Growing in a Bigger Playing Field
Transcription
Growing in a Bigger Playing Field
Growing in a Bigger Playing Field Investor Day – June 25, 2014 – London The Optical Industry in 2014 €68bn in retail value 4.3bn people in need of 1.8bn people wearing vision correction / +2% CAGR eyeglasses / +3% CAGR 1.6bn myopes 2bn presbyopes +3% CAGR +2.5% CAGR Investor Day - June 25, 2014 1 The Lens Industry is still Fragmented… Breakdown of local spectacle lens leaders Number of players across the value chain Prescription lenses Manufacturers 150 to 200 Essilor Small operators Readers Non-prescription sunglasses 250 to 350 Manufacturers 150-200 1,500 to 2,000 Distributors & Laboratories 400-600 500-600 Local operators 400-500 Retail 400,000 200-300 Eye Care Professionals 1.2 billion prescription lenses 220 million pairs of readers 550 million pairs of nonprescription sunglasses Source: Essilor estimates Investor Day - June 25, 2014 2 Value-Added Lens Categories are Underpenetrated Penetration of total worldwide lens industry in volume, % Progressive lenses Antireflective lenses 48% 14% 15% 2007 2013 Photochromic lenses 9% 10% 2007 2013 2007 57% 2013 Prescription sun lenses 6.9% 2007 Thin lenses 7.2% 2013 12% 15% 2007 2013 Polarized lenses 1% 2007 2% 2013 Source: Essilor estimates Investor Day - June 25, 2014 3 Lens Spending per Capita is Low, Particularly in Fast-Growing Markets 55 50 45 40 Finland 35 U.K. 30 Lens Spending/ Capita (€) Italy 20 Portugal Belgium H.K. Austria Spain 15 Brazil 10 -5 Australia Canada 25 5 India 0 0 -5 U.S.A Korea New Zealand Denmark Singapore Japan China Russia 5 10 15 20 25 30 35 40 45 50 -10 GDP/Capita (k€) Source: Essilor estimates, World Bank , 2012 figures Bubble size in proportion to lens market volumes Investor Day - June 25, 2014 4 Essilor is a Pure Player, Fully Dedicated to “Improving Vision” Vision solutions Awareness Poor vision is the world’s leading handicap Yet a full range of solutions exists Investor Day - June 25, 2014 5 Essilor is a Key Player, but Only in Small Parts of a Large and Growing Optical Industry Prescription lenses Readers & Sun < €11.0 bn €7.5 bn Contact lenses Worldwide manufacturers Worldwide distributors & laboratories +3-4% North America Europe +6-7% Fast-growing markets Rest of world Retail €3.0 bn Online sales +14% €68.0 bn Essilor market shares Investor Day - June 25, 2014 6 A Bigger Playing Field, Entirely in Optics Eye Care Professionals Geography Strategy One Mission “Improve Lives by Improving Sight” Consumers Technology Healthcare Investor Day - June 25, 2014 7 An Extended Playing Field Leveraging the Full Width of Essilor Capabilities 2008-2013 2013-2018 PRESCRIPTION LENSES PRESCRIPTION LENSES SUNGLASSES ONLINE Manufacturers, Distributors & Laboratories €12.7 bn €8.5 bn €5.8 bn +3-4% +6-7% +14% FAST GROWING MARKETS +c.10-12% Developed Markets +c.1-2% <€11.0 bn +3-4% €27.0 bn +6-7% Investor Day - June 25, 2014 8 Technology is Further Expanding our Playing Field Online Technologies Design & Surfacing Technologies Thin Layer Technologies Coatings Filters Protection Polarization Premium: personalization Sun prescription Essilor strong both in branded products and in private labels Digital surfacing has increased value pool accessible to Essilor Investor Day - June 25, 2014 9 Essilor is Getting Closer to the Consumer Online sales platform Media spending Initiatives for retail Investor Day - June 25, 2014 10 Significant Geographic Upside Left Growth drivers New countries Premium / Mid-tier / Entry All business models Sun Partnerships Revenue in fast-growing markets(a) Revenue in € billions 2018 2.8 2013 1.1 21%* * As a percentage of total Group revenue Industry growth in fastgrowing markets >10% 120 countries & 2.0 billion people yet to cover Expected CAGR: 20% (a) Fast-growing markets include China, India, ASEAN, South Korea, Hong-Kong, Taiwan, Africa, the Middle East, Russia and Latin America Investor Day - June 25, 2014 11 We Have All the Talent and Resources Needed to Drive this Expansion Leveraging Essilor Capabilities and Talents Online Sales Segmented offerings Acquisitions MyOnlineOptical R&D Supply chain Geographical coverage Brands Fast-Growing Markets Acquisitions & Partnerships New countries All segments Investor Day - June 25, 2014 12 Outperforming a Bigger Playing Field 2013 Industry Size Industry Growth <€11.0 bn Change (b) 2018 (a) €27.0 bn 6-7% 3-4% ~ 10% CAGR Revenue Like-for-Like Growth ~ €8.2 bn €5.1 bn 3.6% > 6% (c) ~ 11% CAGR EBITDA €1.17 bn €2.0 bn (a) At constant exchange rates (b) Corrective lenses only (c) 2012-2013 average Investor Day - June 25, 2014 13 Driven by Innovation Paul du Saillant – Chief Operating Officer Innovation has been in Essilor’s DNA for 160 Years Cooperative roots Entrepreneurship culture Pioneering through breakthrough innovations in the ophthalmic optics industry Investor Day - June 25, 2014 15 World Recognition for Essilor Innovations Awards Won by Essilor R&D Innovations Investor Day - June 25, 2014 16 A Global Organization Supported by the Best Scientific, Industrial and Academic Communities CI&T EUROPE Essilor Centers of Innovation & Technology (CI&T) Strategic partnerships IVS Paris Main R&D partnerships Paris Bar-le-Duc Dijon Norway Montreal, QC Boston, MS CI&T (Dudley) AMERICAS FGX San Diego Chihuahua, MX Smithfield, RI CROSSBOWS Ireland London Madrid TRANSITIONS Tampa, FL Toulouse SATISLOH Switzerland and Germany SHAMIR Israel CHEMIGLAS NIKON-ESSILOR Tokyo Seoul NEIJRC Shanghai Tokyo Wenzhou Tel Aviv Bangkok Bangalore CI&T ASIA Singapore Jakarta Rio de Janeiro Melbourne Investor Day - June 25, 2014 17 Key Expertise by Region High-index materials EUROPE Fundamental studies Computer sciences Sputtering Spin coating Myopia Anti-fatigue AMERICAS Thermoplastics Polymerisation / Casting Chemical characterizations Segmentation and Personalization Dynamic vision studies Vision ageing Photochromic Thin layers Polarized Augmented reality Web/Net Technologies … and computer vision Tinting Film technologies Nanomaterials … ASIA … Investor Day - June 25, 2014 18 Essilor Invests More than All Other Industry Players Combined R&D Expenses* (€m) 187 200 164 180 160 151 140 2009-2014: 120 up 20% 100 80 CI&T Capex: 60 €50m 40 20 0 2009 2013 2014 Est. * Research, Development and Global Engineering Expenses Investor Day - June 25, 2014 19 Innovation, a Key Driver for Value Creation Products Solutions Services Investor Day - June 25, 2014 20 4 Main Factors to Build the Innovation Roadmap ECP segmentation & chains’ development New devices for refraction and framing E-business models Larger, aging population Urbanization with stronger near-vision solicitation Growing middle class Sensitive to well-being & health Distribution networks Unmet/unexpressed needs Consumer pull INNOVATION ROADMAP Unsolved problems, Eliminating compromises Technological push Geographic specific needs, Sun See-through display Embedded electronics and wearable computers High technologies on thin layers Mass Prod / Prescription Lab Premium / Mid-tier / Emerging Single vision vs multifocal lens Sun Investor Day - June 25, 2014 21 