Essilor International reported yesterday a 6.7 percent increase in consolidated sales for last year to €2,258.6 million, but pointed out that they would have increased by 10.4 percent if the dollar and other currencies had staid the same. That's much better than the 9 percent growth forecast made last March, although the group made fewer acquisitions than planned. The group's organic growth reached a strong level of 5.8 percent ? or 8.9 percent excluding the depressed German market ? and acquisitions contributed 4.6 percentage points to these growth rates.

No profit figures have been given yet, but the management indicates that the operating margin (Ebit) for the year increased to a level above the 16.5-17.5 percent range that Essilor has targeted for the next three years, thanks in part to the relatively low acquisition activity, which tends to dilute margins. The margin is predicted to decline slightly this year, based on the assumption that organic growth will return to the 5-6 percent range and that the group will complete new acquisitions all over the world that will bring in annual revenues of €75-100 million.

Essilor predicts that the German market will show a decline also in the 1st quarter of 2005 and then recovery slowly, like it did after former health reforms. In 2004, Essilor's German subsidiary suffered a 27 percent drop in its revenues, not including those of Rupp + Hubrach, the German company bought in October 2003. The latter had to endure a 50 percent drop in its own revenues during the 4th quarter of last year, as compared to the same period the year before.

Overall, Essilor's European sales declined by 3.3 percent in the 4th quarter of 2004, but they rose by 9.8 percent excluding Germany. For the full year, its European sales recorded an organic sales of 2.0 percent including Germany and of 7.4 percent excluding that country. Sales in France rose by 7.3 percent. Other strong increases were recorded in the UK, Spain, Italy, Portugal, Poland, Hungary, the Czech Republic and other countries in Southern and Eastern Europe.

Confirming its recovery, the North American market brought a 7.7 percent sales increase on a comparable basis. Latin America was up by 14.7 percent, thanks mainly to improvements in Brazil and Argentina. The Asia-Pacific region scored an 18.1 percent increase, with China and India up by about 30 percent and Austria and New Zealand up by more than 10 percent. In Japan, where the market is believed to have risen by 8 percent last year, the Nikon-Essilor joint venture had a 13 percent sales increase, resulting in a market share gain.

In terms of products, much of the growth was generated by new entries such as Crizal Alizé coatings, Varilux Ellipse and Varilux Ipseo lenses and 1.74 ultra high-index lenses. Transitions continued to record a double-digit progress.

Essilor made a total of 12 acquisitions in 2004 ? mostly small companies with a combined annual turnover of €78 million. It paid €64 million to buy them up, spending in general the equivalent of 6 times earnings before amortization and depreciation (Ebitda). The French-based group announced a few more acquisitions yesterday that were completed between the end of 2004 and the beginning of 2005:

- A majority stake in 21st Century Optics, a prescription lab in Long Island City that distributes Varilux and Crizal products, generating annual revenues of $15.5 million

- Vision-Craft, a prescription lab in the Detroit area that distributes Varilux products, with annual sales of $4.3 million

- A prescription lab in the Mumbai region of India, Vijay Vision Private Ltd., with sales of €1 million

- Delamare-Sovra, a French manufacturer of surfacing consumables with annual sales of €3 million