Strong sales help boost Oriflame profits

By Simon Pitman

- Last updated on GMT

Related tags Cent United states dollar Euro

Sweden-based direct sales giant Orilflame says it has managed to
boost its profits thanks to double digit sales growth during the
first quarter.

The company reported that local currency sales grew by 26.5 per cent to reach €324.2m, up from €268.5m, while Euro currency sales increased 20.7 per cent.

The strength of the Euro against other currencies weighed down on the bottom line, impacting the results by approximately €2m. However, despite the big rise in sales, the strength of the Euro meant that the gains were not altogether reflected in the bottom line growth.

With the inclusion of a €4.9m tax bill, net profits were up €35.9m compared to the corresponding quarter last year, to €37.9m - an increase of 7.1 per cent.

Operating margin rises sharply The operating margin was also up, by 15.5 per cent, which resulted in operating profits increasing 22 per cent to €50.2m.

The group said that its strong sales gains had been helped along by a positive product mix during the period, highlighting colour cosmetics, skin care and fragrances as particularly strong categories.

Specific products that were particularly well received during the quarter were Wonderlash mascara, Power Shin lipstick, and the Tim Reversing skin care product, while in the fragrance category Signature and After Hours also did well.

On a regional basis sales in the CIS and Baltic states were up 35 per cent to €191.4m, in Central Europe and the Mediterranean they rose by 13 per cent to €69.1, in Latin America they increased 33 per cent to €13.1m and in Asia they increased 35 per cent to €18.4m. Western European sales suffer The only blip was experienced in Western Europe and Africa, where sales fell by 1 per cent to €23.8m - a figure that the company said was down to an increase in the size of the sales force and a corresponding decrease in productivity.

Likewise, the company also said that sales development was particularly weak in the Nordic countries.

Earlier this month Oriflame increased its outlook for 2008 on the back of positive preliminary results from the year's first quarter.

The company cited good performance in all markets and product sectors, and positive effects of the timing of catalogue releases, as reasons behind the results.

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