Roadmap Integrated into the Wearer Lifespan… Myopia Segmentation and personalization / Web Health Seniors Sun, polarized and photochromic Investor Day - June 25, 2014 22 …Addressing 6 Growing Segments… Presbyopia & seniors Myopia Health ↗ Peri-central acuity ↗ Detecting at very early stage ↗ Reducing AMD factors ↗ Stability on dynamic vision ↗ Slowing the pace of myopia ↗ Reducing UV effects ↗ Adaptation to progressives ↗ Decreasing eye fatigue ↗ Migraine ↗ Better night vision ↗ Lens thickness ↗ Amblyopia ↗ Color blindness Sun, polarized & photochromic Personalization & segmentation Online ↗ Color choice with dyes expertise ↗ Morphological parameters ↗ e-platforms for wearers ↗ Dark and clear balance ↗ Behavior parameters ↗ Virtual Try-On ↗ Prescription Sun ↗ Ethnicity ↗ Distance measurement accuracy ↗ Polarized lens technologies for each substrate ↗ Gender ↗ Kiosk and brick and mortar models ↗ Age ↗ Web models Investor Day - June 25, 2014 23 …With Promising Innovation Curves 100.0% 90.0% Unsolved problems Unmet needs 80.0% 70.0% Prevention / protection 60.0% Personalization 50.0% WHERE WE CURRENTLY STAND 40.0% 30.0% 20.0% 10.0% Crizal Prevencia Crizal UV Varillux S series Optifog Definity dual add Airwear polycarbonate Crizal Antireflective coating Transitions photochromic lens Varilux progressive lens Orma 0.0% Investor Day - June 25, 2014 24 Three Areas of Excellence Chemistry Designs Technology Substrates Progressive lenses Satisloh Coatings Personalization/segmentation Web technologies Photochromic dyes Digital surfacing Measuring: IVS, instruments… Filters and additives Investor Day - June 25, 2014 25 Around 70% of Lens Value Comes from Coatings and Materials…. Substrates Equipment >7 different substrates ↗ Thermoplastic ↗ Polymers ↗ Thin layers Organic and mineral compound deposits ↗ Films ↗ Wafers ↗ Dyes ↗ Filters (UV,…) ↗ Vacuum and plasma coaters ↗ Mirroring processes ↗ Dip coating machines ↗ ↗ Tailor-made color ↗ Film production Technologies ↗ Injection ↗ Casting ↗ Spin, dip, vacuum, plasma ↗ Gradient, tinting ↗ Film lamination ↗ Wafer injection ↗ Surface functionalization for edging process (Azur) Patents 50% of Group patents are dedicated to coatings and materials A unique set of capabilities to create new products Investor Day - June 25, 2014 26 Around 70% of Lens Value Comes from Coatings and Materials…. Size = number of functions (added value) on the lens Polarized Photochromic UV Back Side Blue Light Protection Anti-fog Scratch Booster Anti-static Easy to clean Anti-reflection 12 14 16 18 20 22 24 26 28 30 Nbr of layers Investor Day - June 25, 2014 27 …While around 30% Comes from Designs Good vision correction comes from high performance designs Accrued experience is essential to creating new designs 3 major players own the design patents: Essilor, Zeiss and Hoya/Seiko Quality guarantee is central: Essilor validates all its designs with thousands of wearer tests in every region of the world Today, technology makes it possible to apply designs on the front, the back or both sides of a lens The value of progressive lenses is in the design, not in the technology Investor Day - June 25, 2014 28 Essilor is the Leader in Digital Surfacing Digital surfacing has been an opportunity for Essilor and the industry… for 20 years Greater levels of personalization and customization have been reached with digital surfacing Quality and performance of designs are far more important than the technology itself Essilor has embraced the technology in all of its businesses Digital surfacing has a positive impact on logistics optimization, and therefore costs and WCR Essilor is best positioned to capture digital surfacing opportunities in both branded and mid-range products Investor Day - June 25, 2014 29 Transferring Know-How to the Sun Industry Correction Core Lenses (clear and prescription sun) Core Lenses (clear, and prescription sun) 2013 2018 Sun Traditional, DDS, FBS Vision comfort Scratch resistant Anti-reflective Anti-static Easy-to-clean, smudge-free Anti-fog Functionalities Photochromic Polar Protection E-SPF 25, E-SPF 50 E-SPF 50 Prevention Bad blue light protection Computer anti-fatigue lenses Investor Day - June 25, 2014 30 Seize Opportunities from Unsolved Problems Lenses sold per year Better resistance, lighter, thinner lens, better fit to frame, better eye shape 1,200 1200000 Abrasion free 1000000 Windshield 800000 Smudge free, no rain 600 600000 Invisible bad blue cut Thin UHI lenses Less temperature dependent 400000 Permanent activation 200000 00 2013 AntiReflective Easy-Clean Progressive Photochromic Anti-Static Polarized Computer & Anti-Fatigue Anti-Fog UV Protection Blue Light Protection Investor Day - June 25, 2014 31 Great Start for New Products… More Growth to Come Correction Protection Prevention Deflect harmful Blue-Violet Light UV protection Varilux S series: up to 40% market penetration. Growing fast in the US and Brazil Transitions Graphite Green: Launched in May in every region Worldwide adoption of UV protection and E-SPF by leading key accounts Crizal Prevencia: Up to 15% of Crizal volumes in France Investor Day - June 25, 2014 32 Future Product Launches Chemistry Designs Technology New level of performance Innovative lens for myopes for Crizal Thinnest high-index polarized lens Polarized Photochromic High base curve for sun Myopia control for children lenses Virtual try-on for web users New technology for Varilux Comfort and Varilux Physio Investor Day - June 25, 2014 33 Yesterday… Today… Tomorrow… Essilor is a Pioneer Customer experience Myopia Augmented reality glasses Health Sun Selective filtration Sun lens designs 2020 Online technology Personalization 2010 Digital surfacing Anti-reflective lens 2000 Photochromic lens Progressive lens 1990 Organic lens 1960 Investor Day - June 25, 2014 34 Building Stronger Consumer Brands Carl Bracy – VP US Marketing & Business Development Alain Riveline – VP Strategic Marketing Why Market to Consumer in Optics? New phenomena Fundamentals in optics Unrealized category growth and repurchase rate potential More educated shoppers from browsing to purchase Improving ECP ability to explain innovations Growing complexity, more choices and sophisticated innovations ↗ Because it works Other players compete for consumers’ choice: managed care, retail, frame brands Improved balance between Fashion & Function Grow the industry Investor Day - June 25, 2014 36 Positive Impacts of Consumer Marketing in Optics For consumers ↗ Educational ↗ Empowerment ↗ Clearer choice For managed care ↗ Better clarity on coverage and pricing decisions driven by product benefits For ECPs ↗ Confidence to prescribe and explain innovations ↗ Strongly relay POS execution For Essilor ↗ Accelerate category building ↗ Brand building ↗ Organic growth Investor Day - June 25, 2014 37 Transitions: Year on Year Growth in Brand Building TV AD TV AD Product Launch Revenue Product Launch Product Launch Product Launch Product Launch 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Similar successes with Varilux in France, Brazil, Portugal and Spain Investor Day - June 