august 31, 2012 - essilor€¦ · ›brand portfolio management neutral to 2012 eps, accretive...

First-Half 2012 Results

August 31, 2012

Today‟s Focus

First-Half 2012 Highlights

Financial Results

Operational Highlights

Outlook

The New Varilux® Revolution

2First-Half 2012 Results

Key Operational Highlights

Resilience of the optics market

Strong growth in both fast-growing and developed markets

› Power of innovation and market positioning

› Growth in fast-growing markets in line with plan

› Market share gains in all regions

Successful partnerships

Motivated and highly federated teams


A value-creation model that delivers results

Delivering Strong Performance

Revenue €2,530m – up 22.8%

Contribution from operations €454m – up 22.1%

› Contribution margin 17.9% of revenue

Earnings per share €1.45 – up 16.1%

Cash flow* €445m – up 24.6%

*Cash flow = Operating cash flow excluding change in WCR

2012 First-Half Results


Today‟s Focus


Financial Results


Outlook



2,060

137

58

132

50

93

2,530

H1 2011 Revenue

Like-for-like growth

Bolt-on acquisitions*

Strategic acquisitions

Change in consolidation

Currency effect

H1 2012 Revenue

+4.5%

Revenue Up 22.8% to €2,530m

+6.6%

+2.8%

+6.4%

+2.5%

+9.4%

+18.3% at constant exchange rates

In € millions

H1: Shamir +

Stylemark* Local acquisitions or partnerships


Nikon Essilor +

Essilor Korea

2012 First-Half Revenue by Region and Division


Reported revenue in € millions H1 2012 H1 2011% Change

(like-for like and bolt-on

acquisitions combined)

Lenses and Optical Instruments 2,249 1,865 +10.1%

North America 898 758 +8.5%

Europe 798 733 +4.0%

Latin America 145 116 +25.7%

Asia-Oceania/Middle East-Africa 408 258 +24.9%

Equipment 96 89 +2.0%

Readers 186 106 +5.9%

TOTAL 2,530 2,060 +9.4%

Q2: Revenue Up 4.8% Like-for-like

Solid underlying momentum

continues

› Solid growth in North America

› Sustained dynamism in fast-

growing markets

› Innovation successes

A few specific items in Q2

› Southern Europe difficult

› Delivery schedule of one-hour

AR machines in the US

› Equipment down on very high

comparatives


Like-for-like growth Q2 2012 Q1 2012

Lenses and Optical

Instruments+5.6% +8.5%

North America +4.8% +7.8%

Europe +2.0% +5.2%

Latin America +15.0% +13.3%

Asia-Oceania/

Middle East-Africa+13.6% +17.9%

Equipment -9.2% +11.9%

Readers +4.1% +5.2%

TOTAL +4.8% +8.5%

Positive Contribution from All Regions…

North America

€898m

Reported revenue / Growth: like-for-like and bolt-on acquisitions combined

Europe

€798m

Latin America

€145m

Asia-Oceania

Middle East-Africa

€408m

€2,249m

Lenses and Optical

Instruments

+8.5% o/w +6.4% like-for-like




+25.7%

+24.0%

+24.9%

+19.7%

+10.1%

+5.8%



+21.1%

+12.8%

+5.5%

H1 2012/11 H1 2011/10 H1 2010/09


Robust underlying market

Success of Crizal® UV

Improved product mix

Remarkable performance in France

Improvement in Germany and UK

South Europe difficult, Instruments weak

Premium products on the rise in Brazil

Efficient partnership strategy

Stronger position in Mexico

Rapid growth in Japan and Australia

Fast implementation in mid market in China

Expansion in Africa and Turkey

Strong volume increase

New products and contracts

Impact of flooding in Thailand

Market share gains in all regions

… and All Business Segments

Equipment

€96m

Readers

€186m

+2.0%

+33.0%

+5.9%

+10.6%

+20.9%

H1 2012/11 H1 2011/10 H1 2010/09


Reported revenue / Growth: like-for-like and bolt-on acquisitions combined

Strong comparatives

Rapid implementation in fast-growing

markets

Innovation

Robust growth in reading glasses

International expansion

Still some inventory drawdown

Bolt-on Acquisitions* at August 31, 2012:

