Oriflame Reports Q3 Profit Above Forecast

 

Oriflame Cosmetics Russian sales stabilized in the third quarter after the beauty products retailer made changes to a compensation plan for sales representatives in the country. The stock rose the most in more than a decade.

Oriflame's adjusted operating profit totalled 19.7 million euros (15.44 million pounds), topping a mean forecast of 16.8 million in a Reuters poll of analysts.  Revenue in Russia rose 1 percent at local currency rates in the three months through September, the Luxembourg-based company said, the first growth in more than a year.

Oriflame, which gets about half of sales from the countries of the former Soviet Union, reported estimate-beating third-quarter earnings, resulting in a record share rise.

Changes to the so-called Success Plan for employees “are starting to deliver results,” the company said today without elaborating. The Russian sales growth comes after global cosmetics leader L’Oreal SA reported higher revenue in the country yesterday.

“We can see positive trends in Russia with growth in the third quarter and positive continuation into the fourth quarter,” Oriflame Chief Executive Officer Magnus Braennstroem said. The retailer has had operations in the country since 1992.

Oriflame and L’Oreal join western European consumer-products companies reporting surprisingly good growth in Russia in the third quarter, despite the ongoing regional tension. Nestle SA (NESN) said the country drove its eastern European growth, as consumers bought more candy and coffee, while Reckitt Benckiser Group Plc CEO Rakesh Kapoor said the country did well and the Dettol maker had “surprisingly” seen no significant slowdown in its categories.

Source: Bloomberg