CHARENTON-LE-PONT, France, March 4, 2010 /PRNewswire-FirstCall/ -- - A Remarkable Year in the Context of 2009 - Revenue up 6.3% - Contribution Margin at a Record High of 18.2% - Restated EPS up 10% to EUR2.03 - Free Cash Flow up 25% to EUR390 Million - Recommended Dividend of EUR0.70 per Share, up 6.1%
At its meeting yesterday, the Board of Directors of Essilor approved the financial statements for the year ended December 31, 2009. The financial statements have been audited and the auditors are in the process of issuing an unqualified opinion.
EUR millions 2009 2008 % Change Revenue 3,268 3,074.4 + 6.3% Contribution from operations(1) 594.4 551.2 + 7.9% As a % of revenue 18.2% 17.9% - Profit attributable to equity holders 394.0 382.4 + 3.1% Restated earnings per share(2) (EUR) 2.03 1.85 + 10.0% Reported earnings per share(EUR) 1.91 1.85 +3.2% Free cash flow(3) 390 313 + 24.6% (1) Operating profit before compensation costs of share-based payments, restructuring costs, other income and expense, and goodwill impairment. (2) Restated for the EUR26.1 million provision in 2009 in respect of various risks and tax litigations (3) Net cash from operating activities less purchases of property, plant and equipment and intangible assets, according to the IFRS consolidated cash flow statement.
In a recessionary economy, 2009 saw an unprecedented slowdown in the ophthalmic optical market. In this context, Essilor was able to demonstrate the solidity of its growth model and continued to progress in the market by leveraging its innovative products and efficient distribution networks and by stepping up its acquisition strategy.
The year's highlights included: - Successful new products, including the new Crizal(R) anti-reflective lens, Xperio(TM) polarizing lens, personalized lenses incorporating eyecode(TM) technology and the Mr Blue(R) edger. - Faster deployment in the mid-range, thanks to a dedicated local offering. - Entry of 27 new companies into the Company in all regions. - Pursuit of productivity gains and operational efficiency.
Based on its confidence in the Company's outlook, the Board of Directors will recommend that shareholders at the Annual Meeting on May 11, 2010 approve the payment of a 2009 dividend of EUR0.70 per share, representing a 6.1% increase over the 2008 dividend. The payout ratio increased to 37%. The dividend will be payable as from May 28, 2010.
In 2010, the economic environment is expected to be more favourable than in 2009, with a progressive recovery in global activity. The ophthalmic optical market enjoys positive trends, linked to the ageing of the population, the potential of high value-added products and the rise of a middle-class in emerging countries. Backed by the robustness of its business model, demonstrated in 2009, Essilor will step up its strategy of market share gains. 2010 will therefore be a major year for new product launches, geographic expansion and the acceleration of bolt-on acquisitions. Essilor expects a gradual improvement in its revenue and will continue to pursue operational efficiency gains.
A meeting with financial analysts will be held today, March 4, at 10:30 a.m. CET. It will be webcast live in French at http://hosting.3sens.com/Essilor/20100304-47FAFD92/fr/ and in English at http://hosting.3sens.com/Essilor/20100304-47FAFD92/en/.
Forthcoming investor events
First-quarter 2010 report: April 23, 2010
Annual Shareholders' Meeting: May 11, 2010
The world leader in ophthalmic optical products, Essilor International researches, develops, manufactures and markets around the world a wide range of lenses to correct myopia, hyperopia, presbyopia and astigmatism. Its flagship brands are Varilux(R), Crizal(R), Essilor(R), Definity(R) and Xperio(TM). Based in France, the company reported consolidated revenue of EUR3.2 billion in 2009, with 34,700 employees and operations in 100 countries.
For more information, please visit http://www.essilor.com.
The Essilor share trades on the NYSE Euronext Paris market and is included in the CAC 40 index. Codes and symbols: ISIN: FR FR0000121667; Reuters: ESSI.PA; Bloomberg: EI:FP.
