2017 Results 4
2017 Key Highlights
2. 2017 Results
Good sales performance despite challenging optical market conditions
Solid growth in the Lens & Equipment businesses
Strong online sales
Acceleration in the US in H2
Investments in China and e-commerce
Full benefit of the French tax refund reinvested in fueling our Mission initiatives
Record Free Cash Flow(1) generation supported de-leveraging
Key steps toward the proposed combination with Luxottica
(1)Free Cash Flow = Net cash from operating activities less change in WCR and capital expenditure. See slide 15.
2017 Results 5
2017 Key Figures
2. 2017 Results
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs and other operating expenses).
(2)The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the proposed combination with Luxottica and, on the other hand, to the positive effects of tax
changes in the United States and France. 2016 results are not adjusted.
(3)Net cash from operating activities less change in WCR and capital expenditure. Adjusted for non-recurring items related to the German competition authority (BKA) in 2016 and to 2017 items including
costs linked to the proposed transaction with Luxottica along with the settlement of litigation..
(4)To be submitted for shareholder approval at the April 24, 2018 Annual General Meeting.
Growth2016
Revenue+5.3%
€7,115m €7,490m
Adjusted Contribution from operations(1)(2)
As a percentage of revenue
+3.5%
€1,321m
18.6%
€1,367m18.3%
Adjusted Earnings per share(2)+1.6%
€3.79 €3.85
Adjusted Free Cash Flow(3)+4.0%
€963m €1,002m
2017
Dividend per share(4)€1.50 €1.53
7,115
7,490
+5.3%
224
254
(103)
2016 Revenue Like-for-likegrowth
Bolt-onacquisitions (1)
Currency effect 2017 Revenue
+3.1%
+3.6%
-1.4%
2017 Results 6
2017 Revenue Up 6.7% Excluding the Currency Effect
€ millions
(1) Local acquisitions or partnerships.
+6.7%
2. 2017 Results
2017 Results 7
2017 Revenue by Division
2. 2017 Results
(1) Fast-growing countries include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America. All divisions combined.
Like-for-likeAt constant
exchange ratesReported
Lenses & Optical Instruments 6,498 6,218 +3.4% +5.8% +4.5%
Sunglasses & Readers 766 685 +0.1% +15.0% +12.0%
Equipment 226 212 +5.8% +7.8% +6.4%
TOTAL 7,490 7,115 +3.1% +6.7% +5.3%
Fast-Growing Countries(1) 1,825 1,641 +4.2% +12.0% +11.2%
Developed Countries 5,665 5,474 +2.8% +5.1% +3.5%
Change
Reported revenue in € millions 2017 2016 Lenses: solid momentum driven
by new products and e-
commerce
Continued build-up in
Sunglasses & Readers
Equipment and Instruments
performed well
Fast-Growing Markets(1):
24% of total sales
2017 Results 8
H2 2017 Like-for-like Revenue Growth: +3.8%
2. 2017 Results
Sharp acceleration in the US
Robust performance in China
Strong online sales
FGX, Costa and MJS driving
improvement in Sunglasses &
Readers
Like-for-like revenue growth 2017 H1 2017 H2 2017
Lenses & Optical Instruments +3.4% +2.7% +4.1%
North America +4.1% +2.7% +5.5%
Europe +2.4% +2.1% +2.7%
Asia/Pacific/Middle East/Africa +5.1% +5.0% +5.2%
Latin America -0.9% -1.5% -0.4%
Sunglasses & Readers +0.1% -1.5% +1.9%
Equipment +5.8% +11.7% +1.2%
TOTAL +3.1% +2.5% +3.8%
2017 Results 9
9 Acquisitions Representing ~€87m in Full-Year Revenue
2. 2017 Results
Europe
2
Latin America
2
Asia/Pacific/
Middle East/Africa
3
Sun Optical
Technologies Visolab
MangalsonsOpticas
Exclusivas
Optitrade
Logistics Center
Topcon Visioncare
Japan
North America
2
Partners In Vision
Vision Associates
CFE Optique
2 new countries:
Ethiopia, Guatemala
2017 Results 10
Reconciliation of Adjusted to Reported Accounts
2. 2017 Results
There are two main types of adjustment items. First, expenses associated with the proposed combination with Luxottica, and,
second, the positive effects of tax changes in the United States and France. These non-recurring adjustments include:
• Transaction costs related to the proposed combination with Luxottica for €109 million;
• An additional cost of €45 million principally linked to the lifting of performance conditions on two employee shareholding plans
• A one-time contribution for €19 million to mission-related activities focused on eradicating poor vision worldwide;
• An exceptional gain from the refund of the 3% dividend tax in France, net of the additional tax, for €19 million;
• A one-time gain linked to tax reform passed in the United States in December 2017 for €73 million.
