Swedish beauty products company Oriflame on Friday posted lower than expected first-quarter operating profit and said its Russian sales were falling, sending its share price plunging by 16 percent.
Local currency sales increased by 8%, slightly positively impacted by timing of catalogues. Euro sales decreased by 2% to â‚¬334.1m (â‚¬340.1m). Euro sales amounted to â‚¬330.8m* in accordance with IFRS.
Number of registered actives increased by 1% to 3.0m.
EBITDA amounted to â‚¬42.1m (â‚¬40.4m) and to â‚¬46.3m* in accordance with IFRS.
Operating margin was 9.2% (8.8%), negatively impacted by 320 bps from currencies, and operating profit was â‚¬30.6m (â‚¬29.8m). Operating margin was 10.5%* and operating profit was â‚¬34.8m* in accordance with IFRS.
Net profit was â‚¬18.7m (â‚¬19.5m) and diluted EPS â‚¬0.32 (â‚¬0.34). The tax rate was unfavorably impacted by approximately 350 bps from withholding tax on extraordinary large intra group dividends during the quarter. Net profit was â‚¬21.0m* and diluted EPS â‚¬0.36* in accordance with IFRS.
Cash flow from operating activities was â‚¬24.9m (â‚¬-1.5m) and â‚¬24.9m* in accordance with IFRS.
The development in the second quarter to date is approximately -2% in local currency, negatively impacted by timing of catalogues in the CIS as well as conferences in most regions.
*Figures following the adoption of IFRS 15 and IFRS 16.
Significant events after the end of the quarter
After the end of the quarter, Oriflame successfully completed a â‚¬50m issue of Euro denominated US private placement notes bilaterally agreed with the international investor Pricoa. The proceeds refinance the private placement loan maturing during the third quarter 2018 and will be used for general corporate purposes
CEO Magnus BrÃ¤nnstrÃ¶m comments:
2018 has started with a continued strong performance in Asia & Turkey, driven by high online activities, leadership development and the sales of Skin Care and Wellness routines.
I am also pleased to report a stable underlying operating profit for the quarter, despite facing significant currency headwinds. However, Russia showed a notable slowdown during the second part of the first quarter due to both a weaker consumer offering and tougher competitive environment.
The start of the second quarter has been negatively impacted by timing of catalogues in the CIS as well as conferences in most regions. We are taking measures where we meet sales challenges and remain confident in our long-term strategy.’
Oriflame has implemented IFRS 15 Revenue from Contracts with Customers from 1st January 2018. An early adoption of IFRS 16 Leases has been made to allow for all changes being implemented at the same time.
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