Essilor International already has an estimated 22-23 percent market share at the wholesale prescription laboratory level in the USA, and wants to raise it to 30 percent, in connection with a new global service-oriented, internet-based strategy. Following the policy initiated by Essilor to conquer the world's largest eyewear market, Hoya Corp. has acquired Optical Resources Group, a large 2-year-old nationwide US network of 9 wholesale laboratories. Reports indicate that Hoya paid more than $140 million or 15 times EBIT for ORI, whose turnover amounted to the equivalent of about 13 billion yen (e130m-$120m) last year, or 7 percent of the US wholesale market, but Essilor has immediately de-listed ORI's labs for its own Varilux and Crizal lenses. Hoya now has a total of 13 labs and sales offices throughout the USA, giving it a market share estimated by competitors at about 10 percent.
ORI's takeover is in line with the Japanese group's stated corporate goal to raise the share of revenues generated abroad to half of the total consolidated turnover by March of 2002, as compared to the 39.8 ratio reached in the 4th quarter ended last March 31, through a combination of internal and external growth. In Europe, Hoya's lens division acquired last September Buchmann, the Belgian-based firm, and the subsequent month it inaugurated a 2,000-square-meter prescription laboratory in Spain, where its market share is already estimated at about 10 percent. Also in the past year, Hoya established new laboratories or enlarged existing ones in Connecticut, Hong Kong and Japan.
In the year ended last March 31, the Hoya group's total consolidated sales declined by 0.1 percent to 201,110 million yen (e2,040m-$1,890m), largely because of the appreciation of the yen, but its net income improved by 16.1 percent to 20,715 million yen (e210m-$195m), thanks to cost-cutting measures and the transfer of some manufacturing operations to other Asian countries that charge a lower tax rate. On a non-consolidated basis, Hoya's sales grew by 7.5 percent to 126,719 million yen (e1,288m-$1,190m), with sales of ophthalmic lenses and other vision care products up 8 percent to 43,456 million yen (e442m-$408m).
On a consolidated basis, including foreign subsidiaries, Hoya's vision care division raised its sales by 2.7 percent to 71,753 million yen (e729m-$674m) in the year, but its operating profit dropped slightly from 16.8 to 16.2 percent. Sales of its health care division, which includes contact lenses as well as hearing aids, were flat at 19,541 million yen (e199m-$184m), and their operating margin declined from 13.1 to 11.7 percent. A much higher operating margin of 24.9 percent in electro-optics helped the group to obtain a higher 17.2 percent overall operating margin for the year.
Hoya says it managed last year to raise its domestic sales of vision care products and to obtain satisfactory overall sales of high value-added products. Its foreign sales of vision care products increased, partly through acquisitions and partly through an aggressive promotion of high value-added products in all the regions, but the appreciation of the yen caused them to decline in the Japanese currency to 31,329 million yen (e325m-$300m) or 43.7 percent of the division's sales, against 46 percent in the previous year.
In the health care division, where overseas revenues still represent only 0.6 percent of the total, sales of contact lenses declined, due to a fall in market prices, but sales of disposable lenses were good, and the company has decided to focus in the future on high-value products such as bifocal contact lenses. Sales of intraocular lenses increased. A new line of progressive contact lenses is planned.
The 4th quarter showed a marked improvement in the group's overall consolidated sales and profits, but Hoya's operating margin in the vision care division declined to 14.7 percent on sales of 17,937 million yen (e182m-$168m) from 16.1 percent on sales of 16,752 million yen (e170m-$157m) in the year-ago period. Sales of vision care products outside Japan were up 7.6 percent to 8,262 million yen (e84m-$78m). Group sales were up 9.9 percent to 51,214 million yen (e521m-$481m) in the quarter, generating a 36.1 percent improvement in net income to 5,251 million yen (e53m-$49m).