25, 2014 38 Essilor Learning Curve and Deployment Plan for Building Consumer Brands 2009-2013: Deploying winning models to be used in each geography 2014-2016: Global deployment in selected countries 2016 onwards: Further global deployment Investor Day - June 25, 2014 39 Establishing Brand Awareness (Crizal, US) Investor Day - June 25, 2014 40 Establishing Brand Awareness (Crizal, US) Key Message: New Crizal protects your lenses and your eye health Scratch-proof, smudge-proof, no-glare lenses now have E-SPF 25 – to help protect your eyes 25 times more from the damaging rays of the sun Four-quarter media presence Q1 2014 Results Crizal grew 9.1% in Q1 2014 Penetration increased 3% in Q1 2014 Investor Day - June 25, 2014 41 Building on Top of an Established Brand (Crizal Prevencia, France) Investor Day - June 25, 2014 42 Building on Top of an Established Brand (Crizal Prevencia, France) Key messages Dangers of light & Crizal Prevencia as the solution Call to action (satisfied or exchanged offer) Media plan Print campaign – 14m contacts Radio: 66m contacts (national and local stations) Digital and professional marketing waves Q1 2014 Results Prevencia penetration rate and volume doubled Total Crizal growth: +6.1% during the campaign Investor Day - June 25, 2014 43 Building a Brand with a Seasonal Campaign (Xperio UV, US) Investor Day - June 25, 2014 44 Building a Brand with a Seasonal Campaign (Xperio UV, US) Key messages Polarized Sun lenses are available in your prescription Xperio UV eliminates 100% glare, offers crisper vision and brighter colors Media plan 360° media campaign: Seasonal media wave March-July 2014 Pullthrough maximized with POP campaign in ~3000 iECP offices (May) Results 2013: Polarized lens unit 2x segment growth rate 2014 YTD: • Xperio UV growth: 21% • Polarized lens unit growth: 12.7% iECPs Investor Day - June 25, 2014 45 Improving Campaign Return on Investment: the Essilor Experience By assisting consumers Crizal Varilux Transitions By adding in merchandizing Singapore Czech Republic … By providing promotion Increasing multi-pair Essilor constantly deploying new concepts Investor Day - June 25, 2014 46 Adding in Promotion with Group ECP Partners Key messages Varilux superiority Second pair with special price on Crizal Transitions or Prevencia Media plan Quarterly TV waves POS marketing support Results Varilux yoy growth: 30/40% in volume Varilux share growth in PAL mix Investor Day - June 25, 2014 47 Vision is More Important than Fashion for Key Retailers Investor Day - June 25, 2014 48 Deploying New Business Model with Key Accounts Key concept Pushing « Branded vision correction solutions » within Walmart’ « Save Money Live Better » mission Key messages Nikoneyes lenses give sharper & clearer vision, resist scratches & reduce glare, and now have E-SPF 25 protection Satisfaction guaranteed Available at Walmart & Sam’s Club Results First 12-month Nikoneyes unit growth: c.50% Strong value creation based on co-sponsored brand building Investor Day - June 25, 2014 49 A Step Change in Resources to Talk to Consumers Total Group* consumer marketing budget projection €125m >€125m 2016 2018 €25m 2013 * Excludes Bolon, Molsion and Costa media spendings Investor Day - June 25, 2014 50 To be Deployed Globally in Selected Countries 2014 Allocation 2014 Resources Essilor 2014 incremental budget (Transitions synergies) Regular Essilor media consumer budget 35 33 North America Europe 25 12 5 7 30 Transitions own media consumer spend €90m 3 Transitions own media consumer budget 30 Amera Latin America Others 2014 ↗ Priorize core countries and proven brand building models ↗ Open new countries, including fast-growing markets 2015 - 2018 ↗ Redeployment of Transitions consumer marketing budget ↗ Accelerate the deployment of proven models ↗ Starting new models (brands, media, etc.) Investor Day - June 25, 2014 51 New Plan to Build Permanent Media Presence in the US as of Q4 this Year Investor Day - June 25, 2014 52 Getting Closer to the US Consumer with… Adults 35-54 Week Number Jan 1 2 3 Feb 4 5 6 7 Mar 8 9 Apr May Jun July Aug Sept Oct Nov Dec 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Investor Day - June 25, 2014 53 Leveraging Essilor Key Brands to Constantly Raise Consumer’s Awareness on Good Vision Adults 35-54 Week Number Jan 1 2 3 Feb 4 5 6 7 Mar 8 9 Apr May Jun July Aug Sept Oct Nov Dec 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 50 weeks on air in a year! Investor Day - June 25, 2014 54 Building Stronger Consumer Brands Will Push Innovation Accelerate category building in strategic countries Reinforce Group pricing power on high margin products Build the right brand portfolio as long-term Group assets Boost group organic growth Strengthen Essilor’s leadership Investor Day - June 25, 2014 55 “Here Comes the Sun…” Eric Thoreux – President Sun & Readers Group Chief Marketing Officer Sun: Over 50 Years of Expertise 2014 Organic Drivers Acquisitions Snapshot Costa/Intercast Polaroid Bolon Onbitt /Polycore Xperio FGX / Stylemark Polarized Kbco 2000 Transitions Cartier Killy Tint/Mirror Armor 1990 BNL c. €500 million revenue c. 70 million sunglasses c. 25 million prescription sun lenses 12 sun specialist labs A leader in premium non-prescription sun lenses 1950 Investor Day - June 25, 2014 57 An Underpenetrated Category with Solid 5% to 7% Growth Structural drivers Under-penetrated category EMERGING MIDDLE CLASSES World population owning sunglasses c85% c25% CHILDREN Today FASHION Potential Sun prescription among eyeglass wearers c50% AGING c10% Today AWARENESS Potential Source: Estin & Co estimates and analysis; Essilor International Several growth engines for Essilor: fragmentation, prescription, better vision, health, innovation (polarized, etc.) Investor Day - June 25, 2014 58 Today, Most Sunglasses Don’t Offer the Right Vision Quality Street Sales Mass Channels Specialty Retail 15 $ 300 $ 150 $ Sunglasses sold on the street can be harmful Limited differentiation in vision quality whatever the price Technologies exist to differentiate vision performance Investor Day - June 25, 2014 59 Essilor’s Strategy to Change the Sun Game Setting a new sun lens standard Innovate beyond fashion Leverage Essilor’s unique assets R&D, consumer / shopper understanding, etc. Improve lens performance: prescription and non-prescription to answer growing needs for better vision and protection Leverage lens innovations to serve our brands as well as other players Deploy sustainable growth strategy Acquire strong regional brands Comprehensive approach Leverage their clear positioning to innovate and expand in more segments and channels Set up the best prescription offer Leverage Essilor’s experience and global networks to expand globally Capitalize on our new Internet strength Prioritize our proprietary brands Multiple price point expertise Multiple channel expertise Investor Day - June 25, 2014 60 A Strategy Capturing Growth in all three Sun Segments Retail sell-out price Lens Innovation + Lab Service (For clients such as Luxottica, Safilo, etc.) Performance Luxury fashion RSP > $100 26m