16 Transactions Representing €74m in Full-Year Revenue

North America

3

Latin America

4

Africa

Middle East

5

Asia

3

Oceania

1


* Local acquisitions or partnerships

Successful Partnership with Shamir

Implementation of synergy plans:

› Leveraging Essilor‟s networks

› R&D cooperation & product range enhancement (AR coatings, anti-fog lenses)

Geographic development: Brazil

12

Shamir‟s Worldwide Presence

Marketing Campaign for

Shamir Autograph InTouch™


Good first half

Integration proceeding according to plan

› Supply chain

› Brand portfolio management

Neutral to 2012 EPS,

accretive starting in 2013

StyleMark Off to a Good Start


Fast-Growing Markets*:

On Track with our €1.5 Billion 2015 Ambition

Africa

Middle East

+32%

India

+43%

China

+47%

Russia

+9%

ASEAN

+13%Latin America

+26%

Growth: like-for-like and bolt-on acquisitions combined

*Fast-growing markets include China, India, ASEAN, South Korea,

Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America

North Asia

+21%


Revenue of €401m (15.8% of group revenue)

Up 27% (like-for-like and bolt-on acquisitions combined)

In € millions H1 2012 H1 2011 % Change

Revenue 2,530 2,060 +22.8%

Contribution from operations*

% of revenue

454

17.9%

372

18.0%

+22.1%

Operating profit 431 344 +25.3%

Profit of fully-consolidated companies 309 248 +24.5%

Profit attributable to equity holders

% of revenue

301

11.9%

258

12.5%

+16.4%

Earnings per share (in €) 1.45 1.25 +16.1%

Profit of Fully-Consolidated Companies Up 24.5%

* Operating profit before compensation costs of share-based payments, restructuring costs, other income &

expense and goodwill impairment


Profit Attributable to Equity Holders Up 16.4%

* Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense

and goodwill impairment


In € millions H1 2012 H1 2011 % Change

Contribution from operations* 454 372 +22.1%

o/w PPA (13.0) (8.9)

Other income and other expenses (23) (28)

o/w restructuring costs (14.3) (8.2)

o/w compensation costs for share-based payment,

acquisition costs and impairment losses (12.3) (17.7)

o/w other expenses (12.2) (1.2)

o/w net gain on asset disposal 15.5 (0.8)

Operating profit 431 344 +25.3%

Financial result (9) (4)

Income tax

Effective tax rate

(112)

26.6%

(91)

26.9%

Contribution from associates 14 15

Minority interests (22) (6)

Profit attributable to equity holders

% of revenue

301

11.9%

258

12.5%

+16.4%

18.0%

+0.3%18.3%

+0.2% -0.2%

-0.4%

17.9%

H1 2011reported

Operating leverage on H1 2011 business

base

H1 2012before bolt-on and strategic acquisitions

Change in consolidation

Bolt-on acquisitions

Strategic acquisitions

H1 2012reported

Operating Leverage at Work

› Fast

Growing

Markets

› Sales &

Marketing

› R&D

H1: Shamir +

Stylemark


Contribution margin as a % of revenue

Nikon Essilor +

Essilor Korea

Crizal® UV: Successful Launch Supported by

Demonstrable Health Benefits

A significant innovation benefit

› First backside UV protection on the market

› Full replacement of former Crizal® range in

North America

› Excellent ECP feedback

Positive impact on sales and margin

Further launches to follow

› Europe and Asia: On-going

› Latin America: Fall 2012

› Crizal® kids UV: Starting with Europe


Investing in Production and Distribution Capacity

7.1%7.7%

5.9%

3.5%3.2%

4.6% 4.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2006 2007 2008 2009 2010 2011 H1 2012

Capital expenditure net of disposals in € millions and as a % of revenue

192

224

183

116124

192 113


95

48

50

445

12

117

41

192

158

118

Cash Flow Up 25%

Operating cash flow

(excl. change in WCR)

