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Colomer Group Boosts Revlon 2013 Sales to $1.49 Billion

Posted: March 5, 2014

Revlon, Inc. announced its results for the fourth quarter and full year ended December 31, 2013. This earnings release for the year and fourth quarter ended December 31, 2013, is the first report to include the results of operations of The Colomer Group (TCG), which was acquired on October 9, 2013. TCG is a beauty care company that markets and sells nail and hair care products primarily to salons and other professional channels. Beginning as of the acquisition date, TCG’s results of operations are included in Revlon’s financial results and are referred to as the “professional segment,” reported separately from the company’s pre-acquisition consumer segment.

For the full year 2013 results, compared to full year 2012, total company net sales were $1.494 billion compared to $1.396 billion, an increase of 7%. Excluding the impact of foreign currency fluctuations, total company net sales increased by 9.6%. Excluding $116.8 million of professional segment net sales included in total company results, net sales decreased 1.3% and, on an foreign currency basis, increased 1.3%. Operating income was $189 million compared to $199.5 million in 2012.

Commenting on the results announcement, Revlon president and CEO Lorenzo Delpani said, “We successfully completed our transformational acquisition of The Colomer Group on October 9, 2013, reuniting the global Revlon brand and expanding Revlon back into the professional channel. Since the acquisition, we have taken further actions to strategically move the combined business forward. We finalized our integration plan, announced our plans to realize annualized cost reductions related to integrating TCG of up to $35 million by the end of 2015, and began to take actions to achieve these benefits. Also, in December 2013, we announced the exit of our business operations in China, which is expected to generate additional annualized cost reductions of $11 million. Given the transformational nature of our TCG acquisition and our overall cost reduction opportunities, the primary focus for us in 2014 will be the successful execution of these programs to achieve the combined synergies.”

As discussed above, total company net sales in 2013 were $1.494 billion, an increase of 7.0%, compared to $1.396 billion in 2012. On a foreign currency exchange basis, total company net sales increased 9.6%, benefiting from the inclusion of net sales related to the professional segment beginning on the TCG acquisition date, as well as a full year of Pure Ice net sales. Excluding $116.8 million of professional segment net sales, net sales decreased 1.3% and, on a foreign currency exchange basis, increased by 1.3%. Higher net sales across most of the company’s major brands and the inclusion of a full year of Pure Ice net sales were partially offset by lower net sales of Almay color cosmetics and lower net sales in Venezuela.

Consumer segment net sales, which consist of the company’s business lines prior to the TCG acquisition, decreased 1.3% to $1.377 billion as compared to 2012. On a foreign currency exchange basis, 2013 consumer segment net sales increased 1.3%. In addition to the inclusion of the net sales of Pure Ice for a full year, the increase was primarily due to higher net sales of Revlon and SinfulColors color cosmetics, Revlon ColorSilk hair color and Revlon Beauty Tools. The net sales increase was partially offset by lower net sales of Almay color cosmetics and lower net sales in the Latin America and Canada region due to Venezuela. Consumer segment profit in 2013 was $347.1 million, or 25.2% of net sales, as compared to $363.1 million, or 26.0% of net sales, in 2012.

For consumer segment in the U.S., net sales of $800.4 million in 2013 increased 0.1% as compared to 2012. Lower net sales of Almay color cosmetics were offset by higher net sales of SinfulColors color cosmetics, Revlon Beauty Tools, Revlon ColorSilk hair color, as well as the inclusion of a full year of Pure Ice net sales. Asia Pacific net sales decreased 2.2% to $204.5 million as compared to 2012. On an foreign currency exchange basis, net sales in 2013 increased 4.3% over prior year, primarily due to higher net sales of Revlon color cosmetics in Japan and Revlon and SinfulColors color cosmetics in Australia. These increases were partially offset by lower net sales of other beauty care products in Hong Kong. Latin America and Canada net sales decreased 5.0% to $192.8 million in 2013 compared to 2012. On a currency exchange basis, net sales decreased 0.8% compared to 2012. Net sales in the region were negatively impacted by $12.7 million of lower net sales in Venezuela. Excluding Venezuela, net sales increased primarily due to higher net sales of Revlon color cosmetics in Argentina, Mexico and certain distributor territories, as well as other beauty care products in Argentina and certain distributor territories. Net sales in Argentina benefited from higher selling prices resulting from market conditions and inflation. These increases were partially offset by lower net sales of Revlon and Almay color cosmetics in Canada. And consumer segment Europe, Middle East and Africa net sales decreased 2.3% to $180.2 million in 2013 compared to 2012. On an currency exchange basis, net sales increased 5.2% over prior year, primarily due to higher net sales of Revlon color cosmetics in the U.K. and certain distributor territories, fragrances in Italy and South Africa, and other beauty care products in South Africa. Net sales also benefited from higher net sales of SinfulColors in the U.K. These increases in net sales were partially offset by lower net sales of other beauty care products in France.

