manufacturers. MicroLab was introduced for smaller laboratories interested
in digital surfacing. The modular system offers wide manufacturing flexibility
for digital surfacing processes, as well as new On-Block Manufacturing
processes. 

The Division also continued to expand internationally, led by its many successes
in Latin America and the opening of a new 2,000-sq.m showroom in Dan Yang, China
to showcase its technology to Asian customers. 

READERS

The Readers Division had a good year, with like-for-like revenue gaining 5.9%.
Growth was mainly fueled by the sunglasses segment, which benefited from the
ramp-up of a new contract with a major nationwide chain and the introduction of
new collections at several key accounts at the end of the year. 

Performance in the non-prescription glasses segment was more mixed, due to
ongoing inventory drawdown at the start of the year. In the United States, FGXI
was helped by the launch of a revamped line-up for a major retailer and the
ramp-up of a new supply contract with a fast-growing variety store chain. These
efforts were backed by a television ad campaign featuring Brooke Shields, the
new face of Foster Grant® eyewear products. 

FGXI also continued its development outside the United States, posting strong
sales growth in the United Kingdom and Latin America. In Latin America, the
Division launched business operations in South America (Ecuador, Bolivia and
Peru) and a certain number of Central American countries, while expanding in
Mexico and Chile alongside existing or new customers. In Italy, Polinelli
reported market share gains in a difficult economic climate. 

The integration of Stylemark and the implementation of the resulting synergies
are in line with expectations. Following the transaction, distribution
operations are gradually being merged at the FGXI site in Rhode Island. The
acquisition has also allowed Essilor to accelerate its growth in the department
store segment, increasing its sales to various fast-growing key accounts.

 Fourth quarter revenue: up 10.5% excluding the currency effect                                                           
                                                                                                                          
 € millions                            Q4 2012        Q4 2011        Change             Change             Contribution   
                                                                     (reported)         (like-for-         from           
                                                                                        like)              acquisitions   
 Lenses and Optical Instruments        1,090.9        979.3          + 11.4%            + 3.5%             + 5.8%         
 North Americaa                        410.1          374.6          + 9.5%             + 3.0%             + 2.1%         
 Europe                                390.1          382.0          + 2.1%             + 1.1%             0%             
 Asia-Pacific/                         209.6          149.7          + 40.0%            + 7.0%             + 29.1%        
 Middle East/Africab                                                                                                      
 Latin Americaa                        81.1           72.9           + 11.3%            + 11.9%            + 6.7%         
 Equipment                             55.6           52.8           + 5.3%             + 1.7%             + 0%           
 Readers                               83.2           58.1           + 43.3%            + 6.5%             + 31.5%        
 TOTAL                                 1,229.7        1,090.2        + 12.8%            + 3.6%             + 6.9%         
 (a)Mexico, representing revenue of €4.3 million in fourth quarter 2011, is now included in the Latin America region.     
 (b)The full consolidation of Nikon-Essilor and Essilor Korea (previously consolidated on a 50% basis) added €23.5 million, 
 representing a 2.2% impact reported under "Contribution from acquisitions"                                               
                                                                                                                          


Revenue grew 12.8% in the fourth quarter, including a 3.6% like-for-like
increase despite the high prior-period comparatives. The 6.9% contribution to
growth from acquisitions breaks down as follows: 3.0% from bolt-on acquisitions,
1.7% from Stylemark, and the remaining 2.2% from the change in the method of
consolidation for Nikon-Essilor and Essilor Korea. The currency effect was a
positive 2.3%. 

Over the period, Essilor generated results in line with its objectives by
continuing to deliver innovative products and expand in high-growth markets. By
region and business:

* Demand remained strong in the United States. 
* The Varilux S series was successfully launched in Europe, where
period-on-period growth was weakened by very high prior-period comparatives and
ongoing difficulties in Southern Europe and in the Instruments business. 
* Sales were strong in the fast-growing markets of Asia-Pacific, the Middle East
and Latin America. 
* The Readers business enjoyed a good fourth quarter. 
* Equipment Division sales stabilized at a high level.

Twenty-four new partnerships forged worldwide in 2012

During the year, the Company finalized 24 partnerships or bolt-on acquisitions
representing €171 million in additional revenue on a full-year basis. These
transactions involved all regions (nine in North America, one in Europe, ten in
Asia-Pacific/Middle East/Africa and four in Latin America). 

