CHARENTON-LE-PONT, France, March 5 /PRNewswire-FirstCall/ -- -
2008: Solid Sales and Earnings - Revenue Up 9.7% Excluding the
Currency Effect - Contribution Margin at 17.9% - Attributable
Profit of EUR382.4 Million (up 8.7% Excluding the Currency Effect)
- Recommended Increase in Dividend: +6.5% to EUR0.66 per Share The
Board of Directors of Essilor International, the world leader in
ophthalmic optical products, today announced its audited financial
results for the year ended December 31, 2008. EUR millions 2008
2007 % change % change excluding the currency effect Revenue
3,074.4 2,908.1 +5.7% +9.7% Contribution from operations(1) 551.2
527.4 +4.5% +8.7% As a % of revenue 17.9% 18.1% --- --- Operating
profit 514.5 504.6 +2.0% +6.3% Profit attributable to equity
holders 382.4 366.7 +4.3% +8.7% As a % of revenue 12.4% 12.6% ---
--- Earnings per share (in EUR) 1.85 1.78 +3.7% +8.4% (1) Operating
profit before compensation costs of share-based payments,
restructuring costs, other income and expense, and goodwill
impairment. In an ophthalmic optics market that experienced slower
growth, especially in the fourth quarter, Essilor demonstrated the
solidity of its business model. With growth of 9.7% in 2008
(excluding the currency effect), the Company increased its market
share while maintaining its margins and capacity for future
investment. The year's highlights included: - Solid 4.9% growth in
sales of corrective lenses, led by the effectiveness of Essilor's
networks and the success of new products, notably the new
generation of Transitions(R) VI variable-tint lenses and the new
Crizal(R) anti-reflective lenses. - Pursuit of the external growth
strategy with the acquisition of a minority or majority stake in 27
companies, including Satisloh, the world leader in optical
manufacturing solutions for prescription laboratories (see "27
Acquisitions in 2008" below). - Continued strong profitability with
contribution from operations at 17.9% of revenue (18.2% excluding
the Satisloh acquisition) and attributable net profit at 12.4%. -
Continued financial solidity. Despite a major investment program,
gearing remained at less than 5%. Annual Shareholders' Meeting The
Annual Shareholders' Meeting will be held on Friday, May 15, 2009
at 10:30 a.m. at Palais de la Bourse, Place de la Bourse, 75002
Paris. The Board of Directors will ask shareholders to approve a
dividend of EUR0.66 per share, an increase of 6.5% over the
previous year. The dividend will be payable as from May 26, 2009.
Acquisitions in 2009 Pursuing its expansion in Asia-Pacific,
Essilor has finalized four acquisitions in Australia representing
EUR3.6 million in full-year revenue. Equity interests were acquired
in three prescription laboratories-Prescription Glass Pty Ltd,
Precision Optics Pty Ltd and Wallace Everett Lens Technology Pty
Ltd-and a 50% stake was acquired in Sunix, a developer of
optometric practice management systems. Outlook In 2009, the global
recession has made forecasting growth for the year very uncertain.
However the economic crisis does not call into question Essilor's
medium- and long-term objectives and the Company will pursue its
development and the deployment of its strategic focus on innovation
and international expansion. Earlier this year, the Company
launched its new Crizal(R) Forte anti-reflective lens in Europe and
the United States, the Transitions(R) VI variable-tint lens in
Europe and its new Mr. Blue edger. Essilor will also continue to
make targeted acquisitions, especially in prescription
laboratories, which could account for around 6% of growth in 2009,
including the full-year contribution of 2008 acquisitions. Lastly,
the Company will continue to optimize its management practices in
response to changes in the economic environment.
