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Coty Reports 3Q Results

May 15, 2014

Revenues rise 2% fueled by fragrance and body/skin care.

Coty’s third quarter Net revenues were $1.0 billion, an increase of 2% like-for-like and 1% as reported relative to the prior-year period. Adjusted operating income of $81.4 million decreased from $103.7 million in the prior-year period, and adjusted net income of $86.7 million increased from $68.4 million in the prior-year period, driven by an increase in one-time tax benefits of $14.3 million.

By segment, fragrances grew 6%, supported by growth in four out of Coty's five fragrance power brands: Calvin Klein, Davidoff, Marc Jacobs, and Playboy. Skin and body care increased 8%, as Philosophy continued its growth momentum, Adidas benefitted from its traction in the emerging markets, and Lancaster saw strong growth particularly in the sun category, noted Coty. Coty's color cosmetics unit saw a 6% decline reflecting continued pressure on the nail category in the U.S., partially offset by strong Rimmel performance, according to the firm.

By geographic region, the growth was driven by EMEA and Asia Pacific, partially offset by continued challenges in the overall U.S. market. EMEA net revenues increased 8% in the quarter, supported by strong results in the U.K., Southern Europe, Eastern Europe, South Africa, and the Middle East. Asia Pacific revenues grew 19%, with strong momentum in Australia and Southeast Asia. Emerging markets had very strong 15% growth, aided by the company's new joint ventures and subsidiaries in Southeast Asia, South Africa, and the Middle East. Net revenue growth was helped by favorable comparison due to cancelled and unshipped orders in the prestige distribution channel in the prior-year period, following the transition to a new third-party logistics provider in Europe.
 
Net revenues for the nine months were $3.51 billion, down 2% like-for-like and as reported relative to the prior-year period. Adjusted operating income of $450.8 million decreased from $527.4 million in the prior-year period. Adjusted net income of $306.3 million decreased from $313.3 million in the prior-year period, including $38.1 million in tax benefits in the current-year period


"Coty returned to revenues growth in the 3rd quarter. The majority of our power brands showed positive development thanks to a competitive innovation program, and growth in the emerging markets accelerated to 15%,” said Michele Scannavini, CEO of Coty Inc. “Both prove our strategic focus on these brands and geographies is starting to bear fruit. While market conditions remain challenging in some product segments in parts of the world, we are sticking to our current strategy and targeting for continued growth for the remainder of the calendar year while working to significantly improve the cost profile of the business."

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