2017 Results. March 1 st, 2018

Transcription

1 2017 Results March 1 st, 2018

2 1. Introduction Hubert Sagnières Chairman and Chief Executive Officer 2017 Results 2

3 Results Laurent Vacherot President and Chief Operating Officer 2017 Results 3

4 2017 Key Highlights Good sales performance despite challenging optical market conditions Solid growth in the Lens & Equipment businesses Strong online sales Acceleration in the US in H2 Investments in China and e-commerce Full benefit of the French tax refund reinvested in fueling our Mission initiatives Record Free Cash Flow (1) generation supported de-leveraging Key steps toward the proposed combination with Luxottica (1) Free Cash Flow = Net cash from operating activities less change in WCR and capital expenditure. See slide Results Results 4

5 2017 Key Figures 2016 Growth 2017 Revenue 7,115m +5.3% 7,490m Adjusted Contribution from operations (1)(2) As a percentage of revenue 1,321m 18.6% +3.5% 1,367m 18.3% Adjusted Earnings per share (2) +1.6% Adjusted Free Cash Flow (3) +4.0% 963m 1,002m Dividend per share (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) The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the proposed combination with Luxottica and, on the other hand, to the positive effects of tax changes in the United States and France results are not adjusted. (3) Net cash from operating activities less change in WCR and capital expenditure. Adjusted for non-recurring items related to the German competition authority (BKA) in 2016 and to 2017 items including costs linked to the proposed transaction with Luxottica along with the settlement of litigation.. (4) To be submitted for shareholder approval at the April 24, 2018 Annual General Meeting Results Results 5

6 2017 Revenue Up 6.7% Excluding the Currency Effect millions 254 (103) -1.4% % +3.1% 7,490 7, % +5.3% (1) Local acquisitions or partnerships Revenue Like-for-like growth Bolt-on acquisitions (1) Currency effect 2017 Revenue 2017 Results Results 6

7 2017 Revenue by Division Reported revenue in millions Like-for-like Change At constant exchange rates Reported Lenses & Optical Instruments 6,498 6, % +5.8% +4.5% Sunglasses & Readers % +15.0% +12.0% Equipment % +7.8% +6.4% TOTAL 7,490 7, % +6.7% +5.3% Fast-Growing Countries (1) 1,825 1, % +12.0% +11.2% Developed Countries 5,665 5, % +5.1% +3.5% Lenses: solid momentum driven by new products and e- commerce Continued build-up in Sunglasses & Readers Equipment and Instruments performed well Fast-Growing Markets (1) : 24% of total sales (1) Fast-growing countries include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America. All divisions combined Results Results 7

8 H Like-for-like Revenue Growth: +3.8% Lik e-for-lik e revenue growth 2017 H H Lenses & Optical Instruments +3.4% +2.7% +4.1% North America +4.1% +2.7% +5.5% Europe +2.4% +2.1% +2.7% Asia/Pacific/Middle East/Africa +5.1% +5.0% +5.2% Latin America -0.9% -1.5% -0.4% Sunglasses & Readers +0.1% -1.5% +1.9% Equipment +5.8% +11.7% +1.2% TOTAL +3.1% +2.5% +3.8% Sharp acceleration in the US Robust performance in China Strong online sales FGX, Costa and MJS driving improvement in Sunglasses & Readers 2017 Results Results 8

9 9 Acquisitions Representing ~ 87m in Full-Year Revenue Europe 2 CFE Optique 2 new countries: Ethiopia, Guatemala Optitrade Logistics Center Sun Optical Technologies Mangalsons Topcon Visioncare Japan Asia/Pacific/ Middle East/Africa 3 Vision Associates Opticas Exclusivas North America 2 Partners In Vision Latin America 2 Visolab 2017 Results Results 9