INCOME STATEMENT

                                                                                             
 € millions                                           2012           2011           Change   
 Revenue                                              4,988.8        4,189.5        + 19.1%  
 Gross profit                                         2,783.6        2,321.5        + 19.9%  
 (% of revenue)                                       55.8%          55.4%                   
 Contribution from operations((a))                    894.1          748.2          + 19.5%  
 (% of revenue)                                       17.9%          17.9%                   
 Other income (expenses), net                         (62.4)         (65.1)                  
 Operating profit                                     831.7          683.1          + 21.8%  
 Cost of gross debt and other financial income        (18.0)         (13.4)                  
 and expenses, net                                                                           
 Income tax expense                                   (207.1)        (179.4)                 
 Effective tax rate (%)                               25.5%          26.8%                   
 Share of profit of associates                        23.8           27.9                    
 Attributable to minority interests                   (46.4)         (12.6)                  
 Profit attributable to Group equity holders          584.0          505.6          + 15.5%  
 % of revenue                                         11.7%          12.1%                   
 Earnings per share (in €)                            2.80           2.44           + 14.7%  
 (a)Operating profit before compensation costs for share-based payment plans, restructuring costs, other income 
 and expense, and goodwill impairment                                                        


Gross margin

In 2012, gross margin (revenue less cost of sales as a percentage of revenue)
rose by 40 basis points to 55.8%. The improvement reflected manufacturing
productivity gains, generated by the sharp rise in volumes, and the success of
new products, particularly the Crizal® UV anti-reflective lens. 

Operating expenses

Operating expenses represented 37.9% of revenue. The 30-basis point increase
compared with 2011 was due to:

* Significantly higher marketing, sales and distribution costs. 
* An increase in corporate costs, notably to strengthen support structures in
fast-growing regions. 
* An uplift in research and development spending to €161.9 million (before
deducting research tax credits of €12.9 million) from €151.5 million in 2011.

In all, the contribution from operations amounted to €894.1 million, up 19.5% on
2011. Contribution margin was stable at 17.9% of revenue. Excluding the impact
of purchase price allocations and the application of IFRS 3 (revised),
contribution margin stood at 18.6%. 

Earnings per share up 14.7% to €2.80

Other income and expenses from operations

This item represented net income of €62.4 million, down €2.7 million from 2011. 

The total includes:

* €28.4 million in compensation costs for share-based payment plans (versus
€23.2 million in 2011), of which €27.7 million for stock option and performance
share plans (including €5 million in employer contributions), with the balance
corresponding to the cost of the discount offered to employees participating in
the Employee Stock Ownership Plan. 
* €25.3 million in restructuring costs, representing slightly more than in 2011.
The 2012 figure mainly concerned the rationalization of the prescription
laboratory network and the transfer of R&D operations from Florida to the new
innovation and technology center opened on the Dallas campus in 2012. 
* €21.2 million in legal costs, notably for the agreement with Carl Zeiss
Vision, and transaction costs on strategic acquisitions. 
* A €15.6 million net gain on asset disposals, arising mainly from the full
consolidation of the Nikon-Essilor and Essilor Korea joint ventures that were
previously consolidated on a 50% basis.

Operating profit

In 2012, operating profit (corresponding to contribution from operations plus or
minus other income and expenses from operations and gains and losses on asset
disposals) totaled €831.7 million, representing 16.7% of revenue versus 16.3% in
2011. 

Cost of gross debt and other financial income and expenses

Cost of gross debt and other financial income and expenses represented a net
expense of €18.0 million, versus €13.4 million in 2011. The increase is mainly
explained by the fact that the average maturity of debt was longer in 2012 than
in 2011, leading to a rise in interest costs. Unfavorable exchange rates were
also a factor. 

Income tax expense

Income tax expense rose by 15.5% to €207.1 million. However, the effective tax
rate declined to 25.5% of pre-tax profit from 26.8%, due mainly to the
non-recurring items included in other operating income and expenses. 

Share of profits of associates

This item corresponds to Essilor`s share of the profit derived from sales by
49%-owned Transitions to third-party lens casters. The decline to €23.8 million
from €27.9 million in 2011 was due to the fall-off in Transitions sales to these
external customers. 

