In a reaction to the initial rumors about EssilorLuxottica's takeover of GrandVision during the release of its latest financial results, the management of Hoya Corp. told investors that its competition with other chain stores could have a positive effect for Hoya's ophthalmic lens business.
Sales of eyeglass lenses went up by only one percent at Hoya in the first quarter of its financial year, ended on June 30. Its sales of contact lenses grew at a more rapid pace of 7 percent, thanks in part to an acquisition in Japan, but they are still restricted mostly to the Japanese market.
The management cited capacity constraints to explain its lackluster performance in ophthalmic lenses. The supply chain should improve with the start-up in November of a second factory in Vietnam, whose production is aimed at mass merchants, mainly in North America. As the eyeglass business is relatively profitable, this should also have a positive effect on Hoya's margins.
Furthermore, severe heat in Europe and a long rainy period in Japan impacted sales of eyeglasses in the two regions, and Hoya lost some opportunities in Brazil due to operational issues.
Eyeglass lenses and contact lenses belong to the Healthcare sub-segment of Hoya's operations, whose revenues grew by only one percent to ¥70.4 billion (€593m-$664m) in the quarter, with an increase of 3 percent in local currencies.
In turn, the Healthcare sub-segment belongs to Hoya's Life Care segment, whose operating margin dropped slightly by 0.1 percentage points to 19.4 percent on 3 percent higher revenues of ¥93.8 billion (€790m-$885m). Sales of intraocular lenses rose by 5 percent on a comparable basis, and they were further boosted an acquisition made in January. Segment sales would have gone up by 5 percent if exchange rates had remained the same, delivering a stable operating margin of 18.2 percent.
Hoya's total revenues inched up by 1 percent to ¥140.9 billion (€1.19bn-$1.33bn) in the quarter, with growth of 3 percent in constant currencies. Operating income went up by 9 percent to ¥38.5 billion (€324m-$363m) and net earnings increased by 6 percent to ¥30.1 billion (€253m-$284).
The group expects that its net profit will be down for the full financial year on one percent higher revenues of ¥284 billion (€2.39bn-$2.68bn), including growth in Life Care driven by acquisitions and sustained growth for contact lenses.