Sola International reported improved results in the 2nd quarter ended Sept. 30 that exceeded analysts' expectations, indicating progress in fulfilling the strategic objectives laid out by its CEO, Jeremy Bishop, a couple of years ago. North American sales made a 7.2 percent jump. Sales in Europe, which represent about 35 percent of the total turnover, resumed their growth, rising by 3.5 percent in local currencies, thanks to improvements in the supply chain.
Overall, sales grew by 7 percent to $138.5 million in the quarter, generating net income of $6,530,000 as against a net loss of $4,003,000 in the same period a year ago. Excluding the impact of foreign currency movements, Sola's net income doubled to $6.1 million from $3.0 million. Further progress is expected in the 2nd half of this year, with a turnaround to an operating profit projected at about $27 million on a 4-5 percent increase in revenues.
Much of the improvement in the 2nd quarter stemmed from a 6 percent increase in global sales of progressive lenses, which carry higher margins, and from an 84 percent increase in sales of polycarbonate lenses, which was accompanied by a 71.5 percent gain in volume. US sales benefited from the group's growing laboratory business in the USA, which rose by more than 22 percent without acquisitions and by 32 percent after acquisitions. It's a business that will be developed further in the future in North America.
Sola continues to see a strong market potential for its new high-margin Teflon Easycare anti-reflective coatings, which have been introduced for the moment only in Italy, France, Portugal, Spain and the UK. A soft launch is taking place right now in the USA. The general goal is to double Sola's global market share in these types of coatings worldwide, capitalizing on the Teflon brand name and on various technical features such as the low reflection level, the high anti-scratch resistance, the unique patented anti-static properties and the residual blue light color.
The potential seems to be particularly high in France, where only about 31 percent of the glasses sold by the opticians are A-R coated, as compared to over 50 percent in Italy, Germany or Benelux where this treatment tends to be part of a standard package of features. About 91 percent of the French population knows the Teflon brand name already. Sola is introducing its Teflon coatings in France without any major advertising campaigns and at prices 5-10 percent higher than standard coatings after very encouraging market tests.