First-Half 2016 Results - Essilor Group · 2016-11-24 · First-Half 2016 Results 8 Second-Quarter...
Transcript of First-Half 2016 Results - Essilor Group · 2016-11-24 · First-Half 2016 Results 8 Second-Quarter...
First-Half 2016 Results July 29, 2016
First-Half 2016 Results 2
Hubert Sagnières – Chairman and Chief Executive Officer
1. First-Half 2016 Highlights
First-Half 2016 Results 3
Key Figures
H1 2016 Growth
(1)Growth at constant exchange rates
(2)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses)
(3)Free Cash Flow = Net cash from operating activities less change in WCR and capital expenditure
+5.1%
€3,408m €3,583m Revenue
€651m €677m 19.1% 18.9%
+4.0% Contribution from operations(2)
As a percentage of revenue
+6.4%
€1.83 €1.95
Earnings per share
+9.3%
€226m €247m
Free Cash Flow(3)
+8.1%(1)
H1 2015
1. First-Half 2016 Highlights
First-Half 2016 Results 4
Key Highlights
Combined growth(1)
of 8.1% in line with yearly objectives
Like-for-like revenue up 5.0% in Lenses & Optical Instruments: in acceleration year-on-year
Double-digit expansion in fast-growing markets(2)
Better-than-expected growth in Europe
Performance in North America impacted by a decline in Transitions Optical sales to other lens casters
Sunglasses & Readers suffered from poor weather and delayed growth at Xiamen Yarui Optical (Bolon™)
Equipment returns to growth
Strong acquisition & partnership momentum
Solid contribution from operations(3)
1. First-Half 2016 Highlights
(1)Like-for-like growth and bolt-on acquisitions (local acquisitions or partnerships)
(2)Fast-growing markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America
(3)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses)
First-Half 2016 Results 5
Laurent Vacherot – Chief Operating Officer
2. Financial and Operating
Performance
3,408
3,583
+5.1%
139
138(102)
H1 2015 Revenue Like-for-like growth Bolt-on acquisitions(1) Currency effect H1 2016 Revenue
+4.1%
+4.0%
-3.0%
First-Half 2016 Results 6
First-Half 2016 Revenue up 8.1% Excluding the Currency Effect
€ millions
(1) Local acquisitions or partnerships
2. Financial and Operating Performance
+8.1%
First-Half 2016 Results 7
First-Half 2016 Revenue by Region and Division
2. Financial and Operating Performance
Reported revenue in € millions H1 2015 H1 2016 Change (reported)
Change (excluding
currency effect)
Lenses & Optical Instruments 2,954 3,129 +5.9% +9.1%
North America 1,312 1,378 +5.0% +5.9%
Europe 904 965 +6.8% +8.4%
Asia/Pacific/Middle East/Africa 536 564 +5.3% +10.3%
Latin America 202 222 +9.5% +30.6%
Sunglasses & Readers 362 360 -0.6% +0.9%
Equipment 92 94 +2.3% +3.2%
TOTAL 3,408 3,583 +5.1% +8.1%
First-Half 2016 Results 8
Second-Quarter Like-for-like Revenue up 3.2% Second-Quarter Combined Revenue(1) up 6.9%
(1) Combined growth = like-for-like growth + bolt-on acquisitions (local acquisitions or partnerships)
(2) Fast-growing markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America
Lenses & Optical Instruments
Fast-growing markets(2)
like-for-like growth
improved from 9.3% in Q1 to 10.5% in Q2
Decline in Transitions Optical sales to
other lens casters, primarily impacting
North America
Sustained performance in Europe
Sunglasses & Readers
Unfavorable weather conditions
Delayed growth at Xiamen Yarui Optical
(Bolon™)
Solid contribution from acquisitions of
3.7%
2. Financial and Operating Performance
Like-for-like revenue growth Q1 2016 Q2 2016 H1 2016
Lenses & Optical Instruments +5.7% +4.4% +5.0%
North America +4.7% +1.5% +3.1%
Europe +4.7% +4.5% +4.6%
Asia/Pacific/Middle East/Africa +8.9% +8.5% +8.7%
Latin America +9.0% +11.4% +10.3%
Sunglasses & Readers -1.5% -5.8% -3.9%
Equipment +3.5% +4.3% +4.0%
TOTAL +5.0% +3.2% +4.1%
+1.3%
+2.4%
+3.6%
+5.1%
+4.7%+5.0% +5.0%
H1 H2 H1 H2 H1 H2 H1
First-Half 2016 Results 9
Solid Momentum in Lenses & Optical Instruments
2013 2014 2015 2016
