Essilor: Solid Growth in the Third Quarter

  Essilor: Solid Growth in the Third Quarter

  *Revenue Growth (Like-for-Like Plus Bolt-on Acquisitions^1) of 7.1%
  *Successful Innovations and Strong Contribution from Acquisitions
  *Agreement to Acquire Transitions Optical
  *Outlook for Full Year 2013: Revenue Growth^2 around 6% with High Level of
    Contribution Margin Maintained

Business Wire

CHARENTON-LE-PONT, France -- October 24, 2013

Regulatory News:

Essilor International (Paris:EI), the world leader in ophthalmic optics, today
announced that consolidated revenue for the nine months ended September 30,
2013 totaled €3,813.0 million compared with €3,759.1 million in the
year-earlier period.

Nine-month revenue up 4.8% excluding the currency effect

                                      2013          2012              % Change         % Change              Change in the       Currency
In € millions                      (9         (9             (reported)    (like-for-like)    scope of         effect
                                      months)       months)^(a)                                              consolidation
Lenses and Optical Instruments     3,410.8    3,354.3        +1.7%         +1.8%              +3.4%            -3.5%
North America                      1,354.3    1,355.5        -0.1%         +0.4%              +2.5%            -3.0%
Europe                             1,178.4    1,177.3        +0.1%         +0.8%              +0.1%            -0.8%
Asia/Pacific/Middle-East/Africa    615.5      580.6          +6.0%         +3.5%              +9.3%            -6.8%
Latin America                      262.6      240.9          +9.0%         +9.8%              +10.1%           -10.9%
Equipment                          144.6      143.6          +0.7%         +4.3%              -1.1%            -2.5%
Readers                            257.6      261.2          -1.4%         +1.4%              +0.0%            -2.8%
TOTAL                              3,813.0    3,759.1        +1.4%         +1.8%              +3.0%            - 3.4%

(a) In the first nine months of 2012, Nikon-Essilor’s revenue in North America
(€29.7 million) and Europe (€8.7 million) was recognized in the
Asia/Pacific/Middle-East/Africa region. In the same way, revenue in Mexico
(€18.1 million) was previously recognized in the North America region, but is
now included in Latin America. Nine-month 2012 consolidated revenue has been
adjusted to reflect these changes.

Commenting on this performance, Hubert Sagnières, Chairman and Chief Executive
Officer said:

"The third quarter saw a number of initiatives that will shape the Company’s
future. First, Essilor signed a major agreement to acquire Transitions
Optical, the world leader in photochromic lenses. Second, we made significant
advances in sun lenses. The 7.1% revenue growth excluding the currency effect
reflected a very dynamic acquisitions policy and more robust demand, driven in
particular by the first steps of innovation in the mid-range segment.

Essilor is actively positioning itself to benefit, in 2014, from growth in the
optics market, where global demand for improved visual health remains largely

^1 Local acquisitions or partnerships
^2 Like-for-like growth plus bolt-on acquisitions

Revenue up 7.1% in the third quarter excluding the currency effect

                                                    Q3             % Change         % Change              Change in the       Currency
In € millions                      Q3 2013    2012^(a)    (reported)    (like-for-like)    scope of         effect
Lenses and Optical Instruments     1,114.5    1,105.1     +0.8%         +2.8%              +4.5%            -6.5%
North America                      439.5      449.2       -2.2%         +0.6%              +3.4%            -6.2%
Europe                             376.4      373.9       +0.7%         +1.9%              +0.3%            -1.5%
Asia/Pacific/Middle-East/Africa    207.6      197.9       +4.9%         +5.7%              +11.3%           -12.1%
Latin America                      91.0       84.1        +8.2%         +11.0%             +13.3%           -16.1%
Equipment                          52.3       48.0        +8.9%         +14.7%             -1.1%            -4.7%
Readers                            70.5       75.5        -6.7%         -0.1%              +0.0%            -6.6%
TOTAL                              1,237.3    1,228.6     +0.7%         +3.1%              +4.0%            -6.4%

(a) In third-quarter 2012, Nikon-Essilor’s revenue in North America (€9.8
million) and Europe (€3.0 million) was recognized in the
Asia/Pacific/Middle-East/Africa region. In the same way, revenue in Mexico
(€6.8 million) was previously recognized in the North America region, but is
now included in Latin America. Third-quarter 2012 consolidated revenue has
been adjusted to reflect these changes.