Profit attributable to equity holders of the parent and earnings per share

Minority interests in profit rose sharply to €46.4 million, reflecting dynamic
implementation of Essilor`s partnership strategy. The main reasons for the
increase were as follows:

* The change of consolidation method applied to Nikon-Essilor and Essilor Korea.

* Consolidation of 50%-owned Shamir over the full year in 2012 versus only part
of the year in 2011. 
* Recognition of minority interests in the new partnerships signed in 2011 and
2012. 
* Growth in the profits of existing partnerships, notably as a result of the
implementation of programs to unleash synergies.

Profit attributable to equity holders of the parent rose 15.5% to €584.0
million, representing 11.7% of revenue. 

As a result of a small increase in the number of outstanding shares, earnings
per share grew at a faster rate, rising 14.7% to €2.80. 

FREE CASH FLOW3: 28.9%

Goodwill and other intangible assets

Goodwill increased by €204 million to €2,087 million at December 31, 2012,
reflecting the acquisitions made during the year. 

Inventories

Inventories amounted to €830 million at December 31, 2012, an increase of €77
million over the year-earlier figure that was also mainly due to acquisitions
for the year. The underlying increase in inventory was consistent with
like-for-like sales growth for the year. 

Investments

Capital expenditure net of disposals totaled €232.3 million or 4.7% of
consolidated revenue for the year. Most of the expenditure concerned
prescription laboratories, with increases recorded in all regions of the world,
while around 20% was committed to series production. In addition, the 2012 total
included expenditure for the construction of the Dallas (USA) and Créteil
(France) innovation and technology centers. 

Free cash flow

Essilor`s business model continued to demonstrate its ability to generate strong
cash flow4 in 2012. Net cash from operating activities (before change in working
capital) amounted to €848 million, an increase of 17.3% compared with 2011. This
amount more than covered the €241 million growth in capital expenditure, and the
more modest €10 million increase in working capital, driving a 28.9% rise in
free cash flow to €597 million, that helped to finance:

* Net financial investments of €193 million. 
* A €201 million increase in dividends paid to Essilor shareholders and the
Company's minority partners in joint ventures. 
* Purchases of treasury stock for a total of €112 million, corresponding to more
than two million shares purchased on the market for employee share-based payment
plans.

Equity

Consolidated equity amounted to €3,921 million at end-2012, up 13.4% from the
year-earlier figure. 

Net debt was cut from €506 million at end-2011 to €237 million, reducing gearing
to less than 10%.

 Change in net debt                                                                                                 
 € millions                                                                                                         
 Operating cash flow (before WCRb)             848        Purchases of property, plant and equipment           241  
 Change in the method of consolidationc        48         Change in WCR                                        10   
 Share issues                                  118        Dividends                                            201  
 Other                                         12         Acquisition of investments, net of disposalsa        193  
                                                          Purchases of treasury stock                          112  
                                                          Reduction in net debt                                269  
 a.Financial investments net of cash acquired, plus debt of newly acquired companies.                               
 b. Working Capital Requirements                                                                                    
 c. Change in the method of consolidation of Nikon-Essilor and Essilor Korea                                        
                                                                                                                    


3 Net cash from operating activities less change in working capital requirements
and less net capital expenditure
4 Net cash from operating activities before change in working capital
requirement 

SUBSEQUENT EVENTS

Acquisitions

Since the beginning of 2013, partnership agreements have been signed with local
companies in two countries:

* In Chile, Essilor has signed an agreement for the acquisition of a majority
stake in Megalux, the country`s leading independent prescription laboratory.
Based in Santiago, Megalux has five branches and generates annual revenue of €7
million. The partnership marks Essilor`s entry into Chile, a country with a
population of around 17 million. It is a fast-growing market, with progressive
lenses accounting for less than one in 20 lenses sold each year. 
* In Israel, Essilor has acquired the production and distribution assets of
Optiplas, its local distributor which has annual revenue of some €5 million. The
new company, Essilor Laboratories of Israel, will take over distribution of
Essilor brands (Essilor®, Varilux®, Crizal® and Nikon®) in Israel. Combined with
Shamir`s local presence, this partnership will allow Essilor to build a credible
multi-network offer in a competitive market where demand for innovations is
strong among eyecare professionals. 
* In Russia, the Company acquired a majority stake in MOC BBGR, a joint venture
that owns Marketing Optical Company, the long-standing distributor of BBGR
lenses in the Russian market. MOK has annual revenue of some €3.7 million. 
* Essilor also announced two agreements to acquire majority stakes in Servi
Optica and Isbir Optik. Servi Optica is the leading distributor in Colombia with
revenue of €29 million, while Isbir Optik is the distribution leader in Turkey
with €15 million in revenue. These two transactions are still subject to
approval by the competition authorities.

