2011 Annual General Meeting Laurent Vacherot May …...Lenses and Optical Instruments Revenue In €M 2011 General Meeting 6 2000 – 2010: Acquisitions & Partnerships Equipments/consumables

2011 Annual General Meeting

Laurent VacherotMay 5, 2011

Annual General Meeting – May 5, 2011 2

> Highlights of 2010

> Outlook 2011

> Essilor share


2010: A Year of Acceleration

Revenue of €3,892m, up 19.1%

Operating profit up 18.9% to €705m, 18.1% margin

Free cash flow of €480m, up 23%


Growth Strategy Pursued

Product strategy

Mid-range segment

Geographic expansion

Bolt-on acquisitions

Strategic acquisitions

240 new products

New local brands and multi-networks

China, Latin America, India

€155m in 2010 vs €117m in 2009

FGXI and Signet Armorlite


The Fastest Growth in 15 years: Up 13.4% at Constant Exchange Rates

3,268

98101

187

51 187

3,892

+3.1%+3.0%

+6.1%

+5.7%

+1.6% +5.7%

+19.1%

2009 Organic growth


FGXI Currency effect

2010SignetArmorlite

In € millions

+13.4% at constant

exchange rates


*organic growth + bolt‐on acquisitions without the strategic acquisitions

2010 overall growth* per Region/ Division (Excluding currency impact)

LATIN AM.

+22.6%

NORTH AM.+3.5%

INDIA+19.4%

CHINA+28.6%

JAPAN‐6.0%

OCEANIA+15.2%

EUROPE+2.3%

EASTERN EUROPE+7.7%

AFRICAMIDDLE‐EAST

+24.6%

ASEAN+24.2%

EQUIPMENTS WW 38.1%INSTRUMENTS WW 9.8%


Acquisitions: a good year

Asia6

Oceania1

Canada2

Latin America4

Europe2

AfricaMiddle East

2

United States9

Equipment1

Strategic acquisitions Bolt-on acquisitions


Net Profit Up 18.2%

* Adjusted for acquisition-related costs on non-closed transactions at December 31, 2009, which reduced net profit by €3.3m** Operating profit before compensation costs of share-based payments, restructuring costs, other income and expense

and goodwill impairment.

In € millions 2009* 2010 % change

Revenue 3,268 3,892 +19.1%

Contribution from operations** 593 705 +18.9%

% of revenue 18.1% 18.1%

Operating profit 550 618 +12.4%

Profit attributable to equity holders 391 462 +18.2%

% of revenue 11.9% 11.9%

Earnings per share (in €) 1.89 2.20 +16.6%


Exceptional Items within Operating Profit

In € millions 2009 2010 % change

Contribution from operations 593.0 704.8 +18.9%

Restructuring/reorganization (11.4) (37.9)

BKA provision (3.9) (41.5)

Sperian sale -- 27.1

Strategic acquisition costs (3.5) (6.5)

Other income/(expense), net (24.1) (27.5)

Operating profit 550.1 618.5 +12.4%


Improved Contribution Margin from Core Business

2009* 2010Before bolt-on and strategic acquisitions

2010reported


Operating leverage

18.1%+0.5 18.6% -0.5

18.1%

* Adjusted for IFRS 3R


Capital expenditure net of disposals in € millions and in % of revenue

Optimized Capex and Increased Global Production Capacity

7.1% 7.7%

5.9%

3.5%

7.2%

3.2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2005 2006 2007 2008 2009 2010

174 192224

183

116 124


389

133

7764

676

0

200

400

600

800

1000

1200

1400

1

349

645

14057

148

0

200

400

600

800

1000

1200

1400

1* Including €107m in acquired debt** Including the change in the cross-currency swap

Operating cash flow(excl. WCR)

Capital increaseOther**

Sperian sale

Reported change in net debt

CapexWCR

Dividends

Net financial investments*

Share buybacks

+480

Free Cash Flow Up 23%


* Adjusted for acquisition-related costs in accordance with IFRS 3R

112296

- 260 - 93- 210- 54

1,6761,892

2,1682,366

2,7353,044

2005 2006 2007 2008 2009* 2010

Net debt Equity

Robust Balance Sheet to Finance Growth

In € millions


Shares back to 2008 level

Shares outstanding at year-end 2009 210.9

New shares issued 2.5

To members of the PEE corporate savings plan 0.5On exercise of stock options 2.0

Existing shares delivered 2.9On vesting of performance shares and exercise of stock options 1.1On conversion of OCEANE bonds 1.8

