2012 Results - Essilor

2012 Results 

February 28, 2013

Agenda 

Introduction 

Operational and Financial Performance 

Innovation 

Crizal ® Prevencia 

Strategy and Outlook 


2

2012: A Year of Acceleration 

2012 Revenue: €4,989m 

Like-for-like Revenue Growth 

& Bolt-on Acquisitions (1) 

Strategic 

Acquisitions 

Revenue Growth 

at Constant Exchange Rates 

+7.3% 

+8.0% 

+9.7% 

+14.5% 

Change in 

consolidation 

+2.4% 

Bolt-on 

acquisitions (1) 

+2.3% 

+2.8% 

+4.1% 

+2.5% 

Like-for-like 

Revenue 

Growth 

+5.0% 

+5.2% 

2012 

2011 2012 


2011 2012 


2011 


(1) Local acquisitions or partnerships 


4

2012: A Year of Market Share Gains 

Lenses 

Readers 


36% 


22% 

2011 

31% 

2011 

16% 

Volume market share 

Volume market share 


5

2012: 

Step-up in Revenues from Fast-Growing Markets 


€911m (2) 

18.3% (1) 

2011 

€664m 

15.9% (1) 

(1) As a percentage of total Group revenue 

(2) Of which €828m for Lenses and Optical Instruments 


6

Strong Contribution from Innovation 

Enhancing vision 

through personalization 

Protecting health 

& reducing risk 

In-store technologies 

in all market segments 

Creating value in high-end and mid-range markets 

Opening new fields for eyeglasses 

Widening the gap with competitors 


7

Leveraging the Power of Partnerships & Acquisitions 

Building new networks 

and new offerings worldwide 

Cascading innovation to 

leaders in local midrange 

markets 

Entering new countries 

with strong local partners 

A unique growth model to maximize value creation 


8

Enhanced Ability to Execute and Deliver 

Members of Essilor’s Executive Committee 


9

Strategy Delivering Consistent and Visible Results 

Contribution from operations (1) 

Earnings per share 

Free cash flow (2) 

894 

In € millions In € 

In € millions 

597 

748 

+19.5% 

2.44 

2.80 

463 

+28.9% 

+14.7% 

2011 2011 2012 

2011 2011 2012 


2011 2011 


(1) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment 

(2) Free cash flow = Net cash from operating activities less change in WCR and less net capital expenditure. 


10

Agenda 

Introduction 


Innovation 




11

Revenue Up 19.1% to €4,989m 


+4.6% 

+4.1% 

+2.4% 

101 

193 

+2.8% 

171 

+5.2% 

117 

217 

4,989 

4,190 

+8.0% 

+14.5% 

at constant exchange rates 

2011 Revenue Like-for-like 

growth 

Bolt-on 

acquisitions* 

Strategic 

acquisitions** 

Change 

in 

consolidation*** 

Currency 

effect 

2012 Revenue 

* Local acquisitions or partnerships 

** H1: Shamir / Full year: Stylemark 

*** Nikon Essilor & Essilor Korea 


12

2012 Revenue by Region and Division 

Reported revenue in € millions 2012 2011 

% Change 

(like-for like and bolt-on 

acquisitions (1) combined) 

Lenses and Optical Instruments 4,445 3,796 +8.3% 

North America (2) 1,736 1,503 +6.0% 

Europe 1,559 1,471 +3.0% 

Asia-Oceania/Middle East/Africa 829 551 +21.6% 

Latin America (2) 322 270 +23.2% 

Fast-Growing 

Markets: +31.8% 

Developed 

Markets: +5.0% 

Equipment 199 185 +2.4% 

Readers 344 209 +6.6% 

TOTAL 4,989 4,190 +8.0% 


(2) Mexico revenue (€15.9m in 2011) has been reclassified from the North America region to the Latin America region 


13

Q4 Revenue Up 10.5% at Constant Exchange Rates 

Like-for-like growth: +3.6% despite high Q4 2011 comparatives 

› Successful launch of Varilux ® S series and further deployment of Crizal ® UV 

› Continued momentum in fast-growing markets 

› Robust performance in Readers 

Good contribution from bolt-on acquisitions (1) 

› 7 new partnerships in both developed and fast-growing countries 

› Leading positions in new key countries (Turkey, Colombia, etc.) 

