Coty reports stronger results ahead of P&G portfolio acquisition
The company reported that revenues were flat on a like-for-like basis, at $1.02 billion, which in reported terms represented a fall of 2%. When taking into account the negative impact of currency translations on a strong dollar the constant currency comparison was up 7%.
The revenues topped expectations on Wall Streets, with six analysts surveyed by financial research company Zacks predicting that sales would come in at $1.01 billion for the quarter.
Back in the black
However, where the company really saw progress was in its net income, with the figure swinging from a loss of $20.1 million in the same period last year, to show a profit of $21.0 million for the current fourth quarter.
Net revenues for the full year were $4.4 billion, which was flat on a like-for-like basis and down 3% on a reported basis, while reported net income was $232.5 million, compared to a loss of $97.4 million in the previous financial year.
Speaking about the results, Coty chairman and interim CEO Bart Becht said that the results had reflected the company focus on its power brands, while profit had been enhanced by the on-going restructuring program.
All about the power brands
“During the year, power brand net revenue growth, while still modest, was in the low single digits like-for-like, driven by Marc Jacobs, Chloe, Sally Hansen, Rimmel, and philosophy,” said Becht.
Becht went on to add that the company’s restructuring program has also been further enhanced and is expected to give further savings.
“We are increasing the savings target for our Global Efficiency Program by 35% to $270 million by fiscal year 2017. These additional savings should allow us to continue to drive margin expansion, while also re-investing part of these savings to gradually improve the growth trajectory of the overall business,” he said.
An expanded future with P&G brands on board
Last month Coty announced the biggest acquisition in the industry for a decade, when it confirmed its intention to complete a tax-free Reverse Morris Trust transaction to buy a slice of the P&G Beauty Business that is valued at approximately $12.5 billion.
The transaction has pushed Coty into a new league, making it one of the world’s largest beauty companies, with pro forma combined annual revenues of more than $10 billion based on fiscal year 2014 performance.
“We remain very excited about this transaction's potential for Coty. We continue to believe that it will not just create a pure-play global leader and challenger in the beauty industry,” said Becht, who also stated that the acquisition: “will also offer material cost and cash savings as well as longer term enhanced growth opportunities.