Transitions Optical Inc.

In January, Essilor announced that it was in discussions with PPG Industries
concerning the future of their joint subsidiary, Transitions Optical, Inc.,
which is 49%-owned by Essilor. 

Renewal of the Kodak license

Signet Armorlite, a subsidiary of Essilor, has renewed the Kodak® lens
manufacturing and distribution license signed with Eastman Kodak. The US$30.5
million investment will allow Signet Armorlite, the Company`s subsidiaries and
some of their partners, to use the Kodak® brand throughout the world until 2029.


Share buybacks

Essilor pursued its share buyback program intended to offset potential dilution
from the issuance of shares under employee share-based payment plans. Between
December 31, 2012 and February 26, 2013, more than 309,000 shares were bought
back on the market for a total investment of approximately €22.5 million. 

Practical information
A meeting with analysts will be held in Paris today, February 28, at 10:00 a.m. 

The meeting will be available live and recorded for later listening at:
http://hosting.3sens.com/Essilor/20130228-DA00CBA8/en/

The presentation will be webcast at:
http://www.essilor.com/en/Investors/Pages/PublicationsDownloads.aspx

Forthcoming investor events
April 25, 2013: First-quarter 2013 revenue announcement
May 16, 2013: Annual Shareholders` Meeting 

About Essilor

The world`s leading ophthalmic optics company, Essilor designs, manufactures and
markets a wide range of lenses to improve and protect eyesight. Its corporate
mission is to enable everyone around the world to access lenses that meet his or
her unique vision requirements. To support this mission, the Company allocates
around €150 million to research and development every year, in a commitment to
continuously bring new, more effective products to market. Essilor`s flagship
brands are Varilux®, Crizal®, Definity®, Xperio®, OptifogTM and Foster Grant®.
It also develops and markets equipment, instruments and services for eyecare
professionals.

Essilor reported consolidated revenue of approximately €5 billion in 2012 and
employs around 52,600 people in some 100 countries. It operates 22 plants, more
than 400 prescription laboratories and edging facilities, as well as several
research and development centers around the world.

For more information, please visit www.essilor.com.

The Essilor share trades on the NYSE Euronext Paris market and is included in
the EuroStoxx 50 and CAC 40 indices.

Codes and symbols: ISIN: FR FR0000121667; Reuters: ESSI.PA; Bloomberg: EI:FP.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012

                                                                                                     
 CONSOLIDATED INCOME STATEMENT                                                                       
                                                                                                     
 € thousands, except per share data                                  2012               2011         
                                                                                                     
 Revenue                                                             4,988,845          4,189,541    
 Cost of sales                                                       (2,205,278)        (1,868,086)  
                                                                                                     
 GROSS PROFIT                                                        2 783 567          2,321,455    
 Research and development costs                                      (161,877)          (151,490)    
 Selling and distribution costs                                      (1,139,856)        (959,692)    
 Other operating expenses                                            (587,688)          (462,094)    
                                                                                                     
 CONTRIBUTION FROM OPERATIONS                                        894 146            748,179      
                                                                                                     
 Restructuring costs, net                                            (25,325)           (22,646)     
 Goodwill impairment losses                                          0                  0            
 Compensation costs on share-based payments                          (28,421)           (23,211)     
 Other income from operations, net                                   12, 006            3,962        
 Other expenses from operations, net                                 (36,319)           (20,722)     
 Gains and losses on asset disposals, net                            15,626             (2,470)      
                                                                                                     
 OPERATING PROFIT                                                    831,713            683,092      
                                                                                                     
 Finance costs                                                       (24,063)           (13,904)     
 Income from cash and cash equivalents                               17,037             10,507       
 Net exchange losses                                                 (6,779)            (85)         
 Other financial income and expenses, net                            (4,173)            (9,917)      
 Share of profit of associates                                       23,811             27,883       
                                                                                                     
 PROFIT BEFORE TAX                                                   837,546            697,576      
                                                                                                     
 Income tax expense                                                  (207,122)          (179,396)    
                                                                                                     