› Valuable additions to Essilor’s business portfolio (IVS, X-Cel Optical, etc.) 


2012 Results 14

Quarterly Revenue Growth 

Revenue growth: like-for-like and bolt-on acquisitions (1) combined 

+11.8% 

+8.5% 

+7.3% 

+6.7% 

+6.7% 

+7.1% 

+6.5% 

+6.6% 

Bolt-on 

acquisitions (1) 

Like-for-like 

Revenue 

Growth 

1 st Quarter 

2 nd Quarter 

3 rd Quarter 

4 th Quarter 

1 st Quarter 

2 nd Quarter 

3 rd Quarter 

4 th Quarter 

2011 




Positive Contribution from All Regions… 

2012/11 2011/10 2010/09 

North America (1) 

€1,736m 

Europe 

€1,559m 

Latin America (1) 

€322m 

Asia-Oceania/ 

Middle East/Africa 

€829m 

Lenses and 

Optical Instruments 

€4,445m 

+6.0% o/w +4.0% like-for-like 






+23.2% 

+26.8% 

+22.6% 

+21.6% 

+20.0% 

+15.1% 

+8.3% 

+6.8% 

+5.0% 

- Dynamic underlying demand 

- Improved product mix/UV protection 

- Successes with key accounts 

- Good performance in France 

- Promising launch of Varilux ® S series 

- South Europe and Instruments weak 

- Robust dynamics in Brazil 

- Key partnerships in Mexico and Columbia 

- Weak economy in Argentina 

- Strong performance in China and India 

- Good year in Japan 

- Expansion in new high potential markets 

- Rigorous deployment of the strategy 

- New products and services 

- Market share gains in all regions 

(1) Mexico revenue (€15.9m in 2011) has been reclassified from the North America region to the Latin America region 

Reported revenue / Growth: like-for-like and bolt-on acquisitions combined 


16

… and All Business Segments 

2012/11 2011/10 2010/09 

Equipment 

€199m 

+2.4% 

+21.9% 

+38.0% 

- Return to normal after high comparatives 

- Strong intra-group activity 

- Customer segmentation 

Readers 

€344m 

+6.6% 

+4.5% 

+6.9% 

- Robust growth in Sunglasses 

- Expansion at new key accounts 

- Integration of Stylemark in line with plan 

Reported revenue / Growth: like-for-like and bolt-on acquisitions combined 


17

24 Bolt-on Acquisitions (1) 

Representing €171m in Full-Year Revenues 

Europe 

1 

Asia 

5 

North America 

9 

Africa – Middle East 

4 

Oceania 

1 

Latin America 

4 



Stylemark Integration Fully on Track 

Building a strong American leader shipping 130 million units at 85,000 doors 

› Increased presence in Department store channel 

› Operations regrouped under single headquarters in the course of H1 2013 

› FGX’s Field service model applied to common customers 

Positive impact on Essilor’s accounts 

› Synergies of c.$5m in 2012 (excluding PPA) 

› Further sales and cost synergies in 2013 

› Neutral to 2012 EPS and accretive in 2013 


19

Fast-Growing Markets (1) : 

On Track to Achieve Revenue of €1.5 Billion by 2015 

Revenue: €911m 

Up 27.3% (2) 

Russia 

+18% 

China 

+47% 

North Asia 

+17% 

Africa – Middle East 

+49% 

India 

+43% 

ASEAN 

+13% 

Latin America 

+23% 

(1) Fast-growing markets include China, India, ASEAN, South Korea, 

Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America 

(2) Growth: like-for-like and bolt-on acquisitions combined 

including: Lenses and Optical instruments, Equipment & Readers 


Earnings per Share Up 14.7% 

In € millions 2012 2011 % Change 

Revenue 4,989 4,190 +19.1% 

Gross profit 

% of revenue 

2,784 

55.8% 

2,322 

55.4% 

+19.9% 

Contribution from operations (1) 

