Rank: #11 (Last year: #12) €12.54 Billion ($13.07 Billion)
Prior Fiscal: €12.19 Billion ($13.46 Billion)
Percentage Change: +2.8%
R&D Expenditure: €371M
Best FY24 Quarter: Q2 €3.3B
Latest Quarter: Q1 €3.23B
No. of Employees: 200,000+
Global Headquarters: Charleton-le-Pont, France

Not bad for a newcomer.

An aged newcomer, at that.

With roots dating as far back as 1849, EssilorLuxottica clearly was one of the more “established” (i.e., older) companies exhibiting at last year’s Consumer Electronics Show (CES).

Age, however, is seldom relevant at these kinds of events. It particularly is immaterial at CES, the global showcase for transformational technological innovation. Past architects of such life-altering creations include Philips (VCRs, CDs), Toshiba (DVDs, plasma TVs), Sony (internet gaming), and RCA (digital satellite system receiver), among others.

The key takeaway here? Changing the world is possible even for geriatrics.

EssilorLuxottica could possibly become the latest member of that older (putting it kindly, “mature”) innovator club following its inaugural appearance at CES 2024, where it showcased its smart eyewear technology. On display at the company’s futuristic exhibit hall booth were its Ray-Ban Meta glasses that allow consumers to make phone calls, capture and share photos and videos, listen to music, and livestream content. Making its world premiere at the show was a prototype for prescription eyeglasses equipped with advanced hearing assistance technology.

Built in-house by EssilorLuxottica’s Super Audio team, the Nuance Audio integrates a smartphone mobile application into a general computing platform within a pair of smart glasses. The frames are embedded with invisible microphones that amplify sounds based on the direction of the wearer’s focus, and volume is controlled through either a companion application or a pocket-sized remote. The glasses are made specifically for adults (ages 18+) with mild to moderate hearing loss.

“At CES, we will take our place among the world’s leading innovators with a product, Nuance Audio, that has the potential to improve quality of life for over a billion people,” EssilorLuxottica Chairman/CEO Francesco Milleri stated in a news release.

Such potential certainly exists. And while EssilorLuxottica undoubtedly will be exploring that potential, its presence at CES also underscored its commitment to propel the eyewear industry into a new era of interconnected and AI-powered devices and solutions.

“As we look ahead, we are stepping into an era of great opportunities. From medtech solutions enhancing lives globally to category-defining wearables reshaping how consumers experience the world, we are driving the future,” Milleri and EssilorLuxottica Deputy CEO Paul du Saillant told shareholders in the company’s 2024 annual report. “Our strategic evolution toward medtech and transformative industries is unlocking cross-sector innovations that will pioneer the future of technology, eye health, and human connection.”

EssilorLuxottica achieved those cross-sector innovations last year through various partnerships and acquisitions, as well as a special regulatory recognition.

The recognition came from the U.S. Food and Drug Administration, which granted Breakthrough Device Designation in February 2024 to SightGlass Vision Inc. (a joint venture between Cooper Companies and EssilorLuxottica) for its Digital Optics Technology (DOT) spectacle lenses. DOT aims to slow myopia progression in children (as young as six and up to age 13) by softly scattering thousands of micro-dots of light across the retina, mimicking more natural contrast at all distances.

The patent-protected DOT has demonstrated proven efficacy and safety through rigorous clinical evaluation, with four-year outcomes showing statistically significant slowing of the eye axial length progression and cycloplegic spherical equivalent refraction.

DOT spectacle lenses are commercially available in China, the Netherlands, and Israel.

DOT’s Breakthrough Designation by the FDA helped EssilorLuxottica reinforce its commitment to medtech innovation and bolster its long-term growth prospects. The company pledged further allegiance to medical technology through two acquisitions in the second half of the year and an expanded partnership with Meta.

The first deal, announced in mid-July 2024, involved EssilorLuxottica acquiring an 80% stake in Heidelberg Engineering, a German provider of diagnostic solutions and technologies for clinical ophthalmology. Heidelberg Engineering has extensive technological and scientific expertise in optical coherence tomography, real-time image processing and analytics, large-scale data analysis, and digital surgical navigation serving medical professionals, scientists, and researchers in various ophthalmic areas. Heidelberg Engineering’s solutions are used for the early detection of such eye diseases as glaucoma and macular degeneration.

FROM THE TOP: “As we look ahead, we are stepping into an era of great opportunities. From medtech solutions enhancing lives globally to category-defining wearables reshaping how consumers experience the world, we are driving the future. Our ambition is clear: we are creating a transformative platform that reimagines the eyes as a gateway to new possibilities—the most seamless and immediate bridge between human intelligence and AI, between reality and the digital world.”

—Chairman and CEO Francesco Milleri and Deputy CEO Paul du Saillant

EssilorLuxottica executives deemed the Heidelberg transaction a “step forward” in the company’s ongoing medtech journey and said it would help enhance the doctor and patient experience.

“Heidelberg Engineering, with its commitment to research and development, shares our core values. By harnessing the full spectrum of our Group’s capabilities in the optical industry…we are dedicated to fostering their long-term growth while enhancing the doctor and patient experience,” Milleri and du Saillant said in announcing the deal. “Heidelberg Engineering…is a perfect fit for EssilorLuxottica as it will bolster our presence in the medtech space.”

So will the late-year (2024) purchase of Italian medical device developer/manufacturer Espansione Group. The company’s patent-protected products are used in more than 40 countries to diagnose and treat dry eye, ocular surface, and retinal diseases. Its photobiomodulation technology—Light Modulation Low-level Light Therapy—is employed in ophthalmological and dermatological applications, along with its Intense Pulsed Light Technology.

“This investment, made in one of our home countries, will expand our portfolio of medical devices and solidify our role in the optical industry,” Milleri said. “EssilorLuxottica’s medtech journey, aimed at elevating vision health standards, will continue to be an open and collaborative one, where our products and services are accessible to all industry players.”

EssilorLuxottica fortified the open and collaborative nature of its medtech journey by extending its partnership with Meta Platforms into the next decade. The pair’s (now) six-year-old collaboration has spawned two generations of Ray-Ban branded smart glasses, the latest of which entered the mainstream last year, garnering widespread adoption.

“I’m proud of the work we’ve done with EssilorLuxottica so far, and I’m excited about our long-term roadmap ahead,” Meta Founder/CEO Mark Zuckerberg declared last fall after the partnership was extended. “We have the opportunity to turn glasses into the next major technology platform and make it fashionable in the process.”

Fashionable and functional. On the heels of their partnership extension, EssilorLuxottica and Meta revealed new features for the Ray-Ban Meta smart glasses. Among the updates is an option for a fully transparent frame with Transitions GEN ST light-adaptive lenses in sapphire and Transitions GEN ST colors ranging from ruby, gray, and graphite green to amethyst, emerald, amber, and brown.

Technological enhancements include:

• Easier conversations with Meta AI. Ray-Ban Meta wearers no longer need to say “hey Meta” for each question. Similarly, questions about objects in view do not need to start with “look and.”
• Memory assistance. The glasses can help wearers remember trivial things, like parking spots or phone calls to family. Ray-Ban Meta also can take action based on text being viewed, so wearers can ask the glasses to call a phone number on a flyer or scan a QR code.
• Recording and sending voice messages on WhatsApp and messenger without pulling out a cell phone.
• Real-time help. Meta AI video enables the glasses to share views with the wearer for more natural conversations. The glasses, for example, could provide meal prep ideas while its wearer is walking through a supermarket, or provide timely tips while its user is exploring a new city.
• Real-time speech translation for conversations in Spanish, French, or Italian.

“As Meta’s AI advances, we’re committed to expanding our styles offerings. Each update introduces new capabilities that enhance the user experience, making our smart glasses more intuitive and accessible,” EssilorLuxottica Chief Wearables Officer Rocco Basilico commented. “We look forward to future innovations that will shape the way we connect with each other and the world.”

While EssilorLuxottica prioritized a disruptive innovation strategy last year in its quest for greater medtech market share, the company also worked to ensure continued future growth in its consumer business.

Besides renewing its licensing deals with Michael Kors, Dolce&Gabbana, and Prada, EssilorLuxottica forged a new 10-year agreement with Diesel. It also established an optical retail footprint in Romania with the July 2024 purchase of Optical Investment Group and expanded into the streetwear sector with the acquisition of the Supreme brand from VF Corporation.

“Over the past years, we have optimized every facet of our organization…expanding our brand portfolio and strengthening our leadership position through technology and AI investments,” Milleri and du Saillant noted in their annual report year-in-review letter. “Today, our company is in the best shape it has ever been.”

Best shape indeed: 2024 revenue soared to a record €26.5 billion ($27.6 billion), adjusted operating profit exceeded €4.4 billion, adjusted net profit surpassed €3 billion, and free cash flow reached €2.4 billion.

Both of the company’s reporting segments delivered stellar financial performances too. Professional Solutions sales rose 2.9% (4.7% in constant currency rates) to €12.54 billion ($13.07 billion), while Direct to Consumer revenue jumped 5.8% (7.1% in constant currency rates) to €13.96 billion ($14.5 billion).

At 9.7%, Latin America posted the largest sales hike in fiscal 2024 (constant currency rates) followed by Asia-Pacific at 9.3%, EMEA at 7.9%, and North America at 3.1%.

€12.19 Billion ($13.46 Billion)
Prior Fiscal: €11.77 Billion
Percentage Change: +3.5%
R&D Expenditure: €593M
Best FY23 Quarter: Q2 €3.2B
Latest Quarter: Q1 €3.08B
No. of Employees: 77,500

The story, as it’s been told, is destined for legendry.

It begins seven years ago at Facebook’s annual developer conference in downtown San Jose, Calif., where head honcho Mark Zuckerberg is plugging his vision for augmented reality technology. He mesmerizes attendees with science-fiction-sounding creations (instant home makeovers? simultaneous mapping?) spawned from a world in which the physical and digital realms are nearly indistinguishable.

“…we all know where we want this to get eventually, right? We want glasses or eventually contact lenses that look and feel normal but that let us overlay all kinds of information and digital objects on top of the real world,” Zuckerberg tells the crowd, according to a transcript of his speech. “So we can just be sitting here and we want to play chess—Snap! Here’s a chessboard and we can play together. Or you want to watch TV, we can put a digital TV on that wall and instead of being a piece of hardware, it’s a one dollar app instead of a $500 piece of equipment…think about going to Rome on vacation and having information about the Colosseum overlaid on the actual building or directions overlaid on the actual street. And think about if your daughter is a big Harry Potter fan, for her birthday, you can change your home into Hogwarts…”

At some point during his F8 2017 sermon, Zuckerberg reportedly shows the crowd a mockup of the smart glasses he envisions. They look similar to Ray-Bans.

As Zuckerberg rallies his troops in preparation for the physical-digital world mashup, Rocco Basilico is sitting half a world away, tossing around his own ideas for smart glasses. He works for Ray-Ban brand owner EssilorLuxottica SA, the world’s largest manufacturer of optical lenses, spectacles, and sunglasses.

