Essilor: First-Half 2007 Results

CHARENTON-LE-PONT, France, August 30 /PRNewswire/ --

- Sustained Business Levels in the First Half

- Contribution Margin at 18.1%, an All-Time High

The Board of Directors of Essilor (OTC: ESLOY) International, the world
leader in ophthalmic optics, has approved the financial statements for the
six months ended June 30, 2007.

EUR millions               First-half 2007  First-half 2006   % change
    Revenue                           1,476.9           1,362.4       8.4%
    Contribution margin                  18.1%             17.8%        -
    Profit attributable to              181.7             164.1      10.7%
    equity holders of Essilor
    International
    Basic earnings per share             0.88              0.80       9.9%
    (in EUR)(1)

    (1) Adjusted for the two-for-one stock split on July 16, 2007



The highlights of the first half were:

- Strong 8.5% organic growth, led by sustained demand, an
improvement in the product mix and higher volumes.

- The success of new products, notably progressive and
anti-reflective lenses.

- A further improvement in profitability with a contribution margin
higher than the 17.9% reported for full-year 2006.

- A 9.9% increase in basic earnings per share.

- An ongoing external growth strategy, with the acquisition of nine
companies or their assets representing an additional EUR118 million in
full year revenue.

- Substantial capital spending (EUR107 million) and financial
investment (EUR111.3 million).

This performance is especially satisfying given the high basis
of comparison in first-half 2006.

In the second half, Essilor will pursue its strategy of
implementing valued-added products and developing in the international
marketplace. For the full year, the Company expects to report high quality
financial results, confirming once again its steady growth.

A conference call will be held today at 2:00 p.m., Paris time.

- The number to dial is: +44-(0)207-750-99-23

- It will be webcast live and available for later listening at:

http://hosting.3sens.com/Essilor/20070830-5CF628F2/en

- A presentation of the first-half 2007 results can also be
downloaded at:
http://www.essilor.com/InvestorRelations/Library/Slides.htm

Regulatory Information:

The Interim Financial Report can be downloaded from the Company's
website, http://www.essilor.com, in the Shareholders/Investors section, 
under Regulatory Information, or by clicking on:
http://www.essilor.com/InvestorRelations/Library/FinancialReport.htm.

Next financial announcement:

Nine-month financial information: October 24, 2007

Essilor International is the world leader in ophthalmic
optical products, offering a wide range of lenses under the flagship
Varilux(R), Crizal(R), Airwear(R) and Essilor(R) brands to correct myopia,
hyperopia, presbyopia and astigmatism. Essilor operates worldwide through 15
production sites, 244 lens finishing laboratories and local distribution
networks. The Essilor share trades on the Euronext Paris market and is
included in the CAC 40 index. Codes and symbols: ISIN: FR 0000121667;
Reuters: ESSI.PA; Bloomberg: EF:FP.

MANAGEMENT REPORT

    First-Half 2007

    EUR millions                First-half 2007  First-half 2006    % change
    Revenue                             1,476.9          1,362.4        8.4%
    Contribution from                     267              242.8       10.0%
    operations(1)
                                           18.1%            17.8%
    Contribution margin
    Operating profit                      252.9            229.3       10.3%
    Profit attributable to                181.7            164.1       10.7%
    equity holders of Essilor
    International
 
    % of revenue                           12.3%            12.0%
    Basic earnings per share                0.88             0.80       9.9%
    (in EUR)(2)

    (1) Operating profit before compensation costs of share-based
    payments, restructuring costs and other expenses, and goodwill 
    impairment.

    (2) Adjusted for the two-for-one stock split on July 16,
    2007.



Revenue up 8.4% to EUR1,476.9 million

Essilor's consolidated revenue for the six months ended June
30, 2007 rose by 8.4% as reported and by 8.5% like-for-like. Changes in the
scope of consolidation boosted revenue by 3.5%, reflecting the contributions
of the businesses acquired in 2006 and in the first half of 2007. The
currency effect was a negative 3.6%.

Organic growth was led by various factors:

- Strong demand in all regions worldwide throughout the
period.

- An accelerated improvement in the price mix and higher
volumes, which contributed equally to growth. Unit sales of medium and
high-index, progressive and photochromic lenses were especially robust.

- The success of new products, in particular the progressive
lens marketed under the Anateo(TM) brand (for BBGR in Europe) and the
Accolade(TM) brand (for optical chains and cooperatives in the rest of the
world), the Crizal(R) anti-reflective, antistatic lens, and the Varilux
Physio(R) progressive lens launched in early 2006.

Revenue by region

    EUR millions      First-half     First-half    Reported   Like-for-like
                           2007            2006      change       change(1)
    Europe                675.7           606.4        11.4%          8.5%
    North America         622.4           596.0         4.4%          7.1%
    Asia-Pacific          128.7           116.8        10.2%         12.4%
    Latin America          50.1            43.2        15.9%         16.7%

    (1)Based on a comparable scope of consolidation and at constant
    exchange rates.



Nine acquisitions since January 1, 2007

Essilor acquired nine companies or their assets during the
first half. Together, they represent additional full-year revenue of EUR118
million for a total investment of EUR101.7 million.

- In Europe the Company acquired a majority stake in the Novacel group,
with annual revenue of EUR39 million.

- In the United States, Essilor acquired OOGP ($50 million in
revenue), Beitler McKee Optical Company ($13 million), Sutherlin Optical
Company ($13 million), Personal Eyes ($2 million), and purchased the
prescription safety eyewear assets of Dispensers Optical Service Corp.
($5 million).