Share buybacks -7.5

Shares outstanding at year-end 2010 208.8

Shares outstanding on March 31, 2011 206.3

In millions of shares


Dividend Per Share Up 18.6%

113129 137 148

173

0.700.66

0.620.55

0.83*

2006 2007 2008 2009 2010

Total payout (€m) Dividend per share (€)

34% 35% 36%37% 37%

% Payout ratio

* Submitted to shareholder approval at the May 5, 2011 Annual Meeting



> Outlook 2011

> Essilor share


In € million

+7.3%

905.8

25.6

39.6

16.2

1027.6+4.5% +2.8% +4.4% +1.7%

+13.4%

Q1 2010 Organicgrowth

Bolt-onacquisitions

Strategicacquisitions

Currencyimpact

Q1 2011

40.4

2011 First quarter revenue: improvement in Organic Growth


2011 First quarter

Strong momentum in fast growing markets

Healthy recovery in developed markets

Sharply higher equipment sales

9 new transactions since January 1st


> Outlook 2011

> Essilor share



Essilor Share over performs the CAC 40 Index

Essilor vs. CAC 40 vs. DJI ‐ 2009/2010/2011

25

30

35

40

45

50

55

60

janv

févr

mars avr

mai juin juil

août

sept oc

tno

vdé

cjan

vfév

rmars av

rmai jui

n juil

août

sept oc

tno

vdé

cjan

vfév

rmars av

rmai

+ 68,6%56,6

* Indice basé sur le cours Essilor au 31/12/08

Base comparaison : clotûre 31/12/2008Essilor (29/12/2008) : 33,57 EURCAC (29/12/2008) : 3297.97 pts

Données mises à jour au 02/05/2011

+ 28,2%43,0

33.57

CAC 40*

Essilor

2009 2010 2011

+ 51,2%50,7

DJI


Share Performance – Past 15 years

Essilor vs. CAC 40depuis 1996

0

10

20

30

40

50

60

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

CAC 40*+ 116,0%

Essilor + 677,9%56,6

15,7

* Indice basé sur le cours Essilor au 02/01/1996

Base comparaison : clotûre 02/01/1996Essilor (02/01/1996) : 7.27 EURCAC (02/01/1996) : 1908.38 pts

Données mises à jour au 02/05/2011

Essilor vs CAC40 since 1996


In brief

The recovery of the market is confirmed

Back to historic level for organic growth

Continued efforts to improve operational efficiency

Continuation of our acquisition and partnership strategy


Paul du SaillantMay 5, 2011

Europe: A key position for Essilor


22011 General Meeting

GDP(in B$ constant 2010, log scale)

US

Japan

FranceGermany

China

India

Actual

10

100

1 000

10 000

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

5 000

2 000

500

200

50

20

Forecast(2010-2020)

2015 2020

CAGR 2010-2020

3%

1%

2%2%

8%

7%

World 5%

Source: IMF, EIU, USDA, UNO, Estin & Co analysis

GDP – 1945-2020 – Developed and emerging countries - volume

Economic growth in developed countries demands entrepreneurial innovative strategies

3

160 years of growth and innovation…


… to become the leader in the ophthalmic industry

4 Production Plants

65 business units40 prescription laboratories

11,000 employees

€1.4 Bn sales

Satisloh and Instruments headquarters

Innovation and Technology Center


800

1000

1200

1400

1600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

En M€

2000 – 2010: Average growth rate 5%

Europe36%

Lenses and Optical Instruments Revenue

In €M


2000 – 2010: Acquisitions & Partnerships

Equipments/consumables 3*Lenses/Instruments 27*

* number of companies acquired


600 M inhabitants

80,000 points of sales

A key market

210 M lenses per year

300 M wearers


Growth potential for progressive lenses

Sources : Euromonitor, www.ined.fr

>200 M EMERGING PRESBYOPES IN THE NEXT 20 YEARS

femalemale

45 year old

25%

51%

Gro

wth

Pot

entia

lProgressive lenses

Europe

Denmark


Growth potential for added value products

51%

98%

Anti-reflective lenses

Gro

wth

pot

entia

l

Europe

Japan

20%

8% Gro

wth

pot

entia

l

Photochromic lenses

Europe

Australia

40%

7% Gro

wth

pot

entia

l

Europe

USA

Polarised lenses (within Tinted)