Clearly, EssilorLuxottica needed help in only one area—incorporating digital technology into its eyewear. It needed a partner that could make its ordinary glasses (and lenses) “smart.”

Basilico thinks Facebook could be that partner. He runs the idea past Zuckerberg in a cold email in 2018 or early 2019 (accounts differ). Shortly thereafter, Zuckerberg flies to Milan, Italy, to meet with Luxottica’s late Founder/Chairman Leonardo Del Vecchio (his company’s merger with French ophthalmic optics firm Essilor was still fresh). Following that meeting, Facebook’s hardware executives tour Luxottica’s Italian research center, and then join Luxottica management in a week-long workshop to hash out features of the smart glasses (codenamed “Stella”).

And that’s the story—as it’s been told—of EssilorLuxottica’s move into the barely-tapped smart glasses market. While it carries risk (remember Google Glass?), the company’s carefully calculated gambit could eventually pay off as augmented reality, interconnectivity, and artificial intelligence-powered solutions become more commonplace in the eyewear industry.

FROM THE TOP: “It was a year of major investments: growing new product categories, with Stellest in myopia and Ray-Ban Meta in wearables, adding beloved brands like Moncler and Jimmy Choo to our portfolio, leveraging artificial and business intelligence, expanding our operations footprint and reinforcing the retail presence globally. This will support the evolution of the Company and the transformation of the industry over the next decade.”

—Chairman and CEO Francesco Milleri and Deputy CEO Paul du Saillant

“Eyewear is the perfect tool,” Basilico told Forbes earlier this spring. ‘Half the populace is already wearing it. That’s the magic. That’s the hope, to combine beauty and technology. They go hand in hand. I believe they can save the world and make it a little better place.”

Making the world a better place—for the spectacled public, at least—was the major impetus behind next generation of smart glasses developed by EssilorLuxottica and Meta Platform Inc. Introduced last fall, the Ray-Ban Meta smart glasses are the first to feature live streaming and built-in Meta AI, a higher quality camera, and better microphones.

The glasses’ livestreaming function allows content creators to broadcast their experiences and point of view in real time, hands free. Wearers can toggle between the glasses and phone camera to Instagram Live or Facebook Live for up to 30 minutes. The Meta AI offering was exclusive to the United States at launch; wearers can use the voice prompt “Hey Meta” to dive deeper into a creative moment and control features on the glasses.

The Ray-Ban Meta’s camera goes from 5 MP to an ultrawide 12 MP, which takes high-quality photos and immersive 1080p videos in portrait orientation. Discreet open-ear speakers have increased bass response and noise suppression, and each pair of glasses has five built-in microphones to support seamless switching between music and calls, while allowing wearers to hear background sound and stay attuned to the world around them. The Ray-Ban Meta collection features 21 styles, colors, and lens variations.

“This is what we imagined when we first decided to enter this space,” Basilico said upon the smart glasses’ September 2023 release. “Truly wearable, life-enhancing technology. And it will only get better.”

Significantly better, conceivably: The encore to Ray-Ban Meta is a pioneering technology that blends eyeglasses with hearing aids. Facilitated by EssilorLuxottica’s acquisition last summer of Israeli startup Nuance Hearing, whose devices reduce background noise and distractions, the glasses will cater mostly to people with mild to moderate hearing loss. Nuance’s acoustic beamforming technology will be embedded in EssilorLuxottica’s lenses, with the audio component “completely invisible,” according to the company. The glasses are expected to debut in North America the second half of this year.

“While sight remains our core business—and growing the optical market our strategy—we are positioned to open up a new avenue for the industry by addressing the need for good hearing with innovative technologies,” EssilorLuxottica Chairman/CEO Francesco Milleri and Deputy CEO Paul du Saillant said in a joint statement upon the Nuance deal. “Our proprietary hardware and software, combined with our design and manufacturing capabilities, will enable us to pair hearing solutions and prescription glasses into one groundbreaking product.”

Both the Nuance Audio eyewear line and Ray-Ban Meta collection represent a significant switch in EssilorLuxottica’s business strategy and the combined firm’s first ventures into new business sectors. The shift likely was driven by the growing popularity and future market potential of smart solutions, digital connectivity, AI, and the Metaverse.

Expanding into the smart glasses sector could help the company capture considerable market share and safeguard its fiscal future. The Ray-Ban Meta has already proven beneficial for EssilorLuxottica’s financial health, having helped lift fourth-quarter 2023 sales despite its release late in Q3.

The company’s Professional Solutions segment was the main beneficiary of Ray-Ban Meta’s late-year sales sprint: Revenue jumped 7.4% to €12.19 billion ($13.46 billion), and all geographic regions posted gains, according to EssilorLuxottica’s full-year earnings report.

The company’s overall gross profit rose 3% last year to €16.04 billion ($17.71 billion), while total operating profit climbed 0.6% to €3.17 billion ($3.5 billion) and net profit came to €2.42 billion ($2.67 billion), though the gains were slightly impacted by inflationary headwinds.

“…[we] delivered another year above 7% revenue growth, including an acceleration in Q4, with every one of our regions doing its part. Our profitability remained strong…” Milleri and Saillant said, summarizing the firm’s 2023 financial performance. “It was also a year of major investments: growing new product categories, with Stellest in myopia and Ray-Ban Meta in wearables, adding beloved brands to our portfolio, leveraging artificial and business intelligence, expanding our operations footprint, and reinforcing the retail presence globally. This will support the evolution of the company and the transformation of the industry over the next decade.”

EssilorLuxottica reinforced its global retail presence through a perpetual license agreement it signed last July with Eastman Kodak Company. Effective Jan. 1, 2024, the agreement grants the eyewear giant exclusive rights to use Kodak’s brand for any products or services in connection with its business.

Product line reinforcements came in the form of clinical trial results. In April last year, EssilorLuxottica shared four-year study data showing its Essilor Stellest lenses continue to slow myopia progression and axial eye elongation in children in the fourth year. Essilor Stellest lenses are based on the optical 3/31 design of highly aspherical lenslets (HAL). Key study findings included:

• • HAL lenses saved more than one and a quarter dioptres of myopia on average after four years.

• • Myopia progression and axial eye elongation in children wearing HAL lenses was slower compared to a modeled control single vision group.

• • HAL lenses remain effective in slowing myopia progression and axial eye elongation in older children (11-16 years old) in the fourth year.

€11.77 Billion ($12.55 Billion)
Prior Fiscal: €10.4 Billion ($11.78 Billion)
Percentage Change: +13.2%
R&D Expenditure: €343M
Best FY22 Quarter: Q2 €3.06B
Latest Quarter: Q1 €3.03B
No. of Employees: 72,000

Leonardo del Vecchio, chairman of spectacles maker EssilorLuxottica and one of Italy’s wealthiest business titans, passed away at age 87 in June 2022. The Italian businessman founded Luxottica in 1961 and built up a firm that owns the Ray-Ban brand and joined forces with France’s Essilor in a megamerger in 2018.

Del Vecchio began his childhood in an orphanage and grew to build a fortune of tens of billions of Euros in what CNBC called “one of the most famous rags-to-riches story in Italy’s post-war economic recovery.”

“Leonardo Del Vecchio was a great Italian. His story, from orphanage to leadership of a business empire, seems like a story from another time. But it is an example for today and tomorrow. RIP,” European Economy Commissioner Paolo Gentiloni said on Twitter.

Del Vecchio was executive chairman of EssilorLuxottica until 2021, when he relinquished the reins of day-to-day leadership to CEO Francesco Milleri. He personally supported Milleri as head of the eyewear giant when the merged group began. According to Forbes, Del Vecchio was Italy’s second-richest man behind Giovanni Ferrero of the Nutella-making group.

“With the passing of Del Vecchio, Milan loses one of the most emblematic figures of its recent history,” Milan mayor Giuseppe Sala said on Twitter.

EssilorLuxottica’s “Professional Solutions” business encompasses the Essilor International eyeglass business. The segment posted €11.77 billion ($12.55 billion) in revenue in its 2022 fiscal year, growing 13.2% over the prior year. According to a press release the company issued reporting full-year results, Latin America outperformed in the double-digit growth territory. North America posted single-digit growth despite “softer trends” with independent eye care providers. EMEA and Asia-Pacific reported at high-single digit levels. The lens category supported the business and myopia management portfolio, mainly driven by Stellest lens’ sales, more than doubled.

To start off March, EssilorLuxottica completed the acquisition of the U.S.-based lab network Walman Optical. Walman is a lab partner to vision care practices around America. First revealed in March 2021, the acquisition will draw on EssilorLuxottica’s product and service innovation to create growth opportunities.

The beginning of March also saw the closing of EssilorLuxottica and GrandVision’s transaction for Vision Group to acquire the Vista Sí chain in Italy, which includes the brand and all 99 stores, as well as 75 GrandVision stores in the country. The deal followed agreements made as part of the acquisition of GrandVision by EssilorLuxottica.

EssilorLuxottica finalized a joint venture agreement with CooperCompanies in March as well. The two vision care leaders aim to commercialize novel spectacle lens technologies to expand myopia management. SightGlass Vision’s Diffusion Optics Technology uses thousands of micro-dots in a lens to softly scatter light to reduce contrast on the retina.

A month later, EssilorLuxottica, GrandVision, and the Optic Retail International Group BENE (ORIG/MPG) closed the book on the deal for ORIG/MPG to acquire 142 EyeWish stores in the Netherlands and 35 GrandOptical stores in Belgium.

EssilorLuxottica and Politecnico di Milano revealed the first-ever joint research center to design the “smart glasses of the future”—EssilorLuxottica Smart Eyewear Lab—in July. The over €50 million investment will produce industrial research and experimental development of wearables capable of autonomous network connection. The project aims to provoke development of tech and services by means of eyewear interfaces.

The lab will initially last five years, and when fully operational will employ over 100 researchers and scientists. Its main challenge will be developing core hardware, software, and application tech to interact with the digital world. The project will analyze and develop electronic and photonic components, as well as algorithms to acquire, process, and offer real-world info from augmented reality. The tech will then be integrated into prototype glasses by developing materials, charging systems, and algorithms to validate performance in the real world. An ad hoc curriculum will also aim to foster development of skills in the wearable and smart eyewear field.

The company released three-year clinical trial results for its Essilor Stellest lens in September, demonstrating the lenses continue to show strong efficacy in slowing myopia progression and axial elongation in the third year of the trial. The lenses saved over one diopter of myopia on average over three years as well as a marked increase in myopia control efficiency in children who wore the lenses full-time. Stellest lenses were also shown to be effective to slow myopia progression and axial elongation in older children.

The French competition authority (FCA) published a decision concerning Essilor International in November related to an investigation opened in 2014. An €81 million penalty was imposed for discrimination of online players and protection of brick-and-mortar retailers, connected with distribution of certain prescription lenses.

Essilor claimed its practices were compliant with the competitive and regulatory contexts of the concerned period and they benefitted customers, partners, and the whole industry. EssilorLuxottica “strongly disagreed” with the FCA’s decision in a press release, will appeal it, and is confident it will successfully show the decision is ungrounded.