2. Financial and Operating Performance
First-Half 2016 Results 10
11 Acquisitions as of July 29, 2016 Representing ~€130m in Full-Year Revenue
2. Financial and Operating Performance
Europe
1
Latin America
4 Asia/Pacific/
Middle East/Africa
1
North America
5
Vision Direct Opti-Port
Opticas Place
Vendôme One Vision
Optical
Icare Industries
Digital Lab
Summer Vision
Ocutec
Laboratorio
Axis Medical Group
Allaboutvision.com
US Optical
First-Half 2016 Results 11
North America: Healthy Lens Business, Poor Sun Season
HIGHLIGHTS
Good performance with the independent eye care professionals in the US
Decline in Transitions Optical sales to other lens casters
Sun season impacted by poor weather conditions
SUNGLASSES &
READERS
Market share gain at Costa®
New channels for FGX
LENSES & OPTICAL
INSTRUMENTS
Innovation
Launch of Eye Protect System™ range of products
New offerings for Doctor Alliances
New partnerships with two prescription laboratories
Online
Continued success of EyeBuyDirect™ and Frames Direct™
Return to growth of Clearly™ in Canada
Coastal™ still challenging in the US
H1 2016 revenue growth
excluding currency
effect, across all
business divisions
5.1%
2. Financial and Operating Performance
First-Half 2016 Results 12
Europe: Sustained Dynamic
HIGHLIGHTS
Good performance in major countries, Russia and Eastern Europe
Sales acceleration in Nordic countries
UK and Central Europe stable
H1 2016 revenue growth
excluding currency
effect, across all
business divisions
7.8%
SUNGLASSES &
READERS Launch of Costa® in France and Spain
LENSES & OPTICAL
INSTRUMENTS
Innovation
Success of Eyezen™ lenses in France and Switzerland
Launch of Transitions® Style Colors lenses in Italy
(four new colors)
Online
Acceleration of Lensway™ in Scandinavia
Acquisition of Vision Direct in the United Kingdom
2. Financial and Operating Performance
First-Half 2016 Results 13
Asia(1): Continuing Momentum in Lenses
HIGHLIGHTS
Robust growth in India and Africa
Good performance in Southeast Asia
Implementation of new shipment model at Xiamen Yarui Optical (Bolon™)
H1 2016 revenue growth
excluding currency
effect, across all
business divisions
FGM: 10.3% Total Asia: 8.8%
SUNGLASSES &
READERS
Rebound at Xiamen Yarui Optical expected in H2
Good performance of Merve in Turkey
LENSES & OPTICAL
INSTRUMENTS
Positive momentum for Transitions® and Varilux® lenses in India
Broader product range offsetting slower economy in China
South Korea driven by Perfect UV offer from Chemilens
Revenue growth in developed countries
(1) Asia/Pacific/Middle East/Africa
2. Financial and Operating Performance
First-Half 2016 Results 14
Latin America: Sales Acceleration Driven By Organic Growth and Acquisitions
HIGHLIGHTS
Slight acceleration in sales growth in Q2 in Brazil
Strong growth in Argentina, Colombia and Mexico
New footprint in Peru and expansion in Chile
H1 2016 revenue growth
excluding currency
effect, across all
business divisions
30.8%
LENSES & OPTICAL
INSTRUMENTS
Crizal® lenses: Healthy growth in Brazil, Mexico, Argentina,
Costa Rica and Nicaragua
Kodak® lenses: Success in Brazil and launch in Mexico
Transitions® lenses: Solid performance in Mexico
Strong dynamic in online sales in Brazil (e-Ótica, e-lens and
glasses4you™)
2. Financial and Operating Performance
EQUIPMENT Recovery driven by the adoption of the digital surfacing
technology by small and mid-size labs
First-Half 2016 Results 15
Profit Attributable to Equity Holders up 7.3%
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses)
2. Financial and Operating Performance
Revenue 3,408 3,583 +5.1%
Contribution from operations ( 1 ) 651 677 +4.0%
Other income (expenses), net (37) (31) -
Operating profit 614 646 +5.3%
Financial income (expense), net (20) (37) -
Income tax (172) (159) -
Effective tax rate 29.0% 26.1% -
Net profit 422 450 +6.7%
Minority interests (34) (34) -