units RSP > $100 12m units Lens Innovation + Lab Service + Brand Portfolio +Multi-price Point Entry/ mid-tier Brand Portfolio + Supply Chain + Key Account + Acquisition Consolidation RSP $5 - $100 510m units “INFORMAL TRADE” Functional use Investor Day - June 25, 2014 61 Essilor has the Right Capabilities to Succeed in Sun … Core Essilor R&D Rx Labs Mass manufacturing Frames / Logistics Consumer Access Scale: 125m pairs of eyewear Chinese partners Multi-channel presence Partnerships with Sun players Online presence Sun Lens know-how Brand portfolio Prescription Sun know-how Investor Day - June 25, 2014 62 … a Strong Portfolio of Proprietary Brands… 8 major proprietary sun brands Strong awareness and annual sales growth since acquisition Foster Grant: 80% in US, sales up 10% Bolon: 85% in China, sales up 20% Costa: 60% in US shore fishing communities, sales up 15% Doubling FGX revenue since acquisition in 2010 (at constant exchange rates) Investor Day - June 25, 2014 63 … and Unique Innovations Technology Design Value-added Performance and Fashion Polarized Lenses Retail Offerings Frame Frame/Lens Package Investor Day - June 25, 2014 64 An Operational Set-up Aligned with Business Priorities Entry / Mid Tier Sunglasses FGX + Yarui Profitable growth Bolt-on acquisitions Growing product offer (sun prescription, readers) Increased distribution and Internet New consumer segments (children) Bolt-on acquisitions Growing product offer Performance Sunglasses Costa Performance Lenses Polycore, BNL, … (sun prescription, product technology, female) Increased distribution (10k US doors, new channels) and Internet Strategic acquisitions Increase in profitability Investor Day - June 25, 2014 65 Synergies: Examples of Opportunities Business Synergies Cost Synergies Performance sun lenses ↗ Combine operations ↗ Leverage Polycore factory ↗ Increase factory yields ↗ Leverage Essilor technologies Sunglasses ↗ Increase Costa’s 15% margin ↗ Streamline SG&A ↗ Leverage FGX finance/legal support $6 - 8m Performance sun lenses ↗ Polycore to supply Bolon with CR39 lenses Sunglasses ↗ Buy surfacing machines from Satisloh ↗ Essilor coatings ↗ Shamir designs ↗ Leverage Essilor Canada for Canadian expansion $2 - 3m Investor Day - June 25, 2014 66 Future Synergies will Depend on Acquisition Types Smaller Acquisition Bigger Acquisition Synergy categories Sourcing scale Shared services Product development Prescription lens Shared key accounts Internet & distribution Investor Day - June 25, 2014 67 A Profitable €1.1bn Sun Business by 2018 Sun revenue 2013-2018 snapshot € billion Organic revenue* growth: ~ 7% p.a. from 2015 2018 Total revenue growth > 10% p.a. 1.1 from 2015 € 100-150m of new acquisitions Profitability in the high teens 2013 0.5 *40-45% revenue from sun lenses reported in “Lens and Optical Instruments” / 55-60% revenue from sunglasses reported in “Readers” Investor Day - June 25, 2014 68 A Clear Integration Plan for High Value Creation Bertrand Roy – SVP Strategic Partnerships A Global Leader in a Key Optical Category A unique business model supplying major lens manufacturers Innovation leadership A powerful product portfolio: Everyday lenses (clear to dark): Transitions Signature VII, 2013 revenue: $844m, of which $279m with third party lens manufacturers Strong ties with Essilor Co-created in 1990 and co-managed in JV (49%/51%) with PPG Industries Operational excellence Distribution in 75 countries Available in over 100 designs (open business model) Transitions Vantage (clear to polarized), Xtractive (driving) Sun lenses (dark to darker) Superior product performance: 170 patent families 90% of revenue from products less than 4 years old One of the most renowned brands in optics Over $500m invested in consumer marketing since inception Aided Transitions brand awareness among prescription Eyeglass wearers 86% 63% USA 59% Brazil Singapore Investor Day - June 25, 2014 70 The Largest Transaction in Essilor’s History Set to Create High Value Acquisition price*: $1.73bn on closing and $125m spread over five years for 51% of Transitions Adjusted 2013 EBITDA acquisition multiple**: 11.8x Post Transaction Gearing*** < 0.4x Impacts on Group financial metrics: Increase Essilor’s contribution margin by 150 bp after PPA costs by mid-2016 EPS accretive from Year 1 of the integration and by at least 5% p.a. from Year 2 Increase Essilor like-for-like growth by 50 bp from Year 3 of the integration *Including 100% of outstanding shares of Intercast **Adjusted for royalties paid to shareholders *** Consolidated net debt to equity Investor Day - June 25, 2014 71 Management of Light: an Essential Vision Need High consumer awareness High interest in finding out more Strong retention within the category Category Awareness Among Prescription Eyeglass Wearers (%) Intent to Ask ECP About Photochromic Lenses Among Eyeglass Wearers (% Definitely/ Probably) Transitions Wearers’ Intent to Purchase Transitions Next Time (% very likely) 95 86 92 93 76 54 55 75 83 76 59 65 A category building on wearer’s satisfaction and loyalty Source: Transitions Consumer Brand Tracking (MSW-ARS) Investor Day - June 25, 2014 72 Significant Untapped Photochromics Potential in All Geographies Canada China is the biggest opportunity in volume 15% Eastern Europe Western Europe USA 6% 10% 19% Asia Japan 5% 1% 5% Mid-tier still underpenetrated Africa/Middle-East Latin America 18% India 9% Successful mid-tier strategy in Brazil 27% South Africa 0% ~ 5% 5% ~ 10% 10% ~ 25% 17% >80 % in glass 25% Australia Same penetration in SV and PAL New Zealand > 25% Source: Essilor estimates - IM 2011 Investor Day - June 25, 2014 73 Setting the Path for Growth Photochromic segment growing twice as fast as the optical industry Significant room to grow in all segments 19% 400 300 10% 200 6% 100 0 Single vision lenses All lenses Progressive lenses 2000 2004 2008 2012 2016 2020 Base 100: volume in 2000 / Source: Essilor estimates Penetration rate of photochromic lenses in volume Enhance product positioning and features to develop myopia share Investor Day - June 25, 2014 74 Integrating Transitions As a Product Line Increase sales and marketing efficiency… …while keeping an open business model Leverage Essilor & Transitions Build on brand loyalty Bespoke developments expertise Build on brand recognition outside the US Reinforced R&D capabilities Resources alignment Specific product development Time-to-market innovation Leveraging Transitions technologies An organization to maximize the reach to eyecare professionals Investor Day - June 25, 2014 75 Driving Faster Growth Through Better Use of Group Capabilities Leveraging all distribution networks ECP’s/Key accounts Mid-tier and low end Fast-growing markets/Europe Actively managing a rich brand portfolio Segmentation Pricing power Enlarging with new categories New tints Clear to polarized Dark to darker Adapted SV lens offerings Develop the photochromic segment worldwide Investor Day - June 25, 2014 76 Generating Over $100 million of Synergies Increase efficiency of marketing spending ↗ Co-branding campaigns ↗ Leveraging Group’s ECP