In the third quarter, Essilor International’s consolidated revenue totaled
€1,237.3 million, an increase of 0.7%. This reflected:

  *Like-for-like growth of 3.1% driven by a very good performance in
    Equipment and an improvement in Lenses and Optical Instruments compared
    with the first half, both in developed countries and fast-growing markets.
    In particular, Essilor benefited from the introduction of innovations in
    the mid-range, such as Intuitiv™, the first progressive lens adapted for
    both left- and right-handed wearers. This innovation was recognized with a
    ‘Silmo d’Or’ award at the World Optical Fair in Paris in September.
  *A significant 4% impact from changes in the scope of consolidation on the
    back of the large number of partnership agreements recently signed in
    fast-growing markets and North America.
  *A negative 6.4% currency effect caused by the sharp depreciation of
    numerous currencies against the euro, chief among them the Brazilian real,
    the US dollar and the yen.

Third-quarter highlights by region and business

North America

  *Good trends for polarized lenses, sales to independent laboratories and
    contact lens distribution
  *Performance with optical chains impacted by the loss of two contracts in
    the first half
  *Weaker performance in Canada


  *Success of the Varilux^® S series progressive lens, especially in France
  *Marked upturn in Eastern Europe, Italy and the Instruments business
  *Sharp decrease in a key account’s purchases at the end of the period


  *Strong rebound in Japan and Australia led by the success of innovations
    adopted by certain chains, such as lenses that offer back-surface
    protection from ultra-violet rays
  *Continued strong growth in domestic markets in India and China
  *Slowdown in exports reflecting high prior-year comparatives

Latin America

  *Acceleration of sales in Brazil despite a lackluster economic environment
  *Continued positive trend in Colombia and Mexico


  *Commercial success of the Satisloh range in the United States
  *Strong demand for digital surfacing machines in Latin America


  *Good performance in reading glasses but poor weather conditions for
  *More dynamic sales in retail locations

Significant third-quarter events and other transactions

Transitions Optical

Essilor International has agreed to acquire PPG Industries’ 51% stake in
Transitions Optical Inc., the leading provider of photochromic lenses to
optical manufacturers worldwide. Following the transaction, Essilor will own
100% of the capital of Transitions Optical. In 2012, Transitions Optical
generated revenue of $814 million, of which around $310 million with lens
manufacturers other than Essilor. The agreement also includes the acquisition
of Intercast, a premium sun lens manufacturer based in Parma, Italy. In 2012,
Intercast reported revenue of nearly $34 million.

The consideration for the transaction amounts to $1.73 billion at closing,
plus a deferred payment of $125 million over five years, for 51% of the
capital of Transitions Optical and 100% of Intercast.

Based on current estimates, the transaction should have a positive impact on
Essilor’s financial indicators. In particular, it is expected to be accretive
from year one and to add at least 5% to earnings per share in subsequent

The process to obtain the various regulatory approvals is under way. No
particular difficulties have arisen thus far and the transaction is expected
to close during the first half of 2014.

Other acquisitions and partnerships

During the third quarter, Essilor pursued its bolt-on acquisition^3 strategy,
which is enabling it to extend its local coverage and bring its innovations to
market more quickly, with five transactions representing €74 million in
combined full-year revenue.

The Company expanded its presence in the low vision segment with the
acquisition of a majority interest in Quebec-based Humanware, a world leader
in the design and distribution of electronic assistance products for the blind
and vision impaired (revenue of around $35 million).

In the United States, Essilor acquired Katz & Klein, a California-based
prescription laboratory with revenue of around $4.0 million, and VIP Optical,
a wholesale optical laboratory based in New Jersey with revenue of $3.9

These three new partnerships come on the heels of the previously announced
acquisitions of Polycore Optical in Singapore (revenue of €30 million) and
Classic Optical in the Ohio (revenue of $17 million). In all, 20 agreements
have been signed since the beginning of the year, representing full-year
revenue of around €165 million.

