2012 Results. February 28, 2013

Transcription

1 2012 Results February 28, 2013

2 Agenda Introduction Operational and Financial Performance Innovation Crizal Prevencia Strategy and Outlook 2012 Results 2

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4 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% (1) Local acquisitions or partnerships 2012 Results 4

5 2012: A Year of Market Share Gains Lenses Readers % % % % Volume market share Volume market share 2012 Results 5

6 2012: Step-up in Revenues from Fast-Growing Markets m (2) 18.3% (1) 664m 15.9% (1) (1) As a percentage of total Group revenue (2) Of which 828m for Lenses and Optical Instruments 2012 Results 6

7 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 2012 Results 7

8 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 2012 Results 8

9 Enhanced Ability to Execute and Deliver Members of Essilor s Executive Committee 2012 Results 9

10 Strategy Delivering Consistent and Visible Results Contribution from operations (1) Earnings per share Free cash flow (2) 894 In millions In In millions % % +14.7% (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 Results 10

11 Agenda Introduction Operational and Financial Performance Innovation Crizal Prevencia Strategy and Outlook 2012 Results 11

12 Revenue Up 19.1% to 4,989m In millions +4.6% +4.1% +2.4% % % ,989 4, % +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 2012 Results 12

13 2012 Revenue by Region and Division Reported revenue in millions % Change (like-for like and bolt-on acquisitions (1) combined) Lenses and Optical Instruments 4,445 3, % North America (2) 1,736 1, % Europe 1,559 1, % Asia-Oceania/Middle East/Africa % Latin America (2) % Fast-Growing Markets: +31.8% Developed Markets: +5.0% Equipment % Readers % TOTAL 4,989 4, % (1) Local acquisitions or partnerships (2) Mexico revenue ( 15.9m in 2011) has been reclassified from the North America region to the Latin America region 2012 Results 13

14 Q4 Revenue Up 10.5% at Constant Exchange Rates Like-for-like growth: +3.6% despite high Q 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.) (1) Local acquisitions or partnerships 2012 Results 14

15 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 (1) Local acquisitions or partnerships 2012 Results 15

16 Positive Contribution from All Regions 2012/ / /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 +4.6% o/w +3.8% like-for-like +3.5% o/w +1.4% like-for-like +3.0% o/w +2.6% like-for-like +2.2% o/w +1.9% like-for-like +2.3% o/w +0.4% 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 2012 Results 16

17 and All Business Segments 2012/ / /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 2012 Results 17

18 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 (1) Local acquisitions or partnerships 2012 Results 18

19 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 H 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 Results 19

20 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 2012 Results 20

21 Earnings per Share Up 14.7% In millions % Change Revenue 4,989 4, % Gross profit % of revenue 2, % 2, % +19.9% Contribution from operations (1) % % of revenue 17.9% 17.9% Operating profit % Profit of fully consolidated companies % Profit attributable to equity holders % % of revenue 11.7% 12.1% Earnings per share (in ) % (1) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment 2012 Results 21

22 Impact of PPA and Acquisition Costs on Profitability In millions 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% 2012 Results 22

23 Other Income and Other Expense In millions % Change Contribution from operations (1) % 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) Operating profit % (1) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment 2012 Results 23

24 Profit Attributable to Equity Holders Up 15.5% In millions % Change Contribution from operations (1) % Other income and other expense (62.4) (65.1) Operating profit % Financial result (18.0) (13.4) Income tax Effective tax rate (207.1) 25.5% (179.4) 26.8% Contribution from associates Transitions business with 3 rd parties Success of partnerships Minority interests (46.4) (12.6) Profit attributable to equity holders % % of revenue 11.7% 12.1% (1) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment 2012 Results 24

25 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 2012 before change in consolidation, bolt-on and strategic acquisitions Change in consolidation** Bolt-on acquisitions*** Strategic acquisitions**** 2012 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 2012 Results 25

26 Investing in New Capacity to Support Growth 9% Capital expenditure (net of disposals) As a percentage of revenue in millions 8% 7% 6% 5% % % 5.9% Digital Surfacing, Export Labs Innovation & Technology Centers Readers new Key Accounts 232 4% % 4.7% 3% 2% 3.5% 3.2% 1% 0% Results 26

27 Free Cash Flow Up 29% In millions 241 Capital expenditure 10 Change in WCR Operating cash flow (excl. change in WCR) Dividends Net financial investments 112 Share buybacks 48 Change in consolidation Capital increase Misc Reported change in net debt 2012 Results 27

28 Strong Financial Position In millions Equity Net Debt 3,458 3,921 1,892 2,168 2,366 2,735 3,044 (210) (260) 112 (93) * * Adjusted for acquisition-related costs in accordance with IFRS 3R 2012 Results 28

29 Dividend Per Share: 0.88* Total payout (in millions) Dividend per share (in ) * * * Submitted to shareholder approval at the May 16, 2013 Annual Meeting 2012 Results 29

30 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 2012 Results 30

31 Essilor Bolstered by Strong Financial Performance in 2012 Revenue +19.1% Gross margin 55.8% of revenue +40 bp Contribution margin (1) 17.9% of revenue including strategic acquisitions Working Capital Requirement from 23% to 20% 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 2012 Results 31

32 Agenda Introduction Operational and Financial Performance Innovation Crizal Prevencia Strategy and Outlook 2012 Results 32