                                                                                                     
 NET PROFIT                                                          630,424            518,180      
 Attributable to equity holders of Essilor International             584,008            505,619      
 Attributable to minority interests                                  46,416             12,562       
                                                                                                     
 Basic earnings per common share (€)                                 2.80               2.44         
 Weighted average number of common shares (thousands)                208,264            207,246      
                                                                                                     
 Diluted earnings per common share (€)                               2.77               2.41         
 Diluted weighted average number of common shares (thousands)        211,015            209,678      
                                                                                                     


                                                                                                                                                                                                         
 CONSOLIDATED STATEMENT OF TOTAL INCOME AND EXPENSES RECOGNIZED IN EQUITY                                                                                                                                
                                                                                                                                                                                                         
                                                                            2012                                                              2011                                                       
 (€ thousands)                                                              Attributable to           Attributable           Total            Attributable to           Attributable           Total     
                                                                            equity holders            to minority                             equity holders            to minority                      
                                                                            of Essilor                interests                               of Essilor                interests                        
                                                                            International                                                     International                                              
                                                                                                                                                                                            
 Profit for the period (A)                                                  584,008                   46,416                 630,424          505,619                   12,562                 518,181   
 Valuation gains and losses on derivative financial instruments, net                                                                                                                                     
 of tax                                                                                                                                                                                                  
 Cash flow hedges, effective portion                                        (244)                                            (244)            (4,466)                                          (4,466)   
 Tax                                                                        (94)                                             (94)             2,494                                            2,494     
 Net of tax                                                                 (338)                                            (338)            (1,972)                                          (1,972)   
                                                                                                                                                                                                         
 Hedges of net investments, effective portion                               836                                              836              1,392                                            1,392     
 Tax                                                                        (114)                                            (114)            (479)                                            (479)     
 Net of tax                                                                 (722)                                            (722)            913                                              913       
                                                                                                                                                                                                         
 Transfers to profit for the period, net of tax:                                                                                                                                                         
 Cash flow hedges, effective portion                                        (1,808)                                          (1,808)          4,104                                            4,104     
 Tax                                                                        239                                              239              (1,194)                                          (1,194)   
 Net of tax                                                                 (1,569)                                          (1,569)          2,910                                            2,910     
                                                                                                                                                                                                         
 Hedges of net investments, effective portion                               (246)                                            (246)            (199)                                            (199)     
 Tax                                                                        11                                               11               68                                               68        
 Net of tax                                                                 (235)                                            (235)            (131)                                            (131)     
                                                                                                                                                                                                         
 Valuation gains and losses on non-current financial assets                 2,289                                            2,289            (1,279)                                          (1,279)   
 Tax                                                                        (47)                                             (47)             (131)                                            (131)     
 Net of tax                                                                 2, 242                                           2,242            (1,410)                                          (1,410)   
                                                                                                                                                                                                         
 Actuarial gains and losses on defined benefit obligations                  (31,337)                                         (31,337)         (10,535)                                         (10,535)  
 Tax                                                                        6,376                                            6,376            2,632                                            2,632     
 Net of tax                                                                 (24,961)                                         (24,961)         (7,903)                                          (7,903)   
                                                                                                                                                                                                         
 Translation adjustments to hedging and revaluation reserves                62                                               62               (978)                                            (978)     
 Translation adjustments to other reserves and profit for the period        (49,868)                  (6 036)                (55,904)         35,738                    812                    36,550    
 Other (Tax)                                                                (6,126)                                          (6,126)                                                                     
 Total income and expense for the period recognized directly in             (80,071)                  (6,036)                (86,107)         27,167                    812                    27,979    
 equity, net of tax (B)                                                                                                                                                                                  
                                                                                                                                                                                                         
 Total recognized income and expense, net of tax (A) + (B)                  503,937                   40,380                 544,317          532,786                   13,374                 546,160   
                                                                                                                                                                                                         


                                                                                                                                               
 CONSOLIDATED BALANCE SHEET                                                                                                                    
 ASSETS                                                                                                                                        
                                                                                                   December 31, 2012        December 31, 2011  
 € thousands                                                                                                                                   
                                                                                                                                               
 Goodwill                                                                                          2,086,933                1,883,331          
 Other intangible assets                                                                           621,622                  581,781            
 Property, plant and equipment                                                                     1 000,558                955,280            
                                                                                                                                               