REVENUE UP 5% AT CONSTANT EXCHANGE RATES Revenue 2009 2008 % Change % Change EUR millions (reported) (like-for-like) Europe 1,331.7 1,356.3 - 1.8% - 2.7% North America 1,354.0 1,253.0 + 8.1% - 0.4% Asia-Pacific 344.7 301.8 + 14.2% + 12.3% Latin America 134.0 127.2 + 5.3% + 7.0% Laboratory 103.6 36.1 + 186.9% - 7.0% equipment Total 3,268.0 3,074.4 6.3% 0.1% Consolidated revenue rose 6.3% to EUR3,268 million in 2009. - On a like-for-like basis, revenue grew by 0.1%, reflecting stable Lens revenue and a 2.3% increase in Instrument revenue. - Consolidation of companies acquired in 2008 and 2009 accounted for 4.9% of reported growth, of which 2.3% from Satisloh. - The 1.3% positive currency effect was mainly due to the rise in the dollar and, to a lesser extent, the yen against the euro, which offset the negative impact on revenue of the weaker British pound, Brazilian real and Canadian dollar.
Geographically, unit sales edged back slightly in mature countries but rose sharply in emerging markets:
- Revenue in Europe declined by 2.7% in a challenging environment. During the year, Essilor stepped up deployment of its multi-network strategy, which allows it to capture the strong demand for entry-level products while continuing to pursue its innovation strategy. Operations in France, Germany and Italy, as well as the Instruments Division, held up particularly well, with operations in Russia and Finland reporting the strongest performances. - Revenue was virtually unchanged in North America (down 0.4%). In the United States, firm sales to eyecare professionals and independent laboratories offset difficulties encountered with certain optical chains. Revenue in Canada was hurt by a fall-off in unit sales. - In Asia, where revenue rose 12.3% overall during the year, performance was satisfactory in every country except Japan. Growth was led in India, China and South Korea by sales of specialty lenses and other new products, and lifted in Australia by strong demand for the Varilux and Crizal lines. Revenue also saw sustained growth in South Africa. - After enjoying very strong growth in 2008, revenue in Latin America rose a solid 7% in 2009 despite the economic slowdown. The sharp increase in anti-reflective lens sales in Brazil and especially Mexico helped to improve the product mix. - Lastly, in a particularly challenging year for the capital equipment industry, Satisloh held the decline in sales to around 7%, thereby enabling the company to increase its market share. Surfacing machine sales remained strong during the year. Fourth quarter: continued recovery in growth Revenue Q4 2009 Q4 2008 % Change % Change EUR millions (reported) (like-for-like) Europe 342.3 338.9 + 1.0% - 0.7% North America 302.4 319.3 - 5.3% + 1.1% Asia-Pacific 85.0 75.7 + 12.3% + 11.2% Latin America 38.1 28.7 + 33.0% + 15.1% Laboratory 31.6 34.0 - 7.1% - 7.1% equipment Total 799.4 796.6 +0.4% + 1.5%
Consolidated revenue for the fourth quarter alone stood at EUR799.4 million, up 0.4% year-on-year as reported and 1.5% like-for-like. With Satisloh now contributing to organic growth, the contribution from acquisitions declined to 2.3% for the period. Lastly, for the first time in 2009, the currency effect turned negative (at 3.4%), primarily due to the appreciation of the euro against the US dollar.
Business conditions improved in every operating region during the quarter: - Business stabilized in Europe. - Demand turned up noticeably in North America and significantly in Latin America. - Growth remained strong in Asia. - The Laboratory Equipment business recovered.
Six new prescription laboratories were acquired in Europe, the United States, India and South Africa, along with a distributor in Brazil, for total additional full-year revenue of EUR23 million.
