Oriflame results hit by tough economic conditions in Europe
Net sales for the most recent quarter ending in June were down by 1 percent on a reported basis to €359.7m, compared to €373.6m in the corresponding period last year, a figure that represented a fall of 4 percent in terms of Euro sales.
The falling sales also hit the bottom line, with the EBDITA amounting to €42.2m, compared to €50.4m in the corresponding period last year and net profit for the period came in at €19.9m, compared to €31.3m.
Extended downturn for the company
The figures for the quarter mark an extended downturn for the player, which has suffered from exposure to many of the markets that have been worst hit by the continuing economic problems in Europe, particularly in southern Europe.
For the first six months of the 2013 financial year, the figures trend looks for similar to that for the most recent quarter, with sales down 1 percent in reported terms and 4 percent in Euro currency, to €741.0m, while EBITDA amounted to €87.4m compared to €105.4m for the same period last year.
Although the company’s performance in the first half of the year seems to have continued a long run of poor results, CEO Magnus Brännström believes the company is about to turn a corner during the second half of the year, thanks to a stronger performance in markets outside of Russia.
Looking to new markets for recovery in second half
"We ended the second quarter weaker than expected, however we see a sales growth of 3 percent in the third quarter to date, and higher in Russia,” Brännström said.
“The implementation of the improved Success Plan in the CIS looks promising, although the related price changes had an initial negative impact on sales and leverage in the second quarter.”
Brännström also commented that the company’s investments to date in future growth markets such as Russia and India, are on track and expected to pay dividends in the near future.
“Our key future growth markets are performing very well. Initiatives to increase sales and efficiency within the group are being intensified."