China Field Trip for Analysts and Investors

Transcription

Building Momentum
in the World’s Largest
Ophthalmic Market
November 7, 2012
Today’s Focus
 Introduction
Hubert Sagnières, Chairman & CEO
Chinese Economy through 2020: The Golden Age for Consumers
He Yi, President, Essilor China Holding Company / Member of the Essilor Board of Directors
Essilor’s Ambition in China
Eric Bernard, President, China, HK & Taiwan / Member of the Essilor Executive Committee
Education: A Key Enabler of Sales Growth in China
Dr John Ang, VP Marketing & Customer Development, AMERA Region
Mastering the Complexity of China’s Retail Landscape
Louise Chen, VP Essilor Branded Network, China
China’s Position in Essilor’s Strategy
Patrick Cherrier, President, AMERA Region / Member of the Essilor Executive Committee
China Field Trip - November 2012
2
A Solid Strategy Serving Essilor’s Mission:
Improving Vision Worldwide
INNOVATE
DEVELOP
GROW
STIMULATE
Products and
Services
Top &
Mid-Range
Markets
Acquisitions &
Partnerships
Demand
for Vision
Improvement
Operational and management efficiency
Corporate social responsibility
3
Accelerating Innovation in Products and Services
Innovate
Develop
Grow
SP-200 Sputter-Coater
More than 220 new products launched in 2012
4
Stimulate
Building Growth and Value in Every Market Segment
Innovate
Develop
Grow
CONSUMER BRANDS
Stimulate
TRADE BRANDS
5
Creating Value Through a Strong Dual Acquisition Strategy
Innovate
Develop
Grow
Bolt-on Acquisitions
Strategic Acquisitions
 Partnerships with local leaders
Stimulate
 Asset acquisitions: technologies,
brands, product categories, etc.
6
Addressing the 2.5 Billion People Needing Correction
Innovate
Develop
Grow
Mature
countries
Awareness/
Willingness
120m
Stimulate
Plug-in
to existing network
$8/day
Business
to enterprise
Mobile POS
Urban
Rural
580m
$2/day
Social impact
810m
$1.25/day
Subsisters
950m
Governments
Enablers
7
ECP support
(optometry school)
Source: UN; Infomarché 2010; UNDP; Worldbank;
CIA World Factbook; World Resource Institute; BCG
analysis
Leveraging the Four Pillars in the Fast
Growing Markets to Reach our Ambition
2015
€1,500m
2011
€612m
Revenue in Fast Growing Markets, in € millions
8
A Dual, Robust Organization in Fast Growing Markets that...
Moscow
Shanghai
LATIN
AMERICA
Dubai
Bangalore
Singapore
Brazil
AMERA
Regional hubs
Headquarters
AMERA: Asia, Middle East, Russia, Africa
9
18%
... Delivers High Growth
Q3 2012
Growth at constant exchange rates
FAST-GROWING MARKETS
+25.6%
+22%


2009
2010
10
2011
249
... Makes it Possible to Capture Local Opportunities
Local acquisitions or partnerships completed since January 1st, 2011
Optik Mekk
Opak
L’N Optic
SIVO
Optiben
Incheon Optics
Seeworld
Ipek Optik
Magrabi
Optical
Enterprise
Ophthalmics
Movisia
Youli
Trend Optical
Opti Express
Optics India
VST Lab
GKB Hi-Tech
LATIN
AMERICA
Crystal y Plástico
JWL Phuket Lab
AAiJoke’s
Unilab
Optic Kenya
Evolution
Optical
Global Vision
Centralab
Comopticos
AMERA
Orgalent
Plants
Riachuelo
Repro
Optovision
Prescription Labs & Wholesalers
Equipments
Readers
Players: Prescription laboratories, manufacturers, wholesalers, etc.