894 

748 

+19.5% 

% of revenue 

17.9% 

17.9% 

Operating profit 832 683 +21.8% 

Profit of fully consolidated companies 607 490 +23.7% 

Profit attributable to equity holders 

584 

506 

+15.5% 

% of revenue 

11.7% 

12.1% 

Earnings per share (in €) 2.80 2.44 +14.7% 



Impact of PPA and Acquisition Costs on Profitability 

In € millions 2012 2011 2010 2009 2008 

Revenue 4,989 4,190 3,892 3,268 3,074 

PPA (27.3) (22.2) (18.4) (12.3) (7.5) 

Bolt-on acquisition costs (5.8) (3.9) (6.6) 0* 0* 

Impact on contribution margin -70 bp -60 bp -60 bp -40 bp -20 bp 

Strategic acquisition costs (1.6) (7.5) (6.5) 0* 0* 

Full EPS impact (in cents) (12) (12) (10) (6) (3) 

* IFRS 3 Revised has applied since 2010 

Contribution margin excluding PPA 

and bolt-on acquisition costs: 18.6% 


22

Other Income and Other Expense 

In € millions 2012 2011 

% 

Change 

Contribution from operations (1) 894 748 +19.5% 

Other income and other expense (62.4) (65.1) 

o/w restructuring costs (25.3) (22.6) 

o/w compensation costs for share-based payment, 

acquisition costs and impairment losses 

(30.8) (30.7) 

o/w other expenses (21.9) (9.3) 

o/w net gain/(loss) on asset disposals 15.6 (2.5) 




23

Profit Attributable to Equity Holders Up 15.5% 

In € millions 2012 2011 

% 

Change 

Contribution from operations (1) 894 748 +19.5% 

Other income and other expense (62.4) (65.1) 


Financial result (18.0) (13.4) 

Income tax 

Effective tax rate 

(207.1) 

25.5% 

(179.4) 

26.8% 

Contribution from associates 23.8 27.9 

Transitions 

business with 3 rd 

parties 

Success of 

partnerships 

Minority interests (46.4) (12.6) 

Profit attributable to equity holders 

584 

506 

+15.5% 

% of revenue 

11.7% 

12.1% 



24

Operating Leverage at Work 

Contribution margin* 

+0.3% 

+0.3% -0.2% 

-0.4% 

Structures in FGM 

Sales & Marketing 

17.9% 

Efficiencies 

18.2% 

17.9% 

2011 

reported 

Operating 

leverage on 

2011 business 

base 


before 

change in 

consolidation, 

bolt-on and 

strategic 

acquisitions 

Change in 

consolidation** 

Bolt-on 

acquisitions*** 

Strategic 

acquisitions**** 


reported 

* Contribution from operations (operating profit before compensation costs of share-based payments, restructuring costs, other income & 

expense and goodwill impairment) as a percentage of revenue 

** Nikon Essilor & Essilor Korea 

*** Local acquisitions or partnerships 

**** H1: Shamir / Full year: Stylemark 


25

Investing in New Capacity to Support Growth 

9% 

Capital expenditure (net of disposals) 

As a percentage of revenue 

in € millions 

8% 

7% 

6% 

5% 

192 

7.1% 

224 

7.7% 

5.9% 

183 

 

 

 

192 

Digital Surfacing, Export Labs… 

Innovation & Technology Centers 

Readers new Key Accounts 

232 

4% 

116 124 

4.6% 4.7% 

3% 

2% 

3.5% 

3.2% 

1% 

0% 

2006 2007 2008 2009 2010 2011 2012 


26

Free Cash Flow Up 29% 


241 

Capital expenditure 

10 

Change in WCR 

Operating cash flow 

(excl. change in WCR) 

