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Coty’s “efficiency programs” and “power brands” have led to a third- quarter 2015 operating profit growth of 24%. As a result, the company will be increasing its $200 million efficiency plan target, which will be announced alongside full-year results, and will reinvest some of the funds.
Despite these efficiencies, Coty noted that overall growth has been slow, despite strength in brands such as Chloe, Rimmel and Sally Hansen. Future results are expected to be aided by the recently acquired Bourjois brand.
Coty predicts full-year results to reflect growth of between 17% and 21%.
Coty has reported that net revenue for the third quarter was flat on a like-for-like basis and decreased 7% overall, totaling $933.8 million. The company achieved adjusted operating income of $100.9 million, up 24% from the prior year’s $81.4 million. Net income reached $75.5 million, up from the prior year’s loss of $253.3 million.
Third-quarter highlights include:
- Color cosmetics grew 6% on a like-for-like basis, led by brands like Sally Hansen and Rimmel
- Fragrances declined 2% as new launches could not compensate for declines among existing products
- Skin and body care fell 4%, with revenue declines in Adidas and Playboy
- The Americas had growth of 5%, with expansions in the United States and Coty’s Avon partnership in Brazil
- Europe, the Middle East and Africa fell 3% due to declines in travel retail, which offset gains in Eastern Europe, the Middle East and South Africa
- Asia Pacific net revenues decreased 2% due to declines in China, which largely offset growth in Australia, Korea, and Southeast Asia
For the first nine months of fiscal 2015, Coty reported net revenues of $3,375.7 million, which were flat on a like-for-like basis and down 4% as reported. Adjusted operating income for the nine months totaled $468.9 million, an increase of 4% from $450.8 million in the prior-year period.
Reported net income of $211.5 million increased from a loss of $77.3 million in the prior-year period. Adjusted net income of $329.8 million for the nine month period was an increase from $306.3 million in the prior-year period. Net cash provided by operating activities was $388.2 million, compared to $443.1 million in the prior-year period.
