Oriflame 2014 Annual Report – Revenue Falls 10% From €1,406 to €1,265 Million

 

From cosmetics Direct Selling company Oriflame annual report 2014:

CEO Magnus Brännström comments:

“2014 has been a year marked by challenges of various kinds for Oriflame. The geopolitical instability in our important markets Russia and Ukraine and the sharp devaluation of their currencies have impacted operations, sales and margins negatively.

On the other hand, 2014 was a good year in other parts of the world – we saw very strong growth in Turkey, Africa and Asia and we continued to build our position stronger in Latin America.

We ended the year with a quarter of decent local currency sales development, but with margins under pressure.

The slower local currency sales development in the first quarter-to-date reflects the continued external challenges and uncertainties we are likely to be faced with throughout 2015. We will tackle these with a continued strive to improve our offer and an intense focus on profitability.”

• Local currency sales increased by 5% and Euro sales decreased by 5% to €353.7m (€371.2m).
• Number of active consultants was unchanged at 3.5m compared to the same period previous year.
• EBITDA amounted to €34.4m (€52.0m).
• Adjusted* operating margin was 8.4% (12.6%), negatively impacted by approximately 350 bps from currency movements, resulting in an adjusted* operating profit of €29.8m (€46.8m). Operating margin was 8.0% (12.0%) and operating profit €28.4 m (€44.7 m).
• Adjusted** net profit amounted to €11.1m (€27.2m) and adjusted** EPS amounted to €0.20 (€0.49). Net profit was €3.3 m (€25.0 m) and EPS €0.06 (€0.45).
• Cash flow from operating activities amounted to €66.0m (€63.7m).
• First quarter update: The local currency sales development in the first quarter to date is around 1%, impacted negatively by a timing effect of approximately 2%.

* Adjusted for restructuring costs of €2.4m, gain from sale of manufacturing assets of €9.2m and VAT cost related to the Russian tax claim of €8.1m in the fourth quarter 2014 and restructuring costs of €2.2m in the fourth quarter 2013
** Adjusted for tax costs from the Russian tax claim of €6.4m

12 months ended 31 December 2014

• Local currency sales increased by 1% and Euro sales decreased by 10% to €1,265.8m (€1,406.7m).
• EBITDA amounted to €122.9m (€166.5m).
• Adjusted* operating margin was 7.7% (10.1%), negatively impacted by approximately 350 bps from currency movements, resulting in an adjusted* operating profit of €97.8m (€142.4m). Operating margin was 7.5% (9.7%) and operating profit €94.7m (€136.6).
• Adjusted** net profit amounted to €47.0m (€84.4m) and adjusted** EPS amounted to €0.84 (€1.52). Net profit was €37.5m (€78.6 m) and EPS €0.67 (€1.41 m).
• Cash flow from operating activities amounted to €90.0m (€112.1m).
• The Board of Directors will continue to prioritise reducing the debt during the forthcoming quarters. As a consequence, the Board of Directors will not seek a mandate for distribution of dividend during the forthcoming four quarters (quarter 2 2015 up until quarter 1 2016).

* Adjusted for restructuring costs of €4.2m, gain from sale of manufacturing assets of €9.2m and VAT cost related to the Russian tax claim of €8.1m for the full-year 2014 and restructuring costs of €5.8m for the full-year 2013
** Adjusted for tax costs from the Russian tax claim of €6.4m

Significant event after the end of the quarter

• Insurance claim of €7.8m relating to Indian warehouse fire in 2013 received in January 2015.