€10.40 Billion ($11.78 Billion)
Prior Fiscal: €8.48 Billion
Percentage Change: +25.1%
R&D Expenditure: €321M (total)
Best FY21 Quarter: Q2 €2.73B
Latest Quarter: Q1 €2.78B
No. of Employees: 180,000 (total)

While M&A dealings can take some time from initial announcement to the transaction’s close, it’s not typically years. That’s been the case, however, for EssilorLuxottica’s €7.3 billion ($8.7 billion) acquisition of GrandVision, a global retailer of optical solutions. The purchase was initiated in July 2019, but faced a number of hurdles along the way.

EssilorLuxottica offered a legal argument that GrandVision made several decisions during the COVID-19 pandemic that could provide an “out” for the former firm to cancel its proposed takeover. A Dutch arbitration court agreed with that assessment and its ruling gave EssilorLuxottica the freedom to walk away from the deal, if it chose.

The company, however, decided to stick with the agreement and move forward with the transaction. “After assessing all our options, we have made the decision to proceed with the completion of the deal without further delay. The strategic rationale of the transaction remains strong and unchanged, and after two years of efforts and relentless work, we are now ready to turn a page and start a new chapter of EssilorLuxottica’s history, with GrandVision,” explained Francesco Milleri and Paul du Saillant, respectively CEO and deputy CEO of EssilorLuxottica, via a company statement.

On July 1, 2021, a few days after that announcement, EssilorLuxottica closed on a deal for 76.72% ownership interest in GrandVision (acquired from HAL Optical Investments). The price was the same as the agreement from 2019, which was €28.42 per share.

Concurrent to the legal proceedings between the two organizations, in March 2021, it was announced the European Commission had given the green light for the deal to take place. The decision came with a number of conditions, however. Specifically, the GrandOptical chain (35 stores in Belgium) must be sold but the brand name could be retained. Also, 174 stores in Italy would need to be divested—a combination of all EssilorLuxottica’s VistaSì chain and 72 “GrandVision by” store locations. Lastly, 142 EyeWish stores in the Netherlands (as well as the brand name) needed to be sold.

In June 2021, EssilorLuxottica gained the final clearance required (which was from the Turkish Competition Authority) for the transaction to proceed.

After acquiring the majority of shares from the HAL Optical Investments deal, EssilorLuxottica acquired additional shares at the same price in September 2021. Then in October 2021, the firm made a recommended mandatory public offer to all remaining shareholders, which brought EssilorLuxottica’s total stake in GrandVision’s issued share capital to 99.73%. The last trading date of GrandVision shares was on Jan. 7, 2022, and the company was then be delisted on Jan. 10, 2022. With this, GrandVision’s approximately 7,000 international stores and 39,000 employees were absorbed by EssilorLuxottica.

While it was the most significant acquisition during FY21, the GrandVision deal was not the only purchase made by EssilorLuxottica. In February, it partnered with CooperCompanies to form a 50/50 joint venture to acquire SightGlass Vision, a U.S.-based life sciences company focused on developing innovative spectacle lenses to reduce the progression of myopia in children.

A month later, the company entered into an agreement to acquire U.S.-based lab network Walman. Walman provided services to vision care practices around the country for more than 100 years. It had a network of 35 facilities across the U.S., including prescription lens-finishing labs and hubs for optical instruments and other vision care products. As part of EssilorLuxottica, the company would continue to serve the market under the Walman brand.

In another transaction, October saw approval granted from the Competition and Markets Authority in the U.K. for EssilorLuxottica’s purchase of the Lenstec Optical Group shareholding. This was not the first financial investment in the firm, as Essilor acquired a minority share in the company in 2016 through Shamir. The U.K. organization maintains a network of three optical laboratories and offers optical lenses to the country and throughout Europe.

These companies join an organization that saw great gains achieved in 2021 as demand returned following the pandemic’s dip during 2020. Overall, the company celebrated revenues of €21.50 billion during its 2021 fiscal year. That was an almost 25% increase over the previous 12 months. Within the segment that serves as home to the medical device side of the company, Professional Solutions saw just over 25% in a rise year-over-year to finish at €10.4 billion. Meanwhile, the Direct to Consumer portion, which represents the retail aspect of the firm, ballooned by 24% with a final figure of €11.1 billion.

Beyond financial gains achieved via normal consumer spending behavior for all product types following the worst portions of the pandemic, EssilorLuxottica made a number of product-related announcements to help maintain some degree of growth. In September 2021, Meta (formerly Facebook) announced it was launching its Ray-Ban Stories smart glasses (in a cooperative effort with the eye-glasses manufacturer). With integrated 5MP cameras, built-in speakers, and a three-microphone audio array, the glasses can be used for answering a phone call or recording video.

At the start of the 2021 fiscal, EssilorLuxottica launched its first joint product offering, combining Ray-Ban frames with prescription sunglass lenses. “Private practices will now have an elevated and differentiated complete pair offering that taps into the deep-rooted passion and love of the Ray-Ban brand through Ray-Ban Authentic Essilor Special Edition,” said Rick Gadd, president of Essilor North America. “This is another way that EssilorLuxottica delivers for independent practitioners to maximize success and provide patients unparalleled style and sight through uncompromising care.”

In July, the organization revealed it would create a smart eyewear innovation hub in France. Leveraging more than 10 years of R&D in this technology segment, the company said it intends to accelerate its initiatives to address consumers’ evolving needs and fully capture the potential of this fast-growing wearables segment. According to the firm, smart eyewear is a complex product category that requires the combination of active lenses and sophisticated frames on the one hand, and electronics, sensors, and software on the other, along with the optical function of a lens.

$8.25 Billion ($14.43 Billion)
Prior Fiscal: $8.84 billion
Percentage Change: +6.7%
No. of Employees: 140,000 (total)

At last year’s Facebook Connect annual conference, Facebook CEO Mark Zuckerberg announced his company and EssilorLuxottica would partner to develop the next generation of smart glasses, combining Facebook apps and technologies with Luxottica brands and Essilor advanced lens technology. The first product will be under the Ray-Ban brand, scheduled to launch this year.

“We’re passionate about exploring devices that can give people better ways to connect with those closest to them,” Vice President of Facebook Reality Labs Andrew Bosworth told the press. “Wearables have the potential to do that. With EssilorLuxottica we have an equally ambitious partner who’ll lend their expertise and world-class brand catalogue to the first truly fashionable smart glasses,”

Since EssilorLuxottica proclaimed its $8 billion purchase of optical retailer GrandVision in 2019, the deal has been fraught with legal skirmishes. Last July EssilorLuxottica began proceedings to assess how GrandVision managed business during the COVID-19 pandemic as well as the extent GrandVision breached obligations under the acquisition agreement. “Despite repeated requests, GrandVision has not provided this information on a voluntary basis, leaving EssilorLuxottica with no other option but to resort to legal proceedings,” EssilorLuxottica commented in a press release.

GrandVision filed intent to start arbitration proceedings three weeks later. EssilorLuxottica believed these to be an obvious attempt to detract from GrandVision’s breaches under the Support Agreement and failure to provide required information. The company became concerned about GrandVision’s reluctance to offer information, worrying about about motives and the extent of the obligation breaches.

EssilorLuxottica’s demands for information disclosure were dismissed a month later, so the company filed an appeal in September against the judgment.

In March of this year, the European Commission cleared the acquisition after a long in-depth review slowed by the pandemic. Chilean market regular FNE cleared it in April, following divestment of GrandVision’s Chilean operations under the brand Rotter Y Krauss. The deal has not yet closed due to decisions regarding the ongoing litigations.

The pandemic urged Essilor to speed integration with Luxottica following tensions over governance where both sides volleyed over who was attempting to dominate the company. Last March as the pandemic shut down the world at large, Paul du Saillant was appointed Essilor CEO, succeeding Laurent Vacherot. du Saillant named a new combined management committee, and the Essilor Board of Directors was trimmed from 15 to five members. EssilorLuxottica Co-CFO Hilary Halper stepped down from her position last March as well.

“This is necessary to rebound faster when the recovery comes, fulfill our mission of improving lives by improving sight and further our integration with Luxottica. Together, we will make EssilorLuxottica stronger,” du Saillant, who is also deputy CEO of EssilorLuxottica, told the press.

Executive vice-chairman Hubert Sagnières retired toward the end of last year. EssilorLuxottica CEO Francesco Millieri and du Saillant were given those executive powers as a result.

The pandemic stifled the company’s revenue, dropping 6.1 percent to 6.7 billion Euros ($8.25 billion) from the year prior. Lenses and optical instrument revenue plummeted 12.2 percent to 6 billion Euros. A steep decline in second quarter sales preceded a gradual V-shaped recovery due to strong prescription lens performance. Launches of the Stellest lens, Transitions Signature GEN 8, Varilux Comfort Max lenses, and the VR-800 measuring instrument further bolstered sales last year.

In July, the firm launched the Stellest spectacle lens for myopia in China’s Wenzhou Medical University Eye Hospital. The lens was rolled out globally later in the year. The lens’s H.A.L.T. (Highly Aspherical Lenslet Target) technology consists of aspherical lenslets spread on 11 rings to create a signal volume that slows down eye elongation. Compared to single-vision lenses in a three-year 2018 trial, Stellest slowed myopia progression by 60 percent on average in children after one year. Over the same period, eye elongation was slowed in 28 percent of children wearing Stellest lenses compared to evidence of eye elongation in all subjects wearing single-vision.

August saw the announcement of EssilorLuxottica360, a digital support tool created to help eye care practices improve traffic, visibility, and patient experience. The program supports independent eye care professionals and provides patient-preferred brands and advanced lens technology.

Last October the company rolled out next-generation Varilux Comfort Max varifocal lenses. The lens’ useful vision zone is up to 46 percent larger than previous generations, enabling less struggle to find the right gaze direction or posture. The company claims a wearer flexibility boost of up to 258 more postures and head movements to see sharply. The lens also includes blue light protective material.

“Essilor has responded to the current challenges faced in today’s digital environment to provide a new and reliable solution to offer to patients,” Essilor managing director Tim Precious told the press. “This could help attract patients to try a varifocal lens for the first time and also helps widen the appeal of varifocal lenses to a younger audience with digital eye strain.”

Sunglasses and readers drooped 19.6 percent to 595 million euros due to pandemic lockdowns. Offsetting this loss were strong FGX reader sales and Bolon prescription frame sales in China. Equipment proceeds tumbled 28.5 percent due to reduced investments early last year, and sales of new machines remained subdued from March onward. Consumable sales were resilient throughout the year.

$8.84 Billion ($19.5B total)
Prior Fiscal: $8.33 Billion
Percentage Change: +6.2%
No. of Employees: 150,000 (total)

Tensions were running high last year at EssilorLuxottica, the company born from the October 2018 merger of Essilor International and Luxottica Group.