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses).
Revenue 7,490 7,490 7,115
Contribution from operations(1) 1,367 (6) 1,361 1,321
Other income (expense) (119) (168) (287) (91)
Operating profit 1,248 (174) 1,074 1,230
Income tax (262) 131 (132) (285)
Net profit 922 (44) 878 880
Net profit attributable to equity holders
of Essilor International833 (44) 789 813
Earnings per share 3.85 3.64 3.79
2016
Reported€ millions
2017
Adjusted
2017
Reported Items adjusted
2017 Results 11
Adjusted Contribution from Operations(1) (2) up 3.5%
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses).
(2)The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the proposed combination with Luxottica and, on the other hand, to the positive effects of
tax changes in the United States and France.
Revenue 7,490 7,115 +5.3%
Gross profit 4,346 4,181 +3.9%
% of revenue 58.0% 58.8%
Operating expenses (2,979) (2,860) +4.2%
% of revenue 39.8% 40.2%
Contribution from operations (1) 1,367 1,321 +3.5%
% of revenue 18.3% 18.6%
€ millions Change2017
Adjusted(2)
2016
Reported
2. 2017 Results
E-commerce
Transitions sales
to other lens casters
Opex management
A
A
BB
18.6%18.5%
18.3%
+0.3%-0.4%
-0.2%
2016 Reported Operating Leverage Other 2017 Adjusted (2)before acquisitions
Acquisitions 2017 Adjusted (2)
2017 Results 12
Adjusted Contribution from Operations(1) (2)
at 18.3% of Revenue
Contribution from operations as a percentage of revenue
2. 2017 Results
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses).
(2)The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the planned combination with Luxottica and, on the other hand, to the positive effects of tax
changes in the United States and France. The reported accounts and a reconciliation of the reported accounts to the adjusted accounts are provided in appendices.
Transitions sales
to other lens
casters
Brazil and India
Strengthening the
organization in
China and
e-commerce
activities
Operational
efficiencies
New products:
Varilux® X
series™,
Eyezen™
E-commerce
improvement in
developed
countries
Revenue 7,490 7,115 +5.3%
Contribution from operations(1) 1,367 1,321 +3.5%
Other income (expenses), net (119) (91) -
Operating profit 1,248 1,230 +1.5%
Financial income (expense), net (64) (66) -
Income tax (262) (285) -
Effective tax rate 22.1% 24.5% -
Net profit 922 880 +4.8%
Minority interests (89) (67) -
Profit attributable to equity holders 833 813 +2.5%
Earnings per share (in €) 3.85 3.79 +1.6%
Change€ millions2017
Adjusted(2)
2016
Reported
2017 Results 13
Adjusted Net Profit(2) Up 4.8%
2. 2017 Results
Share based payments
Litigations’ provisions
Transformation costs
Photosynthesis Group
Partners’ performances
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses).
(2)The 2017 accounts are adjusted for non-recurring items related, on one hand, to expenses associated with the proposed combination with Luxottica and, on the other hand, to the positive effects of
tax changes in the United States and France.
A
C
A
C
B Advanced Pricing AgreementB
2017 Results 14
Capital Expenditure: Deploying Advanced Technologies to Support Long-term Growth
XX = Capital expenditure in € million (net of disposals) Capital expenditure as a percentage of revenue
2. 2017 Results
New photochromic lens
manufacturing lines
Modernization of regional
laboratories
4.6% 4.7%
5.6%
4.0%
4.8%
3.8% 3.8%
2%
3%
4%
5%
6%
7%
2011 2012 2013 2014 2015 2016 2017
192232
285
227
321
273 282
400
317
122
364
34
308
1,291
58
2017 Results 15
Adjusted(3) Free Cash Flow >€1bn
(1) Free cash flow = Net cash from operating activities less change in WCR and capital expenditure / (2) Including €96m of foreign exchange impact. / (3) Adjusted for non-recurring items related to
the German competition authority (BKA) in 2016 and to 2017 items including costs linked to the proposed combination with Luxottica along with the settlement of litigation.