 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT, NET                                          3,709,113                3,420,392          
                                                                                                                                               
 Investments in associates                                                                         109,838                  109,915            
 Other long-term financial investments                                                             119,583                  92,743             
 Deferred tax assets                                                                               116,789                  101,689            
 Long-term receivables                                                                             25,052                   3,891              
 Other non-current assets                                                                          674                      892                
                                                                                                                                               
 OTHER NON-CURRENT ASSETS, NET                                                                     371,936                  309,130            
                                                                                                                                               
 TOTAL NON-CURRENT ASSETS, NET                                                                     4,081,049                3,729,522          
                                                                                                                                               
 Inventories                                                                                       830,478                  753,416            
 Prepayments to suppliers                                                                          15,719                   19,671             
 Short-term receivables                                                                            1,147,525                1,121,746          
 Current income tax assets                                                                         55,806                   48,355             
 Other receivables                                                                                 35,645                   30,838             
 Derivative financial instruments                                                                  33,611                   15,091             
 Prepaid expenses                                                                                  40,651                   41,777             
 Marketable securities                                                                             5,781                    7,450              
 Cash and cash equivalents                                                                         660,958                  390,320            
                                                                                                                                               
 CURRENT ASSETS                                                                                    2,826,174                2,428,664          
                                                                                                                                               
 Non-current assets held for sale                                                                                                              
                                                                                                                                               
 TOTAL ASSETS                                                                                      6,907,223                6,158,186          
                                                                                                                                               
                                                                                                                                               
 CONSOLIDATED BALANCE SHEET                                                                                                                    
 EQUITY AND LIABILITIES                                                                                                                        
                                                                                                   December 31, 2012        December 31, 2011  
 € thousands                                                                                                                                   
                                                                                                                                               
 Share capital                                                                                     38,650                   38,527             
 Additional paid-in capital                                                                        311,622                  307,401            
 Retained earnings                                                                                 2,940,952                2,629,367          
 Treasury stock                                                                                    (239,044)                (264,110)          
 Revaluation and other reserves                                                                    (79,647)                 (49,443)           
 Translation difference                                                                            107,628                  157,496            
 Profit attributable to equity holders of Essilor International                                    584,008                  505,619            
                                                                                                                                               
 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS                                                             3,664,169                3,324,857          
 OF ESSILOR INTERNATIONAL                                                                                                                      
                                                                                                                                               
 Minority interests                                                                                256,571                  132,894            
                                                                                                                                               
 TOTAL EQUITY                                                                                      3,920,740                3,457,751          
                                                                                                                                               
 Provisions for pensions and other post-employment benefit obligations                             204,652                  177,693            
 Long-term borrowings                                                                              526,237                  309,152            
 Deferred tax liabilities                                                                          148,339                  148,755            
 Other non-current liabilities                                                                     232,544                  138,168            
                                                                                                                                               
 NON-CURRENT LIABILITIES                                                                           1,111,772                773,768            
                                                                                                                                               
 Provisions                                                                                        126,954                  141,401            
 Short-term borrowings                                                                             390,012                  606,581            
 Customer prepayments                                                                              16,944                   15,705             
 Short-term payables                                                                               1,014,675                913,218            
 Taxes payable                                                                                     75,627                   62,172             
 Other current liabilities                                                                         207,605                  161,306            
 Derivative financial instruments                                                                  30,115                   14,953             
 Deferred income                                                                                   12,779                   11,331             
                                                                                                                                               
 CURRENT LIABILITIES                                                                               1,874 711                1,926,667          
                                                                                                                                               
 TOTAL EQUITY AND LIABILITIES                                                                      6,907,223                6,158,186          
                                                                                                                                               


                                                                                                                                           
 CONSOLIDATED CASH FLOW STATEMENT                                                                                                          
                                                                                                                                           
 € thousands                                                                                   December 31, 2012        December 31, 2011  
                                                                                                                                           
 NET PROFIT                                                                        (i)         630,424                  518,180            
                                                                                                                                           
 Share of profit of associates, net of dividends received                                      44,796                   34,433             
 Depreciation, amortization and other non-cash items                                           229,629                  180,693            
                                                                                                                                           