Capital increase

Change in

consolidation impact

Reported change in net debt

Capex

Change in WCR

Dividends

Net financial

investments

Share buybacks

+169

Other

In € millions


Strong Financial Position

In € millions

* Adjusted for acquisition-related costs in accordance with IFRS 3R

- 210 - 260112

-93

296506 602

1,8922,168

2,366

2,7353,044

3,4583,682

2006 2007 2008 2009* 2010 2011 H1 2012

Net debt Equity


Today‟s Focus


Financial Results


Outlook



A Strategy Serving Essilor‟s Mission: Improving Vision Worldwide

Operational and management efficiency

Products and

Services

INNOVATE

Corporate social responsibility

Top & Mid-

range markets

DEVELOP

Acquisitions &

Partnerships

GROW

Demand

for Vision

Improvement

STIMULATE


Leveraging Essilor‟s Strengths

WIDENING

THE LEAD

Geographies

New growth

segments

Market

segmentation

Supply chain

People

Innovation


Expanding Presence and Growing Market Share

25

Geographies Supply chain People InnovationMarket segmentation New Growth segments

Fast growing

markets

112 million inhabitants

AR penetration: only 24%

Crystal y Plástico

› Revenue €9 million

› 2 prescription

laboratories and 2

distribution and lens

edging facilities in the

country

Stronger position in

Mexico

75 million inhabitants

Progressive lens segment potential: today only 4% of total sales

volumes

2 acquisitions :

› Ipek Optik (Revenue €5 million, Izmir-based prescription lab)

› Opak (Revenue €8 million, Istanbul-based prescription lab)

New Footprint in Turkey

Partnering with local market leaders

First-Half 2012 ResultsFast-growing markets in which the Group has

announced bolt-on acquisitions during the first-half

High-end

Geographies

Building Growth and Value in Every Market Segment

Supply chain People InnovationMarket segmentation New growth segments

26

Upgrading and Innovating at Every Price Point

Mid-range


FGX Ahead of Plan

Geographies Supply chain People InnovationMarket segmentation New growth segments


A large portfolio of consumer brands in both readers and sunglasses,

available in 80,000 outlets in North America

A strong base for global expansion

Creating value through product innovation

2015

Sales:

$480-520 million2009

Sales:

$259 million

2012

Estimated Sales:

$450 million

IT

Leveraging the Supply Chain for Key Accounts: Boots Opticians


28

Full Eyewear

Management System

Know-how in the

management of integrated

offers

Export laboratories

Strengthening in

Mexico, Thailand and India

Local laboratories

New partnerships with

local market leaders

“ The switch to Essilor for the supply of lenses in particular has yielded major

benefits.” Alex Gourlay, Chief Executive, Health & Beauty Division, Alliance Boots


Source: Optician - May 25, 2012

Strengthening our Talent Pool

Geographies Supply chain People InnovationMarket segmentation New Growth segments

29

Motivated and highly

federated teams

Executive Committee

new members

Eric PERRIER

Senior Vice President

Research &

Development

José Tadeu ALVES

Senior Vice President

Latin America


Accelerating Innovation


30

DALLAS

Tampa, FL

Montreal, QC

Rio de Janeiro

Chihuahua, MX

Boston, MSSan Diego

Dallas ITC now fully operational

More than 220 new products in 2012

New Products


Today‟s Focus


Financial Results


Outlook



Presbyopes: A Significant and Growing Market…

First-Half 2012 Results33

2000 2011 2020

2.3bn

1.9bn

1.5bn

Source: World Bank 2011, Essilor estimates

* CAGR

In billions of people

+2%*

+2%*

World

population +1%*

+400m

…Currently Underpenetrated

by Progressive Lenses


130m 230m

2000 2011 2020

2.3bn

1.9bn

1.5bn

Source: World Bank 2011, Essilor estimates

* CAGR

In billions of people

+2%*

+2%*

+6%*

Presbyopes equipped with progressive lenses

World

population +1%*

Varilux®: The Leading Progressive Lens for

Presbyopes for Fifty Years…

6 Varilux® Generations


1959 2006 2012

Varilux® Personalization

Generation Updates


Every generation in the market has improved the sharpness

and quality of vision but there are still compromises to address

“I feel wary when going down the stairs.”