Operating cash flow
(excl. change in WCR)
Capital increase
Capital expenditure
Change in WCR
Dividends
Net financial investments
€ millions
+925
2. 2017 Results
Foreign exchange and others(2)
Reported change in net debt
1,793
2,089 2,062
1,661
2014 2015 2016 2017
Fast De-leveraging
Net debt in € millions
2017 Results 16
Proposed Dividend(a) per Share
172 177 185 198216
237
323 333
0.83 0.85 0.880.94
1.021.11
1.50 1.53
2010 2011 2012 2013 2014 2015 2016 2017
Payout (in € million) Dividend per share (in €)
(a) To be submitted for shareholder approval at the April 24, 2018 Annual General Meeting.
2. 2017 Results
2017 Results 17
Paul du Saillant – Chief Operating Officer
Laurent Vacherot – President and Chief Operating Officer
3. Essilor in 2018
2017 Results 18
Successful New Product Launches in 2017…
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
North America
0
Europe
Asia/Pacific
Style
Colours
collection
H2
H2
H2
H1
H1
H1
Latin America
H1
2017 Results 19
…Delivering Promising Results
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
Eyezen™ volume
doubled in 2017
Broadened product
range
Above sales target
~70% of Varilux®
series volumes
Trade up
Already 20% of Crizal®
volumes in the USA
Clear brand growth
driver
Eye Protect System™, the
fastest growth in the blue
filter lens category
Volume tripled in 2017
2017 Results 20
Ongoing Benefits of Innovations in 2018
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
North America
NEW IN 2018
Style
Colours
collection
ONGOING BENEFIT
Latin America
NEW IN 2018
Europe
NEW IN 2018
ONGOING BENEFIT
Asia Pacific
NEW IN 2018
2017 Results 21
The “Ultimate Lens Package” Driving Strong Momentum in the US
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
The Best in Vision, Clarity, and
Protection in a Single Lens
Progressive Lens Wearers[c.52 million people in the US]
Single Vision Lens Wearers [c.100 million people in the US]
Varilux®, Crizal® and Transitions® growing high single digit in Q4 2017
+ + + +
Source: Essilor - 2017 estimates
2017 Results 22
Continuing Strong Key Account Partnerships
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
Category development
Supply chain offering
New partnerships formed
Faster growing retail groups
Interest from new players
2017 Results 23
Fast-Growing Markets(1) Will Continue to Drive Growth
3. Essilor in 2018
Latin AmericaAfrica-Middle East
(1) Fast-growing markets include China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia and Latin America
Guatemala Acquisition of an integrated
prescription laboratory with
~50 optical stores
NEW
Asia-Pacific
Vietnam 100m inhabitants
New prescription laboratory
>100 accounts trained in 2017
88 Vision Ambassadors
Indonesia 260m inhabitants
Expansion to 35 cities
Mid-tier acceleration
1,500 Mitra Mata by end 2018
Ethiopia >100m inhabitants
Partnership with market leader
Joint approach by business
and mission
NEW
2017 revenue growth > 15% (like-for-like and bolt-on acquisitions combined, including Lenses and Optical Instruments, Equipment and Sunglasses & Readers)
2017 revenue growth < 15% (like-for-like and bolt-on acquisitions combined, including Lenses and Optical Instruments, Equipment and Sunglasses & Readers)
Innovation ChinaUSA FGM Online Myopia
2016 2017
2017 Results 24
E-Commerce Ready to Sustain High Growth
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
En Route to €500m Revenue
€325m(1)
+47% vs. prior year(2)
Stronger Foundation for Future Growth
Key 2017 achievements:
Global organization fully established
Strong growth from mature markets
Increased our presence in FGM
Strategic giving programs
Key areas of focus for 2018 onwards
Accelerate in the eyeglass segment
Develop platforms for key Sun brands
Increased focus on proprietary contact lens
brands
Leveraging digital properties(1) Including Sunglasses & Readers online sales
(2) At constant exchange rates
€440m(1)
+39% vs. prior year(2)
+15% like-for-like growth
North
America
RoW
Europe
2017 Results 25
Delivering 30% Revenue Growth in China in 2017
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
Lens Business
Double digit growth
Eyezen™
Kodak®/Partners