848 

201 

Dividends 

+597 

193 

Net financial investments 

112 

Share buybacks 

48 

Change in consolidation 

Capital increase 

Misc. 12 

118 

269 

Reported change in net debt 


27

Strong Financial Position 


Equity 

Net Debt 

3,458 

3,921 

1,892 

2,168 

2,366 

2,735 

3,044 

(210) (260) 

112 

(93) 

296 

506 

237 

2006 2007 2008 2009* 2010 2011 2012 

* Adjusted for acquisition-related costs in accordance with IFRS 3R 


28

Dividend Per Share: €0.88* 

Total payout (in € millions) 

Dividend per share (in €) 

0.83 

0.85 

0.88* 

0.62 

0.66 

0.70 

129 

137 

147 

172 177 

184 

2007 2008 2009 2010 2011 2012* 

* Submitted to shareholder approval at the May 16, 2013 Annual Meeting 


29

Transitions: Background to discussions with PPG Industries 

New challenges of the photochromic market 

› The photochromic market is growing rapidly in high-growth countries as well as in the 

mid-range 

› Certain manufacturing customers of Transitions and new Asian players are developing 

alternative solutions 

› Increasing integration of value at laboratory level (digital surfacing and In lab casting) 

At the same time 

› Transitions’ growth has slowed 

› Transitions is very focused on the United States with a high-end brand and products 

› Transitions is dependent on certain manufacturers including Essilor, its main customer 

Objective of discussions with PPG Industries: 

Adapt the governance of Transitions to respond to these new 

challenges and better serve the industry and the consumer 


Essilor Bolstered 

by Strong Financial Performance in 2012 

Revenue 

+19.1% 

Gross margin 

55.8% of revenue 

+40 bp 

17.9% of revenue 

including strategic acquisitions 

Contribution margin (1) from 23% to 20% 

Working Capital Requirement 

of revenue 

Reduction in net debt 

€269m 

(1) Contribution from operations (operating profit before compensation costs of share-based payments, restructuring 

costs, other income & expense and goodwill impairment) as a percentage of revenue 


Agenda 

Introduction 


Innovation 




32

The Ophthalmic Industry is in its Early Stages 

Unsolved problems 

And unmet needs 

Personalization 

Digital surfacing 

New surface function 

First Transitions ® photochromic lenses 

First Crizal ® antireflective coatings 

Plastic lenses 

First Varilux ® progressive lenses 

 

Where we currently stand 


Many New Fields of Research… 

Personalization Ageing Health 


… And Highly Promising Innovation Curves 

Visual Acuity 






Comfort of Use 


First Optifog lenses 

First Xperio ® lenses 




… And Highly Promising Innovation Curves 

Visual Acuity 

Prevention/Protection 






 


First Crizal ® UV lenses 

Comfort of Use 

Therapeutic Lenses 


First Optifog lenses 

First Xperio ® lenses 



2012 Results 36 


First Myopilux lenses

Success of Recent Product Launches 

A new category 

Success with consumers 

New generation at the 

end of 2013 

Success in Europe & Canada: 

25% of Varilux ® volumes after 

4 months of launch 

US ongoing roll-out 

Strong start in the US 

Ramp up in Europe 

Crizal ® category growth 

>10% in value in 2012 


… And Still Many Challenges to Meet… 

Amplified zone 

of phototoxicity 

Transmittance at retinal level 

Retinal photosensitizer absorption 

280 330 380 430 480 530 580 630 680 730 780 

λ (nm) 

NON-VISIBLE 

VISIBLE 

UV light 

 


Agenda 

Introduction 


Innovation 




39

40 

TM

Moving Beyond Vision Correction 

Since 2012, Essilor has protected the eye 

CORNEA and CRYSTALLINE LENS against UV 

(from the lens front & back sides) 

In 2013, Essilor takes this to next level with 

RETINA protection against BLUE LIGHT 


People Can Now Live 100 Years, BUT 

Eyes Start to Lose Natural Performance at Age 45 … 


A Growing Health Issue 

Cataract 

AMD 

In millions of people 

2040 


2040 

>500 

>200 

2013 

2013 

250 

100 

N.B.: Simplified Extrapolation Model of Cataract & AMD prevalence [Essilor Int., DMS, EL, Jan. 2013] 

