* Aims to double revenue in sunwear to 1.1 bln euros by 2018
* Buys Coastal.com for $388 mln to boost online sales
* Sees margin gradually rising to 19.5 pct in 2016
* Sales growth slowed, operating profit missed consensus
By Natalie Huet
PARIS, Feb 27 Lens maker Essilor is
betting on appetite for trendy sunglasses among the fast-growing
middle classes of China and other emerging markets to drive
sales after weakness in Europe and North America weighed on 2013
The French company is the world's largest opthalmic lens
maker with a 37 percent market share, supplying eyewear makers
such as Milan-based Luxottica. Its products span
reading glasses that sell in India for the equivalent of a few
euros to high-performance lenses costing hundreds.
But Essilor had to cut its sales growth forecast twice last
year and still missed this target, blaming a
slower-than-expected recovery in Europe and North America, tough
competition and delays in finalising some acquisitions.
The company now plans to focus more on sunglass lenses -
which currently make up just 10 percent of revenue - aiming to
double sales by 2018. The market in sunglasses is expanding
twice as fast as the corrective lens market, as consumers follow
fashion trends and are willing to spend more to protect their
eyes from the sun's harmful effects.
Eight out of 10 Europeans already own proper protective
sunglasses, but only one in 10 Chinese have them and the
untapped potential in children is also huge, Essilor said.
"China's little emperors deserve good sunglasses too and we
will make sure they get them," Chief Executive Hubert Sagnieres
told analysts and reporters.
Essilor is aiming for like-for-like sales growth of 2.5 to 4
percent in 2014, after it more than halved last year to 2.1
percent. Analysts had expected higher guidance. "The group's
strategy is very good but the organic growth it forecasts in the
short term is weak," said Antoine Belge of HSBC.
Essilor's shares dropped more than 3 percent and were the
biggest faller on France's CAC 40 blue-chip index.
Analysts said the focus on developing economies and more
cyclical products implied higher risk. Weakness in emerging
market currencies against a strong euro cut 3.9 percentage
points from sales growth last year.
But Cedric Rossi at Bryan Garnier & Co said the group's main
markets had reached a certain degree of maturity and the shift
to faster-growing markets should prove rewarding.
"With sunwear, there's a fashion effect that means the
market is constantly renewing itself. It's affordable luxury
that's very sought after by Brazilian, Indian and Chinese
customers," Rossi said.
Emerging economies accounted for more than a fifth of
Essilor's revenue last year and posted by far the strongest
sales growth, driven by an 89 percent jump in Russia, 16-17
percent growth in China and India, and a 9 percent rise in
Essilor is also looking to online sales to speed up growth
and improve its margin - excluding the impact of acquisitions -
to 19.5 percent by 2016, from 18.1 percent in 2013.
The acquisition of Coastal.com for about $388
million should be slightly margin dilutive this year and next as
the Canadian online retailer is currently loss-making, but
Essilor hopes to turn it around.
Essilor's 2013 operating profit rose 1.5 percent to 843
million euros ($1.15 billion) on sales of 5.07 billion, below a
Reuters poll for profit of 882 million on sales of 5.1 billion.