----------------------- A meeting with financial analysts will be
held today, March 5, at 10:30 a.m. CET. It will be webcast live: In
French at http://hosting.3sens.com/Essilor/20090305-1D3C9C05/fr In
English at http://hosting.3sens.com/Essilor/20090305-1D3C9C05/en
--------------------- Next financial announcement: First-quarter
revenue will be released on April 23, 2009. -----------------------
Essilor International is the world leader in ophthalmic optical
products, offering a wide range of lenses under the flagship
Varilux(r), Crizal(r), Essilor(r) and Definity(r) brands to correct
myopia, hyperopia, presbyopia and astigmatism. Essilor operates
worldwide through 15 production sites, 292 lens finishing
laboratories and local distribution networks. The Essilor share
trades on the Euronext Paris market and is included in the CAC 40
index. Codes and symbols: (ISIN: FR 0000121667; Reuters: ESSI.PA;
Bloomberg: EI:FP). ------------------------ ANALYSIS OF THE YEAR'S
RESULTS CONSOLIDATED REVENUE Revenue growth in Reported
Like-for-like Effect of Currency effect 2008 changes in scope of
consolidation EUR millions 166.3 134.6 147.9 (116.2) In % +5.7 %
+4.6 % +5.1 % -4.0 % Consolidated revenue increased 5.7% to
EUR3,074.4 million in 2008. - On a like-for-like basis, revenue
grew by 4.6%. This figure reflects an increase of 4.9% in the lens
business, led by higher unit sales, and a decline in instrument
sales. - Consolidation of companies acquired in 2007 and 2008
contributed 5.1% of reported growth. - The currency effect remained
negative, at 4%, primarily due to the decline in the US dollar and,
to a lesser extent, the British pound, the Canadian dollar and the
South Korean won against the euro. - In the fourth quarter, Essilor
consolidated Satisloh, which contributed EUR34 million to revenue.
The world's leading supplier of prescription laboratory equipment,
Satisloh manufactures and markets anti-reflective coating units and
surfacing machines, as well as consumables. It also provides
customer maintenance services. REVENUE GROWTH BY REGION Revenue
2008 2007 % change % change EUR millions (reported) (like-for-like)
Europe 1,362.3 1,317.5 +3.4% +2.4% North America 1,267.9 1,214.2
+4.4% +5.0% Asia-Pacific 282.9 266.9 +6.0% +8.6% Latin America
127.2 109.5 +16.1% +17.6% Satisloh 34.0 - - - Revenue by
geographical segment: Europe 44.3%; North America 41.3%;
Asia-Pacific and other 9.2%; Latin America 4.1%; Satisloh 1.1%.
INCOME STATEMENT Gross margin up 0.1 point excluding acquisitions
Gross margin (corresponding to revenue less cost of sales,
expressed as a percentage of revenue) narrowed by 0.7 points to
56.9% during the year, as a result of the dilutive impact of
acquisitions, in particular Satisloh. Excluding acquisitions, gross
margin grew by a modest 0.1 point. Operating expenses down 0.4
points Operating expenses amounted to EUR1,198.2 million in 2008.
As a percentage of revenue, they declined by 0.4 points during the
year, to 39.0%. The decrease reflects: - Stable selling and
distribution costs (EUR672.3 million) and savings on overheads, at
a time of sustained research and development spending (EUR144.5
million after deduction of a EUR10.5 million research tax credit).
- The positive impact of acquisitions whose operating expenses are
lower than the rest of the Company's as a percentage of revenue.
Contribution from operations(1) in euros and as a percentage of
revenue EUR millions 2008 2008 excl. 2007 % change Satisloh
Contribution from operations(1) 551.2 553.9 527.4 +4.5% As a % of
revenue 17.9 18.2 18.1 --- (1) Operating profit before compensation
costs of share-based payments, restructuring costs, other income
and expense, and goodwill impairment. Change in contribution
Reported Like-for-like Changes in Currency from operations(1) in
scope of effect 2008 consolidation EUR millions 23.8 35.5 10.2
(22.0) In % +4.5% +6.7% +1.9% -4.2% (1) Operating profit before
compensation costs of share-based payments, restructuring costs,
other income and expense, and goodwill impairment. In all,
contribution from operations increased 4.5% to EUR551.2 million in
2008, while the contribution margin was a slight 0.2 points lower
at 17.9% of revenue. Excluding Satisloh, contribution from
operations increased by 5.0% and the contribution margin was 0.1
point higher at 18.2%. Other income and expenses from operations
Other income and expenses from operations represented a net expense
of EUR36.3 million for the year (an increase of EUR13.8 million),
