Fourth-quarter sales at Bausch & Lomb were $606.6 million, representing increases over the year-ago period of 10 percent in dollars and 7 percent in local currencies. Gains were reported in every product and geographic market category except for an anticipated decline in sales from refractive surgery products in the Americas. Approximately 60 percent of B&L's business comes from outside the USA, so the foreign exchange factor is relevant. Revenues increased by 15 percent in Europe, the Middle East and Africa, with a 7 percent increase on a constant currency basis.
The visual care division, which includes contact lenses and lens care products, experienced strong growth. Contact lenses was the best product category, performing a 16 percent increase in dollars and a 12 percent increase on a constant currency basis, while the lens care segment rose respectively by 6 and 4 percent. Strong growth for soft lenses was partially offset by a decline in the smaller rigid gas permeable lens segment. This segment is mature, says B&L, but it will continue to grow thanks to the improved convenience, quality and comfort of the products.
For the full financial year, B&L's sales of $2.23 billion were up 11 percent, including a 6 percent increase before currency conversion. Growth took place in all product categories and in each geographic region and earnings per share surpassed the company's own expectations, established at the beginning of the year. Net earnings rose to $159.6 million from $125.5 million the year before.
The operating margin as a percentage of sales increased by 9.9 basis points to 12.5 percent as compared to the prior year. Improved gross margins, combined with lower expenses as a percentage of sales, were partially offset by higher R&D investments, which increased last year by 13 percent to $162.5 million, or 7.3 percent of sales. The company is still committed to reach a 10 percent ratio in R&D spending.
The management is anticipating a sales increase of 6-7 percent for this year before currency conversion, which could add another 2 percentage points, with gains of 10-12 percent in contact lenses and of 2-4 percent in lens care.
In 2004 the company launched in the USA and Europe its new SofLens multi-focal lenses, and B&L believes that there is a strong opportunity in this segment where millions of former contact lens wearers, combined with people needing correction for the first time, may be interested in the new technology. At present only a tiny percentage of the population over 40 years of age wear contact lenses. B&L plans to enter also Asia and Latin America with this new product in 2005.
Meanwhile, the group has appointed Henry Tung as its corporate vice president of global surgical operations. Tung joins the company from Boston Scientific, where he was vice president of new business development since 2000. He succeeds Kamal Sarbadhikari, who plans to retire this year after nearly 20 years with the company.