 Profit before non-cash items and share of profit of associates, net of                        904,849                  733,306            
 dividends received                                                                                                                        
 Provision charges (reversals)                                                                 (24,325)                 (2,745)            
 (Gains) losses on asset disposals, net                                            (i)         (14,733)                 2,470              
 Cash flow after income tax expense and finance costs, net                                                                                 
                                                                                               865,791                  733,031            
 Finance costs, net                                                                            7,026                    8,988              
 Income tax expense (current and deferred taxes)                                   (i)         207,122                  179,396            
                                                                                                                                           
 Cash flow before income tax expense and finance costs, net                                    1,079,939                921,415            
 Income taxes paid                                                                             (224,264)                (183,717)          
 Interest (paid) and received, net                                                             (5,586)                  (14,293)           
 Change in working capital                                                                     (10,091)                 (55,607)           
 NET CASH FROM OPERATING ACTIVITIES                                                            839,998                  667,798            
 Purchases of property, plant and equipment and intangible assets                              (24,207)                 (204,717)          
 Acquisitions of subsidiaries, net of the cash acquired                                        (158,224)                (364,428)          
 Purchases of available-for-sale financial assets                                              (12,956)                 (15,120)           
 Purchases of other long-term financial investments                                            (16,077)                 (16,688)           
 Proceeds from the sale of subsidiaries, net of the cash sold                                  1,368                    203                
 Proceeds from the sale of other non-current assets                                            10,770                   14,412             
 NET CASH USED IN INVESTING ACTIVITIES                                                         (416,326)                (586,338)          
 Proceeds from the issue of share capital                                          (ii)        117,899                  83,133             
 (Purchases) sales of treasury stock, net                                          (ii)        (111,788)                (147,502)          
 Dividends paid to:                                                                                                                        
 - Equity holders of Essilor International                                         (ii)        (176,619)                (171,541)          
 - Minority shareholders of subsidiaries                                           (ii)        (24,837)                 (3,783)            
 Increase (decrease) in borrowings other than finance lease liabilities                        (54,840)                 188,590            
 Purchases of marketable securities*                                                           1,724                    2,066              
 Repayment of finance lease liabilities                                                        (2,614)                  (2,866)            
 Other movements                                                                               (1,266)                  (6,855)            
 NET CASH USED IN FINANCING ACTIVITIES                                                         (252,341)                (58,758)           
                                                                                                                                           
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          171,331                  22,702             
 Cash and cash equivalents at January 1                                                        363,109                  345,888            
 Impact of the change of consolidation method applied to the joint ventures                    49,335                                      
 Effect of changes in exchange rates                                                           (4,244)                  (5,481)            
 NET CASH AND CASH EQUIVALENTS AT PERIOD-END                                                   579,531                  363,109            
 Cash and cash equivalents reported in the balance sheet                                       660,958                  390,320            
 Short-term bank loans and overdrafts                                                          (81,427)                 (27,211)           
 (*) Money market funds not qualified as cash equivalents under IAS 7.                                                                     
                                                                                                                                           
 (i) Please refer to the consolidated income statement                                                                                     
 (ii) Please refer to the statement of changes in equity                                                                                   
                                                                                                                                           


