Avon finances given a boost by improved profitability in first quarter
The company said that reported net sales fell by 4 percent to $2.5bn, a figure that was flat in constant dollars, when taking into account the positive impact of currency translations.
This figure reflected a 5 percent dip in reported beauty sales, while personal care, color and skin care fell by 3 percent, 6 percent and 12 percent respectively, while fragrance bucked the downward trend with sales growing 1 percent on a reported basis.
Investors give thumbs up to results
But despite the lack luster sales figures, the company’s restructuring program is showing signs of improving the business dynamics, reflected by the fact that share prices rose 6.3 percent to $23.65 – a 52-week high.
Investors liked the fact that the net loss came in below expectations at $13.7m, compared to a profit of $26.5m in the corresponding period last year, while operating profit was $172m – a figure that was negatively impacted by $20m due to cost cutting measures.
Refinancing also saw the company prepay $535m in outstanding private notes, as well as $380m of the outstanding loans, while the 32 percent devaluation in the Venezuelan currency resulted in a one-time charge of $34m.
The company now has an adjusted net debt of $2.1bn, which is $160m on the same period last year.
All about cost reductions...
"Our first-quarter results reflect continued signs of stabilization, including early progress in our cost reduction efforts," said Sheri McCoy, Chief Executive Officer.
"I'm pleased with the performance of our Latin America and Europe, Middle East & Africa regions, particularly in Brazil and Russia. The teams there are focused on ensuring that this performance is sustainable. As for our other markets, there remains work to be done, particularly in the US."
On a regional basis sales were down 7 percent in Latin America to $1.14bn, impacted by falling revenues in Brazil and Venezuela, while sales in Europe, Middle East & Africa were up 1 percent to $733.1m, on gains in Russia and the overall number of direct sellers.
In North America sales were down 15 percent to $406.2m, on the back of a similar decline in the number of active representatives, while in Asia Pacific sales fell 10 percent to $200.0m, mainly on the back of a 30 percent fall in revenues from China.