CM Equipamentos
Ópticos de Precisão
Cientifica
11
... Makes it Possible to Capture Local Opportunities
Local acquisitions or partnerships completed since January 1st, 2011
750-1,000 players
Optik Mekk
Opak
L’N Optic
SIVO
Optiben
Incheon Optics
Seeworld
Ipek Optik
Magrabi
Optical
Enterprise
Ophthalmics
Movisia
Youli
Trend Optical
Opti Express
Optics India
VST Lab
GKB Hi-Tech
LATIN
AMERICA
Crystal y Plástico
JWL Phuket Lab
AAiJoke’s
Unilab
Optic Kenya
Evolution
Optical
Global Vision
Centralab
CM Equipamentos
Ópticos de Precisão
Cientifica
Comopticos
AMERA
Orgalent
Plants
Riachuelo
Repro
Optovision
Prescription Labs & Wholesalers
Equipments
Readers
450-600 players
Players: Prescription laboratories, manufacturers, wholesalers, etc.
12
China: A Key Market in our Growth Strategy
1,340 million inhabitants
870 million people (65%) require vision correction
330
540
million
million
Corrected
Not corrected
250 millions lenses
2% Progressive Lenses
The World’s Largest Ophthalmic Market in Volume
13
A Clear Strategy to Serve a Great Ambition
2020
€1,000m
2011
€84m
Revenue in China, in € millions
14
Today’s Focus
Introduction
Economy through 2020: The Golden Age for Consumers
 Chinese
He Yi, President, Essilor China Holding Company
Eric Bernard, President, China, HK & Taiwan
Patrick Cherrier, President, AMERA Region
15
Government’s Will to Reshape the Economic Landscape
Succeed in the 3rd
Industrial Revolution
 Invest in new industries
Pursue Rapid Urbanization
 More than 1 Chinese out of 2 lives in a
City
 Encourage R&D
 Develop services
 Creation of 45 million urban jobs by
2015
 Emancipate the private sector
 Urbanization rate set to increase by
+1% per year under XIIth Plan
16
The 12th Five-year Plan is Promoting
a New “Inclusive Growth” Paradigm…
1
 Great emphasis on social well-being
2
 Creation of health insurance and pension plans
3
 7% yearly increase in rural and urban income
17
…Very Favorable to Domestic Spending
CONSUMPTION DRIVERS
RISING INCOME
LOWER SAVINGS RATIO
CONSUMPTION UPGRADE
Economic Growth
Government
Expenditure
Level of Economic
Development
Development of
Service Industry
Income
Re-distribution
Urbanization
Rising Wages
Aging Population
Source: Morgan Stanley Research
18
…Mainly Benefiting the Urban Middle Class
Estimated Percentage of
Middle-Class Residents in
China’s Urban Population
City Tier
50%
52%
45%
37%
2009
2019
2023
City No.
Urban Population (m)
Tier I
4
45
Tier II
23
97
Tier III
260
190
Tier IV
367
113
Tier V
1,636
162
Total
2,290
607
2025
330 Cities Will Match
Shanghai’s Current Income Level by 2020
Source: 2011 Blue Book of Cities in China
19
A Collection of Provinces
with Varying Levels of Economic Development…
Heilongjiang
Jilin
Liaoning
Beijing
Inner Mongolia
Xinjiang
Tianjin
Hebei
Shandong
Shanxi
Ningxia
Jiangsu
Henan
Qinghai
Gansu
Shanghai
Anhui
Shaanxi
Zhejiang
Hubei
Chongqing
Tibet
Sichuan
Hunan
Guangdong
Guangxi
Hainan
20
Fujian
Taiwan
Guizhou
Yunnan
Jiangxi
…And Various Dynamics…
Jiangsu Province GDP to match
Russia’s current GDP by 2020
Heilongjiang
Jilin
Liaoning
Beijing
Inner Mongolia
Xinjiang
Tianjin
Hebei
Shandong
Shanxi
Ningxia
Russia
Henan
Qinghai
Gansu
Shanghai
Anhui
Shaanxi
Zhejiang
Hubei
Chongqing
Tibet
Sichuan
Hunan
Guangdong
Guangxi
Hainan
Source: HSBC
21
Fujian
Taiwan
Guizhou
Yunnan
Jiangxi
…Where Global Companies Need to Set Differentiated
Strategies to Capture Local Growth
Thailand
Projected China GDP in 2020 by Province:
A Union of Second-Tier Developed + Top-Tier Developing Countries
Malaysia
Netherlands
Argentina
South Africa
Israel
Colombia
Korea
Denmark
Canada
Kazakhstan
Sri Lanka
Russia
Turkey
Saudi
Arabia
Kenya
Poland
Indonesia
Belgium
Australia
Egypt
Zambia
Greece
Switzerland
Iran
Argentina
Singapore
Spain
Venezuela
Nigeria
Sudan
Above $1,000bn
Between $500bn-$1,000bn
Source: HSBC
22
Between $100bn-$500bn
Below $100bn
Our Operations Continuously Adapt to Local
Development
Total Employees In China: 7,200
Beijing
Nikon
Chemilens
Headquarters
Tianjin
Tianjing Hospital Partnership
Varilux School
Chengdu
Region Offices
Danyang
Plants
Henan
Local Prescription Labs
REAP
Best
Seeworld
Wanxin
ILT
Youli
Shanghai
Export Prescription Labs
Nikon
Logistic & Edging Centers
Jiangxi
ChemilensShanghai University Partnership
Chemilens
Service Centers
Guangdong
Partnerships with Universities & Hospitals
Essilor
JVs
Hong Kong
Partners
Readers
Equipements
23
Essilor China
Our Chinese Name: Our Ambition in China
Today’s Focus
Introduction
Ambition in China
 Essilor’s
25
Outline
Strong Market Potential
A Growth Strategy Addressing Every Segment
26
Lens Design
 98% Single Vision Lenses, 96% Stock Lenses
Lens Material
 85% Low Index
Lens Features
 95% Anti-Reflective Lenses, 98.6% Clear Lenses
Market
 75% Volume Low End
ECP
 90% Independent, 1 for Every 27,000 Inhabitants
27
Significant Untapped Potential…
Volumes
(in millions of pieces)
Value
(in RMB billions)
X 2.4
X5
15.0
536
226
2.9
2011
2020
2011
A market as big as the US in volume,
but still much smaller in value
28
2020
…with Volumes Growing by an Average of 10% per Annum…
In millions of lenses
488
Trade-in
New wearers
402
Renewals
332
276
226
44
2
180
2011
44
6
10
34
52
22
48
46
402
226
2013
276
2015
29
332
2017
2019
…thanks to Strong Demographic Trends…
People in need of vision correction
>50 yyears old
25-50 years old
0-24 years old
+ 24m p.a.
1,084
1 084
869
589
380
258
287
231
208
2011
2020
Every year, demographics adds the equivalent
of the French market to the number of potential wearers
Source: National Population Development Strategy Research Report; China Bureau of Statistics Year Book 2010; Essilor internal research
30
…and a Huge Reservoir of Uncorrected People
In millions of people
522
433
Population
1,335
105
380
49%
141
53%
153
84
330
90
100%
202
Age
0-24 years old
25-50 years old
No visual defect
540
296
264
>50 years old
Uncorrected
Corrected
31
465
Value is Being Driven by the Potential for Premium
Products…
Premium products as a % of market volume
Mainland China
Taiwan
50%
1.4%
11%
Photochromic
2%
11%
Progressive Lenses
15%
High Index
Under-penetration of premium products
leaves substantial room for value growth
32
Growing Needs in Big Segments like Children…
Rising prevalence of myopia in children
2008
78%
1998
58%
1963
56%
1957
36%
35%
15%
9%
5%
34%
24%
11%
Primary school
Middle school
16%
High school
Parents anxious to spend for children
increasingly affected by myopia
Source:
He et al., Prevalence of Myopia in Urban and Rural Children in Mainland China (2009)
Yang et al., Prevalence of Refractive Error in Erdos Plateau Region (2010)
Zhao et al., Refractive Error Study in Children: Results from the Shunyi district , China (2000)
33
…or 30-Somethings…
Generation W
-/+50
Survived hardship
Conservative
Spend for their child (housing)
Generation X
-/+40
Part of the transition
More open-minded
But heavy family burden:
housing and education
34
Generation Y
-/+ 30