- In Canada, Essilor acquired a majority interest in Optique
Cristal Inc, with revenue of C$2 million.

- In Singapore, Essilor acquired a 51% stake in Integrated
Lens Technology Pte Ltd, with revenue of EUR13 million.

- In China, Nikon Essilor acquired all outstanding shares in
Nikon Beijing, its local distributor.

Gross profit up 7.9% to EUR854.8 million

Gross margin (revenue less cost of sales, expressed as a
percentage of revenue) stood at 57.9%, compared with 58.2% in first-half
2006. In the Company's core businesses, the product mix showed a satisfactory
improvement. However, Essilor's 2007 acquisitions, especially OOGP (contact
lens distribution) and Novacel (lens distribution), adversely affected gross
margin since these companies operate in different segments and have different
business models from the rest of the Company in terms of capital employed and
margins.

Operating expenses up 6.9% to EUR587.8 million

Operating expenses rose less quickly than revenue and
accounted for 39.8% of consolidated revenue in first-half 2007, versus 40.3%
in the prior-year period, when they totaled EUR549.7 million.

Operating expenses comprised:

- R&D and engineering costs representing 4.8% of consolidated
revenue, versus 4.6% in the first six months of 2006, and amounting to
EUR69.1 million (net of a EUR1.7 million tax credit).

- Selling and distribution costs of EUR326.9 million (22.1% of
revenue compared with 22.8% in the previous-year period).

- Other operating expenses of EUR191.8 million (13% of revenue
versus 13.1% in first-half 2006).

The Company continued to invest in research and development
while maintaining tight control over spending.

Contribution from operations up 10.0% to EUR267 million

As a percentage of revenue, contribution from operations stood
at 18.1%, above the full-year contribution of 17.9% in 2006.

This solid performance reflects a favorable product mix driven
by sustained demand in all regions as well as new products, productivity
gains and a limited increase in operating costs.

Operating profit up 10.3% to EUR252.9 million

"Other income and expenses from operations" and "Gains and
losses on asset disposals" together represented a net expense of EUR14.1
million (compared with EUR13.6 million in first-half 2006), of which EUR10.7
million in compensation costs on employee stock ownership plans, stock
options and performance share grants.

Operating profit represented 17.1% of consolidated revenue.

Finance costs net of EUR5.5 million

Finance costs and other financial income and expenses
represented a net expense of EUR5.5 million compared with EUR13.5 million in
first-half 2006. This reflected an improvement in net cash and cash
equivalents, and the reduced impact of exchange losses and changes in the
fair value of financial instruments.

Profit attributable to equity holders of Essilor International
up 10.7% to EUR181.7 million

Net profit totaled EUR183.7 million, an increase of 11%. It
comprised:

- Income tax expense of EUR79.1 million. The 32% effective tax
rate compared with 30.7% for first-half 2006. The higher rate stemmed mainly
from the increased contribution to profit of entities in North America, the
Company's highest tax region.

- The share of profit from associates-VisionWeb, Sperian
Protection (formerly Bacou-Dalloz) and Transitions-which amounted to EUR15.3
million, versus EUR16.1 million in first-half 2006. Profit from Transitions
declined slightly to EUR10.1 million, from EUR12.1 million for the prior-year
period, because

of a substantial currency effect, the concentration of
marketing costs in the first half and restructuring costs related to the
plant closing in Australia.

Profit attributable to equity holders of the parent was 10.7%
higher, at EUR181.7 million. Earnings per share rose by 9.9% to EUR0.88
(adjusted for the July 16, 2007 stock split).

Inventories

Inventories amounted to EUR397 million at June 30, 2007,
compared with EUR371 million one year earlier, a 7% increase. The
like-for-like increase was 2.6%, significantly below the rate of revenue
growth.

Investments

Capital expenditure net of divestments totaled EUR107 million
or 7.2% of consolidated revenue.

Financial investments net of disposals amounted to EUR111.3
million. Of this amount, acquisitions accounted for EUR101.7 million, while
buybacks of shares under the liquidity contract accounted for EUR9.6 million.

Cash Flow Statement

    EUR millions
    Net cash from operations      235  Capital expenditure     107
                                       net of disposals(1)
    Proceeds from employee share   20  Change in WCR and        71
    issue                              provisions
    Decline in net cash and cash  141  Dividends               113
    equivalents
    Effect of changes in            7  Financial investments   111
    exchange rates and in the          net of the proceeds
    scope of consolidation             from disposals(1)

    (1) In all, the proceeds from disposals of property, plant and equipment
    and non-current financial assets totaled EUR1.7 million in first-half 
    2007.



Net cash and cash equivalents declined to EUR69 million, from EUR210
million at year-end 2006 as the Company's high profitability and robust
performance enabled it to pursue an ambitious program of industrial and
financial investment and increase dividends.

Net cash and cash equivalents were also affected by the usual seasonal
impact of annual volume discount payments to customers, which are
concentrated in the first half.

Related party transactions/Risks and uncertainties

In first-half 2007, the nature of transactions with related parties,
consolidated subsidiaries and associates did not change significantly
compared to the description in the 2006 Registration Document. Similarly,
risks and uncertainties affecting business for the months ahead are still in
line with the analysis in Chapter 4 of the Registration Document.

Outlook

In the second half, Essilor will pursue its strategy of
implementing valued-added products and developing in the international
marketplace. For the full year, the Company expects to report high quality
financial results, confirming once again its steady growth.

Investor Relations and Financial Communications 
    Veronique Gillet 
    Phone: +33-1-49-77-42-16