sales force makes it possible to streamline Transitions sales force Optimize the supply chain ↗ Lean manufacturing ↗ Working capital ↗ Obsolescence management ↗ New business models A clear integration plan with low execution risks Investor Day - June 25, 2014 77 “Optics 2.0”: A Major Growth Opportunity Jean Carrier – President, Essilor of America Roy Hessel – President, Online Initiatives The Online Optical Industry is on a Fast Track Global online optical retail* (in € billions) As a percentage of the total optical retail industry +14% 2013-2018e CAGR +13% 5.8 10-15% 2008-2013 CAGR 1.6 1.7 2.0 2.4 2.7 3.0 6% c.4% c.2% 2008 2009 2010 2011 2012 2013 2018e 2025e * Includes online pure players and click & mortars / for spectacles, contact lenses and sunglasses Source: Estin & Co 2013 estimates and analysis; Essilor International Investor Day - June 25, 2014 79 Global Online Optical Potential is Significant Worldwide Penetration Rate of Online Optical Retail*: c.4% Scandinavia 6% UK 10% Germany Japan 8% 7% France 2% 4% China North America Online optical retail* as a percentage of total optical retail industry (in value) 1% – 2% 2% – 5% 4% Latin America 1% 4% 5% – 10 % Australia / New Zealand Major growth drivers: Internet penetration, increased comfort with online payments, technology improvements (e.g., virtual try-on in 3D), etc. * Includes online pure players and click & mortars / for spectacles, contact lenses and sunglasses Source: Estin & Co 2013 estimates and analysis; Essilor International Investor Day - June 25, 2014 80 All Optical Products are Sold Online Today… Investor Day - June 25, 2014 81 ...But Everything Must Begin with an Eye Exam which Still Cannot be Done Online Relationship management Can be done online today (“stay in touch”, re-trade, trade across) Cannot be done online today Ophthalmic Examination 6 Payment 1 Optical Consumer Journey 5 4 Only basic measurements are available online (e.g., PD) Necessarily done by an eye care professional (ophthalmologist or optometrist) Measurements as needed 2 Prescription 3 Product education All optical products are sold online: contact lenses, frames, & selection prescription eyeglasses, sunglasses, readers Investor Day - June 25, 2014 82 Essilor has Invested in this Field for Many Years… Customized supply chain for online players 2000 2004 2009 2010 2012 2013 2014 Investor Day - June 25, 2014 83 … Has Built Solid Expertise… Customized supply chain Online Marketing Expertise Back-office support for several North Category push: anti-reflective, American and European online players EyeBuyDirect supply chain from Danyang polarized, anti-UV, photochromic lenses Dedicated online brand: Teklite Various marketing approaches: banners, search engine optimization (e.g., Google), paid search, affiliates, affinity publishers, etc. Frames Direct: premium, branded Suite of online services for Eye Care Professionals, including a virtual store platform: MyOnlineOptical (adopted by 1,500+ ECPs) Turn-key online services/solutions frames, c$250-350 per pair EyeBuyDirect: unbranded frames, c$50 per pair Sun brands already very active online (Bolon & Costa) FGX web stores: Fostergrant, Ryders, Gargoyles, Readerglasses.com, etc. Multi-channel models Investor Day - June 25, 2014 84 … And Learned to Expand Globally Likely to grow rapidly as it meets a specific need: younger consumers with simple vision correction Supply chain capabilities are key for success Efficient media to educate consumers on the importance of vision and solutions and to push categories (anti-reflective, anti-UV, etc) Drives behaviors that increase overall demand for optical equipment Online Channel Higher appetite for… … multi-pairs … re-trade … antireflective lenses Average pairs per order Average renewal rate years Average penetration rate 1.4 c.3 ≥1 100% 100% 57% 0.8 EyeBuyDirect Worldwide EyeBuyDirect Worldwide Coastal.com Worldwide Remain the best channel for sophisticated progressive lenses, personalized lenses Role of Eye Care Professionals and tailored customer services Clear role to play online: connecting with existing consumers, offering a wider range of frames, etc MyOnlineOptical approach works well… Eye Care Professionals need it to compete and are asking for it Investor Day - June 25, 2014 85 Strong Financial Upside Strong Revenue Growth Better margins per consumer Year-to-date like-for-like revenue growth Base 1 = Essilor Lens Business’ estimated contribution margin per consumer +30% x5 +22% x2 1 Lens Business US market prescription eyeglasses Key profitability drivers Order size Integrated supply chain Marketing efficiencies for customer acquisition, loyalty and product mix Investor Day - June 25, 2014 86 Shaping the Development of the Online Channel with our Customers for the Benefit of Consumers Eye Care Professionals Online Players Eye Exam / Health Simple vision correction needs Refraction (single vision products) Information and education platform for consumers Complex products Personalized products Tailored customer services Key brands (e.g., Varilux) Referrals Traffic Shared technologies (e.g., MyOnlineOptical) Investor Day - June 25, 2014 87 New Online and Mobile Technologies are Accelerating the Development of the Online Channel Innovations in online frame fitting technologies increase customer take-up and conversion rates of the channel New lens performance visualization techniques educate customers and drive higher value orders Mobile sites and technologies increase access and frequency of purchase Investor Day - June 25, 2014 88 Coastal.com, a Major Online Vision Care Retailer Revenue by Segment Strategic Overview ↗ Global player (based in Vancouver) Eyeglasses 27% ↗ Large multiproduct platform ↗ Strong strategic fit to drive 73% Contact Lenses profitability ↗ Future consolidation platform Revenue by Region Rest of the world Key Financials 22% 34% Canada ↗ 2008-2013 revenue CAGR: 13% ↗ 2013 net loss: CAD (16)m Norway 9% Sweden ↗ Financial loss solely in eyeglasses 19% 16% USA ↗ Consolidated since May 1, 2014 Investor Day - June 25, 2014 89 Our Plan with Coastal.com: Global Growth and Value Creation >10% p.a. revenue growth New team in place, combining Essilor, EyeBuyDirect, Frames Direct and Coastal strengths Leverage the platform and best practices for worldwide development Synergies of CAD 30-35m Optimize marketing spend Synergize supply chain (lenses, purchases, laboratories) Essilor know-how especially relevant to eyeglasses division Reaching double digit margin by 2016 Investor Day - June 25, 2014 90 Our Ambition: To Build a Profitable €400-500m Online Business by 2018 In € millions Strong organic growth 2018 Selected bolt-on acquisitions Synergies 400-500 Cost optimization 2014 2013 c.185 (1) 2014-2018 CAGR: >20% Margin: 10-12% c.30 (1) Including Coastal.com full-year revenue Investor Day - June 25, 2014 91 2018 Blueprint for Value Creation Laurent Vacherot – Chief Operating Officer A Stronger Essilor Since 2008 Innovation leadership E-SPF (UV), Blue Light, Varilux S, Optifog, photochromic segment, etc. New CIT organization Strengthened market coverage