10 Reconciliation of Adjusted to Reported Accounts millions 2017 Adjusted Items adjusted 2017 Reported 2016 Reported Revenue 7,490 7,490 7,115 Contribution from operations (1) 1,367 (6) 1,361 1,321 Other income (expense) (119) (168) (287) (91) Operating profit 1,248 (174) 1,074 1,230 Income tax (262) 131 (132) (285) Net profit 922 (44) Net profit attributable to equity holders of Essilor International 833 (44) Earnings per share There are two main types of adjustment items. First, expenses associated with the proposed combination with Luxottica, and, second, the positive effects of tax changes in the United States and France. These non-recurring adjustments include: Transaction costs related to the proposed combination with Luxottica for 109 million; An additional cost of 45 million principally linked to the lifting of performance conditions on two employee shareholding plans A one-time contribution for 19 million to mission-related activities focused on eradicating poor vision worldwide; An exceptional gain from the refund of the 3% dividend tax in France, net of the additional tax, for 19 million; A one-time gain linked to tax reform passed in the United States in December 2017 for 73 million. (1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses) Results Results 10

11 Adjusted Contribution from Operations (1) (2) up 3.5% Adjusted (2) Reported millions Change Revenue 7,490 7, % Gross profit 4,346 4, % % of revenue A 58.0% 58.8% Operating expenses (2,979) (2,860) +4.2% % of revenue B 39.8% 40.2% Contribution from operations (1) 1,367 1, % % of revenue 18.3% 18.6% A B E-commerce Transitions sales to other lens casters Opex management (1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses). (2) The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the proposed combination with Luxottica and, on the other hand, to the positive effects of tax changes in the United States and France Results Results 11

12 (1) (2) Adjusted Contribution from Operations at 18.3% of Revenue Contribution from operations as a percentage of revenue +0.3% -0.4% 18.6% Operational efficiencies New products: Varilux X series, Eyezen E-commerce improvement in developed countries Transitions sales to other lens casters Brazil and India Strengthening the organization in China and e-commerce activities 18.5% -0.2% 18.3% 2016 Reported Operating Leverage Other 2017 Adjusted (2) before acquisitions Acquisitions 2017 Adjusted (2) (1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses). (2) The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the planned combination with Luxottica and, on the other hand, to the positive effects of tax changes in the United States and France. The reported accounts and a reconciliation of the reported accounts to the adjusted accounts are provided in appendices Results Results 12

13 Adjusted Net Profit (2) Up 4.8% millions Adjusted (2) Reported Change Revenue 7,490 7, % Contribution from operations (1) 1,367 1, % Other income (expenses), net (119) (91) - Operating profit 1,248 1, % Financial income (expense), net (64) (66) - Income tax (262) (285) - A A Share based payments Litigations provisions Transformation costs Effective tax rate 22.1% 24.5% - Net profit % Minority interests (89) (67) - Profit attributable to equity holders % Earnings per share (in ) % B C Photosynthesis Group Partners performances (1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses). (2) The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the proposed combination with Luxottica and, on the other hand, to the positive effects of tax changes in the United States and France. B C Advanced Pricing Agreement 2017 Results Results 13

14 Capital Expenditure: Deploying Advanced Technologies to Support Long-term Growth 7% 6% 285 5% % 321 4% 4.6% 4.7% % New photochromic lens manufacturing lines 3% 4.0% 3.8% 3.8% Modernization of regional laboratories 2% XX = Capital expenditure in million (net of disposals) Capital expenditure as a percentage of revenue 2017 Results Results 14

15 Adjusted (3) Free Cash Flow > 1bn millions 58 Change in WCR Fast De-leveraging 308 Capital expenditure Net debt in millions 2,089 2,062 Operating cash flow (excl. change in WCR) 1, Dividends 1,793 1, Net financial investments Capital increase Reported change in net debt Foreign exchange and others (2) (1) Free cash flow = Net cash from operating activities less change in WCR and capital expenditure / (2) Including 96m of foreign exchange impact. / (3) Adjusted for non-recurring items related to the German competition authority (BKA) in 2016 and to 2017 items including costs linked to the proposed combination with Luxottica along with the settlement of litigation Results Results 15