Sources: United Nations, World Population Prospects, Epidemiological and Marketing studies 


Understanding Light’s Crucial Role in Everyday Health 

Most of visible light is essential & beneficial 

› Acuity 

› Color perception 

› Pupillary reflex 

› Control of non-visual functions (circadian rhythm) 

Part of the light spectrum is harmful and even toxic 

› UV can cause crystalline lens opacity & cataract (possible surgery) 

› Blue light can cause retinal cell damage & AMD (no curative solution) 

NON-VISIBLE 

UV 

280nm 

380nm 

BLUE 

500nm 

VISIBLE 

780nm 


Essilor’s Long-term EYE HEALTH Defense Program 

4 years ago, 

Essilor & Paris Vision Institute (IdV)* partnership 

embarked on a long-term eye health program 

The 1 st ever biological in vitro tests in the ophthalmic industry 

were conducted to identify the most toxic wavelengths in blue light: 

- Unique cell illumination system: narrow bands, natural sunlight retinal exposure. 

- Phototoxicity model with primary retinal cells. 

- Rigorous photometric protocol, etc… 

* Based in Paris, and linked to Pierre & Marie Curie University, IdV is considered as one of Europe's foremost integrated research Centers 

of Excellence on eye diseases and vision. Researchers, medical doctors and industry players work together for the discovery and clinical 

evidence of new therapeutic approaches and preventive solutions, as well as innovative compensatory technologies for vision impairments. 


After 2 Years of Photobiology Cell Tests, 

Essilor & IdV Have Released Their SCIENTIFIC DISCOVERY 

Phototoxicity screening and elucidation of a very specific band, 

435nm +/- 20nm, that is the most noxious for target retinal cells, 

corresponding to the Blue-Violet light 

Healthy 

RPE* cells 

Degenerated 

RPE cells 

*RPE – Retinal Pigment Epithelium 


Selective Light Filter to Improve Eye Protection 

NON-VISIBLE 

UV 

280nm 

380nm 

BLUE 

500nm 

VISIBLE 

780nm 

UV light 

435nm 

BLUE-VIOLET light 

Risks even in cloudy weather (40%) 

Skin damage, corneal damage 

Crystalline-lens opacity 

Risks outdoor and more & more indoor (LED) 

CATARACT 

Retinal cell degeneration 

AMD 


A New Technology Allowing SELECTIVE PROTECTION 

Thanks to 20 years of R&D expertise in selective light 

filtering, Essilor once again overcomes a trade-off and delivers a 

clear lens combining 3 features at the same time: 

PATENT 

APPLICATIONS 

PENDING 

Excellent protection against HARMFUL LIGHT 

Excellent transmittance of ESSENTIAL LIGHT 

Excellent TRANSPARENCY 


Introducing…. 

First application of 

The MOST SELECTIVE EYE PROTECTION in the market: 

› 25% less light-induced retinal cell death rate versus the naked eye 

› 25x protection against UV rays versus the naked eye (E-SPF TM 25) 

› The most complete lens protection, as expected from Crizal ® 

Cuts Blue-Violet light 

Cuts UV 


49

2 Strategic Targets for 

Blue-Violet light and UV light hazard 

have a cumulative life-long effect 

Blue-Violet light 

hazard 

Age-related 

accumulation of toxic 

lipofuscin in Retina 

Recommended for everyone, especially 

Kids45 based on age-related 

light risks 


50

Market Size & Pricing Strategy 

Market Size 

1.3 billion people worldwide in 2013 

Population stable over time 

Kids 45 years old 

Pricing Strategy 

Better eye health protection justifies a price premium 

versus Crizal ® Forte UV 


51

Launch Strategy of 

April 2013: Country pilots & getting key opinion leaders involved 

September 2013: Global launch 

Europe: 

Sept 2013 

North America: 

Sept 2013 

Asia-Oceania 

Middle East-Africa: 

Sept 2013/Q1 2014 

Latin America: 

Sept 2013 


52

Essilor Crizal ® Prevencia lenses are Class I medical devices intended for the correction of ametropias and presbyopia and offering selective protection from harmful blue light and UV rays. In compliance with French law of December 29th, 2011 

andwith the decree of May 9th, 2012 Essilor informs you that the above information is general information given as prevention and public awareness. For more information Essilor invites you to consult a healthcare professional. 