                                                                                                                                                                                                                                                                   
 STATEMENT OF CHANGES IN CONSOLIDATED EQUITY                                                                                                                                                                                                                       
 • Full-year 2012                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                   
 (€ thousands)                                                    Share capital        Additional        Revaluation        Retained         Translation        Treasury          Profit                    Equity                    Minority          Total      
                                                                                       paid-in           reserves           earnings         reserve            stock             attributable to           attributable to           interests         equity     
                                                                                       capital                                                                                    equity holders of         equity holders of                                      
                                                                                                                                                                                  Essilor                   Essilor                                                
                                                                                                                                                                                  International             International                                          
 Equity at January 1, 2012                                        3,527                307,401           (49,443)           2,629,367        157,496            (264, 110)        505,619                   3,324,857                 132,894           3,457,751  
 Issue of share capital                                                                                                                                                                                                                                            
 - To the corporate mutual funds                                  69                   21,927                                                                                                               21,996                                      21,996     
 - On exercise of stock options                                   486                  95,417                                                                                                               95,903                                      95,903     
 - Paid up by capitalizing reserves                                                                                                                                                                                                                                
 Issue of share capital for minority shareholders                                                                                                                                                                                                                  
 Cancellation of treasury stock                                   (432)                (113,123)                                                                113,555                                                                                            
 Share-based payments                                                                                                       23, 444                                                                         23,444                                      23,444     
 Purchases and sales of treasury stock, net                                                                                 (23,299)                            (88,489)                                    (111,788)                                   (111,788)  
 Appropriation of profit                                                                                                    505,619                                               (505,619)                                                                        
 Effect of changes in scope of consolidation                                                                                (8,103)                                                                         (8,103)                   108,134           100,031    
 Dividends                                                                                                                  (176,619)                                                                       (176,619)                 (24,837)          (201,456)  
 Transactions with shareholders                                   123                  4,221                                321,042                             25,066            (505,619)                 (155 ,167)                83,297            (71,870)   
 Total income (expense) for the period recognized directly                                               (30,266)                                                                                           (30,266)                                    (30,266)   
 in equity                                                                                                                                                                                                                                                         
 Profit for the period                                                                                                                                                            584,008                   584,008                   46 416            630 424    
 Exchange differences on translating foreign operations                                                  62                 (9,457)          (49,868)                                                       (59,263)                  (6,036)           (65,299)   
 Total recognized income and expense                                                                     (30,204)           (9,457)          (49,868)                             584,008                   494,479                   40,380            534,859    
 Equity at December 31, 2012                                      38,650               311,622           (79,647)           2,940,952        107,628            (239,044)         584,008                   3,664,169                 256,571           3,920,740  
                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                   
 STATEMENT OF CHANGES IN CONSOLIDATED EQUITY                                                                                                                                                                                                                       
 • Full-year 2011                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                   
 (€ thousands)                                                    Share capital        Additional        Revaluation        Retained         Translation        Treasury          Profit                    Equity                    Minority          Total      
                                                                                       paid-in           reserves           earnings         reserve            stock             attributable to           attributable to           interests         equity     
                                                                                       capital                                                                                    equity holders of         equity holders of                                      
                                                                                                                                                                                  Essilor                   Essilor                                                
                                                                                                                                                                                  International             International                                          
 Equity at January 1, 2011                                        38,098               224,697           (40,872)           2,331,494        121,865            (136,258)         461,969                   3,000,993                 43,186            3,044,179  
 Issue of share capital                                                                                                                                                                                                                                            
 - To the corporate mutual funds                                  94                   21,708                                                                                                               21,802                                      21,802     
 - On exercise of stock options                                   335                  60,996                                                                                                               61,331                                      61,331     
 - Paid up by capitalizing reserves                                                                                         1,018                                                                           1,018                                       1,018      
 Issue of share capital for minority shareholders                                                                                                                                                                                     4,845             4,845      
 Cancellation of treasury stock                                                                                                                                                                                                                                    
 Share-based payments                                                                                                       21,577                                                                          21,577                                      21,577     
 Purchases and sales of treasury stock, net                                                                                 (19,650)                            (127,852)                                   (147,502)                                   (147,502)  
 Appropriation of profit                                                                                                    461,969                                               (461,969)                                                                        
 Effect of changes in scope of consolidation                                                                                3,941            452                                                            4,393                     75,272            79,665     
 Dividends                                                                                                                  (171,541)                                                                       (171,541)                 (3,783)           (175,324)  
 Transactions with shareholders                                   429                  82,704                               297,314          452                (127,852)         (461,969)                 (208,922)                 76,334            (132,588)  
 Total income (expense) for the period recognized directly                                               (7,593)                                                                                            (7,593)                                     (7,593)    
 in equity                                                                                                                                                                                                                                                         
 Profit for the period                                                                                                                                                            505,619                   505,619                   12,562            518,181    
 Exchange differences on translating foreign operations                                                  (978)              559              35,179                                                         34,760                    812               35,572     
 Total recognized income and expense                                                                     (8,571)            559              35,179                               505,619                   532,786                   13,374            546,160    
 Equity at December 31, 2011                                      38,527               307,401           (49,443)           2,629,367        157,496            (264,110)         505,619                   3,324,857                 132,894           3,457,751  


Essilor
Investor Relations and Financial Communications
Véronique Gillet / Sébastien Leroy / Ariel Bauer, +33 (0) 1 49 77 42 16
or
Corporate Communication and Press
Maïlis Thiercelin, +33 (0) 1 49 77 45 02 

Copyright Business Wire 2013

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