Grew up in economic boom
Independent
Spend
for THEMSELVES
…Will Accelerate Growth of Value-Added Products
Est. Volume
CAGR 2011-2020
Est. Value
CAGR 2011-2020
+33%
+24%
+26%
+17%
+18%
+10%
Single Vision
Lenses
Progressive
Lenses
Single Vision
Lenses
Anti-Fatigue
Lenses
35
Progressive
Lenses
Anti-Fatigue
Lenses
Value is Also Being Driven by Market Forces…
Low-end renewers intend to pay 48% more
compared than for their first eyeglasses*
CAGR
High
>+25%
High
Mid High
~+20%
Mid High
Mid Low
>+15%
Mid Low
Low
~+5%
Low
2011
2020
*Source: « China Low Income Survey », The Nielsen Company, 2012
36
…Where Low-End Players Differentiate only with Brands
Source: Essilor internal research
37
Paving the Way for Market Consolidation
 A distorted pyramid…
 … served by atomized players
18
› 60/70 Casters with limited
direct access to ECPs
37
› Hundreds of brands
› ~90% Independent stores
170
226 million pieces per annum
38
Outline
Strong Market Potential
A Growth Strategy Addressing Every Segment
39
A Unique Strategy for Total Market Coverage
CITIES
Tier 1
Tier 3
Tier 2
Tier 4
Tier 5
High
Mid high
MARKET
Mid low
Low
Partnering with local leaders is key to building the pipeline
40
Innovation at Every Market Level
CITIES
Tier 1
Tier 3
Tier 2
Tier 4
Tier 5
High
Mid high
MARKET
Mid low
WHITE LABELS
Low
Upgrade from low index
Innovation creates value at each price point
41
Essilor Has a Comprehensive Education Strategy in China
CITIES
Tier 1
Tier 3
Tier 2
Tier 4
High
Mid high
MARKET
Mid low
Low
Education accelerates trade-up
42
Tier 5
Consumer Awareness Through In-store Visibility
CITIES
Tier 3
Tier 2
Tier 1
High
Corner
Tier 4
Experience
Center
Mid high
MARKET
Mid low
Low
Enhanced marketing helps create loyalty
43
Tier 5
Promoting Personalized Lens at Strategic Retail Locations
Essilor Experience Center at a Leading Domestic Chain, Baodao, Hangzhou
Partnering with Retailers to Reach High-end Consumers
Nikon Corner at LensCrafters, Shanghai
Increasing Brand Awareness Across the Country…
46
…Is Helping to Widen Our Market Lead
Basis #3: Estimates Sales = 100
600
[200]
[100]
Essilor Group
#2
#3
47
Strong Long Term Growth Coming from Organic Gains
and Acquisitions
2020
Revenue in € millions
€1,000m
2011
€84m
€1 billion in Revenue by 2020
48
Questions
& Answers
Today’s Focus
Introduction
A Key Enabler of Sales Growth in China
 Education:
50
ECPs are a Vital Conduit to Consumers…
Consumers
Eye Care
Professionals
ECPs are the key prescribers:
their number and expertise are crucial
51
… but in China, Their Skills Level is Still Low …
 Anyone with one
month training
can become an “optician”
 Essilor’s solution
to raise their capabilities:
The Essilor Academy
Essilor is involved in education to raise standards
52
… and their Number is Too Small
 Number of opticians
per 100,000 inhabitants
 Essilor’s solution
to train more opticians:
The Varilux Tianjin school
16
4
Europe
China
Essilor is involved in education
to expand distribution
53
Essilor has a Comprehensive Education Strategy in China
CITIES
Tier 1
Tier 3
Tier 2
Tier 4
High
Mid high
MARKET
Mid low
Low
Education accelerates trade-up
54
Tier 5
Essilor Academy: Raising the Skills of Existing ECPs
55
Teach ECPs to Respond to the Rising
Prevalence of Myopia in Chinese Children
Urban kids:
Urban:
60-70%
~50%
Total
Total
35 ~ 40%
~35%
2011
Prevalence
2020
Prevalence
Lifestyle changes
Parent misconceptions
 Near Work
 Homework / Video
 No Outdoor Activities
 Is wearing
glasses good?