53

Crizal ® Prevencia: 

A New Step Forward in Eye Protection 


54


55

Agenda 

Introduction 


Innovation 




56

Poor Vision: A Global Handicap Throughout the World… 

Solutions Exist for All Conditions 

2030 

6.0 

billion 


4.2 

billion 

Number of people requiring vision correction in the world 

Source: Essilor estimate 


Optical Market: An Accelerating Growth Path 

Strong Impact from Demographics 

Need for Vision Correction is Increasing 

Per Capita GDP Growth Drives Volume & Value 

Product Mix is Changing Rapidly 

Social and Economic Impact of Poor Vision 


58

Strong Impact from Demographics 

Fast-Growing Markets 

drive population growth 

Aged population growth exceeds 

total population growth by 2 to 3 times 

World population 

In billions of people 

8.3 

Population over 45 years old 


2,821 

7.0 

CAGR: +1.0% 

1,921 

CAGR: +2.2% 

Fast-Growing Markets: 

+1.0% 

North America: +0.8% 

Europe: +0.2% 

Other developed: +0.1% 

Over 60 years old: 

+3.0% 


2012 2030 



Source: Worldbank 


Need for Vision Correction is Increasing 

Myopia 

Presbyopia 


2030 


2030 

2.7 

33%* 

2.8 

34%* 



1.5 

24%* 

1.9 

27%* 

* As a percentage of worldwide population 

Lifestyle changes increase vision needs 

Migration and Urbanization: urban population +1.5 billion by 2030 

Source: United Nation, CIA, Essilor analysis 


Per Capita GDP Growth Drives Volume & Value 

Volume Growth potential 

Spectacle lenses per person with correction need (2012) 

Value Growth potential 

Price to consumer (log $) 

1.0 1,0 

Canada 

UK 

USA 

Size proportional to 

the population with 

correction need 

30 M 

0.8 0,8 

0.6 0,6 

0.4 0,4 

Indonesia 

Egypt 

0.2 0,2 

0,0 

Brazil 

China 

Russia 

Mexico 

Philippines Hungary 

India 

0 10,000 10000 20,000 20000 30,000 30000 40,000 40000 50,000 50000 60,000 60000 

Fast-Growing Markets 

France 

Austria 

Malaysia Germany Netherlands 

Argentina Finland 

Belgium 

Hong-Kong 

Italy Sweden 

Turkey 

Switzerland 

Taiwan 

Slovenia 

Slovakia SpainDK 

Ireland 

Poland NZ 

S. Africa 

Thailand 

Portugal 

Czech Japan 

Australia 

GDP per capita 

(in PPP USD, 2012) 

Developed Markets 

Geography with 

strong market growth 

in value (CAGR 

2012-2017 > 5%) 

GDP per capita (log $) 

$2,000 $20,000 $100,000 

Fast-Growing Markets Developed Markets 

Fast-Growing Markets per capita GDP: +8% per year 

Middle class: from 26% (2012) to 59% (2030) of worldwide population 

Source: Worldbank, Essilor estimate, Estin & Co. 


Product Mix is Changing Rapidly 

Progressive lenses 

Anti-reflective lenses 

Thin lenses (index>=1.6) 

14% 

15% 

16.5% 

48% 

57% 

66% 

12% 

15% 

20% 

2007 


2007 


2007 


2% 

13% 

26% 31% 49% 

13% 24% 37% 

60% 

100% 

2% 4% 6% 14% 60% 

China Italy USA France New 

Argentina India USA Spain Japan 

Zealand 

Penetration of total lens market in volume / Source: Essilor estimate 

Brazil Czech. USA China Korea 

Rep. 

