Essilor reported partially positive results for its part of the merged business during the third quarter of this year in the first financial report since its merger with Luxottica. Fueled by good results in Asia, the online business and the Sunglasses & Readers division, the group's global revenues improved by 5.0 percent in constant currencies, reaching €1,811 million.

They improved by 4.4 percent from the year-ago period on a reported basis thanks to a negative currency effect of 1.2 percentage points. On a comparable basis, growth reached 5.0 percent, reflecting solid results at the Lenses & Optical Instruments division, in fast-growing markets and online, as well as double-digit growth at the Sunglasses & Readers division.

On a comparable, currency-neutral basis, the group's sales of lenses and optical instruments rose by 4.5 percent, with growth in all regions. They went up by 3.9 percent in North America, 1.4 percent in Europe, 9.8 percent in Asia-Pacific, the Middle East and Africa, and 7.1 percent in Latin America.

In North America, the core U.S. lens business grew at a quicker pace than in the whole region. The company's regional performance was further boosted by high online sales of prescription eyeglasses and the general development of e-commerce. In the U.S., the company's strategy to drive innovation in the lens market and deliver on initiatives to support independent eyecare professionals and optical chains fueled robust growth.

Transitions Style Colors and Style Mirrors were launched in the US market and exceeded expectations, particularly with younger wearers. Activity remained buoyant with alliance group members, aided by a significant expansion in the number of independent eyecare professionals in the Essilor Experts program in the course of 2018. Essilor also forged a partnership with UnitedHealthcare Vision, one of the leading managed vision care organizations in the U.S.

Sales growth in Europe accelerated in the third quarter, relative to the first half of 2018. The deployment of additional sales resources boosted market penetration by value-added products, notably the Varilux X series and Transitions photochromic lenses. The growth was robust in France, where all distribution networks posted gains, both with independent eyecare professionals and the retail chains.

Russia and Eastern Europe, led by Poland, continued to benefit from an improving product mix. Online sales, notably of corrective lenses, also boosted growth in the region. In its conference call with analysts, the management highlighted its new partnership with Synsam in the Scandinavian countries, where the growth advanced by double digits. The two parties agreed jointly to invest in marketing to raise consumer awareness. The management also highlighted the strong performance of its new Crizal Sapphire anti-reflection coating, which it believes will be a strong growth generator for the coming quarters.

Essilor International Revenues

(million euros, nine months ended Sept. 30)

 

2018

2017

%
Change

Like-for-like
Growth (%)

Acquisitions
(%)

Currency
Effect

Lenses & Optical Instruments

4,808

4,874

-1.4

3.9

0.5

-5.8

North America

2079

2127

-2.3

3.9

0.7

-6.8

Europe

1485

1488

-0.2

1.1

0.1

-1.4

Asia/Pacific/Middle East/Africa

902

891

1.2

7.6

0.3

-6.7

Latin America

342

368

-7.1

5.7

1.6

-14.3

Sunglasses & Readers

581

565

2.8

9.0

0.5

-6.7

Equipment

148

154

-3.9

1.0

0.0

-5.2

TOTAL

5,537

5,593

-1.0

4.3

0.5

-5.8

The strong growth of the group in Asia-Pacific, the Middle East and Africa reflected strong momentum in fast-growing markets, where sales rose by 13 percent. One of the best performances in the region occurred in China, where the domestic business was robust notably thanks to myopia control solutions, Varilux and Transitions lenses, and blue light filtering lenses. Greater penetration of progressive, photochromic and antireflective lenses boosted growth in several other countries including South Korea, Southeast Asia and Turkey. Trends were again more mixed in India aside from a sharp rise in online sales. In developed countries in the region, Japan had a strong quarter and Australia saw an uptick.

In Latin America, sales growth was balanced between Brazil and the Spanish-speaking countries. Varilux and Transitions lenses both achieved double-digit volume growth in the region. Gains in Brazil were driven by promotional campaigns, in particular to promote Varilux progressive lenses, and by the promising launch of a new optometry line. The main driver for the rest of the region was a sharp sales rebound in Mexico, to which all distribution networks contributed.

The revenues of the Equipment division rose by 1.2 percent on a comparable basis. This was achieved despite the postponement of several shipments, notably in Asia and Latin America, and a demanding comparison base in Europe.

Essilor's Sunglasses & Readers division saw revenues jump by 11.4 percent on a comparable basis. The management attributed this good performance to a return to robust and sustained growth at Xiamen Yarui Optical (Bolon) in China and by the expansion of the MJS store network and product range in a very competitive market. In North America, sales to consumers remained strong both at FGX International for sunglasses and readers, and at Costa, which also benefited from new acetate sunglasses in its line-up and from its expansion in optical shops and sporting goods stores.

Acquisitions continued to play a minor role across the group. During the quarter, FGX acquired One Click Internet Ventures. This U.S. company, which is based in Indianapolis, sells non-prescription glasses online and owns the readers.com website. One Click generates revenue of around $15 million a year.

The management said the full-year guidance issued by Essilor at the start of 2018 cannot be transposed to EssilorLuxottica. However, it confirmed its full-year targets for this year, which call for comparable revenue growth of around 4 percent and a contribution margin from operations greater than or equal to 18.3 percent of revenues.