While reporting new record financial results, HAL Holding has announced two deals that will allow its 97-percent-owned Pearle Europe subsidiary to enter two new markets. The most important one concerns the big Indian market, where it is looking at a potential network of 500 stores that would be built from scratch, contrary to the group's habit of acquiring an existing operation.
For this purpose, and in view of the fact that local legislation prevents foreign interests from controlling any retail companies in India, Pearle Europe has signed an agreement to establish a 50-50 joint venture for the Indian optical market with Reliance Retail, a subsidiary of one of the country's largest private companies, Reliance Industries.
The project, which is expected to be approved by India's Foreign Investments Promotion Board within the next four to five months, is part of a wider US$6 billion plan by Reliance Retail to create a nationwide network of more than 5,000 stores in 1,500 cities and towns over the next years, also covering other product categories such as electronics, apparel and food. Currently, Reliance Retail has more than 500 stores in operation across India.
Separately, Pearle Benelux has completed the acquisition of Steffen Optique, a chain of five optical stores in Luxembourg. One of them is located in the capital of the small European state, a country where Pearle had no presence before. A fifth store will be opened soon. Steffen Optique will be re-branded into Pearle and the stores will be integrated into the Belgium Pearle organization.
Before these transactions, the HAL group had a total of about 3,200 optical stores, including franchises, in 31 different countries. Together, these stores generate annual sales of about €2.4 billion. As previously reported, the group recently entered new markets including Switzerland, Brazil, Turkey, Romania and Bulgaria.
It also expanded its retail activities last year in the hearing aids sector by acquiring 71 stores in Germany, Denmark, France, the Netherlands, Italy and Belgium. The aggregate annual sales of these stores is about €22 million. HAL has also made investments in insurance, wine imports, orthopedic devices, protective equipment and high-pressure laminates.
HAL's actual revenues from its own optical retail stores grew last year to €1,842 million from €1,676 million in 2006. On a comparable store basis, they rose by 4.4 percent in 2007, after a 3.8 percent gain recorded in 2006. They generated operating income (EBIT) before exceptional items of €269 million, up from €219 million in the previous year.
HAL's total net sales increased by €408 million to €3,187 million in 2007, and its net income went up sharply to €735.7 million from €496.8 million the year before. The total net value of its assets grew from €3,591 million to €4,354 million in the course of the year. The board of directors has proposed the distribution of a dividend of €3.25 percent share for 2007, up from €3.15 for the previous year.