Creasky
Quality Wholesalers
2017 China Revenue Breakdown
Sunwear
Bolon™ streamlined supply
chain, strong brand equity
International deployment
Mujosh brand
Retail and Online
Double digit growth
MJS/Aojo deployment
Growing presence on leading
platforms
New retail
Over 1,200 stores 2018 Revenue
>€500m
800 million consumers in need of vision care; 4 people out of 10 are myopic
Unique leadership and management team
KEY ACCOUNT
ORGANIZATION
€5.8bnONLINE
ORGANIZATION
MONOBRAND
RETAIL
WHOLESALE
LENSES
Myopia
Management
Kids & Teens
Distribution of
specialized
products
MYOPIA SOLUTIONSAFFORDABLE
SUNWEAR & FASHION
2017 Results 26
A New Consumer-Driven Organization
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
2.5 New Vision
Generation
Essilor Vision
Foundation
Last mile
distribution
INCLUSIVE
SOLUTIONS
2017 Results 27
Innovate in the Myopia Segment: A 5 Bn Wearer Opportunity
3. Essilor in 2018
Innovation ChinaUSA FGM Online Myopia
Billion people(1)
2017 2030CAGR
1.8
2.73.2%
A Growing Pandemic Key Consumer Challenges
Poor aesthetics and physical comfort
Growing prevalence of myopia in children(2)
Risk of eye disease in high myopes(3)
Integrated approach including science, awareness, solutions and distribution
Global team reporting to COO
Dedicated business unit in China
A Dedicated Organization
2050CAGR
5.03.1%
(1) Source: Essilor estimates, Brien Holden Vision Institute
(2) Morgan IG1, Ohno-Matsui K, Saw SM. Myopia. Lancet. 5 May 2012
(3) Verkicharla, Ohno-Matsui, Saw. Current and predicted demographics of high myopia and an update of its associated pathological changes, Ophtalmologic & Physiological Optics. 2015
2017 Results 28
Further Progress towards our Core Ambition: Eradicating Poor Vision Within One Generation
3. Essilor in 2018
3.8
2017
If we do nothing Impact with $500M/yr
2.5
0
3.3
$5to improve the sight
of one person*
$500M/ yr
to eradicate poor vision
in 30+ years
# Uncorrected
in billion of people
2050 2100
Collective impact
(*) Low-income populations and people living below the international poverty line
2.93.8
2.0
2.6
2.5
3.3
0
2
4
6
8
10
12
2017 2050
No need for vision correction
Corrected
Uncorrected
in billions of people
2017 Results 29
Accelerating in 2018
Awareness Inclusive Business Strategic Giving
More than 5,700 primary
vision care providers trained
in ten countries at the end of
2017
New countries: Bangladesh,
Liberia, Indonesia
Private Public Partnerships
Product Innovation
Essilor Social Impact Fund
More than 3,000 Essilor
employees volunteered
globally
3. Essilor in 2018
€19 million new contribution
2017 Results 30
Essilor in 2018 at a Glance
3. Essilor in 2018
Deployment of robust innovation pipeline
Strong potential in the US and China
Improvement in Brazil and India
Lenses business
Xiamen Yarui Optical (Bolon™) expected to be back to growth
Expansion of MJS and Aojo footprint
Sunglasses
& Readers
Targeting acceleration from acquisitions & partnerships in H2
Tax rate similar to 2017 level
Continued deleveraging
Group-wide
Sustained momentum in developed countries
Continue to invest in fast-growing marketsE-commerce
2017 Results 31
Outlook for 2018
3. Essilor in 2018
(1) Contribution from operations = Revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses).
(2) Excluding any new strategic acquisition(s).
Like-for-like Revenue Growth
Contribution from operations(1)
as a percentage of revenue
Finalization of the Essilor and Luxottica proposed combination planned for the first
part of 2018
≥ 18.3%(2)
Around 4%
2017 Results 34
Reported P&L Statement
4. Appendices
Revenue 7,490 7,115 +5.3%
Gross profit 4,346 4,181 +3.9%
% of revenue 58.0% 58.8%
Contribution from operations(1) 1,361 1,321 +3.0%
% of revenue 18.2% 18.6%
Operating profit 1,074 1,230 -12.7%
Net profit 878 880 -0.1%
Net profit attributable to equity holders
of Essilor International 789 813 -3.0%
% of revenue 10.5% 11.4%
Earnings per share (in €) 3.64 3.79 -4.0%
€ millions 2017 Change2016
(1)Contribution from operations corresponds to revenue less cost of sales and operating expenses (research and development costs, selling and distribution costs, other operating expenses).