16 Proposed Dividend (a) per Share (a) To be submitted for shareholder approval at the April 24, 2018 Annual General Meeting. Payout (in million) Dividend per share (in ) 2017 Results Results 16

17 3. Essilor in 2018 Paul du Saillant Chief Operating Officer Laurent Vacherot President and Chief Operating Officer 2017 Results 17

18 Successful New Product Launches in 2017 Innovation USA FGM Online China Myopia North America Europe H2 H1 0 H2 H2 Style Colours collection H1 Latin America Asia/Pacific H1 H Results 3. Essilor in

19 Delivering Promising Results Innovation USA FGM Online China Myopia Above sales target ~70% of Varilux series volumes Trade up Already 20% of Crizal volumes in the USA Clear brand growth driver Eyezen volume doubled in 2017 Broadened product range Eye Protect System, the fastest growth in the blue filter lens category Volume tripled in Results 3. Essilor in

20 Ongoing Benefits of Innovations in 2018 Innovation North America NEW IN 2018 Style Colours collection USA FGM Online China Myopia NEW IN 2018 Europe ONGOING BENEFIT ONGOING BENEFIT Latin America Asia Pacific NEW IN 2018 NEW IN Results 3. Essilor in

21 The Ultimate Lens Package Driving Strong Momentum in the US Innovation USA FGM Online China Myopia The Best in Vision, Clarity, and Protection in a Single Lens Single Vision Lens Wearers [c.100 million people in the US] Progressive Lens Wearers [c.52 million people in the US] Varilux, Crizal and Transitions growing high single digit in Q Source: Essilor estimates 2017 Results 3. Essilor in

22 Continuing Strong Key Account Partnerships Innovation USA FGM Online China Myopia Category development Supply chain offering New partnerships formed Faster growing retail groups Interest from new players 2017 Results 3. Essilor in

23 Fast-Growing Markets (1) Will Continue to Drive Growth Innovation USA FGM Online China Myopia Africa-Middle East Asia-Pacific Latin America NEW Ethiopia >100m inhabitants Partnership with market leader Joint approach by business and mission Indonesia 260m inhabitants Expansion to 35 cities Mid-tier acceleration 1,500 Mitra Mata by end 2018 Vietnam 100m inhabitants New prescription laboratory >100 accounts trained in Vision Ambassadors NEW Guatemala Acquisition of an integrated prescription laboratory with ~50 optical stores 2017 revenue growth > 15% (like-for-like and bolt-on acquisitions combined, including Lenses and Optical Instruments, Equipment and Sunglasses & Readers) 2017 revenue growth < 15% (like-for-like and bolt-on acquisitions combined, including Lenses and Optical Instruments, Equipment and Sunglasses & Readers) (1) Fast-growing markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America 2017 Results 3. Essilor in

24 E-Commerce Ready to Sustain High Growth Innovation USA FGM Online China Myopia En Route to 500m Revenue Stronger Foundation for Future Growth 325m (1) +47% vs. prior year (2) RoW 440m (1) +39% vs. prior year (2) +15% like-for-like growth Key 2017 achievements: Global organization fully established Strong growth from mature markets Increased our presence in FGM Strategic giving programs North America Europe (1) Including Sunglasses & Readers online sales (2) At constant exchange rates Key areas of focus for 2018 onwards Accelerate in the eyeglass segment Develop platforms for key Sun brands Increased focus on proprietary contact lens brands Leveraging digital properties 2017 Results 3. Essilor in

25 Delivering 30% Revenue Growth in China in 2017 Innovation USA FGM Online China Myopia Retail and Online Double digit growth MJS/Aojo deployment Growing presence on leading platforms New retail Over 1,200 stores Sunwear Bolon streamlined supply chain, strong brand equity International deployment Mujosh brand 2018 Revenue > 500m Lens Business Double digit growth Eyezen Kodak /Partners Creasky Quality Wholesalers 2017 China Revenue Breakdown 2017 Results 3. Essilor in

