Hoya plans to transfer to its large factory in Thailand the balance of its Japanese production of eyeglass lenses for the mass market, which is relatively small, but it will continue to make high-end products in Japan. The idea is to reduce costs in view of the continued decline in retail prices on the Japanese market, engendered by the growing dominance of discount shops, which is polarizing the market. Hoya will continue to expand sales of new products and to stress added-value items, particularly in foreign markets.

Sales of progressive and high-index lenses increased, but total sales of eyeglass lenses rose by only 2.3 percent to 23.7 billion yen (e196m-$198m) in the quarter, with a 9.2 percent sales decline in Japan offset by a 12.3 percent increase in foreign markets. Sales of contact lenses and intraocular lens rose by 22.3 percent to 6.9 billion yen (e57m-$58m), largely driven by a 22.5 percent increase in Japan which still represents 99.7 percent of sales in this segment.

The appreciation of the euro and other developments allowed Hoya to again raise its operating margins for eye care products. The margin on eyeglass lenses increased from 15.1 to 18.0 percent year-on-year, while the margin on contact and intraocular lenses jumped from 14.7 to 21.2 percent. The group's total sales increased by 6.4 percent to a record of 61.77 billion yen (e510.9m-$516m) in the quarter. Net income improved by 28.8 percent to 7,977 million yen (e66m-$67m).

At the recent Silmo fair in Paris, the fast-growing French subsidiary of Hoya presented a new photochromic lens technology, SunTech, that it has already presented at the Vision Expo fair in Las Vegas. Coated in its own labs, it will be available on the company's ultrathin 1.70 index lenses in France as of next January. Germany should follow next May. The rest of Europe should be covered by the end of 2003.

Separately, Hoya issued last Nov. 1 share subscription rights for 236 executives and other company employees to enhance their morale and to give them an additional incentive to improve performance. The selected persons at the parent company and its subsidiaries will be able to exercise these right between Oct. 1, 2003 and Sept. 30, 2007 at the stock market price of 7,670 yen (e 63.40-$64.10) a share recorded last Oct. 18. The 965,900 shares due to be issued under this stock option plan are worth a total of 7,408,453,000 yen (e61.3m-$61.9m).