mainly comprised of: - Compensation costs on share-based payments
(EUR24.9 million), reflecting stock option and performance share
costs (EUR23.3 million) and costs related to the share price
discounts on the Employee Stock Ownership Plan (EUR1.6 million). -
Restructuring costs to rationalize production facilities, charges
to provisions for contingencies, claims and litigation, and other
expenses, for EUR11.7 million. Operating profit In 2008, operating
profit (corresponding to contribution from operations plus or minus
other income and expenses from operations and gains and losses on
asset disposals) rose 2.0% during the year to EUR514.5 million
(16.7% of revenue) from EUR504.6 million (17.3%) in 2007. Change in
operating Reported Like-for-like Changes in Currency profit in 2008
scope of effect consolidation EUR millions 9.9 34.5 8.2 (32.8) In %
+2.0% +6.8% +1.6% -6.5% Finance costs and other financial income
and expenses: sharp improvement Finance costs and other financial
income and expenses represented a net expense of EUR2.5 million,
versus EUR6.5 million in 2007. The improvement was led by a
reduction in net finance costs due to a higher average cash
position for the year (as the Satisloh acquisition price was
settled in the fourth quarter). Income tax expense: effective tax
rate of 29.2% Income tax expense of EUR149.3 million represented an
effective tax rate of 29.2%, down from 31.3% in 2007. The
improvement was led by a lower tax rate in the United States, and
to a lesser extent in the Latin American countries, as well as by
sharply higher earnings in regions where tax rates are below the
Company average. Share of profits of associates The share of
profits of associates Sperian Protection (15%-owned), Transitions
(49%-owned) and Vision Web (44%-owned) was slightly lower, at
EUR26.1 million. The decline resulted mainly from Sperian
Protection's earnings and also from the negative impact of the
dollar on Transitions' earnings, although the company had a good
year. Profit attributable to equity holders of the parent up 4.3%
and earnings per share of EUR1.85 Consolidated net profit totaled
EUR388.8 million for the year, an increase of 4.8%. Profit
attributable to equity holders of the parent was 4.3% higher at
EUR382.4 million and represented 12.4% of revenue (12.7% excluding
Satisloh), virtually unchanged from 2007. Earnings per share grew
3.7% to EUR1.85. BALANCE SHEET Goodwill Goodwill totaled EUR958
million at December 31, 2008, an increase of EUR367 million
principally due to the Satisloh acquisition. Inventories and
working capital Inventories amounted to EUR475 million at December
31, 2008, up 21% from a year-earlier as reported and 9.1%
like-for-like. Investments EUR millions 2008 2007 2006 Capital
expenditure net of the proceeds from asset sales 182.9 224.4 191.9
Depreciation 143.6 137.4 133.1 Gross financial investments 617.5
217.9 81.3 Cash flow(1) 490.9 486.1 449.4 (1) Cash provided by
operations less change in working capital requirement and
provisions. Capital expenditure net of disposals totaled EUR182.9
million or 5.9% of consolidated revenue for the year. Around
two-thirds of expenditure was committed to distribution operations
and prescription lens laboratories, with series production
accounting for the rest. Financial investments net of disposals
amounted to EUR617.5 million. Of this amount, acquisitions
accounted for EUR505.0 million, while net buybacks of shares
accounted for EUR112.5 million. Cash Flow Statement EUR millions
Net cash from operations 557.5 Capital expenditure net of
disposals(1) 182.9 Proceeds from employee share Change in WCR and
issue 31.4 provisions 66.6 Currency effect, changes in Dividends
128.5 the scope of consolidation and conversions of OCEANE
convertible bonds Change in net debt 371.9 Financial investments
net of the proceeds from disposals(1) 617.5 (1) In all, the
proceeds from disposals of property, plant and equipment and
non-current financial assets totaled EUR3.8 million in 2008. The
Company's very good operating performance for the year enabled it
simultaneously to continue investing in subsidiaries' production
resources, significantly increase the size of its financial
investments and recommend a further increase in the dividend, while
maintaining its solid financial position. At December 31, 2008, net
debt stood at EUR112.3 million and gearing amounted to 4.7%. Key
Ratios - Return on equity (ROE) Return on equity (corresponding to
the ratio of net profit to equity) stood at 16.4% in 2008, on a par