Cash position

During the third quarter, the Company carried out share buybacks to offset
dilution from share-based payment plans. These buybacks amounted to €47.6
million and totaled 584,783 shares.

Despite the buyback program and acquisitions over the period, the Company’s
cash generation enabled a slight reduction in debt to €383 million at
September 30, 2013 from €419 million at June 30, 2013.

Since October 1, the Company has bought back 966,982 shares. Including these
transactions, some 2.2 million shares have been bought back since the start of
the year for a total of around €173 million.


In the fourth quarter, the launches of Crizal^® Prevencia™ and new mid-range
products will sustain the Company’s momentum.

These initiatives, along with ongoing acquisitions, will contribute to a
further improvement in the fourth quarter and place Essilor on a stronger
growth path for 2014.

Based on the first nine months’ performance and taking into account the delays
in finalizing certain acquisitions together with the slower than expected
recovery in North America, Essilor expects revenue growth (like-for-like plus
bolt-on acquisitions^3) of around 6% for full year 2013. The Company confirms
its objective of a sustained high contribution margin.

^3 Local acquisitions or partnerships

A conference call in French will be held today at 9:00 a.m. (CEST).

The number to dial is +33(0)1 76 77 22 27 (Access code: 6670605).

The call will be available for later listening at:

Another conference call in English will follow at 10:00 a.m. (CEST).

The number to dial is +44(0)20 3427 1903 (Access code: 6003897).

The call will be available for later listening at:

Investor calendar

The 2013 annual results will be released on February 27, 2014.

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 more than €150 million to research and innovation every
year, in a commitment to continuously bring new, more effective products to
market. Essilor’s flagship brands are Varilux^®, Crizal^®, Definity^®,
Xperio^®, Optifog^TM 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 50,700 people. It operates in some 100 countries with 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

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

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

Appendix: Essilor International’s consolidated revenue (€ millions)

                                           2013         2012
First Quarter                                           
Lenses and Optical Instruments              1,149        1,139
  *North America                           463          460
  *Europe                                  402          408
  *Asia/Pacific/Middle-East/Africa         205          193
  *Latin America                           79           77
Equipment                                   42           46
Readers                                     85           85
TOTAL First Quarter                         1,276        1,270
Second Quarter                                          
Lenses and Optical Instruments              1,148        1,110
  *North America                           452          446
  *Europe                                  400          395
  *Asia/Pacific/Middle-East/Africa         203          190
  *Latin America                           93           79
Equipment                                   50           50
Readers                                     102          101
TOTAL Second Quarter                        1,300        1,261
Third Quarter                                           
Lenses and Optical Instruments              1,114        1,105
  *North America                           439          449
  *Europe                                  376          374
  *Asia/Pacific/Middle-East/Africa         208          198
  *Latin America                           91           84
Equipment                                   52           48
Readers                                     71           76
TOTAL Third Quarter                         1,237        1,229
Fourth Quarter                                          
Lenses and Optical Instruments                          
  *North America                                       
  *Latin America                                       
TOTAL Fourth Quarter                                    

Note that:

  *Since fourth-quarter 2012, Mexico has been included in the Latin America
    region. As a result, the 2012 revenues presented above for North America
    and Latin America have been restated accordingly.
  *In 2012, Nikon-Essilor’s revenue in North America and Europe was
    recognized in the Asia/Pacific/Middle-East/Africa region. In 2013 revenue
    from this operation has been recognized in their respective regions.
    Quarters in 2012 have been adjusted to reflect this change.


Investor Relations and Financial Communication
Véronique Gillet – Sébastien Leroy – Ariel Bauer, +33 (0)1 49 77 42 16
Corporate Communication
Lucia Dumas
Maïlis Thiercelin, +33 (0)1 49 77 45 02
Press spacebar to pause and continue. Press esc to stop.