Strong consumer benefits driven by innovation 

Demand for better vision drives product mix 


Increasing Recognition 

of Social and Economic Impact of Poor Vision 

Children Workers Elderly Drivers 

810 

million 

1,100 

million 

300 

million 

280 

million 

Uncorrected 

Uncorrected 

Uncorrected 

Uncorrected 

$275 billion 

Global economic productivity loss due to poor vision 

Source: World Health Organization, BCG 


A Further 1.4 Billion People Will Correct their Vision by 2030 


1.7 

billion 

Corrected 

CAGR: +3.4% 

2030 

3.1 

billion 

Corrected 

Source: Essilor estimate 

But 2.9 billion will remain 

uncorrected in 2030 


Fundamental Characteristics Driving 

Mid-Term Growth of the Optics Industry 

A Fragmented Industry 

Robust Momentum in Fast-Growing Markets 

Strength of the US Market 

Strong Demand for Innovation 

Increasing Accessibility to Vision Care 


65

A Fragmented Industry where Consolidation has Only Started 

Breakdown of 

local leaders* 

Spectacle Lenses 

Readers 

Plano Sun 

Manufacturers 

Essilor 150 to 200 

Small operators 

250 to 350 Manufacturers 

Distributors 

& Laboratories 

1,500 to 2,000 

Local operators 

500-600 

150-200 

400-600 

400-500 

Retail 

200-300 

1.2 Billion 

Rx lenses 

220 Million 

Readers 

Pairs 

420 Million 

Plano Sun 

Pairs 

Source: Essilor estimate, 2011 Infomarket, VisionWatch 2011 

* Only for spectacle lenses 

An industry led by strong, local entrepreneurs 

Accelerating new technologies and innovations push need to consolidate 


Robust Momentum in Fast-Growing Markets 

Which Are Less Sensitive to Economic Conditions 

20 

15 

Expected market growth in value 

(CAGR 2012-2017, in %) 

9 MPc 

Size proportional to market 

size in volume 2012 

Russia 

India 

China 

China: the largest presbyope 

market in the world 

Middle-Class* 


Presbyopes** 


10 

5 

0 

Ghana 

Kenya 

Kazakhstan 

Colombia 

Egypt 

Turkey 

Ethiopia 

Vietnam 

Costa Rica 

Chile 

Morocco 

Saudi Arabia 

Brazil 

Dom Rep. 

Nigeria 

UAE 

Mexico 

South Africa 

Serbia 

USA 

Croatia Finland Argentina 

Canada 

Ireland 

Taiwan 

UK 

Norway 

France 

Denmark 

Netherlands 

Switzerland 

Spain Japan 

Germany 


300 

2020 

580 


450 

2020 

570 

0,2 0,5 1 2 5 10 20 50 100 

200 

Market volume in 2012 (millions of lenses) 

* Annual Income of US$ 10,000 – 60,000 

* * > 45 years old 

Source: Essilor estimate, Estin & Co. 

Source: Worldbank, Wolfensohn Center for Development 

India: one of the fastest growing optical markets 

Africa & Middle East: catching up fast 


Catch-Up Supporting Growth of the US Industry 

Progressive lenses 

Antireflective 

lenses 

Photochromic 

lenses 

Thin lenses (index>=1.6) 

50% 

95% 

70% 

27% 

26% 

20% 

37% 

6% 

USA 

Denmark 

USA 

China 

USA 

South Africa 

USA 

Japan 

Penetration of total lens market in volume / Source: Essilor estimate 

US market grew ~3% in volume in 2012 

Fast deployment of coating and digital surfacing capabilities 


Strong Demand for Innovation 

from Professionals and Consumers Alike 

Consumers 

Eye-Care Professionals 

Laboratories 

Backside UV protectors represent 50% of Crizal ® lenses, just 1 year after launch 