with previous years. - Return on assets (ROA) Excluding Satisloh,
return on assets (corresponding to the ratio of EBIT to non-current
assets and working capital) amounted to 24.1%. 27 ACQUISITIONS IN
2008 In 2008, Essilor maintained its sustained pace of external
growth, carrying out 27 acquisitions during the year, mainly
prescription laboratories. This strategy was deployed in all
regions, with 15 acquisitions in North America, seven in Europe,
three in Asia and one in Brazil, as well as Satisloh, the world
leader in optical manufacturing solutions for prescription
laboratories. Satisloh During the year, Essilor acquired all
outstanding shares of Satisloh Holding AG. Created by the merger of
Satis and Loh in 2004, Satisloh has a global distribution network
and is the world's leading supplier of prescription laboratory
equipment. It manufactures and markets anti-reflective coating
units and surfacing machines, as well as consumables, to
independent prescription laboratories, integrated lens
manufacturers and optical chains. It reported revenue of EUR139
million in 2008 and has more than 400 employees. The acquisition
strengthens Essilor's capabilities for developing innovative
products, technologies and services for the entire ophthalmic lens
industry. CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2008
CONSOLIDATED INCOME STATEMENT EUR thousands, except per 2008 2007
2006(a) share data Revenue 3,074,419 2,908,116 2,689,958 Cost of
sales (1,325,106) (1,233,977) (1,123,078) GROSS MARGIN 1,749,313
1,674,139 1,566,880 Research and development costs (144,518)
(137,672) (127,629) Selling and distribution costs (672,268)
(642,634) (604,548) Other operating expenses (381,368) (366,417)
(352,137) CONTRIBUTION FROM OPERATIONS 551,159 527,416 482,566
Restructuring costs, net (3,736) (958) (2,662) Impairment losses 0
(2,293) (2,929) Compensation costs on share-based payments (24,906)
(20,185) (16,101) Other income and expenses from operations, net
(7,357) (948) (68) Gains and losses on asset disposals, net (629)
1,557 (304) OPERATING PROFIT 514,531 504,589 460,502 Finance costs
(28,181) (35,759) (30,510) Income from cash and cash equivalents
29,042 32,934 20,090 Other financial income and expenses, net
(3,368) (3,688) (9,442) PROFIT BEFORE TAX 512,024 498,076 440,640
Income tax expense (149,266) (155,949) (137,534) NET PROFIT OF
CONSOLIDATED COMPANIES 362,758 342,127 303,106 Share of profits of
associates 26,053 28,743 28,499 NET PROFIT 388,811 370,870 331,605
Attributable to equity holders of Essilor International 382,356
366,740 328,733 Attributable to minority interests 6,455 4,130
2,872 Basic earnings per common share (EUR) 1.85 1.78 1.61 Weighted
average number of common shares (thousands) 206,875 205,727 204,247
Diluted earnings per common share (EUR) 1.81 1.74 1.55 Diluted
weighted average number of common shares (thousands) 213,615
214,647 216,339 (a) 2006 figures have been adjusted for the option
of recognizing actuarial gains and losses on pensions and other
post-retirement benefits directly in equity. CONSOLIDATED BALANCE
SHEET AS OF DECEMBER 31, 2008 ASSETS EUR thousands December
December December 31, 31, 31, 2006 2008 2007 (a) Goodwill 957,605
591,147 474,771 Other intangible assets 205,249 121,636 118,166
Property, plant and 811,484 740,601 671,257 equipment PROPERTY,
PLANT AND EQUIPMENT AND INTANGIBLE ASSETS, NET 1,974,338 1,453,384
1,264,194 Investments in associates 164,690 157,496 155,596 Other
long-term financial investments 44,214 39,174 34,657 Deferred tax
assets 51,955 37,645 41,577 Non-current receivables 8,093 14,314
9,338 Other non-current assets 693 1,024 840 OTHER NON-CURRENT
ASSETS, NET 269,645 249,653 242,008 TOTAL NON-CURRENT ASSETS, NET
2,243,983 1,703,037 1,506,202 Inventories 475,299 393,597 371,133
Prepayments to suppliers 9,521 9,849 7,698 Current trade
receivables 684,797 605,356 551,013 Current income tax assets 5,859
12,072 7,929 Other receivables 37,294 10,423 6,558 Derivative
financial 50,996 32,777 3,174 instruments Prepaid expenses 21,242
19,307 16,174 Short-term investments 32,538 31,179 75,147 Cash and
cash equivalents 505,571 696,002 584,889 CURRENT ASSETS, NET
1,823,117 1,810,562 1,623,715 TOTAL ASSETS 4,067,100 3,513,599
3,129,917 (a) 2006 figures have been adjusted for the option of
recognizing actuarial gains and losses on pensions and other
post-retirement benefits directly in equity. CONSOLIDATED BALANCE
SHEET AS OF DECEMBER 31, 2008 EQUITY AND LIABILITIES EUR thousands