“When moving my head, I feel everything moves

and yet nothing should move.”

“I do not enjoy reading anymore because I need

to constantly move my head to target what I am

looking at.”

…With Further Consumer Needs to Satisfy

Each Progressive Lens Deals with a Compromise


Limit „swim‟ effect Increase width of vision fieldOR

10 years of research


Introducing Varilux® S series…

14 patents*

(*) Patent applications under examination

…The First Progressive Lens Combining

Limited „Swim‟ Effect AND Wide Field of Vision


Low

High

Narrow Wide

Natural Vision

Combining Two Proprietary,

Revolutionary Lens Technologies


4 newpendingpatents*

A revolution in lens

technology

A revolution in lens

design2 newpendingpatents*


Nanoptix entirely reengineers the fundamental structure

of the lens during calculation

Base and Power are designed to control beam deviation

through each element

NanoptixTM: A Revolution in Lens Technology

Up to 90%

of 'swim' effect

reduction




NanoptixTM: A New Manufacturing Process


Up to 5 times

more accurate!

Controlling

Surfacing



SynchronEyesTM: A Revolution in Lens Design

Based on the most advanced Human Research,

SynchronEyes takes into account the physiological

differences between the 2 eyes

Image quality is balanced between the 2 eyes for every direction

Up to 50%

wider field

of vision


Field of vision based on binocular field of vision analysis. 50% represent the maximum

gain extracted from all analyzed lenses. Varilux® S design vs Varilux® Physio 2.0 and 6

competition premium progressive products. Per product : 10 prescriptions analyzed

from -3 Add2 to +2.5 Add2. In lab R&D testing, 2011.




Varilux® S 4D: An exclusive

Version for Premium Eyecare Professionals

4D TechnologyTM: A Revolution in Lens

Personalization


15 parameters including

the exclusive measure

of dominant eye

to provide wearers with

Unlimited Reflex Vision



Varilux® S series:

Unparalleled Consumer Feedback

Wearers around the world recognise

the excellence of Varilux® S series

Superior adaptation

Superior vision when subject is moving

Superior intermediate vision

Superior transition from far to near vision

Varilux® S series is N°1 on every single lens‟ features


Source: Essilor Wearer Tests – 97 wearers accross Europe, the USA and Asia

High Level of Approval from Eyecare

Professionnals


“He forgets that he is wearing multifocals” (Netherlands)

“My vision is clear like never before. My sensation is different” (Spain)

“Immediately she said she was surprised by the brightness” (France)

“Very sharp. Like single vision” (Germany)

“It is like I am seeing with single vision: colors, contrast, position, spaces,

there is no distortion!" (Italy)

“Electricity was not invented by someone trying to improve the candle. For 26

years, I have been watching attempts to improve the candle while you offer an

entirely new approach. At last!”” (France)

An Offensive Marketing Strategy


These innovations command premium pricing

› Varilux® S series: enhanced performance

› Varilux® S 4D: positionned as the premium offering

A global roll-out by 2013

North America

Q3 & Q4 2012

Europe

Q3 & Q4 2012

Asia

2013

Latin America

2013

10 years of research, 3 revolutionary technologies, 14 patents*



Today‟s Focus


Financial Results


Outlook



Outlook for the Second-Half

Varilux® S series is a major innovation

Value creation led by global deployment of new products

on all segments

Worldwide implementation of the partnership strategy

… International economic situation


We are continuing to deploy our value-creation model

Outlook for 2012

Total Revenue Growth: 12% to 15% at constant exchange rates

(including combined like-for-like and

bolt-on acquisitions growth of 6% to 9%)

Contribution from operations:

maintain current high level of profitability(excluding strategic acquisitions)


56

Questions

&

Answers

Thank you

57

august 31, 2012 - essilor€¦ · ›brand portfolio management neutral to 2012 eps, accretive...

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