33 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 2012 Results 33

34 Many New Fields of Research Personalization Ageing Health 2012 Results 34

35 And Highly Promising Innovation Curves Visual Acuity Where we currently stand Digital surfacing New surface function Plastic lenses First Varilux progressive lenses Comfort of Use Where we currently stand First Optifog lenses First Xperio lenses First Transitions photochromic lenses First Crizal antireflective coatings 2012 Results 35

36 And Highly Promising Innovation Curves Visual Acuity Prevention/Protection Where we currently stand Digital surfacing New surface function Plastic lenses First Varilux progressive lenses??? Where we currently stand First Crizal UV lenses Comfort of Use Therapeutic Lenses Where we currently stand First Optifog lenses First Xperio lenses First Transitions photochromic lenses First Crizal antireflective coatings 2012 Results 36 Where we currently stand First Myopilux lenses

37 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 Results 37

38 And Still Many Challenges to Meet Amplified zone of phototoxicity Transmittance at retinal level Retinal photosensitizer absorption λ (nm) NON-VISIBLE VISIBLE UV light? 2012 Results 38

39 Agenda Introduction Operational and Financial Performance Innovation Crizal Prevencia Strategy and Outlook 2012 Results 39

40 40 TM

41 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 2012 Results 41

42 People Can Now Live 100 Years, BUT Eyes Start to Lose Natural Performance at Age Results 42

43 A Growing Health Issue Cataract AMD In millions of people 2040 In millions of people 2040 >500 > 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 2012 Results 43

44 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 2012 Results 44

45 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 Results 45

46 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 2012 Results 46

47 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 2012 Results 47

48 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 2012 Results 48

49 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 2012 Results 49

50 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 Kids<10 and Adults>45 based on age-related light risks 2012 Results 50

51 Market Size & Pricing Strategy Market Size 1.3 billion people worldwide in 2013 Population stable over time Kids <10 years old 1.9 billion people worldwide in 2013 Up to 3.7 billion people in 2050 Adults >45 years old Pricing Strategy Better eye health protection justifies a price premium versus Crizal Forte UV 2012 Results 51

52 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/Q Latin America: Sept Results 52

53 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

54 Crizal Prevencia : A New Step Forward in Eye Protection 2012 Results 54

55 2012 Results 55

56 Agenda Introduction Operational and Financial Performance Innovation Crizal Prevencia Strategy and Outlook 2012 Results 56

57 Poor Vision: A Global Handicap Throughout the World Solutions Exist for All Conditions billion billion Number of people requiring vision correction in the world Source: Essilor estimate 2012 Results 57

58 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 2012 Results 58

59 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 In millions of people 2, 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% Source: Worldbank 2012 Results 59

60 Need for Vision Correction is Increasing Myopia Presbyopia In billions of people 2030 In billions of people %* %* %* %* * 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 2012 Results 60

61 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, , ,4 Indonesia Egypt 0.2 0,2 0,0 Brazil China Russia Mexico Philippines Hungary India 0 10, , , , , , 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 > 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 Results 61

62 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% % 100% 60% 2% 13% 26% 31% 13% 24% 37% 60% 2% 4% 6% 14% 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 2012 Results 62

63 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 2012 Results 63

64 A Further 1.4 Billion People Will Correct their Vision by billion Corrected CAGR: +3.4% billion Corrected Source: Essilor estimate But 2.9 billion will remain uncorrected in Results 64

65 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 2012 Results 65

66 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 Retail 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 2012 Results 66

67 Robust Momentum in Fast-Growing Markets Which Are Less Sensitive to Economic Conditions Expected market growth in value (CAGR , in %) 9 MPc Size proportional to market size in volume 2012 Russia India China China: the largest presbyope market in the world Middle-Class* In millions of people Presbyopes** In millions of people 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 ,2 0, 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 2012 Results 67

68 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 2012 Results 68

69 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 2012 Results 69

70 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 2012 Results 70

71 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 2012 Results 71

72 Key Areas of Focus for 2013 Talent Pool Innovation Market consolidation Operational Gains Improving Worldwide Vision Fast-Growing Markets Supply chain Developed Markets 2012 Results 72

73 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 2012 Results 73

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77 Gaining Share through Market Consolidation Innovation Market Consolidation Fast-Growing Markets Developed Markets 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 2012 Results 77

78 Accelerating Development in Fast-Growing Markets Innovation Market Consolidation Fast-Growing Markets Developed 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 2012 Results 78

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83 Leveraging our Strengths in Developed Markets Innovation Market Consolidation Fast-Growing Markets Developed Markets Multinetworks Brands Integrated Business Solutions Significant media spend in 2013 on major brands Pricing and sales force efficiencies 2012 Results 83

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87 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: 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 2012 Results 87

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89 Operational Gains to Continue Financing Growth Supply Chain Operational Gains Talent Pool Improving Vision Worldwide Reducing cost of goods Improving capacity Productivity gains 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 2012 Results 89

90 Strengthening our Talent Pool to Support Growth Supply Chain Operational Gains Talent Pool Improving Vision Worldwide 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 2012 Results 90

91 53,000 People and a Unique Entrepreneurial Model with a Simple Mission Supply Chain Operational Gains Talent Pool Improving Vision Worldwide Improving the Vision of 4.2 Billion People 2012 Results 91

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93 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 (1) Local acquisitions or partnerships (2) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment 2012 Results 93