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Oriflame released its interim financial report for January 1 through September 30, 2012, reflecting a slowdown for the company.
For the three months ended September 30, 2012, local currency sales for Oriflame decreased by 7% and Euro sales were down by 4% to €309.4 million (€321.6 million). Adjusted net profit amounted to €18.4 million (€15.1 million) and adjusted EPS after dilution amounted to €0.32 (€0.26). Also, the average size of the sales force decreased by 8% to 3.2 million consultants, and its closing sales force was down by 9%.
For the nine months ended September 30, 2012, the company saw flat local currency sales and Euro sales were down by 1% to €1,078.7 million (€1,085.1 million). Adjusted net profit amounted to €84.2 million (€70.7m) and adjusted EPS after dilution amounted to €1.48 (€1.24).
Commenting on the results, Oriflame CEO Magnus Brännström said, “The sales development in the third quarter was below our expectations, affected by continuously challenging market conditions in many key markets as well as a lower sales force. On the positive side we continue to see good development of margins and operating cash flow, which reflects our commitment to strengthen the current brand positioning and improving the profitability.”
“The results from the important recent recruitment campaign are in line with our expectations and fourth quarter local currency sales are to date in line with prior year,” he continued. “However, in view of the weak macro situation, we estimate 2012 full year local currency sales slightly below prior year. Operating margin remains in focus and is expected to improve compared to prior year. We continue to adapt the cost structure and organization to the challenges and opportunities that lie ahead.”
Consequently, the company announced a revised outlook for 2012. Now local currency sales are expected to be slightly below 2011 for the full year while operating margin is expected to improve compared to prior year. The previous outlook for 2012 was to focus on reversing the sales trend and returning to growth with an improved operating margin.