Growing in a Bigger Playing Field

Transcription

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
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
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
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
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
6
A Bigger Playing Field, Entirely in Optics
Eye Care
Professionals
Geography
Strategy
One Mission
“Improve Lives by
Improving Sight”
Consumers
Technology
Healthcare
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%
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
9
Essilor is Getting Closer to the Consumer
Online sales platform
Media spending
Initiatives for retail
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
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
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
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
15
World Recognition for Essilor Innovations
Awards Won by Essilor R&D Innovations
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
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
 …
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
19
Innovation, a Key Driver for Value Creation
Products
Solutions
Services
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
21
Roadmap Integrated into the Wearer Lifespan…
Myopia
Segmentation and personalization / Web
Health
Seniors
Sun, polarized and photochromic
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
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%
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
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
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
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
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
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
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
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
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
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
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
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
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
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
39
Establishing Brand Awareness (Crizal, US)
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
41
Building on Top of an Established Brand
(Crizal Prevencia, France)
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
43
Building a Brand with a Seasonal Campaign
(Xperio UV, US)
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
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
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
47
Vision is More Important
than Fashion for Key Retailers
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
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
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.)
51
New Plan to Build Permanent Media Presence
in the US as of Q4 this Year
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
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!
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
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
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.)
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
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
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
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
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)
63
… and Unique Innovations
Technology
Design
Value-added
Performance and Fashion
Polarized Lenses
Retail Offerings
Frame
Frame/Lens Package
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
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
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
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”
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
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
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)
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
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
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
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
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
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
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
80
All Optical Products are Sold Online Today…
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
82
Essilor has Invested in this Field for Many Years…
Customized
supply chain
for online players
2000
2004
2009
2010
2012
2013
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
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
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
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)
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
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
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
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
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
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
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
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
96
What is the Ambition for the Next 5 Years?
Playing Field
Sales
EBITDA
Cash
Return
Creating More Value While
Expanding the Playing Field
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Visual Impairments
Visual Health
(in millions of people)
* Age-related Macular Degeneration
Source: Essilor estimates, Worldbank, United Nation, CIA, World Population Prospects, Epidemiological and Marketing studies
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
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
 Suitable for people with presbyopia
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
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
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
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)
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
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
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
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
30000
30,000
40000
40,000
50000
50,000
60000
60,000
Developed Markets
$2,000
$20,000
$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.
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
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.
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
Countries with no direct presence
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
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
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
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
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
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
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
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
137
Four Areas of Action
BOP Innovation Lab
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
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
140
Inclusive Business: Innovating to Bring Vision
Care to the Last Mile
India
Eye Mitra
& Refraction Vans
China
Presbyopes
& Children
Brazil
Enterprise
& Urban Poor
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
142
Inclusive Business: a Growing Global Presence
China
(2012)
India
(2011)
Gambia
(2014)
Mexico
(2014)
Brazil
(2013)
Indonesia
(2014)
143
Philanthropy: Serving Those Most in Need
2014
2013
2008
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
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.

Growing in a Bigger Playing Field

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