According to Bloomberg reports, the organization has been wracked with infighting among its leaders. Bloomberg also noted that the company’s share price was 22 percent down at the time of the news (last March). The public fight began with a disagreement over the group’s new chief executive. According to the report, Luxottica founder, EssilorLuxottica executive chairman, and largest company shareholder Leonardo Del Vecchio said Essilor’s leaders weren’t complying with the agreed-upon corporate governance terms.

According to Financial Times, Essilor went on the offensive after Del Vecchio seemed to put confidant and Luxottica Group deputy chairman/CEO Francesco Millieri forward as EssilorLuxottica CEO. Essilor leader and EssilorLuxottica executive vice chairman Hubert Sagnières claimed that Del Vecchio staged a “de facto attempt to take control of the new group.” He also said Del Vecchio made false accusations about the group’s governance and management.

“Francesco Milleri is a scapegoat. Hubert Sagnières must have the courage to say that, for him, I am the problem,” Del Vecchio told Financial Times.

Del Vecchio previously told French newspaper Le Figaro that Sagnières did not communicate with him on filling key management jobs. “He has acted as if Essilor bought Luxottica,” Del Vecchio was quoted saying. The merger agreement was crafted to ensure equal power between the two sides until spring 2021. The clash worried investors because synergies would take longer to occur.

“It’s war between the French and the Italians. All these risks blocking the planned synergies. It’s very bad for the stock. At one moment or another, one of the parties will have to take control,” Jerome Schupp, fund manager at Geneva-based investment firm Prime Partners, told Reuters.

Two months later, EssilorLuxottica and parent company Deflin developed a settlement agreement to overcome the governance issues. Millieri and then-Essilor CEO Laurent Vacherot were given the responsibility of integration and approved appointment of key executives for central functions. Vacherot was also appointed as an EssilorLuxottica director. The search for a new CEO (for which Millieri and Vacherot stated they would not be candidates) began mid-May last year, all existing claims were waived, and legal proceedings were terminated.

“I’m very pleased of this outcome. The industrial rationale of the combination is even stronger when looking at all the opportunities raised during the meetings of the Integration Committee,” Del Vecchio told the press.

“With these decisions driving to a more unified company, EssilorLuxottica is well positioned to accelerate its growth in order to achieve its mission…” Sagnières added.

Paul du Saillant was named CEO of Essilor International this March. He also replaced the retiring Vacherot as a director. He will work directly with Milleri. A proposal submitted April 18 to appoint one additional EssilorLuxottica director was also withdrawn. The search for a new EssilorLuxottica CEO is ongoing, and a final appointment is expected to be made by the end of this year.

Despite the infighting, Essilor International’s revenue jumped 6.2 percent to $8.84 billion last year. (Luxottica revenue also increased 3.2 percent to 9.5 billion euros, but this segment will not be further analyzed. Total EssilorLuxottica revenue grew 4.4 percent to 17.4 billion euros).

Strength across all geographical regions expanded Essilor’s Lenses & Optical Instruments division revenue 5.5 percent to 6.8 billion euros. The Vision-R 800 phoropter was particularly successful in Europe. Double-digit growth in China for Eyezen, Crizal, and Varilux lenses further padded the increase. Latin America gained a boost thanks to market expansion activities and a new partnership with a critical player in the region. In North America, sales grew 7.6 percent to 2.3 billion euros; European revenue rose 5.7 percent to 971 million euros; Asia, Oceania and Africa proceeds boosted 6.8 percent to 756 million euros, and Latin America earnings increased 1 percent to 304 million euros.

Essilor also launched its Transitions Signature GEN 8 lenses in the U.S. in July. Transitions Signature GEN 8 photochromic lenses offer protection, outdoor darkness, full indoor clarity, responsiveness, and long-lasting performance. Activation and fade back speed have also been improved.

Essilor’s Sunglasses and Readers segment revenue rose 8.9 percent to reach 885 million euros. Strong demand for Xiamen Yarui Optical (Bolon) products in China and robust demand for readers and sunglasses at Costa and FGX International in the U.S. helped to achieve the result. E-commerce sales for the division were up an impressive 20 percent. The company also divested its Turkish subsidiary Merve, which markets sunglasses to consumers, in keeping with an antitrust commitment outlined in the merger deal.

The firm’s Equipment division posted 2 percent sales gains with 221 million euros. Strong performance in Europe, Latin America, and Asia was able to offset a slowdown in other developed markets. Digitalization, new generation surfacing machines, and coating machines drove the positive performance. The order book business also contributed, enabling continued R&D investment for production methods and lab efficiency across the ophthalmic lens industry.

The company acquired a 76.72 percent interest in optical retailer GrandVision in an $8 billion deal at the end of July, making it a part of the global eyewear and eyecare group. This purchase will expand EssilorLuxottica’s optical retail platform and strengthen its direct-to-consumer business, mainly in Europe. Expanding retail operations while maintaining wholesale distribution will allow the company to more effectively drive consumer engagement with eye care. The buy will also add over 7,200 stores globally, over 37,000 employees, and is expected to garner about 3.7 billion euros in annual revenue. Upon completion of the transaction, the company will launch a mandatory public offer for the remaining shares.

“EssilorLuxottica is looking here to address all the segments of the market, from glasses with Essilor to spectacles with Luxottica and retail with GrandVision,” Gregoire Laverne, a fund manager with Roche Brune Asset Management, told Reuters.

The company completed 29 merger and acquisition deals in 2019, representing full-year revenue of close to 218 million euros. Major transactions included German online optical products retail platform Brille 24 in April, Mexican integrated prescription laboratory operating optical store chain Devlyn in July, Australian ophthalmic instrument distributor Optimed and Italian optical glass sun lens manufacturer Barberini in September, and Swedish sunglass/readers distributor Future. The company also completed purchase of a 51 percent stake in Ukrainian optical market leader Optical House on Jan. 3, 2020, which through about 190 stores under the Luxoptica brand provides a wholesale platform for lenses, frames, and contact lenses.

At the very end of its fiscal year, EssilorLuxottica uncovered fraudulent monetary transfers at a Thailand plant belonging to Essilor International as it was continuing its efforts to unite both companies’ supply chains and reorganize senior management. According to the firm’s annual report, these illicit activities impacted 2019 results by 185 million euros. The company also terminated any employees suspected of involvement.

AT A GLANCE
$8.53 Billion ($18.5B total)
Prior Fiscal: $8.46 Billion
Percentage Change: +0.8%
No. of Employees: 150,000 (total)

Sometimes the simple fixes are—well, not so simple.

Take poor vision, for example. At first glance, the solution seems fairly straightforward (and obvious): eyeglasses.

But there are far more challenges with this remedy than meets the eye.

Spectacles have been around for centuries (millennia, if history proves correct), allowing for a practical, economical, relatively harmless treatment to visual impairment. Yet a third of the world’s population (2.5 billion) lives with poor vision due to a lack of basic eyeglasses; and 624 million of those folks are considered blind or visually impaired without corrective lenses, according to a 2016 World Economic Forum (WEF) report.

Such numbers should hypothetically shrink, if not disappear altogether, with the widespread dissemination of eyeglasses.

It should. And it would—if indeed the solution was as simple as it seems.

But there are numerous complexities involved in a mass eyeglass distribution/access project. Cost is perhaps the greatest challenge, as 80 percent of people with bad eyesight live in less developed countries, where few can afford glasses. Poor access is another barrier—eyeglasses in developing nations are primarily available in high-priced urban optical shops; for the rural indigent, traveling to these stores can be an expensive and prohibitive proposition (it often requires a day-long trip each way to a nearby city).

Limited screening efforts, cultural biases, and misconceptions also complicate vision correction initiatives. In some areas of China, for instance, school administrators and doctors believe glasses weaken vision. Also, an East Timor study found vanity and embarrassment keep residents from wearing spectacles.

Other hurdles to better vision correction access include the lack of trained optometrists in developing countries (there are roughly 100 in Kenya serving 50 million people), and the prevalence of more serious diseases (AIDS, malaria, tuberculosis, etc.).

Poor eyesight may not be much of a health threat but it’s become quite an economic menace over the years, costing the global economy $227 billion annually in lost productivity among the vision impaired, according to WEF data. That loss can be easily be recouped, though: The agency estimates that productivity could rise as much as 34 percent through better access to reading glasses for presbyopes.

“Illiteracy costs the global economy $1.19 trillion each year; in fact, research reveals that 74 percent of illiterate adults failed one or more parts of a vision screening,” the WEF states in its report, “Eyeglasses for Global Development: Bridging the Visual Divide.” “Secondary benefits of correcting vision in adults include safer drivers and safer roads, as well as increased participation in the digital economy.

“Solving this problem is within society’s grasp, but it needs to seize the opportunity to harness market forces for accomplishing the task. Although eyeglasses have existed for hundreds of years, scalable distribution models have [only] now emerged…” the report notes. “Equitable access to eyeglasses is in the best interest of governments and businesses…shouldn’t this achievable and highly impactful goal be added to the global development agenda?”

Essilor Group certainly thinks so. The company, now operating as “EssilorLuxottica” upon finalizing its 2017 merger with Luxottica Group SA last fall, is doing its part to improve access to eyewear. In 2018, the company partnered with an integrated global energy firm as well as several Asia-Pacific governments to create a vision care infrastructure for underserved communities in Bhutan and India.

Essilor’s alliance with Total Group (a supplier of oil, natural gas, and low-carbon electricity) created a pilot vision care program for drivers in Kenya, where an estimated 650,000 people are blind or visually impaired. The program enables professional and non-professional drivers to receive eye checkups at Nairobi truck stops and Total service stations.

Over in Asia, Essilor rolled out its Eye Mitra initiative in Bangladesh, Odisha (India), and Bhutan. Launched in 2013, Eye Mitra—meaning friend of the eyes in Sanskrit—trains young under-employed residents of rural and semi-urban areas to become primary vision care providers. The program teaches participants to conduct basic vision tests and helps them start a prescription eyewear business in their communities. Essilor provides ongoing entrepreneurship, logistics, and marketing support to help Eye Mitras grow their businesses, employ additional staff, and run outreach screening events to expand vision care to outlying rural areas.

“Poor vision affects every aspect of a person’s life, impacting their ability to learn, to work, to live independently, and to realize their full potential,” Essilor Chairman Hubert Sagnières said in announcing the Eye Mitra rollout in Bhutan last December. “We are proud to be collaborating with the Bhutanese government to develop a strategy and actions which will see poor vision eradicated from the country. This will bring further prosperity and happiness to its people and Essilor one important step closer to its ambition of eradicating poor vision worldwide within one generation.”

Considerably sound finances enabled Essilor to take such a paramount step last year: Annual revenue rose 4.6 percent on a “like-for-like” basis to 7.45 billion euros (5.1 percent excluding currency volatility), with fourth-quarter proceeds swelling 5.7 percent. The company boosted its 2018 sales in all product and geographic reporting segments thanks largely to robust demand throughout most of the world for its Varilux progressive opticals and Transitions photochromic lenses.

Both lenses helped Essilor regain its footing in Brazil last year after a disappointing 2017 performance, though Transitions were particularly popular in Columbia. Solid overall sales in all Spanish-speaking countries partly contributed to a 7.7 percent increase in Latin American revenue (down 3.5 percent reported to 468 million euros).

