Oriflame beats expectations despite Euro dip and tough market conditions


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CEO Magnus Brännström says the outlook is encouraging after a 'stronger' year for Oriflame
CEO Magnus Brännström says the outlook is encouraging after a 'stronger' year for Oriflame

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Oriflame saw Euro sales dip in its fourth quarter and yearly figures, but with local currency sales up, growth in some developing markets, and by utilising price initiatives to offset certain devaluation, the company has managed to beat expectations.

For its fourth quarter ended 31 December 2015, the Swedish beauty manufacturer saw local currency sales increase by 3% and Euro sales decrease by 4% to €339.5m, compared to €353.7m last year.

This mirrored the results for the year with local currency sales increasing by 1% and Euro sales decreasing by 4% to €1,211.6m, compared to €1,265.8m in the previous 12 months.

The Russian tax probe is most notably still taking its toll​ on the figures with the company noting that the tax expense which has affected the company’s profits,  was impacted by a new provision related to the Russian tax case as well as other one-off impacts totalling approximately €8.0m.

The Board of Directors also states it will continue to prioritize reducing the firm’s debt, with $80.0m of the long-term debt to be repaid in the first quarter 2016.

Despite these situations, company CEO Magnus Brännström explains that the company has emerged into 2016 as a stronger and more focused company having managed changing and challenging market conditions.

“Oriflame leaves 2015 as a stronger company thanks to our transition to meet the demands of tomorrow – with a more balanced geographical footprint and proven success from our strategic product categories and active online leaders,”​ he says.

He points to the company’s strong growth in Latin America, Turkey, Africa and Asia, which now account for almost half of the Group sales, as a marker for this improvement, as well as a continued strong cash flow development in 2015, which has helped Oriflame reduce its net debt.

“At the same time – it was yet another year of challenging market conditions especially in the CIS, where price initiatives were taken to offset the devaluation leading to adverse effect on volumes,”​ adds Brännström.

Encouraging future

Other reasons for encouragement looking ahead relate to the new organisational structure presented in December last year​, to leverage on digital opportunities in global functions combined with a decentralised regional delivery organisation.

As part of this initiative the company will have a new split of Global Business Areas; Latin America, Europe & Africa, CIS and Asia & Turkey, and this will be reflected in the Group’s financial reporting as from the first quarter 2016. The first quarter-to-date sales development is approximately 9% in local currency.

“During the end of the fourth quarter we took another step towards becoming an even more agile company when we presented a new organisational set-up to further strengthen our position in a more digital world,”​ says Brännström.

“2016 has started in an encouraging way and we will continue to deliver on our strategy to improve our offer and effectiveness."

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