Mid-tier, FGM expansion, new countries New Vision Generation initiative Reinforced human resources and expertise 55,000 employees dedicated to a central mission: providing better vision Internationalized Executive Committee New growth platforms: Readers & Sun, Equipment, On-line models Operational and management efficiency Increased global industry share with no additional debt Investor Day - June 25, 2014 93 Delivering High Shareholders Returns Revenue +€2 billion in 5 years (in €m) EBITDA + 40 basis points 1 200 4 800 (in €m) 1 100 CAGR: +10.5% 4 300 CAGR: +10.9% 1 000 3 800 900 3 300 800 700 2 800 600 2 300 500 1 800 400 2008 2013 Free Cash Flow €2.5 bn in 5 years 2008 Dividend €880 millions in 5 years 240 (in €) 2013 (in €m) 550 200 CAGR: +12.1% 450 CAGR: +11% 160 350 120 250 150 80 2008 2013 2008 2013 Investor Day - June 25, 2014 94 €2 Billion in Additional Revenue Generated by Organic Growth and Acquisitions 6 MM organic growth FGM organic growth Strategic acquisitions Bolt-on acquisitions 5 +€2bn* 4 3 2 1 0 2008 Web Readers & Sun 2013 Equipment Lens (FGM) Lens (MM) * Split excluding the change in currencies and the change in the method of consolidation Investor Day - June 25, 2014 95 Fast Growth while Maintaining High Quality Margins 18.1% 18.1% +50 2009 -50 +50 -50 2010 +30 -50 2011 +60 -60 2012* +40 -20 2013 Operating leverage (in bp) = 210bp Dilution from acquisitions (in bp) 2008 2013 Initial dilution from acquisitions consistently offset by: Operating leverage Synergies from acquisitions and partnerships *Of which 20 bp gain stemming from change in the method of consolidation Investor Day - June 25, 2014 96 What is the Ambition for the Next 5 Years? Playing Field Sales EBITDA Cash Return Creating More Value While Expanding the Playing Field Investor Day - June 25, 2014 97 A Clear Value Creation Plan for Each Segment Playing Field Sales EBITDA Cash Return 2013-2018 PRESCRIPTION LENSES SUNGLASSES ONLINE Accelerate in our core industry Outperform the industry innovation roadmap Performance sunwear Consumer marketing push Selected brands Capture higher value per sale Leverage Transitions acquisition Push Rx Solutions Build a strong consumer data base Bolt-on acquisitions strategy Leverage Group capabilities Leverage Group supply chain Targeted acquisitions Opportunistic M&A Grow a profitable distribution channel Expand in fast-growing markets: €2.8 bn revenue ambition €12.7 bn +3-4% €27 bn +6-7% €8.5 bn €5.8 bn +6-7% +14% Outperforming every segment through organic growth and acquisitions Investor Day - June 25, 2014 98 Building a Stronger Portfolio in Optics to Capture New Long-Term Growth Playing Field Sales EBITDA Organic Sales in €bn Acquisitions* Cash Return Major acquisitions done** 9 ~0.5 ~1.1 8 >€3bn 7 ~0.8 6 ~2.2 0.5 0.5 1.0 5 4 3 ~3.6 2 3.0 1 0 2013 Web Sunlens & sunwear 2018e Equip&Instr. + Readers Clear Lens (FGM) Clear Lens (MM) Growing at c.10% over the next 5 years*** * Excluding new strategic acquisitions ** Transitions, Yarui, Costa, Coastal.com *** On average, at constant exchange rates Investor Day - June 25, 2014 99 Key Acquisitions Strengthening the Group’s Business Portfolio Playing Field Sales PRESCRIPTION LENSES ACQUISITION RATIONALE Transitions Take the lead in one of the fastest growing optics category EBITDA Cash SUNGLASSES 1) Costa 2) Yarui (Bolon) Innovate in performance sunwear and expand in the mid-tier globally Return ONLINE Coastal.com Grow a profitable distribution channel 1ST YEAR SCOPE EFFECT (IN % OF SALES*) c.€200m (<4%) MID-TERM IMPACT ON ORGANIC GROWTH +50 bp** ~15bp ~10bp Continue partnerships and seize opportunities Selected brands New geographies / products NEXT MOVES 1) c.€80-85m (>1.5%) c.€150m (c.3%) 2) c.€75-85m (c.1.5%) * At constant exchange rates ** As of year 3 after integration Investor Day - June 25, 2014 100 Balanced Revenue Growth Between Mature Markets and Fast-Growing Markets Playing Field Sales EBITDA Cash Return Targeting Revenue of ~€8.2bn by 2018 2.8 Fast-growing markets 1.1 4.0 Mature markets Dedicated strategy to provide better vision to more than 80% of WW population 5.4 Still a lot of untapped potential in mature markets Sales in €bn * At constant exchange rates Investor Day - June 25, 2014 101 Solid, Sustainable Organic Growth Playing Field Sales EBITDA Cash Return >80bp >70bp >100bp 3.6% 2012-2013 average Innovation Media push Photochromic Country focus Share gains Sunglasses Sun lenses Web Favorable business mix >6% Strong Demand Trade-up New countries FGM ambition 2018 trend Gradual acceleration in organic growth Investor Day - June 25, 2014 102 Implementing a Successful Acquisition Strategy Playing Field Sales Low integration risk for Transitions EBITDA Fast turnaround at Coastal.com Cash Return Pursuing partnership strategy with local players Prescription Lenses Readers Plano sunglasses 20% Manufacturing & marketing Significant synergies reinvested in brand building costs Reach double-digit margin Proven value creation strategy Rich pipeline of new targets Clear integration plans to deliver quick returns Investor Day - June 25, 2014 103 Leveraging the Group’s Innovation Edge Playing Field Sales Developing key categories in every segment EBITDA Media push on high-margin brands Cash Return High-value solutions for key accounts Materials Designs Dual side Full backside Photochromic deployment High indices Sun prescription Coatings Protection / Prevention & new functions Cascading in mid-tier … Sunwear Balanced value drivers Over €500m in consumer marketing investments Leveraging Group capabilities: Supply chain, IT, Technology Product portfolio Brands / Private label Strengthening our pricing power in the high-end and in the mid-tier Investor Day - June 25, 2014 104 Continuous Cost Optimization Playing Field Industrial efficiency programs Sales EBITDA Supply chain Cash Return Cost management Shared services Laboratories Lean management Fixed costs reduction Productivity gains Transitions On-line model efficiency Synergies with Sun business Opex efficiency Investor Day - June 25, 2014 105 From non Dilutive to Margin Accretive Growth Playing Field Sales 2008-2013 EBITDA Cash Return 2013-2018 Ambition Expected Revenue CAGR: Revenue CAGR: 10.5% Stable operating margin ~10% Increase in EBITDA margin by more than 100bp Investor Day - June 25, 2014 106 2018 Free Cash Flow Ambition: €1 Billion Playing Field Sales EBITDA Cash Financial discipline Capex supporting growth 4% to 5% of sales Bolt-on acquisition strategy €200-250 million per annum Dividend pay-out Ratio Keep current level Return Steady deleveraging 2500 2000 1500 1000 500 0 2013 2014 2015 2016 2017 2018 Without new strategic acquisition * At constant exchange rates Investor Day - June 25, 2014 107 Return on Capital to Remain High Playing Field Sales EBITDA Cash Return ROCE will continuously remain over-market: Significantly higher than average cost of capital Catching up as of 2016 ROCE* Value creation WACC** scenarii 2014e 2015e 2016e 2017e 2018e * Return on capital employed, excluding new strategic acquisitions ** Weighted average cost of capital: market consensus and estimate Investor Day - June 25, 2014 108 Creating Value in a Bigger Playing Field 2013 Market Size Market growth <€11.0 bn €27.0 bn 3-4% 6-7% ~ 10% CAGR Total Revenue Growth (ex-currency) Like-for-like growth 2018 Change 3.6%* >6% ~ 11% CAGR EBITDA €1.17 bn ~ 12.5% CAGR FREE CASH FLOW NET DEBT €0.55 bn ~ €2.0 bn ~ €1.0 bn From c.