Varilux and Transitions opticals also worked their pecuniary magic in Europe, where proceeds jumped 2.5 percent (1.3 percent reported) to 1.99 billion euros. Supporting that gain were Crizal (anti-reflective) and Eyezen (blue light-blocking) lenses.

Varilux lenses proved futile in North America, though. Transitions Style Colors and Style Mirrors helped elevate sales there by 3.2 percent to 2.77 billion euros (down 0.4 percent reported). Other revenue determinants on the continent included the continued expansion of the Essilor Experts program, strong online sales of eyeglasses and contact lenses, and partnerships with Alliance members, key accounts, and managed vision care organizations.

Varilux made up for its North American futility in Asia/Pacific/Middle East/Africa, where it teamed with Eyezen lenses to raise revenue 2.3 percent (reported) to 1.19 billion euros. Growth was strong in mainland China both for higher-end and mid-range products; progressive and photochromic lenses, as well as major brands drove significant gains in Turkey, southeast Asia, South Korea, and to a lesser, extent, Japan. Trends, however, were mixed in the Middle East and India.

Essilor’s solid like-for-like gains throughout its geographic reporting divisions in 2018 helped boost Lenses and Opticals Instruments revenue 0.4 percent (reported) to 6.43 billion euros. The Lenses and Opticals segment’s Instruments division delivered like-for-like 6 percent growth on the year, fueled by solid refraction and diagnostic device sales, along with new innovations in edging-mounting (Mr. Blue Sun & Sport) and aberrometers (an instrument that customizes optical equipment).

The company’s Mr. Blue edger allows eyecare professionals to produce Chemistrie clips as custom-made sunwear and achieve Half Jacket frame coverage for endurance and extreme sports. “With Mr. Blue Sun & Sport, eyecare professionals have the opportunity to generate additional revenues by targeting eyewear needs for outdoor activities,” said Samy Lauriette, senior vice president, Essilor Instruments Americas.

The Wave Analyzer Medica 700+ (automatic) aberrometer provides seven measurements in 90 seconds. Based on wave-front and Shack-Hartmann technology, the machine uses wireless technology to facilitate data transfers and allow eyecare professionals to share results with patients.

Surfacing machines were popular with customers, too. The latest generations of Essilor’s VFT-Orbit 2 digital generator, the Multi-FLEX polisher, and the ART (Alloy Replacement Technology) lens blocking machine—which holds lenses in place during their manufacturing—raised Equipment sales 0.8 percent (reported) to 227 million euros in 2018. Asian and U.S. machine sales surged during the fourth quarter, and Latin American sales benefitted from small prescription laboratories’ switch to digital surfacing technology throughout the year.

Essilor’s Sunglasses & Readers segment posted the highest (reported) sales increase in 2018: Proceeds climbed 4.1 percent to 798 million euros due mainly to higher FGX International revenue, Costa’s expansion in the western United States, and solid demand in China for sunwear and optical frames.

$9 Billion
NO. OF EMPLOYEES: 67,000

Presbyopes are a challenging lot.

They’re the folks suffering from presbyopia (age-related farsightedness, i.e., the inability to focus clearly on close-up objects). Though it sounds easily remediable, the condition actually can be tricky to treat depending on its severity and age of the person.

Reading glasses (readers), for example, usually correct the problem in newly diagnosed presbyopes, but this solution can trigger eye fatigue. Bifocals, on the other hand, are common in older patients with deteriorating (near) vision, though conventional lined lenses often cause image “jump”—the shifting of images as the eye passes from the lens’s distance portion to its magnifying segment. Some bifocals control image jump better than others; those with a softer line between lenses typically cause less eye stress during crossovers. A hard line, conversely, requires a sharper, more abrupt transition, and can be jarring for people who are unaccustomed to the effect.

Progressive (“no-line”) lenses eliminate image jump, as they seamlessly transition between three different viewing fields (distant, intermediate, close). But these lenses generally are more expensive, have longer adjustment periods, and frequently result in peripheral image distortion (a.k.a., the “swim effect”). Progressives also are prone to geometric distortions along the power change gradient, and require a careful fit to avoid on-axis blur, narrow vision fields, and one-eyed clear vision.

Moreover, both progressives and straight-line bifocals are still fairly inept at mastering intermediate vision or defending against harmful blue light—the kind emitted from the sun, fluorescent bulbs, flat-screen televisions, and most electronic devices.

French lensmaker Essilor International SA, however, is addressing those shortfalls with the development of corrective lenses for improved intermediate vision, reduced reflection/glare, and blue light protection. The company’s Varilux X series—touted as the first progressive lens for the “modern world”—is engineered to optimize vision for tasks within arm’s reach (16-28 inches); its Xtend technology increases both the depth and breadth of simultaneous vision for multiple near distances, giving Gen Xers the ability to switch between smartphone texting, face-to-face conversations, and work emails with minimal head movement.

The new lens meets 75 percent of a presbyope’s visual needs within arm’s length—16 percentage points higher than the average match for alternative premium progressive designs, Essilor claims.

“Today, most of us work in the middle distance, on computer screens or other digital devices, and this is where traditional varifocal lenses are inadequate—intermediate distance isn’t great,” Dr. Ryan Powell, president of Vision Source Eye Care in Kansas City, Mo., noted in Essilor’s 2017 annual report. “However, the Varilux X series allows you to transition smoothly from far range to close range. It’s the first progressive lens to offer smooth transition for high-quality vision at every distance. In our practice we’re prescribing for our patients the best options for them. The Varilux X lens with that improved intermediate distance is fantastic. Our patients are loving that lens.”

So is Essilor, but for completely different reasons: The Varilux X helped boost the company’s Lenses and Optical Instruments revenue 4.5 percent last year to 6.5 billion euros. Sales also rose in the division’s four geographic reporting segments, with Europe posting the highest increase (5.7 percent to 2.01 billion euros), followed by Asia/Pacific/Middle East/Africa (4.7 percent to 1.19 billion euros), Latin America (4 percent to 486 million euros) and North America (3.6 percent to 2.8 billion euros).

The Varilux X also was instrumental in raising overall company revenue in 2017, though the Crizal Sapphire 360˚ UV anti-reflective lens and Eye Protect System assisted as well. The Crizal lens is equipped with multi-angular technology to reduce reflections and protect against ultraviolet (UV) light, whereas the Eye Protect System protects against UV and blue-violet light while allowing the transmission of good blue-turquoise light. Compared to standard anti-reflective coated lenses, Eye Protect System optics offer up to three times more protection against harmful light, according to product data.

Augmenting the three lenses’ general impact on Essilor’s 2017 finances was robust growth in the company’s Equipment segment and U.S. gains in Sunglasses & Readers.

Equipment sales jumped 6.4 percent to $226 million due to high demand for new lens manufacturing technologies, while Sunglasses & Readers proceeds surged 12 percent to $766 million on the fettle of expanded online retailing and key brand growth in U.S. and international markets. Total company revenue swelled 6.7 percent (constant exchange rates) to 7.5 billion euros.

“We continued to provide a growing number of solutions in all price ranges to correct and protect eyesight and prevent visual health risks,” president and chief operating officer (COO) Laurent Vacherot said in the company’s latest annual report. “With sales up 6.7 percent and adjusted net profit up 2.5 percent, our 2017 performance illustrates the strength of our development strategy.”

That strategy no longer relies on traditional R&D methods but rather a customer-driven design approach organized by technique/skill, physical/chemical properties, engineering, and optical construction. Implemented last year, Essilor’s new approach to innovation targets products in five consumer segments: kids/teens (ages 0-18); young adults (ages 19-44); midlife (ages 44-64); seniors (ages 65 and older); and “next-gen” consumers who lack easy access to eyewear and eyecare.

To better understand these new segments, Essilor is studying social networks, online communities, and selfie videos, and conducting real-life product testing in a specially designed “house lab.”

“Innovation at Essilor reflects the world today—networked, collaborative, and creative,” COO Jean Carrier said in an investor Q&A. “By putting consumers’ needs at the heart of discussions involving multidisciplinary teams, we’re drawing on a diversity of expertise to generate ideas and develop solutions for new needs and expectations.”

One of those new solutions is “connected glasses” similar to the kind Google has intermittently been developing for several years now. The project is bound to get a major boost from Essilor’s 46 billion euro  “combination” with Luxottica Group SA, the world’s leading consumer eyewear group and owner of Ray-Ban, Oakley, and Sunglass Hut. Announced in January 2017, the deal would create a global eyewear powerhouse worth 15 billion euros and generate cost savings and increased revenue of 400 million euros to 600 million euros annually within three to four years.

Although the transaction has not yet officially closed (expected soon), the combination has been unconditionally approved by the EU. The agency cooperated with antitrust authorities in Australia, Brazil, Canada, Chile, China, Israel, New Zealand, Singapore, South Africa, Turkey, and the U.S. Federal Trade Commission.

“With this agreement, my dream to create a major global player in the eyewear industry, fully integrated and excellent in all its parts, finally comes true,” Leonardo Del Vecchio, executive chairman and founder of Milan, Italy-based Luxottica Group, said when the deal was announced. “It was some time now that we knew this was the right solution but only [now] are there the right conditions to make it possible. The marriage between two key companies in their sectors will bring great benefits to the market, for employees and mainly for all our consumers. Finally, after 50 years, two products which are naturally complementary, namely frames and lenses, will be designed, manufactured, and distributed under one roof.”

Del Vecchio—Italy’s second-richest person—will become executive chairman and CEO of the combined business (named EssilorLuxottica) once the deal closes.

By far, Luxottica was Essilor’s largest partnership (or combination, as the companies like to call it), but it was certainly not its only one in 2017. Essilor executed nine acquisitions of distributors and prescription labs last year, strengthening its presence in existing markets and entering new countries (Ethiopia and Guatemala, representing 20 million customers). In addition, the company signed a new partnership with the Australian government in December to provide affordable vision care for 100,000 low-income consumers in rural Bangladesh (India), and paired with the Fédération Internationale de l’Automobile to raise awareness of the importance of regular eye checks for safe driving.

$7.5 Billion
NUMBER OF EMPLOYEES: 63,676

“Improving the lives of 7.4 billion people by improving their sight.” That’s the stated mission of Essilor as dictated by chairman and CEO Hubert Sagnières. And based upon the performance of the company in fiscal 2016, the optics OEM is doing a fine job of maintaining that focus as sales grew yet again—a consistent trend since at least 2012.

In 2016, the company reported revenue of €7.1 billion, an increase over 2015’s €6.7 billion. In fact, the company has seen growth continue gradually since 2012 when it reported just under €5 billion in revenue. Looking at the world market, developed countries are providing the greatest amount of overall revenue contribution at €5.5 billion, an increase of almost 5 percent over 2015. While much smaller at €1.6 billion, revenue from fast-growing countries grew at more than 9 percent over the prior year, which could signal an opportunity for Essilor.

