The results of Hoya Corporation for its third quarter, ended Dec. 31, showed that the Japanese group was pursuing its recovery from the negative impact of Covid-19, with stable revenues and a double-digit year-on-year increase in profits. Top line figures for the Health Care division were back in the black for the quarter with year-on-year sales growth for both eyeglass lenses and contact lenses, after two consecutive quarters in the red.
Quarterly revenues in the Life Care segment, which includes lenses, contact lenses and medical instruments, reached ¥94.5 billion (€748.3m-$906.1m) representing a year-on-year increase of 2 percent in reported terms and 4 percent on a neutral-currency basis. Operating profits in the segment jumped by 39 percent to ¥21.7 billion (€171.8m-$208.1m) as compared to last year, resulting in a 23.0 percent operating margin.
The Life Care segment growth in sales was entirely attributable to the Health Care unit, with aggregated sales of lenses and contact lenses growing by 3 percent to ¥69.1 billion (€547.2m-$662.6m) year-on-year, and by 5 percent in constant currencies, whereas medical instruments’ revenues declined by 1 percent in the quarter.
Although the Japanese group does not publish detailed figures for each product category in the segment, we estimate that eyeglass lenses represented about 70 percent of the Health Care total in the quarter or a little less than ¥50 billion (€396.0m-$479.6m). Revenues for this product category increased by 3 percent in the quarter as compared to last year. The group commented that it remained cautious about the recent resurgences in Covid-19 infections but expected the market to progressively return to normal levels.
Third-quarter sales of contact lenses increased by 12 percent year-on-year, mostly because of a positive comparison basis with the same quarter last year when contact lenses sales dropped after the implementation of a value-added tax increase in Japan. However, the group also stressed that this positive result was achieved in spite of an estimated 10 percent overall decrease in contact lenses’ wearing frequency due to the general homeworking trend. Hoya said it plans to open new stores, including different formats, and look at potential acquisitions in the segment.
Quarterly revenues in the IT business unit went down by 3 percent year-on-year to ¥51.1 billion (€404.6m-$490.0m) in reported terms but the segment’s profitability improved with operating margin reaching 49.2 percent, contributing to record profits for Hoya. While the group posted stable revenues in the quarter at ¥146.9 billion (€1,163.2m-$1,437.3m), representing a 2 percent increase in constant currencies, Ebitda jumped by 21 percent to ¥46.1 billion (€365.0m-$442.0m). During the quarter, Hoya also maintained a tight control on expenses, reducing their total by 6 percent against the same quarter last year with important savings in inventory changes, raw materials and employees’ benefits.
In its guidance for the last quarter of its financial year, Hoya sees stable revenues in the Life Care segment as compared to the same quarter last year when Covid-19 was already impacting the business, and a 7 percent increase of the group’s total sales. For the full year, group revenues are expected to be down by 6 percent year-on-year but pretax profit is projected to grow by 6 percent.
Hoya also announced the completion of its share buyback program started last October, with a total of 3 million repurchased shares or 0.82 percent of total outstanding shares, which will be cancelled. Mentioning an improved outlook, the absence of large-scale acquisition projects in the near future and its intention to improve capital efficiency, the company announced the launch of a new share buyback for a maximum of 3.3 million shares to be repurchased by April 20, 2021.