More sales for ECPs, more sales for Essilor
56
Teach ECPs to Sell More Progressive Lenses
to the Growing Population of Presbyopes
 Only 2% of the 380m Chinese
presbyopes wear progressive
lenses …
 … but 60% would consider progressive
lenses if advised properly
Q : Why didn’t you buy progressive lenses?
Too expensive
24%
Never heard about
progressive lenses
22%
My optician
did not propose it to me
16%
Satisfied
with my current equipment
I don’t feel I need it
I need proof
for this new technology
15%
11%
9%
More sales for ECPs, more sales for Essilor
57
A Varied Range of Short ECP Courses,
Tailored to Different Levels
TRAINING
Management
Coaching
Selling
Skills
Product
Technical
Owners
& Corporate
Managers
Store Managers
ECP
Opticians
Sales Staff
Fitters
3 AMERA
training
directors
4 local training managers, 16 Varilux consultants
58
58
Tianjin Varilux Ranks in the Top 3
of the 20 Optometry Schools in China
A joint-venture between Essilor and Tianjin Eye Hospital
Strong increase in student numbers
960
1150
Training levels
Advanced Technician
1300
10%
Technician
700
15%
500
300
20%
100
55%
Junior
& Intermediate
Advanced
2005
2006
2007
2008
2009
2010
2011
59
59
A Well Structured and Targeted Curriculum
ADVANCED
TECHNICIAN
TECHNICIAN (10 years + experience)
15-Day Course
15-Day Course
ADVANCED
(standard optometry
experience)
21-Day Course
INTERMEDIATE
(basic sales
experience)
30-Day Course
8 dedicated trainers
Graduates get free access to higher level
if they sell 15 pairs of Varilux in a year
60
JUNIOR
(no experience)
30-Day Course
Leading Training for the Mid-level Segment
End
Customer
Training
West Point Style
Training
Province
Level
Training
TTT Training
Professional
Skill Training
Internal
Training
3 training managers, 15 Wanxin consultants
61
61
Aggressive Plan for Essilor’s Education Effort in China
# of Trainers
# of Training Days
2500
35
30
23
25
25
27
29
2,000
2000
19
20
1500
15
1,700
2,150
1,850
1,400
1000
10
500
5
0
0
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
# of Participants
80000
70000
58,680
60000
50000
63,500
68,000
73,000
 Providing business,
technical and selling
training to ECPs
44,200
40000
 Increase training days
and staff support
year on year
30000
20000
10000
0
2012
2013
2014
2015
2016
62
62
Our Goal:
Be the #1 Provider of Vision Care Education in China
Essilor
Education
Essilor
Education
Business
Growth
63
Business
Growth
Today’s Focus
Introduction
the Complexity of China’s Retail Landscape
 Mastering
64
China’s Retail Landscape is Very Fragmented…
Chains
International chain
Hospitals
Hospital
Other chains
Independents
Independent
11% of Stores
50,000
stores
89%
No. of stores
15% of Volume
226 m
pieces
86%
Vol.