Présentateur

Commentaires de présentation

Japon: Checker with Remy – OK Afrique du Sud: Checker with Remy OK Usa: Checker with Remy OK


Deploy Essilor strategy… to capture growth potential

Trading up by Innovation

Conquering the mid- range

Market expansion

Acquisitions


Innovation at the heart of our strategy

Stimulate demand for premium products

Develop multi- network

Develop solutions and services for customers

Growth potential for added value products

51%

98%


Gro

wth

pot

entia

l

Europe

Japan

20%

8% Gro

wth

pot

entia

l

Photochromic lenses

Europe

Australia

40%

7% Gro

wth

pot

entia

l

Polarised lenses (within Tinted)

Europe

USA

Présentateur

Commentaires de présentation

Japon: Checker with Remy – OK Afrique du Sud: Checker with Remy OK Usa: Checker with Remy OK


Innovation to personalize lenses

Effortless vision

Measures the eye in 3D


Multi-network strategy to serve all market segments and channels


Innovation in services

Helping our partners to differentiate, grow and be more efficient.

“Loyalty” programs

EQE, Alliance…


Solutions for Key Accounts

Frame Management

Lenses

Edging and mounting

New business example:

+ 700 stores

16,000 pairs of glasses per day

IT & Supply Chain


Essilor in Europe: a strong base for competences …and value creation

2013 – New World Center for Innovation and Technology in Créteil


Strategy and Outlook


Hubert SagnièresMay 5, 2011


A still significantly under-penetrated market

A high ramp-up potential

A growing, profitable mid-range segment

A highly fragmented industry

The Optical Market in 2011



A still significantly under-penetrated market

A high ramp-up potential

A growing, profitable mid-range segment

A highly fragmented industry

The Optical Market in 2011

Acceleration driven by fast growing markets


Acceleration Driven by Fast Growing Markets…

GDP growth = 5%

Expected GDP Growth2010-2016(in volume, constant price in %, IMF)

GDP per Capita (in USD)Source: Essilor, Estin & Co.

0 10,000 20,000 30,000 40,000 50,000 60,000

Brazil

China

France

India

Indonesia

USAUK

Mexico

0

2

8

10

12

4

6

SpainGermany


…With the Fastest Volume Growth…

Number of lenses sold linked to GDP per capitaNumber of lenses sold linked to GDP per capita

GDP per capita (in USD)

Lenses per capita

Volume growth

Netherlands

Mexico

MalaysiaArgentina

AustraliaAustria

Belgium

Brazil

Canada

China

Croatia Czech Rep

Finland

France

Germany

Hong -Kong

Hungary

India Indonesia

Ireland

Italy

Japan

Philippines

Poland

Portugal

Russia

Singapore

Slovakia

Slovenia

South Africa

SpainSweden

Switzerland

Taiwan

Thailand

UK USA

0 10,000 20,000 30,000 40,000 50,000

Turkey

Egypt

Mexico

Brazil

China

France

India

Indonesia

Russia

Singapore

UK USA

Netherlands

Mexico

MalaysiaArgentina

AustraliaAustria

Belgium

Brazil

Canada

China

Croatia Czech Rep

Finland

France

Germany

Hong -Kong

Hungary

India Indonesia

Ireland

Italy

Japan

Philippines

Poland

Portugal

Russia

Singapore

Slovakia

Slovenia

South Africa

SpainSweden

Switzerland

Taiwan

Thailand

UK USA

Turkey

Egypt

Mexico

Brazil

China

France

India

Indonesia

UK USA

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

Germany

Spain

Hong-Kong

Source: Essilor, Estin & Co.


