Oriflame first quarter earnings down by 22 percent

Oriflame first quarter earnings down by 22 percent

Swedish cosmetics retailer Oriflame has revealed that its first quarter earnings decreased by 22 percent to €23m, compared to €29.4m during the same period last year.

The decrease in earnings before interest, tax, deductions and amortization (EBITDA) was also accompanied by a decline in Euro sales, which were down by 6 percent from €327.2m to €307.8m.

However, the company’s local currency sales increased by 1 percent.

Adjusted net profit amounted to €11.2m, down from €12m and adjusted earnings per share amounted to €0.20, down from €0.22. Net profit was €11.2m, down from €11.6m.

The company, which utilizes a sales force of direct sellers, reported that its number of active consultants decreased by 1 percent to 3.4m.

Oriflame has also revealed that so far during the second quarter, underlying sales volume has deceased by 1 percent in local currency.

CEO Magnus Brännström commented, “The overall market conditions remain very volatile in the CIS region, despite the recent strengthening of the Rouble, and we have seen a slow-down in Russia. In the quarter, we have implemented significant price increases, which have had short-term adverse effect on the volume. We will continue to sequentially implement the price increases and other measures we consider appropriate in order to secure both our margins and the income opportunity for our Consultants.

“The difficulties in some of our core markets are however balanced by the strong performance of our key growth regions Latin America, Turkey, Africa and Asia representing close to 45 percent of group sales in the quarter. While the strong growth in these regions is encouraging, we focus our strengths on getting back to sustainable growth in CIS and Europe.”

In April, Oriflame signed a new Revolving Credit Facility amounting to €110m in total with its existing core relationship banks which replaces the existing €330m facility (signed in May 2011 and with maturity in 2016). As part of the refinancing process, the covenants for the company’s existing Private Placement Notes and the new Revolving Credit Facility were aligned.