Acquisitions Fuel Coty’s Skyrocketing Sales

Coty says net revenues for the fiscal year ended June 30, 2017 rose 76% to $7.65 billion. Excluding the positive contribution from the acquisitions of ghd, Younique, and seven additional months of Hypermarcas Brands, the company’s combined organic net revenues declined 5% on a constant currency basis.

Fourth quarter net revenues were $2.2 billion, an increase of >100% as reported compared to Legacy-Coty net revenues in the prior-year period. Excluding the positive contribution from the acquisitions of ghd and Younique, combined company organic net revenues declined 3% on a constant currency basis, which includes a 1% net benefit as a result of pre-shipments to customers in advance of the termination of the Transition Services Agreement for Europe which occurred on July 1, the firm said.
 
“Fiscal 2017 was a transformational year for Coty,” said Camillo Pane, CEO. “We completed the incredibly complex acquisition of the P&G Beauty Business, fully reorganized into a product and customer focused organizational structure, successfully reached significant milestones in our integration efforts, and boosted our brand portfolio through the additions of Younique, ghd, and the agreement to acquire the Burberry Beauty license. Equally important, we believe the strategy we outlined earlier in the year which focuses on strengthening our global brands, shifting more resources to fuel the growth of the brands with higher growth potential, stabilizing the remaining brands, and continuing to expand the geographic reach of our portfolio, is beginning to bear fruit as demonstrated by the improvement in net revenue trends in the second half of the fiscal year.”

According to Pane, Q4 results continued to demonstrate that Coty’s Professional and Luxury divisions are performing well.

“Professional Beauty's positive performance was driven by continued growth in Wella and improving trends at OPI, and the Luxury division delivered strong growth for the second quarter in a row supported by Hugo Boss, Gucci, Chloe and philosophy. On the other hand, our Consumer Beauty division remains under pressure and its recovery is a key priority for us,” he said.

Pane said that “fourth quarter adjusted operating income declined year-over-year as a result of materially higher marketing spend to drive further revenue momentum in our business and to achieve flawless execution at retail for key launches. Profit was also impacted by a higher combined company fixed cost base that we are rapidly working to address as part of our synergy program and organic efficiency initiatives. Our cost base is not where it should be and we are highly focused on this issue as a key initiative for Fiscal 2018. On a separate note, our cash generation has been strong through the year, underlining its continued strength.”

The CEO said P&G Beauty Business integration efforts are “proceeding well and we remain on track with the synergy delivery.”
 
Further, he said that in Q4, Coty achieved “another significant milestone” as Europe successfully exited its TSA on July 1, following North America’s TSA exit on May 1. ALMEA continues to progress well towards the final TSA exit expected in September, Pane said.

“In conclusion, I am proud of what we have been able to accomplish in less than a year since the transformational acquisition of the P&G Beauty Business and remain confident in our potential to establish Coty as a global leader and challenger in beauty,” Pane concluded.