…And the Greatest Potential for Average Prices to Increase

Value growthAverage price to end consumer per spectacle lens(logarithmic scale, in €)

GDP per capita (logarithmic scale, in USD)

50,00020,00010,0005,0002,000

200

100

50

20

10

5

2

Hong-Kong

UK

Mexico

Indonesia

India

GermanyFrance

Brazil Spain

USA

China

Average selling price also linked to GDP per capitaAverage selling price also linked to GDP per capita



Our Priorities for 2011

Significantly increase exposure to fast growing markets

Capture full growth potential of developed markets

Continue to strengthen worldwide positions in the mid- range market

Leverage Equipment and Instruments division

Accelerate worldwide development of FGXI


Significantly Increase Exposure to Fast Growing Markets

Implement through a dedicated organization

Focus on key countries(Amera and Latam)

Leverage all Essilor’s know-how

Accelerate acquisitions

Expected market growth in value (CAGR 2010-2015, in %)

Market volume in 2010 (millions of lenses)


0,2 0,5 1 2 5 10 20 50 100

Kenya

Serbia

Costa Rica

Slovenia

Kazakhstan

Malaysia

Saudi Arabia

Portugal

Mexico

Chile Thailand

Ghana

Russia

India

China

Brazil

Indonesia

USAFrance

20

15

10

5

0

Size proportional to market volume 2010

9 MPc

NetherlandsJapan

200

Singapore CanadaSouth Africa

Adapt business model to each countryAdapt business model to each country

Columbia

Egypt

Turkey






Capture full growth potential of developed markets





2%3%

7%

1%0,5%

11%

25% 26%29%

34%

Capture Full Growth Potential of Developed Markets

35%41%

55%

78%

98%

7%11%

18%20%

1%

Essilor’s growth potential is as strong in developed countries as in fast growing countries Essilor’s growth potential is as strong in developed countries as in fast growing countries

Innovation at the heart of our strategy

Stimulate demand for premium products

Develop customer solutions & services

Gro

wth

pot

entia

l

Italy

Progressive lenses

Spain USAFrance

Canada


Japan

USAFrance

Canada

Germany

Gro

wth

pot

entia

l

Photochromic lenses

Gro

wth

pot

entia

lG

row

th p

oten

tial

Polarized lenses

JapanGermany

France

USAAustralia

Spain FranceItaly

Canada

USA




Pub crizal en francais - film




Capture full growth potential of developed Markets





Continue to Strengthen Worldwide Positions in the Mid-Range Market


Multi networks

All geographies150 / 200

Capitalize on export labs and Asian acquisitions to grow profitably in the mid-range market Capitalize on export labs and Asian acquisitions to grow profitably in the mid-range market








Leverage Equipment & Instruments division



Leverage Equipment & Instruments Division

Continue to deploy worldwide distributionFacilitate the penetration of premium lensesSupport growth of fast growing markets

Surfacing Consumables Coating

Strengthen Essilor’s positions worldwideStrengthen Essilor’s positions worldwide

Edgers






Leverage Equipment & Instruments division



Accelerate Worldwide Development of FGXI

Acquisitions

Leverage Essilor’s strengths

Extend product lines

2015

Sales > $500 million

2015

Sales > $500 million2010

$277 Million Sales

2010

$277 Million Sales

Opticals

Department Stores

International

Alt Channels

A growth driver for Essilor and the optical marketA growth driver for Essilor and the optical market



A Corporate Culture to Support our Growth Strategy

Trading-up through

innovation

Conquering the mid-

range segment

Expanding the market

Acquisitions

Operational efficiency

Corporate social responsibility


Strengthened Commitment to Corporate Responsibility

Our convictions:

• Strong management systems: Quality, Environment, Health & Safety

• Employee shareholding reinforces our culture

• Pledged to support UN Global Compact

• Essilor Vision Foundation “Better Life through Better Sight”

Deployment of « Essilor Principles »to support sustainable growthDeployment of « Essilor Principles »to support sustainable growth

A recognized commitment:




Documents

2011 Annual General Meeting Laurent Vacherot May …...Lenses and Optical Instruments Revenue In €M 2011 General Meeting 6 2000 – 2010: Acquisitions & Partnerships Equipments/consumables