€2 bn** to c.€1 bn Excluding new strategic acquisitions * 2012-2013 average **Including the financing of Transitions and Coastal.com acquisitions Investor Day - June 25, 2014 109 Growing in a Bigger Playing Field Hubert Sagnières – Chairman & CEO A Bigger Playing Field, Entirely in Optics Eye Care Professionals Geography Strategy One mission “Improve lives by improving sight” Consumers Technology Healthcare Investor Day - June 25, 2014 111 Essilor by 2018 € 2.8bn in fast-growing €8.2bn Revenue > 6% like-for-like growth markets / ~20% CAGR ~10% CAGR € 0.5bn Online revenue € 1.1bn Sun revenue ~20% CAGR / ~17% CAGR < €1.0bn Net debt Investor Day - June 25, 2014 112 The Optical Industry Solid Growth Potential Driven by Demographics, Ageing, Urbanization and Lifestyle 2013 Volume CAGR 2020 Worldwide Population 7.0 1.0% 7.6 Urban Population 3.7 4.3% 5.0 Correction Needs 4.3 2.2% 5.0 Correction Wearers 1.8 3.0% 2.2 Myopia 1.6 3.2% 2.0 Presbyopia 2.0 2.3% 2.3 Cataracts 250m 3.6% 320m AMD* 100m 2.6% 120m Demography (in billions of people) Vision Industry (in billions of people) Visual Impairments (in billions of people) Visual Health (in millions of people) * Age-related Macular Degeneration Source: Essilor estimates, Worldbank, United Nation, CIA, World Population Prospects, Epidemiological and Marketing studies Investor Day - June 25, 2014 114 Presbyopia and Myopia: Two Segments with Structural Growth In millions of people Europe 340m North America 361m Asia-Pacific* 272m 248m 141m 153m 2013 2020 157m 134m 1,274m 1,178m 2013 2020 Presbyopia 2013 2020 Myopia 996m 993m Presbyopia Africa-Middle East 195m 2013 2020 Presbyopia 117m 168m 2013 2020 2013 Myopia 2020 Myopia Latin America 155m 241m 2013 2020 Presbyopia 2013 188m 115m 150m 2020 Myopia 2013 2020 Presbyopia 2013 2020 Myopia Source: Essilor estimates, Worldbank * Including Russia Investor Day - June 25, 2014 115 Eye Glasses Account for 86% of Vision Correction in the World REFRACTIVE SURGERY 6% CONTACT LENSES 6-7% Does not cure or sufficiently treat presbyopia Insufficient for people with presbyopia PRESCRIPTION LENSES 3+% 4% 10% READING GLASSES 4% Suitable for near vision SINGLE VISION LENSES: One optical power per lens Suitable for people with myopia, hyperopia or astigmatism Insufficient for people with presbyopia 11% Offer clearer vision to people with presbyopia 75% BIFOCAL LENSES: Two optical powers per lens Suitable for people with presbyopia PROGRESSIVE LENSES: Seamless gradients of optical powers from distant to near vision Weight in value Volume CAGR Source: Essilor estimates Suitable for people with presbyopia Investor Day - June 25, 2014 116 Photochromic and Sun Growing Twice as Fast as the Optical Industry… 400 300 CAGR c.7% CAGR 5-7% 200 100 CAGR 3+% 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Base100 in 2000 / Source: Essilor estimates Optical volume Sun volume Photochromic volume Investor Day - June 25, 2014 117 Strong Regional Differences in Penetration of Value-added Lenses Progressive lenses Anti-reflective lenses Thin lenses (index>=1.6) 100% 62% 49% 57% 60% 30% 32% 39% 13% 15% 26% 8% 3% China 15% 16% Italy WW USA France New Zealand Photochromic lenses Mexico 2% 4% 5% India USA WW Spain Japan Prescription sun lenses* 27% Brazil Czech. USA Rep. WW China Korea Polarized lenses 7.2% 30% 18% 19% 20% 4.0% 10% 7% 7% 10% 7% 0% 1% Japan France WW India 2.2% 1.7% 2.0% 2.0% USA South Africa India USA WW Brazil France Korea Germany Singap. WW Switz. Australia USA Penetration of total lens industry in volume in 2013 / Source: Essilor estimates * Excluding polarized lenses Investor Day - June 25, 2014 118 Fast-Growing and Mid-tier Offer Strong Volume Growth Developed Markets FastGrowing Markets ~2.5% High-end 120 35 +1-2% Mid-tier Entry 20 80 125 190 +6-8% >5% ~6% 570 million consumers per annum Growing globally at 3+% Volume CAGR Source: Essilor estimates Investor Day - June 25, 2014 119 China is the Largest Optical Industry in Volume, the US is the Largest in Value Expected growth in value (CAGR 2013-2018, in %) 20 India Size proportional to 2013 volume 9 MPc Russia 15 China Colombia Turkey Kenya Ghana Kazakhstan Egypt 10 Ethiopia Vietnam Morocco Costa Rica Chile Dom Rep. Nigeria UAE Serbia 5 Brazil Saudi Arabia Croatia USA Argentina Finland Ireland Mexico South Africa Canada UK Taiwan Norway France Denmark Switzerland Netherlands Germany Spain 0 0,2 Source: Essilor estimates, Estin & Co. 0,5 1 2 5 10 Japan 20 50 100 200 Volume in 2013 (millions of lenses) Investor Day - June 25, 2014 120 Strong Regional Differences in Replacement Rate of Spectacle Lenses… In number of years Japan France 4.1 3.0 2.8 USA 1.9 China 2.9 India Brazil 2.9 4.2 South Africa 1.6 Australia More than 4 years Between 3 and 4 years Between 2 and 3 years Between 1 and 2 years Source: Essilor estimates Investor Day - June 25, 2014 121 … as Well as in Optical Retail Penetration # inhabitants per optical retail outlet Europe Asia-Pacific Fast-Growing Markets* 10,700 29,350 North America 6,650 Asia-pacific Developed Markets 10,700 Africa-Middle East 55,000 Latin America 13,300 5,000 to 15,000 16,000 to 30,000 More than 30,000 * Including Russia / Source: Essilor estimates Investor Day - June 25, 2014 122 Fast-Growing Markets Rapidly Emerging Middle Class With Significant Purchasing Power Creates Outstanding Opportunities… In billions of inhabitants 9 High income 8 7 6 Middle-class 5 4 3 2 Low income 1 0 2010 2020 2030 Source: United Nations Investor Day - June 25, 2014 124 …Both In Volume and Value Volume growth potential Value growth potential Spectacle lenses per person with correction need (2012) Price to consumer (log $) Size proportional to the population with correction need UK 1.0 1,0 USA Canada France 0.8 0,8 30 M Australia Geography with strong market growth in value (CAGR 20122017 > 5%) Austria Netherlands Malaysia Germany Finland Hong-Kong Belgium Sweden Italy Switzerland Turkey Taiwan Slovenia Ireland DK Slovakia Spain NZ Poland Argentina 0.6 0,6 Brazil China Portugal Czech Japan 0.4 0,4 Indonesia Russia Philippines Mexico Hungary Egypt 0.2 0,2 S. Africa Thailand GDP per capita (in PPP USD, 2012) India GDP per capita (log $) 0,0 0 0 10000 10,000 20000 20,000 Fast-Growing Markets 30000 30,000 40000 40,000 50000 50,000 60000 60,000 Developed Markets $2,000 $20,000 Fast-Growing Markets $100,000 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. Investor Day - June 25, 2014 125 Essilor’s Organization is Geared to Deliver High Growth... Growth ex. currency* 2010 2011 2012 2013 22.0% 25.6% 27.3% 20.3% Moscow Shanghai Dubai Bangalore Singapore Brazil Regional hubs Headquarters AMERA: Asia, Middle East, Russia, Africa Investor Day - June 25, 2014 126 Expanding Through a Proven Partnership Strategy... 