CooperVision claims it grew twice as fast as the global soft contact lens market in the last quarter of its financial year, ended last Oct. 31, and for the previous three quarters. It gained market share everywhere except in the Asia-Pacific region, but that should end following its acquisition of a few days ago of a Japanese producer, Aime.
The acquisition will take 5 cents from Cooper Companies' earnings per share next year, but it will allow CVI to enter the Japanese market for silicon hydrogel lenses, estimated at $400 million a year, with its Biofinity line in the second half. CVI is currently projecting an increase in its currency-neutral sales of between 6 and 8 percent in the current fiscal year, compared with growth of 4 and 6 percent in the global soft contact lens market during the 2011 calendar year.
According to the Contact Lens Institute (CLI), worldwide sales of soft contact lenses grew by 5 percent in the three months ended last Sept. 30 and for the first nine months of 2010, reaching levels of $1,669 million and $4,855 million, respectively. The market rose in the last quarter by 6 percent in the Americas as well as in the Europe, Middle East and Africa (EMEA) region, and by 3 percent in Asia-Pacific.
Somewhat comparatively, CVI's sales grew by 10 percent in the three months ended Oct. 31, with increases of 13 percent in the Americas and the EMEA and a decline of 1 percent in Asia-Pacific. The ramp-up of its Biofinity and Avaira lines of silicon hydrogen lenses contributed largely to its expansion. CVI's sales of these products increased by 91 percent in the latest quarter and by 106 percent for its full fiscal year, against increases in the market of 20 and 21 percent, respectively.
CVI's progress in the silicon hydrogel category has been taking place in spite of capacity contraints that have limited the availability of its Avaira toric line and delayed the introduction of Biofinity multi-focal lenses until a still undefined date in 2011. On the other hand, CVI executives candidly told investors in a conference call that their company was capitalizing on the recall of Johnson & Johnson's TruEyes line, on its ongoing patent litigation with Ciba Vision and on an apparent lack of a major technological breakthrough at Bausch & Lomb.
CVI's quarterly sales grew by 10 percent in absolute terms as well as in constant currencies, reaching $263.2 million. On a constant-currency basis, they rose by 20 percent in the Americas and by 8 percent in EMEA, but fell by 5 percent in Asia-Pacific. Sales of silicon hydrogel lenses rose to $72.7 million and are now on a par with those of its older Proclear line, which continued to grow by 5 percent. In terms of the main categories, its sales of toric lenses grew by 16 percent and single-use spheres by 9 percent, while multi-focals recorded a 2 percent decline.
The gross margin improved to 59 percent in the quarter from 56 percent in the same period a year ago, and the operating margin went up to 22 percent from 17 percent. In spite of the remaining costs associated with the closure of CVI's Norfolk factory in Virginia, which was completed in October, and charges of $27 million to settle a class action suit, CVI's parent, Cooper Companies, managed to deliver cash flow of $32 million in the quarter. Debt is now down to $611 million from $913 million two years ago.
For the full year ended last Oct. 31, a 7 percent increase in CVI's revenues to $970.5 million helped the Cooper Companies group to post a total sales increase of 7 percent to $1,158.5 million, up 8 percent in constant currencies. The group's gross margin improved to 58 percent from 55 percent, and the operating margin to 16 percent from 14 percent. The bottom line showed a net profit of $112.8 million for the year or $2.43 per share, up from $100.5 million
The management is predicting non-GAAP earnings of $3.30 to $3.50 per share on total revenues of $1,250 to $1,280 million for the current financial year. The gross margin should be in the 60-62 percent range and the operating margin in the 17-18 percent range.