Oriflame reshuffles executive board
and falling profits has prompted major boardroom changes,
highlighted by the appointment of Magnus Brännström as the
company's new CEO, Simon Pitman reports.
At just 38 years old, Magnus Brännström becomes the new managing director and CEO of the Sweden-based direct sales cosmetic business, succeeding Sven Mattsson. The company also announced a new management structure, which sees Jesper Martinsson appointed chief operating officer.
Alongside the announcement, Oriflame's board of directors acknowledged that its first year on Stockholmsbörsen - the Stockholm Exchange - had not lived up to the expectations. In view of this performance it added that future development required new leadership.
Indeed it was the company's IPO that impacted profits, adding an extra €4.7 million in expenses. This, combined with the fact that the company was also hit by an additional €4.8 million in restructuring costs, led to profits dropping by 10 per cent to €79.6 million, outweighing the 3 per cent increase in sales achieved during 2004.
Likewise, the company's share prices have been hit by the rocky performance. It went public at the end of March, 2004, when shares were floated at an initial price of €208.50. They then hit a high of €272 in July of this year, before falling to their current level of €159 per share.
"For the last eight years, Magnus Brännström has been responsible for Oriflame's key markets in Russia and the CIS region (Commonwealth of Independent States), where he has raised sales from € 88 million to over € 330 million on an annual basis," said Robert af Jochnick, chairman of the board. "The experience he has gained making Oriflame one of the leading cosmetics brands in Russia makes him well suited to lead and invigorate efforts to strengthen our business."
Brännström has been employed by Oriflame Cosmetics since 1997, serving as regional director for CIS and Asia, prior to which he was managing director for Russia and regional director for CIS. He has been credited with developing the company's sales in the CIS and Baltic region, helping to make it the company's mainstay business.
Oriflame is currently present in 35 different countries, covering parts of Asia, Latin America and the whole of Europe and had group sales of €197.3 million. Currently the company is constructing a production facility in China, where it is aiming to tap in on huge growth in direct cosmetics sales.
The current regional director for Western Europe, Central Europe and the Mediterranean, Jesper Martinsson, has been appointed to the newly created position of chief operating officer (COO) where he will be primarily responsible for the company's established markets established markets.
The company said that Mattsson will leave his current position as well as the board of directors, but remain during a transition period where he will assist with start-up preparations in China. He has served with the company for 17 years.