26 A New Consumer-Driven Organization Innovation USA FGM Online China Myopia LENSES AFFORDABLE SUNWEAR & FASHION MYOPIA SOLUTIONS INCLUSIVE SOLUTIONS KEY ACCOUNT ORGANIZATION ONLINE ORGANIZATION MONOBRAND RETAIL Myopia Management Kids & Teens Distribution of specialized products 2.5 New Vision Generation Essilor Vision Foundation Last mile distribution 5.8bn WHOLESALE 800 million consumers in need of vision care; 4 people out of 10 are myopic Unique leadership and management team 2017 Results 3. Essilor in

27 Innovate in the Myopia Segment: A 5 Bn Wearer Opportunity Innovation USA FGM Online China Myopia A Growing Pandemic Key Consumer Challenges 2017 CAGR 2030 CAGR 2050 Poor aesthetics and physical comfort Billion people (1) 3.2% % 5.0 Growing prevalence of myopia in children (2) Risk of eye disease in high myopes (3) 1.8 A Dedicated Organization Integrated approach including science, awareness, solutions and distribution Global team reporting to COO Dedicated business unit in China (1) Source: Essilor estimates, Brien Holden Vision Institute (2) Morgan IG1, Ohno-Matsui K, Saw SM. Myopia. Lancet. 5 May 2012 (3) Verkicharla, Ohno-Matsui, Saw. Current and predicted demographics of high myopia and an update of its associated pathological changes, Ophtalmologic & Physiological Optics Results 3. Essilor in

28 Further Progress towards our Core Ambition: Eradicating Poor Vision Within One Generation 12 in billions of people # Uncorrected in billion of people $5 to improve the sight of one person* Collective impact $500M/ yr to eradicate poor vision in 30+ years No need for vision correction Corrected Uncorrected If we do nothing Impact with $500M/yr (*) Low-income populations and people living below the international poverty line 2017 Results 3. Essilor in

29 Accelerating in 2018 Awareness Inclusive Business Strategic Giving More than 5,700 primary vision care providers trained in ten countries at the end of 2017 New countries: Bangladesh, Liberia, Indonesia Private Public Partnerships Product Innovation Essilor Social Impact Fund More than 3,000 Essilor employees volunteered globally 19 million new contribution 2017 Results 3. Essilor in

30 Essilor in 2018 at a Glance Lenses business Deployment of robust innovation pipeline Strong potential in the US and China Improvement in Brazil and India E-commerce Sustained momentum in developed countries Continue to invest in fast-growing markets Sunglasses & Readers Xiamen Yarui Optical (Bolon ) expected to be back to growth Expansion of MJS and Aojo footprint Group-wide Targeting acceleration from acquisitions & partnerships in H2 Tax rate similar to 2017 level Continued deleveraging 2017 Results 3. Essilor in

31 Outlook for 2018 Like-for-like Revenue Growth Around 4% Contribution from operations (1) as a percentage of revenue 18.3% (2) Finalization of the Essilor and Luxottica proposed combination planned for the first part of 2018 (1) Contribution from operations = Revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses). (2) Excluding any new strategic acquisition(s) Results 3. Essilor in

32 Questions & Answers

33 4. Appendices 2017 Results 33

34 Reported P&L Statement millions Change Revenue 7,490 7, % Gross profit 4,346 4, % % of revenue 58.0% 58.8% Contribution from operations (1) 1,361 1, % % of revenue 18.2% 18.6% Operating profit 1,074 1, % Net profit % Net profit attributable to equity holders of Essilor International % % of revenue 10.5% 11.4% Earnings per share (in ) % (1) Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses) Results 4. Appendices 34