1

ItalyEyewear Key Figures 2016

2

General information 2016

➢ Population: 60.589.445 (-0,1% vs 2015)

➢ GDP per capita: 27.313€ (+1,7% vs 2015)

➢ Population over-40: 55% of population➢ Population over-65: 22% of population

➢ Population with visual defects: 61,5%

➢ Number of optical shops: 9.638 (-1,8% vs 2015)

➢ Population/shops: 6.178

Population data, GDP data: ISTAT - IMF Optical shops data: GfKOthers data: ANFAO

3

High economic risks and political instability, which are closely

interconnected and tied in a cause-effect cycle, still prevail in the global

economic scenario.

Before the recession, GDP increased by 3.2% a year and trade by

6.8%. Now this is limited to 2.4% for the former and 1.8% for the

latter.

With this increasing turbulence worldwide, the Italian economy appears

to be weaker than expected. These recent developments have also

clearly revealed again the growing divide between Italy’s growth and that of

other European countries, whose performance on average has not been

brilliant either.

2016 overall situation

Sourc

e:

Anfa

o

4

This overall situation has also negatively affected the

performance of the Italian eyewear industry.

After posting two record years for exports, with double-

digit increases, 2016 closed on a positive note,

albeit on a different scale: an “ordinary” scale.

The same is true of the domestic market, which

remains positive but is not showing any signs of

being able to recapture pre-recession heights.

2016: “ordinary” year for Italian eyewear

Sourc

e:

Anfa

o

5

➢ 862 companies (-0,9% over 2015)

➢ 17.250 people employed (+0,0% over 2015)

➢ 3.697 millions euro production (+3,7% over 2015)

➢ 3.579 millions euro export (+3,6% over 2015)

➢ 1.007 millions euro domestic market (+2,2% over 2015 – sell-in value)

Sourc

e:

AN

FAO

Italian eyewear 2016: main figures

6

In 2016, Italian eyewear production totaled 3,697 million Euros, up by 3.7%

over 2015.

This increase in production was lower than for the previous 2 years due to a lower rise

in exports and the sluggish domestic market.

Sourc

e:

AN

FAO

Italian eyewear industry: details of last years

Million € value Euro var.% Euro var.% Euro var.% Euro var.% Euro var.% Euro var.%

Output 2.659 8,6% 2.799 5,3% 2.898 3,5% 3.171 9,4% 3.565 12,4% 3.697 3,7%

Export 2.459 11,3% 2.622 6,6% 2.782 6,1% 3.064 10,2% 3.453 12,7% 3.579 3,6%

Import 808 5,8% 844 4,4% 885 4,9% 988 11,6% 1.146 16,0% 1.184 3,3%

Domestic

Mkt1.008 0,6% 963 -4,5% 941 -2,2% 932 -1,0% 985 5,7% 1.007 2,2%

20162015201420132011 2012

7

The number of companies remained basically the same, with 862 businesses nationwide

(0.9% less than in 2015).

Employment levels also remained the same as in 2015: without taking other employment

contracts into account (approx. 500) there were 17,250 people employed at the end of 2016.

Sourc

e:

AN

FAO

Italian eyewear industry structure

YEAR

OUTPUT

(million €

value)

EMPLOYEES

(number)

FIRMS

(number)

INDUSTRIAL

FIRMS

(employment

contract:

industry)

2016 3.697 17.250 862 160

2015 3.566 17.245 870 158

2014 3.171 16.195 868 165

2013 2.898 15.830 869 166

2012 2.799 16.220 880 169

2011 2.659 16.120 903 172

8

IMPORT-EXPORT

9

Sourc

e:

Anfa

o

Italian eyewear industry: 2016 export performance

Exports of frames, sunglasses and lenses, which account for almost 90% of production by theindustry, rose by 3.6% versus 2015, totaling 3,579 million Euros.

This increase was solely contributed by sunglasses, whereas frames lagged behind, confirmingthe trend that had already been posted in the last part of 2015.

In 2016, exports of sunglasses rose by 6.8%, amounting to approx. 2,465 million Euros.

Exports of frames instead, decreased by 2.8%, totaling approx. 1,045 million Euros.