Net sales in Revlon’s professional segment were $116.8 million. The professional segment includes brands such as Revlon Professional in hair color, hair care and hair treatments; CND in nail polishes and enhancements, including CND Shellac and CND Vinylux nail polishes; and American Crew men’s grooming products. On a pro forma basis for the full year 2013, professional segment net sales would have been approximately $531 million. In regard to its Q4 2013 results, Revlon reported total company net sales of $491 million, an increase of 28%, compared to $383.5 million in the fourth quarter of 2012. On a currency exchange basis, total company net sales increased 31.2%, benefiting from the inclusion of $116.8 million of net sales related to the professional segment beginning on the TCG acquisition date. Excluding the TCG acquisition, total company net sales were $374.2, an increase of 0.7% over the prior year on a currency exchange basis. The company had higher net sales across most of its major brands, largely offset by lower net sales of Almay color cosmetics and lower net sales in Venezuela. Total company operating income in the fourth quarter of 2013 was $33.5 million compared to $84.8 million in the same period last year.

In Q4 2013, consumer segment net sales decreased 2.4% to $374.2 million in the fourth quarter of 2013 as compared to the same period last year. On a currency exchange basis, net sales during the fourth quarter of 2013 increased 0.7% as higher net sales of Revlon color cosmetics, Revlon ColorSilk hair color, Revlon Beauty Tools and other beauty care products were largely offset by lower net sales of Almay color cosmetics, as well as lower net sales in the Latin America and Canada region due to Venezuela. Consumer segment profit in the fourth quarter of 2013 was $106.9 million, or 28.6% of net sales, as compared to $117.3 million, or 30.6% of net sales, in the fourth quarter of 2012.

In the U.S., net sales were $218.6 million in the fourth quarter of 2013, a decrease of 0.3% over the prior year. Lower net sales of Almay color cosmetics were offset by higher net sales of Revlon color cosmetics, Revlon ColorSilk hair color and Revlon Beauty Tools. Asia Pacific net sales in the fourth quarter of 2013 decreased 5.0% to $55.4 million compared to the same period last year. On a currency exchange basis, net sales increased 3.8% over the prior year, primarily due to higher net sales of Revlon color cosmetics in Japan and certain distributor territories, higher net sales of SinfulColors color cosmetics in Australia and higher net sales of Revlon ColorSilk hair color in certain distributor territories. These increases were partially offset by lower net sales of Revlon color cosmetics in Australia and lower net sales of other beauty care products in Hong Kong. Latin America and Canada net sales decreased 11.2% to $49.4 million in the fourth quarter of 2013 as compared to the same period last year. On a currency exchange basis, net sales decreased 4.7% compared to the same period in the prior year. Net sales in the region were negatively impacted by $3.8 million of lower net sales in Venezuela. Excluding Venezuela, net sales increased primarily due to higher net sales of Revlon Beauty Tools in Canada and other beauty care products in Argentina. Net sales in Argentina benefited from higher selling prices resulting from market conditions and inflation. These increases were partially offset by lower net sales of Revlon and Almay color cosmetics in Canada, as well as lower net sales of Revlon ColorSilk hair color in certain distributor territories. Europe, Middle East and Africa net sales increased 0.8% to $50.8 million in the fourth quarter of 2013 as compared to the same period last year. On a currency exchange basis, net sales in the fourth quarter of 2013 increased 7.5%, primarily due to higher net sales of Revlon color cosmetics in South Africa and certain distributor territories and other beauty care products in France and South Africa.

Professional segment net sales for the period beginning on the TCG acquisition date were $116.8 million. Also, the professional segment profit was $5.2 million, resulting in 4.5% profit margin.

Additional information on the Q4 2013 and full year 2013 financial results from Revlon can be found here.