60% of progressive lenses in Europe are digitalized after just 3 years 


Improving Distribution Networks & Accessibility 

Entry level 

Mid-range 

Internet 

High-end 

Over 20,000 new Eye-Care Professionals per year 

Digital development driving growth of e-retail 


A Strategy that Delivers Results 

INNOVATE 

DEVELOP 

GROW 

STIMULATE 

Products and 

Services 

Top & Midrange 

markets 

Acquisitions & 

Partnerships 

Demand 

for Vision 

Improvement 

Operational and management efficiency 

Corporate social responsibility 


71

Key Areas of Focus for 2013 

Talent Pool 

Innovation 

Market 

consolidation 

Operational 

Gains 

Improving 

Worldwide 

Vision 

Fast-Growing 

Markets 

Supply chain 

Developed 

Markets 


72

Maximizing Value Creation through Innovation 

Innovation Market Consolidation Fast-Growing Markets Developed Markets 

Leveraging 

partnerships 

Cascading down 

Seeking out unmet 

consumer needs 

ITC* Dallas (2012) 

ITC* Créteil (2013) 

New technologies are driving segmented products and services: Personalization 

* ITC: Innovation & Technology Center 

Upgrading and innovating frequently and with differentiation 

at every price points 


73

Gaining Share through Market Consolidation 


Wholesalers, 

laboratories & casters Technologies New footprints 

Morocco 

Tunisia 

Laos 

Dominican 

Republic 

Turkey 

Colombia 

Sri Lanka 

Togo 

Côte d’Ivoire 

Chile 

Local market shares between 3% and 50%+ 

Still over 130 countries with no direct distribution 


77

Accelerating Development in Fast-Growing Markets 


Brands and Innovation 

in high-end market 

Partnerships in 

mid-range market 

To generate a minimum of 25% growth per year 

A unique business model based on governance, 

culture and technology 


78

Leveraging our Strengths in Developed Markets 


Multinetworks 

Brands 

Integrated 

Business Solutions 

Significant media spend in 2013 on major brands 

Pricing and sales force efficiencies 


83

Integrated Supply Chain to Improve Efficiency and Service 

Supply Chain Operational Gains Talent Pool Improving Vision Worldwide 

Europe: 

47 

North America: 163 

x3 

Asia – Oceania – Africa 

– Middle East: 

161 

13 Essilor Plants 

9 Partner Plants 

> 400 Local Prescription Labs 

7 Export Prescription Labs 

16 Distribution Centers 

Latin America: 31 

Designing innovative offers/solutions to increase value creation 

Complete end-to-end supply chain 


87

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

Operational Gains to Continue Financing Growth 


Reducing 

cost of goods Improving capacity Productivity gains 

120 

100 

80 

60 

40 

20 

0 

Unit Production Cost for Polycarbonate 

Lens (1) halved in 11 years 

New tooling for Multicoat 

deposition: +20% capacity (2) 

New, shorter process 

+20% productivity (3) 

Leveraging sourcing from all partners 

Optimizing the laboratory network 

(1) SFSV Lens / Base 100 in 2000 / Not adjusted for inflation - (2) Average capacity increase thanks to Gen IV tooling, depending on lens caliber - (3) 2013 implementation 


89

Strengthening our Talent Pool to Support Growth 


Lenses & Optical Instruments 

Equipments 

Readers 

Paris 

Baar 

Shanghai 

Dallas 

Rhode Island 

Dubai 

Bangalore 

Bangkok 

Singapore 

Mexico 

Rio de Janeiro 

Reinforcing local presence in regional hubs 

Worldwide deployment of “Essilor Principles” 


90

53,000 People and 

a Unique Entrepreneurial Model with a Simple Mission 


Improving 

the Vision of 

4.2 Billion 

People 


91

Outlook for 2013 

Revenue Growth: more than 7% 

combined like-for-like and bolt-on acquisitions (1) growth 

Contribution from operations (2) : 

Maintain current high level of profitability 


(2) Operating profit before compensation costs of share-based payments, restructuring costs, other income 

& expense and goodwill impairment 


93

2012 Results - Essilor

Create successful ePaper yourself

Delete template?

Save as template?