Profit attributable to equity holders 388 416 +7.3%
Earnings per share (in €) 1.83 1.95 +6.4%
€ millions ChangeH1 2016H1 2015
Rise in US interest rates
Gain on FX in H1 2015
Partial script dividend
Geographic mix
First-Half 2016 Results 16
Contribution from Operations(1) up 4%
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses)
2. Financial and Operating Performance
Revenue 3,408 3,583 +5.1%
Gross profit 2,041 2,135 +4.6%
% of revenue 59.9% 59.6%
EBITDA 835 866 +3.8%
% of revenue 24.5% 24.2%
Contribution from operations (1) 651 677 +4.0%
% of revenue 19.1% 18.9%
€ millions H1 2016 ChangeH1 2015
Efficiency gains
Transitions Optical sales
to other lens casters
Acquisitions
Incremental media
spend
19.1%18.9%
0.5%-0.2%
-0.5%
H1 2015 Operating leverage and
synergies
Incremental media
spend
Acquisitions(2) H1 2016
First-Half 2016 Results 17
Contribution from Operations(1) at 18.9% of Revenue
Contribution from operations as a percentage of revenue
(1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses)
(2) Bolt-on acquisitions (local acquisitions or partnerships)
2. Financial and Operating Performance
Bolon performance
Preparing the future:
FGM, 2.5 NVG, …
Trade up/Innovation
Efficiency gains
4.6% 4.7%
5.6%
4%
4.8%
3.6%
2%
3%
4%
5%
6%
7%
2011 2012 2013 2014 2015 H1 2016
192 232
285
227
321
129
First-Half 2016 Results 18
Capital Expenditure: Continuing to Invest in Long-term Growth
2. Financial and Operating Performance
Capital expenditure in € million (net of disposals) As a percentage of revenue
66
29383
103
145625
233
First-Half 2016 Results 19
Free Cash Flow(1) up at €247m, up 9.3%
(1) Free cash flow corresponds to net cash from operating activities less change in WCR and capital expenditure
(2) After disbursement of the fine to the Bundeskartellamt (BKA) that was set aside in 2010, for a total amount of €63m, including accrued interest
(3) Including €38m of foreign exchange impact and €3m of capital increase
(4) The theoretical 2015 dividend amounted to €237.1 million. However, the option to receive the dividend in shares was taken up by 67.6% of shareholders and the cash dividend effectively
disbursed amounted to €79.1 million.
Operating cash flow(2)
(excl. change in WCR)
Capital expenditure
Change in WCR
Dividends(4)
Net financial investments
€ millions
+247
Reported change in net debt
Foreign exchange, capital increase and others
(3)
2. Financial and Operating Performance
First-Half 2016 Results 20
Net Debt as of June 30, 2016: 1.3x EBITDA(1)
2. Financial and Operating Performance
Strong cash generation
Working capital usual seasonality
Disbursement of the fine to the BKA
Acquisitions
An active first-half
Earn-out & put options
(1) For the last 12 months ended June 30, 2016
2,1682,089
2,172
1.41.3 1.3
H1 2015 2015 H1 2016
Net debt Net debt/EBITDA
First-Half 2016 Results
Continued momentum in fast-growing markets
New initiatives for Transitions® lenses
Eyezen™ and Eye Protect System™ product ranges
Acceleration in online sales
21
H2 2016 at a Glance
Lenses
& Optical Instruments
2. Financial and Operating Performance
New channels/countries for Costa®, FGX and Bolon™ products
Xiamen Yarui Optical (Bolon™) back to growth in the course of H2
Sunglasses
& Readers
Good order book in the Equipment division
Consumer branding across all businesses
Solid acquisition pipeline
Capital expenditures to sales: around 4% for FY16
Group-wide
First-Half 2016 Results 22
Hubert Sagnières – Chairman and Chief Executive Officer
3. Strategy and Outlook
First-Half 2016 Results 23
A Powerful Growth Strategy
Size and growth of industry segments by 2018 / Prescription sun lenses are included in prescription lenses
Fast-Growing Markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America
3. Strategy and Outlook
Innovation
Consumer Focus and Branding
Partnerships and Acquisitions
Business Interconnections
10-12%
FAST-GROWING
MARKETS