Digging deeper, the overwhelming majority of the company’s revenue originated from the OEM’s Lenses and Optical Instruments segment, which accounted for 87 percent of the firm’s overall revenue. Specifically, the segment contributed €6.2 billion in fiscal 2016, with the other segments—Sunglasses and Readers, and Equipment—accounting for €685 million (10 percent) and €212 million (3 percent) respectively. Within the primary Lenses and Optical Instruments segment, the largest customer base is located in the North American market, which generated €2.7 billion in 2016 (or 38 percent of the total revenue for the segment). Following that was Europe (€1.9 billion; 27 percent), Asia/Pacific/Middle East/Africa (€1.1 billion; 16 percent), and Latin America (€468 million; 6 percent).

ANALYST INSIGHTS: Historically, Essilor is a unique company, simply by its unique strategy to focus on organic growth and to be less reliant on acquisitions. However, that all changed in 2017 with the proposed mega-merger acquisition of Luxottica. Assuming the EU approves the deal, Essilor will be challenged to continue aggressive organic growth rates globally. It will be interesting to see how it balances its new pricing power (due to larger market share) versus the ability to provide lower cost lenses (which has driven its global growth).

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

The company points to several reasons for its growth in 2016 without any one specifically outstanding initiative. Rather, the combination of efforts was what ultimately resulted in the 2016 increases. These included addressing unmet visual needs through product innovation, new partnerships, product launches, and leveraging online opportunities. Product innovation was driven primarily by the company’s investment of €214 million toward research and development initiatives. New partnerships included acquisitions and totaled 18 transactions in 2016 for revenue totals of approximately €304 million (further outlined later in this report). Product launches of note in 2016 were fairly numerous (also outlined in greater detail later in this report). E-commerce revenue also grew, as the company experienced successful results through online initiatives, most notably EyeBuyDirect.

“In 2016, [Essilor] continued to provide an ever-growing number of solutions for unmet visual needs by widening its scope of activity in prescription lenses, sunglasses, and online sales,” said Laurent Vacherot, president and COO of Essilor. “Let’s remember that our strategy is to expand in industry segments that are growing faster than average. With this in mind, this year we have forged promising new partnerships, with 18 majority shareholdings in companies across all continents, strengthening our positions in China and in online sales.”

With regard to the aforementioned partnership/acquisition activities, the company made significant investments in a number of companies worldwide and across all segments.

Lenses & Optical Instruments – North America

• • Axis Medical Group – Acquired stake: 51 percent – Optical Instruments distributor to eyecare professionals

• • AllAboutVision.com – Acquired stake: 100 percent – Consumer website; source of eye health and vision correction news and information

• • ICare Industries Inc. – Acquired stake: 80 percent – Florida-based prescription laboratory

• • Opti-Port L.L.C. – Acquired stake: 80 percent – Purchasing alliance of multi-office eyecare practices

• • US Optical L.L.C. – Acquired stake: 60 percent – New York-based wholesale optical laboratory

Lenses & Optical Instruments – Europe

• • MyOptique Group Ltd. – Acquired stake: 100 percent – Leading European online prescription glasses, contact lenses, and sunglasses business

• • Vision Direct Group Ltd. – Acquired stake: 100 percent – Leading online optical products retailer

Lenses & Optical Instruments – Asia/Pacific/Middle East/Africa

• • One Vision Optical Pty. Ltd. – Acquired stake: 65 percent – Eyewear, readers, and sunglasses distributor; markets comprehensive vision solutions to independent opticians

• • Jiangsu Creasky Optical – Acquired stake: 55 percent – Ophthalmic lens manufacturer and distributor based in Danyang, China

• • Mamtora Lens Technology – Acquired stake: 50 percent – Prescription laboratory and ophthalmic lens distributor based in the Kolkata region (India)

• • Essilor Distribution (acquired assets of Thai Thanh Phat Co. Ltd.) – Acquired stake: 51 percent – Ophthalmic lens distributor

Lenses & Optical Instruments – Latin America

• • Laboratorio Óptica Ltda/Ópticas OPV Ltda – Acquired stake: 100 percent – Integrated laboratory and distributor

• • Digital Lab Industria e commercio de lentes e Óculos Ltda – Acquired stake: 42 percent – São Paulo, Brazil-based prescription laboratory

• • Laboratorio Ótico Summer Vision Ltda – Acquired stake: 49 percent – Rio de Janeiro-based prescription laboratory

• • Sistemas Ópticos Integrales S.A. de C.V (SOI) – Acquired stake: 51 percent – Ophthalmic lens distributor based in Oaxaca state with two prescription laboratories and several distribution centers

• • Ocutec Laboratorio – Acquired stake: 51 percent – Prescription laboratory

Equipment

• • SCL International – Acquired stake: 80 percent – Manufacturer of cleaning and hard coating machines; engineers and produces coatings for plastic lenses

Sunglasses & Readers

• • Photosynthesis Group – Acquired stake: 50 percent – Hong Kong-based company that markets sunglasses and corrective lenses under a range of banners including MJS

Adding to its M&A strategies in 2016, the company also offered an array of new products to customers in order to further growth. Most notable, Essilor continued the global launch of its Eyezen stock lens, which is targeted to users of connected devices such as smartphones and tablets. The lenses were developed to provide protection and relief on a daily basis for those without visual defects. The OEM also launched its Eye Protect System, a clear lens that protects users against light related dangers (i.e., UV rays and blue-violet light). Within the company’s Varilux product line, the Physio 3.0 and Comfort 3.0 lenses rollout continued, while the Varilux Liberty 3.0 was launched. The company also enhanced its Transitions offerings with the launch of the Style Colors line, which offers a palette of four new colors applied directly in prescription laboratories. To support these new launches (as well as the company’s legacy products), Essilor invested approximately €209 million on consumer advertising and marketing by year’s end.

“We also launched in 2016 the first online innovation communities dedicated to vision,” explained Éric Thoreux, president of Sun, Readers, and China. “Thanks to our two Sharing Views websites—one in China and the other in the United States—we now hear directly from consumers aged 18 to 45 years old. Drawing on these two independent communities, each with 2,000 members, not only gives us an extremely rich base of information but also provides a great platform for cocreating and testing new products. The future of consumer proximity is undoubtedly online. It is an extremely powerful channel for bringing our innovations to market.”

Online is primarily a sales strategy for the company’s international markets, including growth regions such as Brazil and China, as well as more established sectors such as the United Kingdom. But the company is also leveraging the internet for sales within its strongest market—the United States. Its Costa line is one brand that is gaining momentum online.

“While our dealer network is the backbone of the Costa brand, we have also worked hard at building strong relationships with our consumers over the years and it’s become a real point of difference,” said Costa CEO Holly Rush. “By investing in a unique community marketing strategy and a strong digital presence, we’ve established a cult following of brand loyalists who want to engage with us and direct-to-consumer channels, like Web are a natural next step in the brand’s evolution.”

Perhaps in the years to come, with the right technology in place, consumers may look to Essilor for their prescription lenses to be provided through the internet without the need for a visit to their optometrist.

$7.3 billion
NUMBER OF EMPLOYEES: 60,883

Essilor’s mantra is “seeing the world better,” and nothing epitomizes that sentiment more than the launch of a new, philanthropic initiative.

In January 2015, Essilor created the “Vision for Life” program. The company committed 30 million euros to the campaign, making it the largest strategic program dedicated to eliminating Uncorrected Refractive Error (URE), or as it’s more commonly known, poor vision. “The launch of the Vision For Life program is a natural sequel to the creation of our Corporate Mission division in 2013 and provides impetus to our efforts to bring good vision to everyone, everywhere in the world. By addressing the vast unmet vision correction needs, we can make a lasting impact on the lives of individuals and on human development worldwide,” Hubert Sagnières, chairman and CEO of Essilor International, said in a company press release.

“We are very excited to be marking a new page in the history of the fight against poor vision,” commented Jayanth Bhuvaraghan, Essilor’s chief corporate mission officer. “Vision for Life is a global strategic giving program that will fund, monitor, and measure the impact of projects showing the most potential to scale up and improve the lives of as many people as possible through improved access to vision care.”

During the year, the initiative accomplished a great deal for those suffering from poor vision without the means to correct it:

• • A large-scale awareness-raising and eye test operation took place on the Journée des Oubliés des Vacances (for children who do not have the opportunity of a vacation) organized by the Secours populaire français. The event provided 70,000 families and children from disadvantaged backgrounds with information, raising their awareness of visual disorders, and more than 1,000 children were given an eye test.

• • Implementation of a PASS-O (permanence d’accès aux soins de santé en milieu ophtalmologique), which provides access to ophthalmology care for people without medical insurance in a healthcare center run by the Adolphe de Rothschild Foundation, with the involvement of the Vision for Life program. This new structure, the largest in France in the field of ophthalmology, will allow 3,000 underprivileged individuals to be seen for a full vision care pathway and the provision of optical equipment if required.

• • Several projects were undertaken in Africa, including in Tunisian and Moroccan schools, where over 3,000 children were given an eye exam and then provided with eyeglasses.

• • In Ethiopia, Essilor worked with British NGO Vision Aid Overseas and UK Aid to screen more than 120,000 people between 2014 and 2015.

Financial Landscape

Essilor’s business is divided into three operating segments: lenses and optical instruments, sunglasses and readers, and equipment. The company had quite a successful year in terms of revenue, reporting 6.7 billion euros ($7.33 billion), a whopping 18.4 percent increase from 2014. Noteworthy in terms of breaking records, Essilor achieved a historically high contribution from operations, which accounted for 18.8 percent of revenue, largely in part due to gains from the company’s 2014 acquisition of Transitions Optical—its largest deal to date.

Essilor’s most profitable and arguably most well-known division is its lenses and optical instruments segment, which consists of corrective lenses and optical instruments intended for optician and optometrist use. The company’s lenses—which actually allow some of the MPO staff to effectively perform their jobs—are fairly household names; Crizal, Transitions, Varilux, and Xperio are among the most recognizable. That said, the lenses and optical instruments division experienced a strong fiscal year in 2015 (ended Dec. 31). Total revenue amounted to 5.84 billion euros, a 17.5 percent bump from 2014. Lenses and optical instruments accounted for 87 percent of Essilor’s total revenue in 2015.

The North American region of the lenses and optical instruments division (Essilor only breaks this section down by region) generated 39 percent of total group revenue with 2015 sales of 2.6 billion euros, a 26.9 percent increase from the prior year. Essilor enacted a steady rollout of consumer advertising campaigns in the still-expanding U.S. market in 2015, which brought about strong sales of the “big four” lenses previously mentioned. The region’s success was also a result of two partnerships formed with platforms delivering services to independent optometrists, which broadened Essilor’s presence in the optical products retailing segment.

While not quite as dramatic as the domestic market’s growth, the remaining global regions’ lenses and optical instruments revenue is still something to keep a close eye on. In 2015, European net sales (26 percent of total group revenue) grew to 1.8 billion euros, a 7.5 percent increase from the previous year, driven by similar consumer marketing campaigns enacted in the United States. The Asia/Pacific/Middle East/Africa region (16 percent of total group revenue) nearly matched the North American region’s impressive growth, with a 19.3 percent bump from the prior year. Latin American region (6 percent of total group revenue) net sales rose 6.2 percent from 2014, according to Essilor’s 2015 annual report.

