Hoya Corporation’s performance was again severely impacted by the Covid-19 pandemic in the first quarter ended on June 30, particularly for its life care segment. The group reported quarterly revenues of 61.9 billion yen (€496,6m-$585.3m) for the segment, down by 34 percent in absolute terms from ¥93.8 billion in the same period last year and by 32 percent on a same currency basis. Operating profit in this segment, which includes eyeglasses, contact lenses and other medical devices, dropped to ¥9.3 billion (€74.6m-$87.9m) from ¥18.2 billion last year.
Sales of eyeglasses and contact lenses in the quarter represented a total of ¥43.9 billion (€352.2m-$415.1m) for the quarter, down by 36 percent on a comparable basis from the same period last year.
The eyeglass lenses’ business was most heavily hit, with sales diving by 42 percent year-on-year, due to the impact of lockdown restrictions and store closures in most countries. However, the group expressed confidence in a progressive market recovery, encouraged by a rise in demand in the last two months. Hoya said that sales of lenses in July were almost back to last year’s level, although with significant regional differences as the restart in the U.S. was slower than in Europe. The company also commented that a six-week lockdown in the Philippines interrupted production in its factory, resulting in delivery delays in Japan. On the positive side, factories in Hungary and Vietnam, including one recently opened, are said to be operating well.
Revenues of the group’s contact lenses unit, which consists mostly of a network of more than 250 Eyecity stores in Japan, decreased by 23 percent year-on-year in the first quarter. But, Hiroshi Suzuki, the company’s CEO, noted that the segment had started to recover with current sales reaching about 92 percent of last year’s level. The group had to close about 40 percent of its Japanese stores during the state of emergency in the country but this was partly offset by Hoya’s decision to start home-delivery services during the quarter.
At group level, reported quarterly revenues went down by 22 percent to ¥109.3 billion (€876.8m-$1,033.5m) as steady revenues in the IT business segment helped to mitigate the drop in the health care unit. By region, revenues in Japan declined by 24.8 percent, accounting for about a third of the group’s sales. The rest of Asia, roughly equivalent in size, was the only region that posted higher revenues in the quarter, albeit only by 1.3 percent. The U.S. and Europe, each representing slightly less than 20 percent of Hoya’s revenues, were down by 48.9 and 30.1 percent respectively.
Reducing expenses by 22 percent in the quarter through no-pay leaves and cuts in salaries among other measures, Hoya managed to soften the impact of the sales drop on profits. Operating profit went down by 19 percent to ¥31.3 billion (€251.1m-$296.0m) and pre-tax profit by 14 percent to ¥31.9 billion (€255.8m-$301.7m), as compared to last year.
Going forward, the group said that sales in the lifecare segment are seen recovering in the second quarter but would suffer from the comparison with exceptionally high revenues in the same quarter last year, in particular in the contact lenses segment that had been boosted by anticipated purchases before a rise in Japanese VAT rates. Overall, the group expects second-quarter revenues to be down by 12 percent and pre-tax profit by 20 percent.