CONTRIBUTION MARGIN AT 18.2% EUR millions 2009 2008 Gross margin 1,832.6 1,749.3 As a % of revenue 56.1 56.9 Operating expenses 1,238.2 1,198.2 Contribution from operations(1) 594.4 551.2 As a % of revenue 18.2 17.9 (1) Operating profit before compensation costs of share-based payments, restructuring costs, other income and expense, and goodwill impairment.
The contribution from operations increased 7.9% to EUR594.4 million in 2009, while the contribution margin improved by 0.3 points to 18.2%, despite the dilutive impact of consolidating Satisloh. The growth may be analyzed as follows:
- Gross margin declined by 0.8 points to 56.1% of revenue, due to the dilutive impact from Satisloh and other acquisitions. Excluding the impact of these acquisitions, gross margin was unchanged for the year. - Operating expenses as a percentage of revenue declined by 1.1 point, to 37.9%, thanks to i) tight control over selling and distribution costs (EUR706.6 million) and major reductions in overheads while maintaining a strong research and development commitment (funded at EUR151.2 million before deduction of a EUR10.4 million research tax credit) and ii) the positive impact of acquisitions whose operating expense/revenue ratio is lower than the Company average. RESTATED EPS UP 10% Profit attributable to equity holders of the parent up 3.1%
Profit attributable to equity holders rose by 3.1% to end the year at EUR394 million, it represented 12.1% of revenue, close to the level of 2008. It may be analyzed as follows:
- Other income and expenses from operations amounted to a net expense of EUR39.2 million, comprising EUR21.9 million in compensation costs of share-based payments and EUR17.3 million in restructuring costs, charges to provisions for contingencies, claims and litigation, and other expenses. - Operating profit increased 7.9% to EUR555.2 million for the year. - Finance costs and other financial income and expenses represented a net expense of EUR11.2 million compared with EUR2.5 million in 2008, reflecting the increase in net finance costs due to the higher average net debt for the year and, to a lesser extent, a decline in creditor interest income. - Share of profits of associates remained unchanged at EUR26 million, as higher earnings at Transitions (49%-owned) offset a decline at Sperian Protection (15%-owned).
Income tax amounted to EUR168.2 million, including a EUR26.1 million provision in respect of the various tax controls and litigations underway for the Company. Excluding this non-recurring item, the effective tax rate was 26.1%. The improvement was primarily led by a decline in the tax rate in Brazil and the faster earnings growth in regions with more favorable tax regimes.
Earnings per share rose 3.2% to EUR1.9. Restated earnings per share rose by 10 % to EUR2.03.
FREE CASH FLOW UP 25%
Essilor's business model continued to demonstrate its ability to generate strong cash flow in 2009. Operating cash flow amounted to EUR515 million, providing ample funds to finance the company's growth, by covering:
- The EUR71 million rise in working capital requirement due to an increase in trade receivables. - EUR125 million in gross capital expenditure, representing 3.8% of revenue.
This left free cash flow up 24.6% to EUR390 million.
This good cash flow performance also enabled Essilor to continue deploying its acquisitions and partnership strategy around the world (EUR161 million invested, net of acquired cash); pursue its share buyback programs (EUR76.1 million) and increase the dividend (EUR136 million).
Change in net debt EUR millions Operating cash flow (before 586 Purchases of property, 125 WCR) plant and equipment Conversions of OCEANE 153 Change in WCR 71 convertible bonds and other Issue of share capital 37 Dividends 139 Other 2 Financial investments 161 net of the proceeds from disposals Share buybacks 76 Decrease in debt 206 A STRONG BALANCE SHEET Net cash position
The growth in earnings and cash flow helped to further strengthen an already very solid balance sheet. At December 31, 2009, the Company had net cash of EUR92.8 million, equivalent to 3.4% of consolidated equity.
Goodwill increased by EUR102 million in 2009, to stand at EUR1,060 million at year-end, or 25% of total assets.
Inventories amounted to EUR486 million at December 31, 2009, an increase of EUR10 million or 1% like-for-like.
In all, the balance sheet structure was strengthened, with an equity to assets ratio of 65.2%.
