As previously announced by Alexandre Montague, the new chief executive of Hoya Vision Care, in an interview with us, eyeglass lenses’ revenues of the Japanese group Hoya have bounced back to pre-Covid levels. In the presentation of its results for the second quarter ended on Sept. 30, the company reported a year-on-year 1 percent decrease in lenses’ sales, after a 42 percent year-on-year decline in the previous quarter.
Hoya does not provide the regional breakdown of its revenues but commented that sales in Europe progressed at high growth rates in the quarter, particularly with suburban independent opticians. China was also singled out as a dynamic region. The group expects to register a net growth in lenses’ revenues in the third quarter, based on a 6 to 7 percent increase in volumes sold until Oct. 17, but remains cautious of a possible second wave of Covid-related lockdowns.
However, quarterly sales for the Health Care segment, which also includes the Japanese Eyecity retail chain of contact lenses, declined by 10 percent year-on-year to 68.2 billion yen (€552.3m-$653.2m), both on reported and constant currency terms. The decrease in the segment revenues is entirely attributable to the contact lens’ business whose revenues dropped by 25 percent year-on-year, as last year’s sales had been artificially boosted by anticipated consumers’ purchases before a hike in Japan’s value-added tax. However, Hoya also said that, neutralizing the tax hike effect, the market was shrinking by 7-8 percent as consumers tend to wear their contact lenses less often because of the generalization of teleworking.
In the larger Life Care segment, which comprises medical tools such as endoscopes on top of eyeglass lenses and contact lenses, year-on-year quarterly revenues went down by 10 percent to ¥ 90.1 billion (€729.6m-$862.8m). However, Hoya managed to improve the profitability in the segment, with an operating margin of 23.5 percent in the quarter, representing a 1.9 percentage point hike from the same quarter last year. As another reference point, the company had reported a 14.9 percent operating margin in the previous quarter.
This improvement in profitability on lower revenues’ figures results from a 8.7 percent drop in total quarterly expenses at group level, with significant drops in purchase of raw materials and consumables, as well as advertising and promotion expenses. The company also explained that the product mix improved in the quarter as the recovery in the lenses’ segment was driven by independent opticians in Europe who pushed sales of higher range products.
As a group, and including the Electronics and Imaging businesses, Hoya reported a 9 percent year-on-year decline in quarterly revenues, down to ¥ 140.3 billion (€1.14bn-$1.34bn) this year from ¥ 154.1 billion in 2019. Operating profit from ordinary activities declined by 4 percent to ¥ 43.3 billion (€350.6m-$414.6m) and net profit decreased by 9 percent to ¥ 31.8 billion (€257.5m-$304.5m).
Commenting on its results, Hoya further noted that it booked a ¥ 3.1 billion (€25.1m-$29.7m) impairment loss linked to delays in clinical trials and the impact of Covid on a previously acquired, but unidentified, overseas’ subsidiary. Separately, the group announced that, thanks to an improved visibility, it is launching a share buyback program until January next year. The group will acquire a maximum of 4 million of its own shares for a maximum ¥ 40 billion(€323.9m-$383.0m), and the repurchased shares will be cancelled.