Oriflame reports exceptionally high growth figures

By Guy Montague-Jones

- Last updated on GMT

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Supported by a burgeoning sales force, Oriflame reported rapid growth in both turnover and profit in the third quarter.

The Sweden-based company said sales for the three months ending September 30 grew by 30 per cent to reach €311.0m and operating profit was up 41 per cent to €36.8m.

Bigger sales force drives growth

“This was achieved mainly as a result of successful recruitment campaigns,”​ said Oriflame CEO Magnus Brannstrom. The average size of the sales force increased 22 per cent.

Other drivers for growth in the quarter included price increases and a range of product launches with the greatest success coming from colour cosmetics and fragrances.

To keep up with the expansion of the business Oriflame has increased capacity at its Russian and Swedish factories and plans to follow suit in Poland next quarter.

Increasing production capacity will help Oriflame keep up with demand without falling under the burden of excessive inventory days.

Operating margins widen

Oriflame is already beginning to see the fruits of restructuring. Operating margins were up to 9.7 per cent from 8.6 per cent helping to the company to deliver significantly higher profit figures. Net profit rose 93 per cent over last year to €23.1m.

Operating margins are expected to widen further over the coming quarters and 15 per cent is the target for 2009.

Commenting on the results Brannstrom said: “With a world economy which is less predictable than before, we are especially happy to report a sales growth of 32 per cent in local currency, making this the strongest quarter since its stock exchange listing in 2004.”

Looking ahead, Oriflame has increased its forecast for the full financial year from over 15 per cent sales growth in local currencies to above 20 per cent.

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