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Avon Reaffirms 3Q and Full-Year Earnings Outlook

November 22, 2005

Avon Products, Inc., New York, NY, reaffirmed its earnings outlook for the third quarter and full-year 2004 last month. Earnings in the third quarter are expected to increase 21% to $0.34 a share, while full-year earnings are expected to rise 24% to $1.72 a share. Avon executives said sales should increase 11% in both dollars and local currencies in the third quarter.
Operating profit in the third quarter is expected to grow about 20% versus prior-year, including incremental consumer and strategic investments of $10 million, executives said. Operating margin is forecast to expand by about 100 basis points, attributed to new benefits from the company’s business transformation initiatives and operating leverage.
Andrea Jung, chariman and chief executive officer, said international regions are each expected to generate double-digit gains in local currency sales, units and active representatives.
“Looking ahead, on a full-year basis, we remain very comfortable with our earlier earnings estimate of $1.72 per share, reflecting the continued broad-based strength of our international operations, as well as anticipated improvement in our U.S. business in the fourth quarter,” Ms. Jung added. “The power of our global portfolio, coupled with the financial flexibility provided by our business transformation initiatives, position us well to achieve our 2004 earnings target.”
In a new three-year program that began July 1, Mr. Lafley could receive up to $11.22 million which would be paid in restricted stock units. He also received stock options. P&G executives said more than 90% of Mr. Lafley’s total compensation is at risk, based on the company’s performance. P&G’s profit rose 25% in its fiscal year ended June 30. Unit volume grew 17% and net sales grew 19% to $51.4 billion.
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