The revenues of Hoya Corporation's Health Care sub-segment, which covers essentially eyeglasses and contact lenses, grew by 21.2 percent to 58.3 billion yen (€434.7m-$488.4m) in the third quarter of its financial year, ended Dec. 31. They rose by 17.5 percent in terms of constant currencies, benefiting in part from the consolidation of Seiko Optical Products (SOP).
Sales of eyeglasses expanded at a double-digit rate in Europe in local currencies. They grew also in the Americas. Excluding the tough Japanese market, where Hoya's performance was not good, they grew by a mid-single digit in Asia.
Hoya's sales of contact lenses rose in Japan by 5 percent in the quarter, after a major decline in the second one, due to the increase in the national sales tax on April 1. The depreciation of the yen has allowed Hoya to raise its market share in contact lenses because it has increased the procurement costs of internet retailers, said Hiroshi Suzuki, chief executive of the group, in commenting on the group's results.
The Health Care sub-segment belongs to the broader Life Care segment of Hoya, whose total revenues went up by 17.4 percent to ¥67.8 billion (€505.6m-$568.4m) in the quarter, up by 13.0 percent on a currency-neutral basis. Unit sales and average prices went up in overseas market, the company says. However, the segment's profit was virtually flat. The profit margin for ordinary activities declined to 18.9 percent from 19.5 percent in the same period a year ago.
According to Suzuki, the drop in profitability can be explained by the depreciation of the yen and investments for future growth. “I want to accelerate revenue growth more,” he told analysts. “Speeding up sales growth in the Life Care segment is one of Hoya's highest priority,” he added. He said that Hoya is not covering the full market, and that it wants to expand market coverage both in terms of products and regions.
Estimating Hoya's global market share in ophthalmic lenses at about 15 percent, compared with 45 percent for Essilor, Suzuki said his understanding is that his company is capturing market share from other manufacturers. He noted that “customers have some dissatisfaction and concerns about top manufacturers monopolizing the market,” particularly in view of the growing concentration of the retail sector, so Hoya wants to offer a better customer experience in terms of products and supply capabilities. It wants to raise brand awareness for its main brand, which, he feels, is still relatively low in the smaller optical retail stores in overseas markets.
The group's total sales rose by 16.9 percent to ¥128.2 billion (€955.9m-$1,074.1m) in the latest quarter, or by 10.8 percent in local currencies. The profit for the quarter was 30.8 percent higher than year ago in terms of yen, reaching ¥29.1 billion (€217.0m-$243.8m), or 22.7 percent of sales, but in real terms it was up by only 15.6 percent.
The management is projecting an increase of 56 percent in net profit to ¥94.0 billion (€70.1m-$78.8m) for the group over the whole financial year ending March 31 on 12.8 percent higher revenues of ¥482.5 billion (€3,597.3m-$4,043.0m). The forecast assumes that sales will be down during the current quarter as compared to the same period a year ago.
Hoya's board of directors has decided to use some of the company's cash flow for a stock repurchase program worth a maximum of ¥30 billion (€223.7m-$251.4m). Hoya plans to purchase up to 7.5 million of its own shares on the Tokyo Stock Exchange between Feb. 2 and May, corresponding to 1.77 percent of its equity, and to cancel them afterwards.