This slowdown in growth is also reflected in imports which grew by 3.3% at almost 1,184 millionEuros.

However, the balance of trade for Italian eyewear continues to be largely in surplus (2,395million Euros in 2016), up by 4 percentage points versus 2015.

10

Sourc

e:

AN

FAO

As stated, 2016 was an “ordinary” year for Italian eyewear exports, and in line with the globalslowdown in trade and definitely lower economic growth, in both developed and emerging countries.In this situation, sunglasses and the geographical area of Europe were the keys to the positiveexport results posted by Italian eyewear in 2016.Italian eyewear exports to emerging countries were lackluster, both in well-established marketplacesfor eyewear imports and new markets.

➢ The main market for eyewear exports in 2016 continued to be Europe, with a share of almost 50% of totalItalian eyewear exports and rising by 7.1% (+12.2% for sunglasses, -1.3% for frames).

➢ The share of exports to America in 2016 was 30.2%, with exports of sunglasses-frames up by 2.7% over2015 (+3.9% for sunglasses, -0.5% for frames).

➢ In Asia, which accounts for 17.4% of Italian sunglass and frame exports, exports in 2016 fell by 1percentage point.

Italian eyewear export: 2016 geographical details

11

The first 10 export markets count about for 73% of the total Italian exports of sunglasses and frames. S

ourc

e:

AN

FAO

Italian eyewear export 2016: first 10 mkt and share

1 USA 26,8% 1 USA 21,5%

2 France 10,9% 2 France 17,5%

3 United Kingdom 7,2% 3 Germany 9,1%

4 Spain 6,6% 4 United Kingdom 7,2%

5 Germany 5,8% 5 Spain 5,9%

6 China 4,5% 6 China 4,0%

7 South Korea 2,8% 7 Netherlands 3,4%

8 United Arab Emirates 2,5% 8 Brazil 2,1%

9 Turkey 2,4% 9 Hong Kong 1,7%

10 Hong Kong 2,3% 10 Portugal 1,5%

Sunglasses Frames

12

Sourc

e:

AN

FAO

Italian eyewear export 2016: countries details

Percentage changes by value

13

Sourc

e:

AN

FAO

Italian eyewear export 2016: emerging countries

Percentage changes by value

14

The Italian eyewear industry exported about 100.1 million pairs of glasses in 2016 up by 2.1% over 2015.

Of the more than 100 million glasses exported, 66.8 million were sunglasses (66.7%) and 33.3 million were optical frames (33.3%). More specifically, the number of sunglasses exported rose by 4.4% over 2015, with frames falling by 2%.

Sourc

e:

AN

FAO

Italian eyewear industry: 2016 export volume

100,1 million pairs

15

DOMESTIC MARKET

16

In 2016, the domestic market maintained the positive trend of the previous year,however, the positive result in terms of value (+2.2% for the sell-in) wasgenerally lower than what had been expected, in the hope of a greatermomentum that would close the divide which has been building up from 2007 on.

In terms of products, sunglasses (+3%) did better than frames (+1%),whereas for ophthalmic lenses (+0.5%), the best performers were stillprogressives (+3.8%).

Sourc

e:

AN

FAO

Main facts

17

Sourc

e:

AN

FAO

by value

2016 sell-in market share

18

Sourc

e:

AN

FAO

2011 2016

Frames and sunglasses sell-in: plastic and metal

2011 2016

19

Sourc

e:

AN

FAO

Frames and sunglasses sell-in: brands

2011 2016

20

Sourc

e:

AN

FAO

Frames and sunglasses sell-in: sales channel

21

Single vision and progressive lenses share the lenses market.Pal represent 19,7% in term of volume, but count for about 53% of turnover.

About PAL position, Italy is recovering (ie 2016 vs 2010).

Sourc

e:

AN

FAO

Plastic lenses sell-in: geometry market share

volume value

22

Photocromatic segment represent the 10,6% of total lenses in volume.In 2016 the market share slowly increased 2010’s level.