ACQUISITIONS IN 2009
Essilor actively pursued its acquisitions strategy in 2009, purchasing interests in 27 companies during the year, mainly prescription lens laboratories or distributors. The strategy was deployed in every region, with 13 acquisitions in North America, five in Europe, six in Asia-Pacific, one in the Middle East, one in South Africa and one in Brazil.
Since the beginning of 2010, Essilor has continued to expand in the global marketplace with new partnerships. In China, a majority interest was acquired in Danyang ILT, an ophthalmic lens manufacturer, while a prescription lens laboratory was purchased in Abu Dhabi. In Australia, Essilor acquired a 70% interest in Eyebiz Pty Limited, Luxottica's Sydney-based optical lens finishing laboratory that supplies Luxottica's retail optical outlets in Australia and New Zealand.
In December 2009, Essilor agreed to acquire FXG International, the leading designer and marketer of non-prescription eyewear in the United States, with revenue of $259 million in 2009. The transaction, which is subject to regulatory approvals and the affirmative vote of a majority of FGX's shareholders, is expected to close in March. It will enable Essilor to enter a new growth market.
---------------------------------  Net cash from operating activities less purchases of property, plant and equipment and intangible assets, according to the IFRS consolidated cash flow statement. ------------------------------ CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2009 CONSOLIDATED INCOME STATEMENT EUR thousands, except per share data 2009 2008 Revenue 3,267,978 3,074,419 Cost of sales (1,435,333) (1,325,106) GROSS MARGIN 1,832,645 1,749,313 Research and development costs (151,221) (144,518) Selling and distribution costs (706,619) (672,268) Other operating expenses (380,367) (381,368) CONTRIBUTION FROM OPERATIONS 594,438 551,159 Restructuring costs, net (11,383) (3,736) Impairment losses 0 0 Compensation costs on share-based payments (21,865) (24,906) Other income from operations, net 2,456 1,926 Other expenses from operations, net (7,128) (9,284) Gains and losses on asset disposals, net (1,303) (629) OPERATING PROFIT 555,215 514,530 Finance costs (31,498) (28,181) Income from cash and cash equivalents 18,739 29,042 Other financial income, net 41,551 43,349 Other financial expenses, net (39,946) (46,716) Share of profit of associates 25,974 26,053 PROFIT BEFORE TAX 570,035 538,077 Income tax expense (168,169) (149,266) NET PROFIT 401,866 388,811 Attributable to equity holders of Essilor 394,036 382,356 International Attributable to minority interests 7,830 6,455 Basic earnings per common share (EUR) 1.91 1.85 Weighted average number of common shares (thousands) 206,691 206,875 Diluted earnings per common share (EUR) 1.89 1.81 Diluted weighted average number of common shares (thousands) 210,557 213,615 CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2009 ASSETS EUR thousands December 31, December 31, 2009 2008 Goodwill 1,059,941 957,605 Other intangible assets 221,688 205,249 Property, plant and equipment 803,022 811,484 INTANGIBLE ASSETS AND PROPERTY, PLANT AND 2,084,651 1,974,338 EQUIPMENT, NET Investments in associates 180,034 164,690 Other long-term financial investments 73,920 44,214 Deferred tax assets 57,229 51,955 Non-current receivables 10,570 8,093 Other non-current assets 854 693 OTHER NON-CURRENT ASSETS, NET 322,607 269,645 TOTAL NON-CURRENT ASSETS, NET 2,407,258 2,243,983 Inventories 485,606 475,299 Prepayments to suppliers 12,373 9,521 Current trade receivables 746,266 684,797 Current income tax assets 17,039 5,859 Other receivables 18,434 37,294 Derivative financial instruments 40,485 50,996 Prepaid expenses 20,765 21,242 Marketable