45 acquisitions or partnerships completed since January 1, 2011 750-1,000 players Optik Mekk Opak L’N Optic Ipek Optik Optiben MOC Seeworld Isbir Optik Youli Optiplas SIVO Xiamen Yarui Optical Nemkul Movisia VST Lab Enterprise Ophthalmics Optics India Deepak Optic JWL Phuket Lab GKB Hi-Tech Onbitt Incheon Optics Trend Optical Crystal y Plástico Opti Express Shih Heng PSA Nilo AAiJoke’s Servi Optica Global Vision Polycore Cientifica Evolution Optical AMERA Comopticos Orgalent Megalux Transitions Plants Prescription Labs & Wholesalers Readers and Sunglasses Equipment LATIN AMERICA Tianhong Unilab Centralab Optiminas Comprol CM Equipamentos Ópticos de Precisão Riachuelo Repro Optovision 450-600 players Players: Prescription laboratories, manufacturers, wholesalers, etc. Investor Day - June 25, 2014 127 ...To Be Rolled Out in New and Significant Territories Uncovered markets Almost 2 billion inhabitants yet to cover Uzbekistan Syria Algeria Egypt Irak Afghanistan Pakistan Iran Soudan Yémen Nigeria Ethiopie Bangladesh Myanmar Venezuela Ghana Uganda Congo Tanzanie Mozambique Peru Madagascar 3 countries over 150m inhabitants 9 countries over 50m inhabitants 21 countries over 20m inhabitants Countries with no direct presence Investor Day - June 25, 2014 128 Additional Growth Engines Shaping the Way to a Significant Increase in Sales by 2018 >20% CAGR >27% CAGR 2009 2012 2015e €360m €911m >€1,500m • Photochromic • Media push • New countries • 2.5 NVG • Equipment • Sun & Readers • Internet 2018 Ambition €2,800m 249 21% 2013 Investor Day - June 25, 2014 129 A Unique Strategy for Total Chinese Market Coverage CITIES Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 High Mid-high MARKET Mid-low Low Combining organic growth and key partnerships Investor Day - June 25, 2014 130 Innovation at Every Market Segment in China CITIES Tier 1 Tier 2 Tier 3 Tier 5 Tier 4 High Mid-high MARKET Mid-low WHITE LABELS Low Upgrade from low index Innovation creates value at each price point Investor Day - June 25, 2014 131 Value Creation in Brazil Through Segmentation Segmentation by Population Tiers Class A: 10m; Class B: 65m Premium Mid-Tier AB X1.5 in 10 years C + 20 M of people Class C: 102m Entry No Name no Line GBO and ILT D/E Class D/E: 23m Brazil 2013 200m People Investor Day - June 25, 2014 132 Corporate Mission “Improve Lives by Improving Sight” 2.5 Billion People in the World Still Need Eye Correction 7 billion people in the world 4.3 billion people (60%) require vision correction 1.8 2.5 billion billion Corrected Uncorrected North America 50 Europe Asia 130 1,600 170 550 Latam Africa In millions of people Investor Day - June 25, 2014 134 Poor Vision is the World’s Largest Handicap Children Workers Elderly Drivers 810 1,100 300 280 million million million million Uncorrected Uncorrected Uncorrected Uncorrected $275 billion Global economic productivity loss due to poor vision Source: World Health Organization, BCG Investor Day - June 25, 2014 135 Essilor Is Committed to Reversing the Trend Ambition of 50 million new wearers per year by 2020 3.2 # non-corrected (in billion of people) Before 2.6 2.6 2.5 -10% 2.4 - 54% After 2.4 1.5 0.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2050 Investor Day - June 25, 2014 136 A Unique Governance System to Increase Impact and Gain New Customers Essilor’s Mission: Improve lives by improving sight Executive Committee Board of Directors Creation of the Position of Chief Corporate Mission Officer Creation of a Corporate Social Responsibility Committee Investor Day - June 25, 2014 137 Four Areas of Action BOP Innovation Lab Investor Day - June 25, 2014 138 Awareness: Educate Consumers and Drive Policy Change Non-profit association funded by Essilor Collects and publishes valuable data and research on vision economics Calls for action by stakeholders, policy makers, eye care professionals and media Investor Day - June 25, 2014 139 : An Independent Advisory Board Pr Kevin Frick Dr. Clare Gilbert Professor & Vice Dean Johns Hopkins Carey Business School Baltimore USA Ophthalmologist Professor at the London School of Hygiene and Tropical Medicine UK Mr. Arun Bharat Ram President SRF Ltd India Exc. Wu Jianmin Former China Ambassador to the United Nations in Geneva China PR Kovin Naïdoo PhD, OD MPH Optometrist BHVI Global Program Director South Africa Investor Day - June 25, 2014 140 Inclusive Business: Innovating to Bring Vision Care to the Last Mile India Eye Mitra & Refraction Vans China Presbyopes & Children Brazil Enterprise & Urban Poor Investor Day - June 25, 2014 141 Inclusive Business: Leveraging Essilor’s Capabilities to Facilitate On-the-Spot Dispensing ‘Ready to Clip’ lenses Quick: <5min dispensing time Affordable Similar comfort and satisfaction as custom-fitted lenses Low stock lens inventory with no machinery required Reading Glasses Leadership Investor Day - June 25, 2014 142 Inclusive Business: a Growing Global Presence China (2012) India (2011) Gambia (2014) Mexico (2014) Brazil (2013) Indonesia (2014) Investor Day - June 25, 2014 143 Philanthropy: Serving Those Most in Need 2014 2013 2008 Investor Day - June 25, 2014 144 Sustainability and SRI: a Longstanding Track Record as a Responsible Corporate Citizen Signatory to the Global Compact since 2003 The only industry player to be ranked in the major CSR and SRI indices Ranked one of the Most Sustainable Corporations in the World for 2nd year running Investor Day - June 25, 2014 145 Investor Relations Contact For further information, please contact: Investor Relations Sébastien Leroy Véronique Gillet Ariel Bauer Financial Communications Manager Senior Vice President, Investor Relations Investor Relations Director – Asia Pacific France France Singapore Tel: +33 (0)1 49 77 42 16 E-mail: [email protected] Headquarters: 147 rue de Paris - 94220 Charenton-le-Pont - France Website: www.essilor.com ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Disclaimer This presentation contains forward-looking statements that can be identified by terminology such as “potential,” “expected,” “will,” “planned,” “anticipate” or the negative of these terms or similar expressions. Such forward-looking statements reflect the current views of the Group regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. For a detailed description of these factors and uncertainties, please refer to the section “Risk Factors” in our Registration Document (which is available on www.essilor.com). Accordingly, readers of this presentation are cautioned against relying on these forward-looking statements. These forward-looking statements are made as of the date of this presentation. Essilor undertakes no obligation to publicly update or revise any of these forward-looking statements. This presentation includes information relative to our markets and our competitive positions. Such information is based on market data and our actual revenues in those markets for the relevant periods. We obtained this market information from various third party sources (industry publications, surveys and forecasts) and our own internal estimates. Investor Day - June 25, 2014