Sourc

e:

AN

FAO

Lenses sell-in: photocromathic segment

23 Sourc

e:

AN

FAO

Optical trade structure

Optical Shops 2011 2012 2013 2014 2015 2016

TOTAL POS 10.121 10.041 9.969 9.895 9.817 9.638

chain 756 817 821 829 810 801

groups and independent pos 9.365 9.224 9.148 9.066 9.007 8.837

TURNOVER PER POS 317.000€ 282.000€ 279.000€ 280.000€ 285.000€ 310.000€

24 Sourc

e:

AN

FAO

Optical trade share of turnover

Ophthalmic lenses represent more than 50% of optical trade turnover.

25

Millio

ns €

Sourc

e:

AN

FAO

2016 Italian eyewear industry sell-out by value

Products 2015 2016 16vs15

care products (solutions) 57,82€ 56,86€ -1,7%

contact lensens 231,26€ 242,40€ 4,8%

frames 491,43€ 514,72€ 4,7%

sunglasses 650,43€ 661,35€ 1,7%

ophthalmic lenses 1.459,85€ 1.517,22€ 3,9%

Total mkt 2.890,79€ 2.992,54€ 3,5%

26

2017 outlook

27

Forecast for 2017

Looking at the overall situation of growth but strongly characterized by uncertainty,forecasts must necessarily remain cautious.

Considering the particular structure of the eyewear industry, which is mainlyexport-oriented, it will certainly succeed, as usual, in drawing the maximumopportunities arising from international markets.

Furthermore, 2016 also showed that there can also be interesting opportunities forgrowth in developed markets like Europe.

These many aspects could therefore lead to growth albeit on a smaller scale,but probably steadier over time.

28

Sourc

e:

AN

FAO

Last events involving the eyewear industry

January 2017: merger of two worldwide giants Luxottica and Essilor,

respectively undisputed leaders in eyewear (frames/sunglasses) and lenses

February 2017: direct entry of one of the big luxury names, LVMH, into the

sector following a joint venture with Marcolin.

These events definitely demonstrate the vitality of the sector and the

importance that it holds internationally and also follow another trend

that had already been observed, that is, the return of very high-end

production to Italy.

Although the short- and medium-term effects are difficult to forecast, some initial

basic evaluations can be made.

29

Sourc

e:

AN

FAO

Evaluation

Italian eyewear companies possess levels of undisputed excellence and an internationally-

recognized leadership. The know-how and the professional and technological expertise of eyewear

companies, especially in the eyewear district of Belluno, stem from a century-old history which has made

a decisive contribution to the development of eyewear worldwide.

On the one hand, therefore, a maximum level of vertical integration (such as the Luxottica-Essilor

operation) will undeniably guarantee the giant from Agordo, sound and solid future development by

further expanding its possibilities. The operation could therefore lead to more employment and local

investments, as the company’s top management has recently pointed out to the press.

On the other hand, the entry of the large luxury groups into the sector (Kering and now LVMH) is similar

to what has already happened in other sectors of the fashion, clothing, footwear and leather goods

industries. This does not detract from the role of the Italian manufacturing industry, but

allows more investments to be made, something increasingly necessary in order to compete on the

global stage.

Last but not least, this situation could be an incentive for small and medium-sized companies

towards a greater integration into the chain allowing them, with their strong focus on product

innovation or extreme specialization, to take advantage of the opportunities that derive from having a

critical mass on the international marketplace.

30

Export: 1st Quarter 2017

Products (value in mln€) 1Q 2016 1Q 2017 17vs16

FRAMES 284,32 286,28 0,7%

SUNGLASSES 632,76 655,16 3,5%

FRAMES+SUNGLASSES 917,08 941,44 2,7%

The 1 quarter of 2017 shows a slowly increase in export for frames (0.7%), sunglasses perform better (+3.5%): overall export raise by 2.7% versus the same period of 2016.

It’s an outlook for a “ordinary” growth.

Sourc

e:

AN

FAO

31

Domestic Market: 1st Quarter 2017

Sell-out value of the first period of 2017 increased by 2%.In terms of products, sunglasses (+2.7%) did better than frames(+1.1%), whereas for ophthalmic lenses (+2.5%), the bestperformers were still progressives (+3.6%).

From the sell-in data (available until May), a slowdown should bereported.The market seems to be flat again compared to the same period of2016.

Sourc

e:

AN

FAO

32

Thank you for your attention!

f.gili@anfao.itc.ronchi@anfao.it