The sunglasses and readers segment generated 503 million euros in revenue; the total represented the largest overall growth of any business segment in 2015, with a 33.9 percent gain from the previous year. Essilor reached a larger number of consumers in 2015, due to the acquisition of the U.S. Costa and Chinese Bolon trademarks. The company’s equipment division, with 2015 revenue of 203 million euros, was up 2.7 percent from 2014.

Strategic ‘Vision’

Essilor’s acquisitions and partnerships strategy bore quite a significant amount of fruit in 2015. The company closed 19 transactions throughout the year, bringing in about 214 million euros in revenue and strengthening its position in the corrective lens, sunlens, and online retailing markets. In July 2015, Essilor of America announced the purchase Vision Source, then North America’s largest independent optometric service alliance (with nearly 4,000 members). The organization reported $2.2 billion in sales from more than 3,000 locations in 2014. Though the deal represented quite a promising opportunity, different opinions abounded as to what the acquisition would mean for independent optometrists.

“I think the purchase is a big win for independent practice,” said Scott Schachter, OD, Vision Source administrator in Pismo Beach, Calif., in an Optometry Times interview. “Essilor has been an excellent partner to Vision Source for many years, providing proprietary products at exceptional value. In addition, Essilor has supported our practices with staff training and education, sponsoring the Vision Source Representative program for many years, and more.”

But some remained cautious about what the deal meant for independent optometry.

“Virtually every time something gets a big foothold in optometry, it screws us,” Steve Nelson, OD, said in the Optometry Times interview. “That’s true whether it’s Luxottica or VSP. They virtually all start out as a ‘partner to optometry’ and all end up getting too large to be a good partner to us and end up with a business model using optometry to generate huge profits. At that point, we are too invested to back away and we just have to take it. I’m not saying this will screw us because maybe this time will be different, but history certainly suggests we should view this with a fair measure of skepticism.”

Product News

Prolific as ever, in 2015 Essilor introduced about 250 new products and filed 139 new patent applications worldwide. During the year, the company continued its commitment to research and development by opening its first Wearers Evaluation Center in Singapore to test new research and development theories, product concepts, and prototypes with end users, as well as a new development and evaluation center in Danyang (China).

According to the company, as of September 2015, more than 1.5 billion people used a smartphone daily, and nine out of 10 people declared spending more time using digital screens than they did two years ago. In fact, according to the Vision Council, some millennials spend at least nine hours a day in front of a digital screen. With that in mind, Essilor launched its Eyezen glasses, specially designed to defend the constantly connected against the eyestrain of staring at digital devices. At the SILMO World Optical Show in late September, Eyezen received a gold innovation award (Silmo d’Or), which honors values intrinsic to the profession.

The glasses are enhanced with magnification in the lens’s lower section, alleviating eyestrain from viewing text and small screens on tablets and smartphones. They also filter harmful blue-violet light emitted by any number of digital devices. “The technology in Eyezen glasses supports the digitally connected lifestyle of the millennial generation—a lifestyle they aren’t willing to change—by reducing eyestrain and exposure to harmful blue light,” said Lauri Crawford, senior vice president of marketing of Essilor of America.

While Essilor focuses most of its efforts on corrective lenses, the company does develop a number of fashionable—yet still health-conscious—sunglasses. One such example released in 2015 was the Haven Signature collection of polarized sunglass fits, designed to be worn over prescription glasses or readers. With an eye toward fashion, the company incorporated the latest trends, including crocodile and leopard patterns, crystals, and tasteful metal bars.

$6.9 Billion
NO. OF EMPLOYEES: 58,032

The irony is amusing, to say the least.

Last year, in the wake of a survey that linked digital device usage and visual fatigue, global ophthalmic optics designer/manufacturer Essilor International S.A. bolstered its online presence. “In today’s world, a strong Internet presence is essential,” newly minted Chief Operating Officer Jean Carrier-Guillomet noted in a roundtable interview within the firm’s 2014 annual report. “It’s a powerful channel for visual health information and awareness, as well as providing easy access to simple optical products. Essilor has a role to play in helping eye care professionals embrace this fast-growing channel.”

Even if that role is somewhat paradoxical.

Essilor enhanced its cyber world duties last year with MyOnlineOptical.com, an e-commerce solution that enables eye care professionals to create their own Web-based business, and the $430 million purchase of online vision care retailer Coastal Contacts. The deal—reportedly the largest in Canadian e-commerce company history—increases Essilor’s customer base and strengthens its digital presence in various world markets. It also gives the firm ownership of a Coastal program that allows consumers to sample and buy prescription lenses online.

“With Coastal.com, Essilor is acquiring a recognized online vision care platform. Our commitment is to [help] shape this distribution channel for the benefit of the entire industry as well as consumers,” Essilor Chairman/CEO Hubert Sagnières said when the Coastal deal was announced. “The Internet has an important role to play in helping us fulfill our corporate mission of enabling people to enjoy a better life through better sight. But in our industry, as in many others, the purchasing process is becoming more diversified. The Internet, if used properly, can help to drive market growth by educating consumers and making it more convenient for them to enjoy good visual health.”

The Internet certainly has become quite an effective teacher, but the knowledge often comes at a steep price. A 2014 Ipsos survey found that three-quarters of developed nations’ residents suffer from visual fatigue due to daily digital device use, with smartphones (66 percent) and computers among the worst offenders (64 percent of the 4,000 respondents said they spend more than four hours a day working at a computer screen). Such prolonged screen time increases human exposure to blue light, a type of high energy wavelength emitted from most electronics that ultimately can lead to eye diseases like macular degeneration.

Not quite the ringing endorsement for cyber dominance, particularly for an eye care firm like Essilor, which prides itself on improving and protecting the planet’s sight. Nevertheless, the company forged ahead with its strategy to “meet all the needs of all mobile devices, smartphones, tablets and so on…to fund the growth of this [online] business area in a general way, a global way…” Carrier-Guillomet said.

Makes perfect sense: Online eyewear sales are rising 14 percent annually—more than double the annual growth rates of the global medical device (5.5 percent), medical imaging equipment (5.4 percent) and orthopedic (4.9 percent) markets through the end of this decade, according to industry data. Essilor, naturally, wants to capitalize on that growth.

The company, in fact, is well on its way. A 30 percent spike in FramesDirect and EyeBuyDirect digital revenue as well as strong online contact lens sales in the United States helped boost Essilor’s North American revenues 5 percent last year to 2 billion euros ($2.47 billion). Higher sales of anti-reflective lenses (Crizal UV, Crizal Prevencia), progressive lenses (Varilux, particularly the Varilux S series), photochromic lenses (Transitions) and polarized lenses (Xperio) also contributed to the gain.

“While remaining fully focused on our core business of ophthalmic optics, expanding the scope of our business is helping us to be even more effective in delivering our mission of improving lives by improving sight and seizing new opportunities for growth,” Sagnières said in the company’s 2014 annual report. “We have significantly strengthened our business presence in fast-growing markets, sunglasses and photochromic lenses, on the Internet, and [we] moved closer to the consumer in the marketing of our brands and offerings. 2014 was indeed a good year in terms of growth and profitability.”

Indeed, it was a good year for Essilor, as total revenue jumped 3.7 percent to 5.6 billion euros ($6.89 billion), operating profit surged 15.4 percent to 989 million euros ($1.3 billion) and basic earnings per share rose 6.2 percent to 3.05 euros. Its gross margin (as a percentage of revenue) climbed 2.6 percent to 58.7 percent and total contribution from operations increased 14.9 percent to 1.05 billion euros ($1.45 billion).

Gains in lenses and optical instrument sales fueled much of Essilor’s overall growth in fiscal 2014 (ended Dec. 31), helping to offset losses in equipment and sunglasses/reading glasses. Lenses and optical instrument proceeds swelled 4.3 percent to 4.97 billion euros ($6 billion), driven mostly by strong performances in Latin America and Asia/Pacific/Middle East/Africa.

Executives attributed the 10.8 percent growth in Latin American sales (380.8 million euros; $462 million) to the Brazilian launch of the Varilux S series (designed specifically for those suffering from presbyopia), increased demand for Crizal lenses, double-digit volume growth for Transitions photochromic lenses, and the gradual introduction of Kodak brand lenses throughout the country, with volumes increasing significantly in Brazil’s southern states. The company also benefitted from its partnership with Comprol, a prescription laboratory in Brazil’s richest state. Other Latin American gains came from the Colombian launch of Nikon brand lenses and Essilor’s collaboration with prescription laboratory Servioptica.

Emerging markets single-handedly amplified sales in Asia/Pacific, with India and China both posting double-digit revenue gains over 2013. India’s 20 percent sales jump was derived from various sources, including higher domestic and export proceeds, Crizal’s brand identity, robust growth of Varilux and other progressive lenses, Kodak’s popularity among mid-tier residents and the country’s continued shift from glass to plastic lenses. Kodak was popular in China as well, though part of the Middle Kingdom’s growth came from increased consumer awareness of the damaging effect of ultraviolet light on eye health. South Korean sales slowed due eyewear renewal rate increases, but the downturn was offset by strong performances in Southeast Asia, South Africa, Australia and New Zealand. Overall, Asia/Pacific sales ballooned 8.2 percent to 898 million euros ($1.09 billion).

European revenue barely budged last year, climbing just 0.1 percent to 1.65 billion euros ($2 billion). A contract loss in the second half of 2013 continued to haunt the continent’s German-speaking and Benelux regions, while French sales got off to a slow start. Strong growth in Russia and Eastern Europe kept the geographic market (barely) in the black.

Instruments revenue rose 4.1 percent, courtesy of the company’s lens finishing and optometry business. The European launch of Essilor’s second-generation premium edger, Mr. Blue 2.0, featuring custom lens engraving, helped the company gain new share in the global edging market.

That new market share, however, couldn’t save the firm’s sunglasses/readers division from slipping into arrears—sales fell 1 percent to 503 million euros ($611.3 million) due to “operating difficulties” within its FGX subsidiary, a designer and seller of non-prescription reading glasses. Executives said FGX’s North American sales were impacted by extensive inventory drawdowns, certain new eyewear line postponements and the loss of a large customer account.

Equipment sales slid into the red as well, falling 1.8 percent to 197.3 million euros ($239.8 million) despite a 7.2 percent spike in Q4 revenue.

One of the most stablilizing forces throughout the fiscal year was Essilor’s central mission of “improving lives by improving sight.” The company remained true to its core purpose by implementing various social initiatives, including:

• • Brazil’s Instituto Ver & Viver (an Essilor Group program) signed an agreement with the inclusive health unit of the country’s NGO Voluntários do Sertão, which runs a large number of ophthalmology clinics that offer eye care to some of the most deprived Brazilians. For patients with simple prescriptions, the Instituto Ver & Viver provides Ready-to-Clip lenses developed by the 2.5 NVG Division of Essilor. This partnership enabled 30,000 Brazilians to benefit from an affordable corrective solution.