€5.8bn
~ €28.5bn 6-7%
€5.8bn 14%
ONLINE
€10bn
SUNGLASSES
& READERS
6-7%
€12.7bn 3-4%
PRESCRIPTION
LENSES
First-Half 2016 Results 24
A Lot of Upside Left for Essilor
Total market share in units:
ONLINE
~1,260 m lenses
PRESCRIPTION
LENSES
Market units
Essilor market share
~41%
610-650 m pairs
SUNGLASSES
Market units
Essilor market share
250-300 m pairs
READERS
Market units
Essilor market share
~15%
~€4bn
Market value
Essilor market share
~5% ~15%
Source: Essilor – 2015 estimates, Estin
~25%
3. Strategy and Outlook
First-Half 2016 Results 25
Lenses & Optical Instruments: Many Robust Initiatives in H2
(1)Fast-growing markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America
3. Strategy and Outlook
Deployment of Eyezen™ lenses
Launch of Eye Protect System™ range of products
Focus on Transitions® lenses
Products
North America: Deployment of product & service
offerings to our doctor alliances
Europe: Product mix improvement
Fast-Growing Markets(1): Continued momentum
Online: Acceleration in all geographies
Consumer branding: Further benefits in H2
Geographies
Consumers
First-Half 2016 Results 26
Sunwear: Xiamen Yarui Optical to Improve in H2
3. Strategy and Outlook
Powerful long-term success story
>30% revenue CAGR since 2012
Increased capacity with a new plant
Long-term
New distribution channels: direct to ECPs, travel retail
Geographic expansion: Thailand, Malaysia, Vietnam
and the Philippines
Development of prescription lenses
Gradual recovery in shipments
Return to growth expected in the course of H2
Mid-term
Short-term
First-Half 2016 Results 27
Sunwear: Many Upcoming Developments
3. Strategy and Outlook
New viral campaign: Leafcutter
Channel expansion: Travel retail, doctor alliances
Geographic expansion: US and abroad
Costa®
Collection renewal opportunities in several key
accounts in H2
Osse™ / Mustang™ (Merve): In the like-for-like scope
from July 1st, 2016
New contracts with performance and luxury brands
validate our strategy
FGX
New
Opportunities
First-Half 2016 Results 28
Online: Optimization of Business Model to Enhance Growth
3. Strategy and Outlook
New consumer experience at Clearly™/Coastal™
Launch of EyeBuyDirect™ in new countries
Product expansion at VisionDirect
Cross-selling our sunwear brands on most websites
Entering new geographies: India
Organic
Growth
Strengthening geographic and product coverage
Gearing up for powerful technology enablers
Acquisitions
New
Technologies
First-Half 2016 Results 29
Setting the Ground for Acceleration in Fast-Growing Markets(1)
(1) Fast-growing markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America
3. Strategy and Outlook
BRAZIL
New partnerships
Branding
Online models
INDIA
Entry in Sunwear
Building online offering
CHINA
Pioneering online models
Vision ambassadors
New plant for Xiamen Yarui
Optical (Bolon™)
€2.8bn Revenue Ambition by 2018
CHILE, COSTA RICA
& NICARAGUA
Integrated retail model
TURKEY
Merve Sun brands:
Building momentum
AFRICA
New Kodak® frames & lenses
offering in Morocco
2.5 NVG and Charity
active in 12 countries
Pipeline of acquisitions
RUSSIA
Building brand equity
Contact lenses
ASEAN
2.5 NVG models
Pipeline of acquisitions
PERU
New footprint
First-Half 2016 Results 30
A Strong Mission At the Core of Solid Execution and Motivation
3. Strategy and Outlook
Improving Lives by
Improving Sight
7.2 billion people worldwide
63% in need of vision correction
100% in need of vision protection
Source: Essilor – 2015 estimates
First-Half 2016 Results 31
Outlook: Long-Term Objectives Unchanged
3. Strategy and Outlook
(1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses)
(2) Excluding any additional significant acquisitions.
2016 Revenue Growth
Like-for-like
Excluding currency effect
2016 Contribution from operations(1)(2)
as a percentage of revenue
2018 Like-for-Like Growth
>8%
Around 4.5%
≥18.8%
>6%
Questions & Answers