securities 33,965 32,538 Cash and cash equivalents 385,548 505,571 CURRENT ASSETS, NET 1,760,481 1,823,117 TOTAL ASSETS 4,167,739 4,067,100 CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2009 EQUITY AND LIABILITIES EUR thousands December 31, December 31, 2009 2008 Share capital 38,792 37,984 Additional paid-in capital 415,321 311,765 Retained earnings 2,107,571 1,829,870 Treasury stock (174,580) (153,407) Convertible bond (OCEANE) call option 6,854 22,206 Revalution and others reserves (21,653) (9,109) Translation reserve (50,194) (70,235) Net profit attributable to equity holders of Essilor International 394,036 382,356 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF ESSILOR INTERNATIONAL 2,716,147 2,351,430 Minority interests 21,786 14,544 TOTAL EQUITY 2,737,933 2,365,974 Provisions for pensions and other post-employment obligations 131,316 132,401 Long-term borrowings 282,222 437,617 Deferred tax liabilities 24,678 22,406 Long-term payables 2,393 2,359 NON-CURRENT LIABILITIES 440,609 594,783 Provisions 68,887 36,720 Short-term borrowings 82,929 212,835 Customer prepayments 2,866 8,611 Short-term payables 624,184 631,945 Current income tax liability 46,507 35,626 Other liabilities 144,289 143,159 Derivative financial instruments 10,897 28,480 Deferred income 8,638 8,967 CURRENT LIABILITIES 989,197 1,106,343 TOTAL EQUITY AND LIABILITES 4,167,739 4,067,100 CONSOLIDATED CASH FLOW STATEMENT EUR thousands 2009 2008 NET PROFIT 401,866 388,811 Share of profits of associates, net of dividends received 19,504 20,637 Depreciation, amortization and other non-cash items 143,400 148,886 Profit before non-cash items and share of profits of associates, net of dividends received 564,770 558,334 Provision charges (reversals) 19,724 9,810 (Gains) and losses on asset disposals, net 1,303 629 Cash flow after income tax expense and finance costs, net 585,797 568,773 Finance costs, net 13,027 (692) Income tax expense (current and deferred taxes) 168,169 149,266 Cash flow before income tax expense and finance 766,993 717,347 costs, net Income taxes paid (172,226) (144,650) Interest (paid) and received, net (8,773) 8,607 Change in working capital (70,656) (84,503) NET CASH FROM OPERATING ACTIVITIES 515,338 496,801 Intangibles assets and purchases of property, plant and equipment (125,275) (184,298) Acquisitions of subsidiaries, net of the cash acquired (128,634) (452,879) Purchases of available-for-sale financial assets (24,263) (4,673) Purchases of other long-term financial investments (8,071) (11,978) Proceeds from the sale of subsidiaries, net of cash sold 0 0 Proceeds from the sale of other non-current assets 8,889 3,799 NET CASH USED IN INVESTING ACTIVITIES (277,354) (650,029) Proceeds from issue of share capital 37,085 31,385 (Purchases) and sales of treasury stock, net (76,096) (112,613) Dividends paid to: - Equity holders of Essilor International (136,189) (128,393) - Minority shareholders of subsidiaries (2,922) (188) Repayments of borrowings other than finance lease liabilities (185,931) 177,782 Purchases of marketable securities (1,427) (1,359) Repayments of finance lease liabilities (2,521) (2,644) Other movements (536) 473 NET CASH USED IN FINANCING ACTIVITES (368,537) (35,557) NET(DECREASE)-INCREASE IN CASH AND CASH EQUIVALENTS (130,553) (188,785) Cash and cash equivalents at January 1 486,765 677,164 Effect of changes in exchange rates 7,690 (1,614) CASH AND CASH EQUIVALENTS AT DECEMBER 31 363,902 486,765 Cash and cash equivalents 385,548 505,571 Short-term bank loans and overdrafts (21,646) (18,806) Investor Relations and Financial Communications Veronique Gillet - Sebastien Leroy Phone: +33(0)1-49-77-42-16 http://www.essilor.com
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