Essilor International has announced consolidated revenues for the first quarter of €1,784 million, up by 7.5 percent from the first quarter of 2015. On a currency-neutral basis, sales rose by 9.4 percent, above the guidance given by the management for the full financial year. On a comparable basis, sales went up by 5.0 percent, one percentage point better than in the year-ago quarter. They rose by around 4.5 percent in developed countries.

The growth was driven by a sharp acceleration in the Lenses & Optical Instruments division, which rose at an exceptionally strong rate of 5.7 percent for the period, the highest since 2008, with double-digit rate in emerging countries. Even excluding online sales of frames and other e-commerce operations from this category, sales went up by around 5.5 percent on a comparable in the period, thanks to marketing and new products, indicating a gain in market shares.

Conversely, revenues from Sunglasses & Readers were down organically by 1.5 percent due to a one-time adjustment in the management of Bolon, the Chinese brand of sunglasses owned by the group. The company expects to regained momentum for the Sunglasses & Readers division, to be reflected in the numbers in the coming months.

Newly acquired companies boosted the reported revenues for the period by 4.4 percentage points, including a positive impact of 3.4 percentage points from the acquisitions completed in 2015. However, changes in foreign currency exchange rates depressed the reported revenues by 1.9 percentage points, chiefly due to the depreciation of the Brazilian real.

In the Lenses & Optical Instruments division, the biggest business unit of the group, North America saw a 4.7 percent sales increase on a comparable basis, with growth across all distribution channels - independent optometrists, optical chains and online.

In the expanding U.S. market, the business with independent optometrists continued to be driven by innovation and consumer marketing campaigns. In addition, Essilor began collaborating with Vision Source and PERC/IVA - two recently acquired service platforms for about 9,000 eye practitioners - on the development of new solutions.

The performance in Canada was led by the success of the Varilux, Crizal and Nikon brands, as well as the deployment of the Eyezen product line and other lenses offering blue-light protection, and the instruments business. Online sales in North America went up, with EyeBuyDirect and Frames Direct growing by more than 20 percent. Coastal.com performed less well, showing some volatility from one month to the next.

In Europe, revenues from Lenses & Optical Instruments grew organically by 4.7 percent, helped by the start-up of new marketing campaigns early in the period. Advertising drove volume gains and product-mix improvements, led by Varilux and other branded progressive lenses, anti-reflective coatings and blue-light filtering coatings. Eyezen had an “amazing takeoff,” the management said.

Sales to independent eyecare professionals experienced robust growth, especially in Italy, Eastern Europe and Russia, where operations outperformed the regional average. Sales of optical instruments and online sales both posted double-digit growth in the region. This was particularly the case for Lensway in Northern Europe, which is confirming its turnaround. It will be integrated with the recently acquired Vision Direct operation based in the U.K.

Essilor Revenues

(Million Euros, Quarter ended March 31)

 

Q1 2016

Q1 2015

% Change
(reported)

Like-for-like
Growth (%)

Change in
scope (%)

Currency
Effet (%)

Lenses and Instruments

1,567

1,454

7.8

5.7

4.3

-2.3

North America

710

650

9.3

4.7

3.5

1.1

Europe

470

441

6.4

4.7

2.7

-1.0

Asia-Pacific & Africa

283

267

6.0

8.9

1.4

-4.3

Latin America

104

96

9.1

9.0

25.7

-25.5

Sunglasses & Readers

173

163

6.0

-1.5

6.9

0.6

Equipment

44

42

2.9

3.5

-1.0

0.3

TOTAL

1,784

1,659

7.5

5.0

4.4

-1.9

In the Asia/Pacific/Middle East/Africa region, Lenses & Optical Instruments raised their sales by 8.9 percent, led by gains in fast-growing countries. High single-digit growth in China was primarily driven by the growing popularity of blue-light filtering lenses, accelerating export sales and strong momentum with local partners.

Revenues in Indonesia and the Philippines grew at a double-digit pace over the quarter. Operations in India enjoyed a 20 percent increase, mainly driven by photochromic lenses sold under the Transitions brand as well as a more accessible one, Acclimates. Within the Africa/Middle East area, results were particularly good in Turkey, Saudi Arabia and Morocco, where sales accelerated to a rate of more than 20 percent.

In Latin America, sales of Lenses & Optical Instruments rose by 9 percent. Modest low-single-digit sales growth in Brazil was offset by a 15 percent gain in the rest of the region. Operations in Mexico and Colombia, in particular, turned in the fastest growth, with Mexico up by more than 30 percent for the quarter. Sales were also strong in Chile and Argentina. In Costa Rica and Nicaragua, the company capitalized on the acquisition of Grupo Vision in 2015 to step up the introduction of both its premium lens lines, such as Varilux, and the Costa brand of sunglasses.

In a sign of commitment to the currently difficult Brazilian market, Essilor is starting up a totally new factory in the free-trade zone of Manaus for the production of polycarbonate and Transitions lenses.

Essilor reported a 1.5 percent decline in the Sunglasses & Readers division, attributing it to the introduction by Bolon's parent company early this year of its new Artemis inventory management system. As a result, Xiamen Yarui Optical voluntarily limited deliveries of sunwear to wholesalers in the quarter, although this is expected to be more than offset by restocking through the rest of the year, said Essilor. Following the changeover, Xiamen recorded a 33 percent sales decline for the quarter, but sales of Bolon sunglasses in the stores remained strong and its online sales jumped by 70 percent.

Foster Grant and all the other components of the division delivered good growth in the U.S. The Costa brand of sunglasses maintained its double-digit growth in the country, thanks to its entry into the Northern and West Coast markets as well as the development of its prescription sunwear offer. High single-digit growth globally and double-digit growth in China is expected for the division for all of 2016.

The group's Equipment business registered 3.5 percent revenue growth, led by demand in North America across all product lines, including digital surfacing machines, multi-layer coating machines and consumables. Turning the fast-growing countries, the situation of the Equipment division stabilized in Latin America, said Essilor, but remains challenging in Asia.

Overall, the group's online sales revenues rose by a high single digit in the first quarter. Transitions grew slightly within the group and dropped slightly in terms of sales to other parties. It should generate flat revenues for the year.

Essilor did not disclose the bottom line for the quarter. The management confirmed its guidance for the current financial year, which calls for a contribution margin of at least 18.5 percent on revenues, which should grow by more than 8 percent on a currency-neutral basis and by around 5 percent excluding acquisitions.