A number of factors led Essilor International to book a sales increase of only 0.5 percent to €1,276.3 million in the first quarter ended March 31, in contrast with the strong year-on-year sales increases that it usually reports. On a comparable basis, the turnover was actually flat as the slight increase benefited from a boost of 2.1 percentage points from new acquisitions, which was offset by a negative foreign currency effect of 1.6 percentage points.

However, the management assured financial analysts that they were still expecting the company to report increases of around 5 percent on an organic basis and over 7 percent including acquisitions for the full year, accompanied by high profit margins thanks to the roll-out of higher-priced products such as the company's Varilux S series of progressive lenses and its Crizal UV anti-reflective coatings, plus a new, better and more user-friendly version of Optifog, the company's new anti-condensation coating.

Participating in the conference call with the analysts during a visit to Singapore, the group's chief executive, Hubert Sagnières, noted that Essilor is currently discussing some 30 different takeover deals, adding to eight others that have been concluded since the beginning of this year. He pointed out that, in the longer term, the acquisition of a laboratory tends to raise the company's related profit margins by two to three percentage points.

Three major exceptional factors impacted Essilor's revenue flow in the first quarter of this year:

Essilor Revenues

(Million Euros, Quarter ended March 31)



% Change (reported)

Like-for-like Growth (%)

Acquisitions (%)

Change(Currency Effet)

Optical Lenses and Instruments






North America












Asia-Pacific & Africa






Latin America
























- The number of billing days was lower than in the same period of 2012, especially in Europe and Latin America. This factor alone pushed down the turnover by an estimated 1.9 percent.

- The highly unfavorable comparison with the first quarter of 2012, where Essilor enjoyed an 8.5 percent organic increase thanks to some important sales contracts and to Hoya's inability to deliver lenses in Europe and Japan because its superlaboratory in Thailand had been paralyzed by a flood.

- Unfavorable weather conditions, especially in Europe and the U.S. East Coast during the month of March, which reduced store traffic and weakened sales of sunglasses.

The group's equipment sales fell by 7.1 percent in the quarter to €42.5 million, with a 4.5 percent drop on an organic basis. Sales of these products had been particularly strong in the first quarter of 2012 because Essilor's Satisloh subsidiary sold, during that period, a lot of free-form generators to Hoya, along with Schneider, to get its Thai lab up and running again. Furthermore, Swiss-based Satisloh has seen the demand of the market shifting from large installations to smaller ones and has a lot of orders now for its more compact machines as well as for its AR coating equipment.

In the area of readers and sunglasses, sales dropped by 0.1 percent to €85.1 million, although they advanced by 0.6 percent on a comparable basis. Essilor officials are predicting a better performance for FGX International in the months ahead, especially in the second half of the year.

 Total sales of lenses and optical instruments increased by 0.9 percent to €1,148.7 million for the group, and they were up by 0.2 percent organically. North America remained the biggest market for the group in this product category, with sales of €452.9 million in the latest quarter, although Mexico, which generated sales of €5.5 million in the first quarter of 2012, is now part of the Latin America region.

However, the company's sales in the U.S. and Canada rose by only 0.6 percent in the quarter and were off by 0.4 percent organically. The group sold fewer optical instruments in the region and the roll-out of the new Varilux S series was delayed by a slower-than-expected technical upgrading of the region's labs. This means that stronger sales growth can be expected in North America for the balance of the year.

At €400.2 million, European sales of lenses and optical instruments were off by 1.3 percent in reported terms and by 1.2 percent on an organic basis. Aside from the previously mentioned extraordinary factors, the management mentioned a particularly bad market situation in some countries such as Spain and Portugal, but it noted strong market penetration for the Varilux S series in France, Italy and Switzerland.

Sales of lenses and optical instruments grew by 5.5 percent to €216.8 million in the Asia-Pacific and Africa regions, but they were up by only 1.1 percent on a comparable basis because the creation of a subsidiary in South Korea added €2.9 million to the quarterly revenues. In Latin America, sales of these products were up by 1.7 percent to €78.8 million, up by 8.2 percent on a comparable basis in spite of a decline in Argentina.

In Asia-Pacific and Africa, one major negative factor was Essilor's performance in Japan, where sales fell by 15 percent in the first quarter of this year. For all of 2012, Essilor's sales of lenses and optical instruments in Japan had jumped by 40 percent because of Hoya's delivery problems in its own domestic market. The management pointed out that the group is still gaining market shares in the fast-growing Chinese and Indian markets, and developing well in the Gulf states of the Middle East, but noted some weakness in South Korea.

Essilor's management had nothing to say about its ongoing discussions with PPG Industries about the future ownership of Transitions Optical, in which it holds a minority share of 49 percent, but it reported the buyback of 309,097 shares worth €22.5 million and many new acquisitions during the quarter – all in emerging markets:

- In Turkey, Essilor signed an agreement to take a majority stake in Isbir Optik, described as the country's leading distributor in the sector with annual sales of €15 million.

- In Russia, the company acquired a majority share in MOC-BBGR, a joint venture with Marketing Optical Company that has been distributing BBGR lenses in the country for many years, generating annual sales of €4 million.

- In Israel, Essilor bought the production and sales assets of its long-standing distributor, Optiplas, with sales of €5 million.

- In Morocco, Essilor completed the takeover of Movisia, which has annual sales of around €1 million from the distribution of Nikon and Kodak lenses.

- In Chile, the company completed the acquisition of majority ownership in Megalux, described as the country's leading distributor, with annual revenues of €7 million.

- In Colombia, Essilor signed a deal to buy a majority stake in Servi Optica, the leading distributor in the country, which generates annual revenues of €29 million.

- Essilor entered the market of Nepal with the acquisition of a majority stake in Nemkul, a distributor with annual sales of about €500,000.

After the end of the first quarter, Essilor bought a majority share of Advanced Optical Supplies, an Australian prescription laboratory in the state of Victoria that invoices about €800,000 per year.