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Resilient First Half
- Revenue growth of 9.1% and 6.9% in constant currency
- Improving momentum in North America, good performance in Europe
- Fast-Growing Markets impacted by a decline in Brazil
- Mixed performance in Sunglasses & Readers division
- Healthy Free Cash Flow3 generation
The Board of Directors of Essilor International met yesterday to approve the financial statements for the six months ended June 30, 2017. The auditors have performed a limited review of the consolidated financial statements.
Commenting on these results, Hubert Sagnières, Chairman and Chief Executive Officer of Essilor, said: "The first half of the year marks another step forward in our mission to eradicate poor vision around the globe. Worldwide demand for better vision continues to grow and the strength of our business model, based on innovation, acquisitions and partnerships was demonstrated through continued progression in our results. The vast unmet need for vision correction and protection translate to exciting mid to long term opportunities, despite a more challenging near term market environment linked to the announcement of Essilor’s pending combination with Luxottica. We are in progress to finalize the agreement and are more confident and enthusiastic than ever about the opportunities ahead as we build the foundation for future growth.”
First-half operating highlights
Consolidated revenue amounted to €3,909 million in the first six months of 2017, an increase of 6.9% at constant exchange rates and 2.5% in like-for-like1 terms. In line with previously announced expectations, adjusted4 contribution from operations2 amounted to 18.4% of revenue. Adjusted4 earnings per share grew by 2.7%. Free cash flow3 advanced 34% as reported and 13% excluding exceptional charges.
Performance for the first half was characterized by:
- Revenue growth in the Lenses & Optical Instruments division of 5.8% in constant currency, of which 2.7% like-for-like1 growth, including:
Gains in North America where like-for-like sales growth accelerated from 2.3% in Q1 to 3.1% in Q2;
Resilient performance in Europe supported by the recent Eye Protect System™ and Varilux® X series™ launches;
An expansion of sales in fast growing markets dampened by a decline in Brazil;
A 14% increase in online sales;
- A decrease in like-for-like1 sales for the Sunglasses & Readers division (-1.5%) alongside a 16.7% contribution from the perimeter effect mainly linked to the consolidation of Photosynthesis Group in China;
- A strong dynamic in the Equipment division;
- A more challenging market environment following the announcement of the proposed combination with Luxottica.
For the rest of the year, Essilor expects sales growth to be driven by the deployment of innovation along with continuous development across its businesses. Nevertheless, in light of first-half dynamics, the Company now anticipates full-year revenue growth of between 6% and 7% in constant currency terms including around 3% on a like-for-like1 basis. The adjusted4 contribution from operations2 is expected to be close to 18.5% of revenue.
Combination of Essilor and Luxottica
Essilor and Delfin, the majority shareholder of Luxottica Group, announced on January 16, 2017 the signing of an agreement designed to create an integrated global player in the eyewear industry with the combination of Essilor and Luxottica. The transaction is subject to satisfaction of several conditions precedent. In March, the transaction obtained the favorable opinions of Essilor’s employee representative bodies. On April 12, the AMF (Autorité des Marché Financiers) decided to waive Delfin's obligation to file a mandatory tender offer for Essilor’s shares. On May 11, Essilor shareholders convened for a general meeting and holders of double voting rights convened for a special meeting, approved the combination. Lastly, to date, Essilor and Luxottica have jointly filed with the antitrust authorities in several jurisdictions. The two companies’ shared objective in cooperation with the relevant authorities is to close the antitrust process around the end of the year (please refer to the news release issued on July 24, 2017).
1. Like-for-like growth: Growth at constant scope and exchange rates. See definition provided in Note 2.3 to the consolidated financial statements of the 2016 Registration Document.
2. Contribution from operations: 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 purchases of property, plant and equipment and intangible assets, according to the IFRS consolidated cash flow statement.
4. Adjusted in 2017 for expenses accounted for in the financial statements as a result of the proposed combination with Luxottica.
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