• • In Tunisia, the Essilor Vision Foundation and Essilor SIVO laboratories provided vision care to 1,500 students. In a one-week span, 70 volunteers traveled 2,000 kilometers visiting several regions of the country to run vision screening sessions and provide 500 pairs of eyeglasses to children between 5 and 16 years old.

• • Essilor’s Eye Mitra program provided a local eye care service for India’s rural and semi-urban communities. With support from external partners, young people in rural communities were recruited and trained to conduct basic vision tests and dispense corrective eyeglasses. Eye Mitra participants received financial aid and the necessary equipment to provide eye health services in their own villages. Roughly 330 trained and operational Eye Mitra players provided 35,000 people with their first corrective eyeglasses.

• • Essilor partnered with Le Secours Populaire Français as part of La Journée des Oubliés des Vacances, a one-day event that provided underprivileged French children with a vacation. Five thousand children were treated to a day by the sea at Ouistreham, where they learned about the dangers of UV exposure and received a pair of FGX sunglasses.

• • Essilor launched a new vision ambassadors program in China to improve access to eye care for rural residents. Run in partnership with local hospitals, the program involved training 300 ambassadors to serve an area that boasts a population of 178 million people. In addition to simple health consultations, the ambassadors were trained to conduct vision tests and refer those with poor sight to mobile clinics or local eye care professionals.

Essilor also espoused its central mission by establishing the Centre for Innovation and Technologies-Europe in Creteil, France, a facility believed to be the world’s largest private campus of ophthalmic optics R&D.

The goal of the new campus is to push the ophthalmic lens’ physical limits to better answer and anticipate consumers’ needs, Essilor executives said. Consolidating research and engineering teams and expertise at a single site will help foster fruitful collaboration, accelerate projects as well as new product and technologies launches. The new campus complements Essilor’s global research efforts, enabling the company to focus on innovation as a key part of its development strategy.

“Vision is our most important sense and plays an essential role in our lives. The new center is a powerful platform for developing tomorrow’s lenses, materials and coatings that will open new perspectives in term of vision correction and protection, and take up the challenge of prevention and visual health,” Sagnières said.

$6.97 Billion
No. of Employees: 55,129

Benjamin Disraeli, a late 1800s conservative British politician (twice elected prime minister), writer and aristocrat famously noted: “Seeing much, suffering much, and studying much, are the three pillars of learning.”

If the management of Paris, France-based vision technology company Essilor has its way, the first pillar of learning would be much stronger than the other two.

The company’s 2013 fiscal year was another step closer toward its goal of enabling “everyone around the world to access lenses that meet his or her unique vision requirements.”

Essilor designs and makes lenses to improve and protect eyesight. It also develops equipment, instruments and services for eye-care professionals. For the third year in a row, the company was named to Forbes magazine’s annual Most Innovative Companies list, a ranking of the 100 firms investors think are most likely to generate big, new growth ideas. This year, Essilor ranked 23rd, up from 28th in 2012.

In 2013, the company’s product portfolio generated revenue of nearly 5.1 billion euros ($6.98 billion) for its fiscal year (ended Dec. 31), up 1.5 percent from the previous year. Net profit was 646 million euros ($889.3 million) up from 630 million euros ($832.5 million) for fiscal 2012. Notably, sales of lenses and optical instruments Latin America increased 20.4 percent to 351 million euros ($483.2 million) and increased 12.4 percent in Asia/Middle East/Africa/Pacific to 812 million euros ($1.12 billion). The North American market (35 percent of the company’s revenues), by contrast, rose at 3.3 percent.

Overall, sales of lenses were up 5.3 percent to 4.51 billion euros ($6.21 billion), and equipment sales rose 5.8 percent to 205 million euros ($282 million). Remaining sales primarily comprised the company’s lines of reading glasses, up 6.4 percent to 355 million euros ($488.7 million).

Commenting on the year’s results, Hubert Sagnières, chairman and CEO, said: “In 2013, Essilor consolidated its positions after two years of strong growth. The company improved every indicator and laid extensive groundwork in such future-shaping areas as visual health, the sun lens strategy and brand development, while further expanding in fast-growing countries. These initiatives have strengthened our confidence in the future and will help to drive faster organic growth in the years ahead.”

The company has 28 plants, more than 450 prescription laboratories and edging facilities, as well as several research and development centers around the world. Essilor spends more than 150 million euros a year on R&D, and products launched in the last three years account for approximately 40 percent of the firm’s annual sales.

More than anything, 2013 was a year of growth for Essilor via constant acquisition throughout the year. Fiscal 2013 saw purchases of full or controlling interest in distributors and/or manufacturers in, Turkey, Colombia, Brazil, South Korea, Taiwan, South Africa, India and China, among others.

Sagnières predicted that the company’s “ability to forge partnerships with local industry leaders” while fostering organic growth has moved the company closer to generating annual revenue of 1.5 billion euros in fast-growing and emerging countries by 2015.
The company even created a project in FY12 called “2.5 New Vision Generation” targeting vision problems in emerging growth countries. According to Essilor’s figures, 2.5 billion people worldwide need to have their vision corrected and 95 percent live in emerging countries. India and China have the largest number of people with uncorrected vision. Without change, the number of affected people could reach 3.2 billion by 2050. The company’s New Vision Generation division was established to create “innovative, scalable and profitable inclusive business models” that will add 50 million new eyeglass wearers per year by 2020, according to company officials.

As part of its emerging market outreach, Essilor also formed a Joint Research Center in China with Wenzhou Medical University to investigate the progression of myopia, causes of the condition and ways to fight the disorder. The company has been cooperating with the university for more than 10 years on numerous research projects.

Emerging markets, however, weren’t the only growth play for Essilor in 2013. The company continues to grow its presence in the United States—the world’s largest corrective lens market.

During the year, the company inked a deal for an 80-percent stake in Minnesota-based X-Cel Optical, a manufacturer of ophthalmic lenses. X-Cel Optical produces more than two million lenses a year and generates full-year revenues of approximately $33 million. Essilor also signed a deal with Lenstech Optical, a prescription laboratory in Indiana with annual revenue of $6 million. Later in the year, the company bought a majority interest in prescription lens laboratories Prodigy Optical in Minnesota, which has annual revenue of around $3.5 million, and e.magine Optical in Oklahoma, with annual revenue of approximately $3 million.
Terms of the deals were not disclosed.

July brought the company’s largest-ever deal in which it acquired the 51-percent stake in Transitions Optical, owned by Pittsburgh, Pa.-based PPG Industries. The deal was finalized in April this year. Essilor had owned 49 percent of the company as part of its joint venture with PPG.

Essilor paid $1.73 billion at closing, as well as a deferred payment of $125 million dollars over five years.

Founded in 1990 and based in Pinellas Park, Fla., Transitions Optical is the inventor of variable-tint plastic lenses. The business had been developed jointly by Essilor and PPG. The majority of its products are distributed under the Transitions brand. Transitions Optical generated revenue of $814 million in 2012, of which around $310 million with lens manufacturers other than Essilor.

Under the agreement, Essilor also acquired 100 percent of the capital of Intercast, a high-performance sun-lens manufacturer based in Parma, Italy. In 2012, Intercast’s annual revenue was roughly $34 million.

“This agreement marks the start of a new phase of growth for Transitions Optical, which Essilor and PPG have turned into a leader in photochromic lens products,” said Sagnières. “It’s a company we know well, so the integration process should be smooth. It will enable us to boost expansion in the photochromic segment, which is growing twice  as fast as the optical industry, notably in Asia, Latin America and Europe.”

PPG will remain a key partner for Transitions Optical.

Dave Cole, president of Transitions Optical, said: “Since the founding of our business 23 years ago, our parent companies have been key to Transitions Optical’s success. We appreciate PPG’s long investment in and collaboration with our organization. We look forward to a continued strong relationship with PPG as they will be providing ongoing research and development services and optical dyes to Transitions Optical under multi-year agreements with Essilor.”

Concluding the fiscal year, Essilor purchased Lincoln, R.I.-based Costa Inc. for approximately $270 million. Costa makes polarized performance sunglasses and currently derives the majority of its revenue from the Southeastern United States. Plans call for accelerated U.S. geographic expansion as well as international growth.

On the new-product front, Essilor’s primary technology rollout of the year was a new preventive lens offering selective protection against harmful blue light and ultraviolet (UV) radiation that can damage retinal cells and contribute to the development of age-related macular degeneration (AMD) cataracts.

The lens, Crizal Prevencia, is the product of a two-year research project that Essilor conducted in partnership with Paris Vision Institute, one of Europe’s largest eye health research centers. The combined team was able to identify the portion of the visible light spectrum that is noxious to retinal cells. In order to identify the part of the spectrum that is damaging to the human retina, an in-vitro test on retinal cells with narrow screening light exposure to determine the harmfulness of rays depending on their wavelength was developed. This test—a scientific first in ophthalmic optics, according to the company—allowed for the discovery that wavelengths between 415 and 455 nanometers (nm) are the most harmful for the target retinal cells.

Crizal Prevencia lenses are designed to protect eyes from wavelengths that contribute to the degeneration of retinal cells while allowing beneficial blue light to pass through. The lens was developed using Light Scan, an exclusive technology that filters out harmful blue-violet rays that can contribute to AMD, as well as UV rays, an important cause of cataracts, while maintaining the transparency of the lens.

According to figures cited by Essilor, the battle against irreversible eye conditions is targeted at the entire population, but primarily the 1.3 billion children around the world and the 1.9 billion people older than 45 who currently are more vulnerable to blue-violet light. During childhood, the eye is very transparent and lets all visible light and some UV pass through to the retina. After 45, the retina’s natural defense system is weakened; there will be 3.7 billion people worldwide older than 45 in 2050.

During Fiscal 2013, Essilor created the Vision Impact Institute—a group that will act as a global connector of knowledge, data and solutions for vision correction. The institute’s mission is to raise awareness about the socioeconomic impact of poor vision and to foster research where needed. Today’s most widespread disability, impaired vision, affects 4.2 billion worldwide, of whom 2.5 billion have no access to corrective measures.

The World Health Organization estimates that 30 percent of young people in the world under the age of 18 reportedly suffer from uncorrected refractive error, which often is not diagnosed due to lack of awareness or access to care. This proportion rises to 33 percent in the labor force, 37 percent among elderly people and 23 percent among motorists, according to the World Bank and research conducted by the Boston Consulting Group.

The global economic impact is significant. Billions of dollars in productivity are reportedly lost every year, including $50 billion in Europe, $7 billion in Japan, and $22 billion in the United States—even though there are solutions to correct most of the impaired vision cases. The annual global cost of productivity loss—about $275 billion—corresponds to providing an eye exam for half of the current world population. According to the Vision Impact Institute, simple measures might drastically reduce the economic consequences of impaired vision and also the social ones, even though the cost, level of access to care, and awareness differs by country. The institute, which is based in Paris, is guided by an independent advisory board of international vision experts.