While announcing some more acquisitions of its own, Essilor International reported a 12.6 percent increase in net profit for the 1st half of 2006 to €164.1 million, representing a net margin of 12.0 percent. Thanks to the very strong sales growth enjoyed during the period, the operating margin (EBIT) remained at the high 17.8 percent level of a year ago, leading the management to anticipate new record results for the full year. Furthermore, the company's EBIT ratio seems to be trending above 17 percent for the near term, close to the levels recently reported by Hoya Vision Care, although Essilor does not exclude using its stronger profitability to become more aggressive in the market.
As previously reported, the group's total revenues rose by 15.2 percent to €1,362.4 million during the first six months of this year. Excluding currency changes they rose by 12.4 percent. On an organic basis they increased by 8.7 percent, with gains of 11.5 percent in the 1st quarter and 6.2 percent in the 2nd one. Sustained demand for value-added lenses was accompanied by excellent results in the instruments division.
The gross margin expanded from 57.4 to 58.2 percent during the 6-month period because of a higher product mix, higher volumes and productivity gains in the group's factories and laboratories. Operating expenses, which had been slashed down last year, increased from 39.6 to 40.3 percent of revenues, due in part to the launch of Varilux Physio and the related investments in digital surfacing equipment.
Finance costs increased. Foreign exchange losses and other charges, including a €3.8 million provision on a minority stake in a Thai company due to bad debt, offset a lower loss from Essilor's investment in VisionWeb, which should finally reach balanced results in the 2nd half, and higher profits from Christian Dalloz and Transitions.
The group conducted 19 different acquisitions in the 1st half, representing extra annual revenues of €63 million. Four other takeovers were completed during the summer months. In the USA Essilor bought Vision Starn, a $2 million company that develops and sells software for laboratory management; Prio Corporation, which distributes corrective lenses to treat computer vision syndrome; and Sunstar, a prescription lab with operations in Nevada and Utah and annual revenues of $7.7 million. Additionally, Essilor has bought Tec Optik Pty, a prescription lab in Sydney, Australia, with annual sales of 6.7 million Australian dollars.