Volume
52% of Revenue
48%
Lens
lens retail
~ 90% of stores are independent
Source
: Essilor
research 2012
China
Field internal
Trip - November
65
RMB 18bn
…Very Atomized Geographically…
Tier 1 city
# of Chains & Hospitals
# of Independent Stores
Tier 2 city
Tier 3 city
Tier 4 city
Tier 5 county
Tier 6 township
Village
Low penetration of chains and hospitals in all tiers
Source
: Essilor
internal
research
China Field
Trip
- November
2012
66
…with Mixed Levels of Marketing Sophistication…
High-end store
PROFILE:
International chains,
flagship stores of other chains
Mid-range store
PROFILE:
Mainstream stores of other chains
67
Low-end store
PROFILE:
Independent stores
…and Subject to Ongoing Consolidation
Hospitals
High
Consolidation
Aier
International
chains
Expansion
by acquisitions
LensCrafters,
HAL
Other
chains
Independents
Consolidation
American Eye
Mid-high
Consolidation
franchise
Mid-low
Trade up
to mid-market
Low
68
Essilor Present at All Levels
with an Elaborate Multi-channel Strategy
Hospitals
High
Mid-high
Group strategy
• Children
• Leverage
hospitals for
B2B & B2C
education
• R&D: clinical
studies
International
chains
Group strategy
• New product
categories
• Campaigns
& alliances
Mid-low
INFLUENCE
Low
69
Other
chains
Group strategy
• Tailored
solutions
• Becoming
partner of
choice
Independents
Group
strategy
• Partner with
distributors
• Geographic
coverage
• Help to trade
up
Hospitals: a Robust Channel for Essilor…
Value of Hospital sales
(base 100 in 2010)
 Preferred channel for children
due to strong medical
credibility
 Hospitals prefer partners like
Essilor with strong R&D and
high professionalism
153
124
100
2010
70
2011
2012
…and a Trusted Partner for Education & R&D
 Tianjin Varilux: Opticians vocational training
 Aier-Essilor: Over 7,000 people screened in 7
cities in 2011
 Tongren-Essilor: Joint promotion of eyecare
in children’s day-to-day activities
 Tianjin Eye Hospital: Wearers tests based on
clinical results from myopia vision tests
71
International Chains:
Strategic Alliances to Develop New Product Categories
Anti-fatigue campaign with Baodao
72
Domestic Chains:
Tailored Solutions to Become their Partner of Choice
Edging services
 ECPs outsource
their edging to Essilor
- Recent ECPs:
Guangzhou Dongfang
Shenzhen Asia
Retail solutions
 Essilor experience
center to upgrade
shop image
- Recent ECPs:
Jilin Wangpeng
Xi’an Xibeihang
73
Coaching
 Management
coaching for shop
owner
- Recent ECPs:
Kunming Tianming
Independents: Partner with Distributors to Expand
Geographic Coverage
 Essilor lenses distributed to over 4,000 smaller accounts across China
HLJ
MG
XJ
JL
LN
HEB
GS
NX
TJ
SX
QH
HEN
TB
BJ
SD
SNX
JS
HUB
SH
SC
AH
ZJ
HUN
JX
GZ
YN
FJ
GX
GD
HN
74
SOLID
RESULTS
VISIBLE
MOMENTUM
75
BRIGHT
FUTURE
Today’s Focus
Introduction
Position in Essilor’s Strategy
 China’s
76
China’s Global Strengths Apply to the Ophthalmic Industry
CHINA’s PRODUCTION
IN THE WORLD
INDUSTRY
CHINA’s PRODUCTION
IN THE GLOBAL
EYEWEAR INDUSTRY
- 60% of worldwide
Prescription Lenses
production
- 40% of worldwide
Dishwashers production
- 70% of worldwide Plano
Sunglasses production
- 50% of worldwide Shoes
production
- 80% of worldwide
Readers production
- 66% of worldwide
Cell phones production
25% of Essilor global
Lenses production
77
Most of Essilor Assets Can be Leveraged
In and From China
Ophtalmic lenses
Equipment
Readers and Sun
Research partnerships
78
Leveraging our Chinese Partners to Support
Mid-Segment Growth in other Fast Growing Markets
RUSSIA
MIDDLE
EAST
AFRICA
ASIA
LATIN
AMERICA
Ophthalmic lens
Readers / Sun
Equipment
79
79
Fast Growing Markets, a Key Growth
Engine For the Group
2015
€1,500m
2011
€612m
Revenue in Fast Growing Markets, in € millions
80
Questions
& Answers
Thank you

China Field Trip for Analysts and Investors

Transcription

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