December December December 31, 31, 31, 2006 (a) 2008 2007 Share
capital 37,984 38,030 36,347 Additional paid-in capital 311,765
329,880 236,858 Retained earnings 1,829,870 1,565,991 1,332,544
Treasury stock (153,407) (101,910) (71,502) Convertible bond
(OCEANE) 22,206 23,408 35,489 call option Revalution and hedging
(9,109) (4,717) (13,357) reserves Translation reserve (70,235)
(61,247) (4,399) Net profit attributable to equity holders of
Essilor International 382,356 366,740 328,733 EQUITY ATTRIBUTABLE
TO EQUITY HOLDERS OF ESSILOR INTERNATIONAL 2,351,430 2,156,175
1,880,713 Minority interests 14,544 12,090 11,032 TOTAL EQUITY
2,365,974 2,168,265 1,891,745 Provisions for pensions and other
post-employment benefits 132,401 106,890 116,245 Long-term
borrowings 437,617 435,583 262,997 Deferred tax liabilities 22,406
2,042 1,267 Long-term payables 2,359 1,750 198 NON-CURRENT
LIABILITIES 594,783 546,265 380,707 Provisions 36,720 24,552 23,350
Short-term borrowings 212,835 31,990 187,011 Customer prepayments
8,611 4,363 3,183 Short-term payables 631,945 598,434 554,693
Current income tax liability 35,626 31,349 29,086 Other liabilities
143,159 94,243 50,591 Derivative financial instruments 28,480 5,457
2,221 Deferred income 8,967 8,681 7,330 CURRENT LIABILITIES
1,106,343 799,069 857,465 TOTAL EQUITY AND LIABILITES 4,067,100
3,513,599 3,129,917 (a) 2006 figures have been adjusted for the
option of recognizing actuarial gains and losses on pensions and
other post-retirement benefits directly in equity. CONSOLIDATED
CASH FLOW STATEMENT EUR thousands 2008 2007 2006 (a) NET PROFIT
388,811 370,870 331,605 Share of profits of associates, net of
dividends received 20,637 14,667 (6,416) Depreciation, amortization
and other non-cash items 148,886 139,306 132,509 Profit before
non-cash items and share of profits of associates, net of dividends
received 558,334 524,843 457,698 Provision charges (reversals)
9,810 5,127 4,328 (Gains) and losses on asset disposals, net 629
(1,557) 312 Cash flow after income tax expense and finance costs,
net 568,773 528,413 462,338 Finance costs, net (692) 3,008 10,134
Income tax expense (current and deferred taxes) 149,266 155,949
137,534 Cash flow before income tax expense and finance costs, net
717,347 687,370 610,006 Income taxes paid (144,650) (157,034)
(127,553) Interest (paid) and received, net 8,607 6,364 (4,543)
Change in working capital (84,503) (44,796) (26,849) NET CASH FROM
OPERATING ACTIVITIES 496,801 491,904 451,061 Purchases of property,
plant and equipment (184,298) (227,701) (204,745) Acquisitions of
subsidiaries, net of the (452,879) (136,435) (44,024) cash acquired
Purchases of available-for-sale financial assets (4,673) (2,375)
(2,135) Purchases of other long-term financial investments (11,978)
(5,488) (4,829) Proceeds from the sale of subsidiaries, net of cash
sold 0 0 (116) Proceeds from the sale of other non-current assets
3,799 6,937 14,080 NET CASH USED IN INVESTING ACTIVITIES (650,029)
(365,062) (241,769) Proceeds from issue of share capital 31,385
40,200 33,312 (Purchases) and sales of treasury stock, net(112,613)
(49,415) 9,192 Dividends paid to: - Equity holders of Essilor
International (128,393) (113,043) (95,840) - Minority shareholders
of subsidiaries (188) (239) (381) Repayments of borrowings other
than finance lease liabilities 177,782 57,752 (138,426) Purchases
of marketable securities (b) (1,359) 43,968 (75,147) Repayments of
finance lease liabilities (2,644) (2,769) (2,175) Other movements
473 1,152 2,464 NET CASH USED IN FINANCING ACTIVITES (35,557)
(22,394) (267,001) NET(DECREASE)-INCREASE IN CASH AND CASH
EQUIVALENTS (188,785) 104,448 (57,709) Cash and cash equivalents at
January 1 677,164 569,873 631,100 Effect of changes in exchange
rates (1 614) 2,843 (3,518) CASH AND CASH EQUIVALENTS AT DECEMBER
31 486,765 677,164 569,873 Cash and cash equivalents 505,571
696,002 584,889 Short-term bank loans and overdrafts (18,806)
(18,838) (15,016) (a) 2006 figures have been adjusted for the
option of recognizing actuarial gains and losses on pensions and
other post-retirement benefits directly in equity. (b) Money market
funds not qualified as cash equivalents under IAS 7. Investor
Relations and Financial Communications Veronique Gillet - Sebastien
Leroy Phone: +33(0)1-49-77-42-16 http://www.essilor.com/ Essilor
DATASOURCE: Essilor CONTACT: Investor Relations and Financial
Communications, Veronique Gillet - Sebastien Leroy, Phone:
+33(0)1-49-77-42-16
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