Avon Boosts Earnings Outlook Slightly

Avon Products Inc., New York, has raised its earnings estimate slightly, citing stronger-than-expected operating results in the U.S. and Europe, according to a Dow Jones Business News report.

The cosmetics company said it now expects earnings before items of $2.31 a share for 2002. That is up a penny a share from its Oct. 18 estimate. The new estimate compares with $2.09 a share before items in 2001. Last year, items reduced reported earnings by $0.24 a share, to $1.85 a share.

For the fourth quarter, Avon expects earnings before items of $0.79 a share. Avon anticipates fourth quarter sales to be up 4% to 5%, thanks to 8% to 9% growth in sales of beauty products, driven by double-digit increases in the U.S. The company said the growth reflects its strategy to focus resources on its beauty business.

Avon expects international operations to post solid profit growth in the quarter, with double-digit gains in Europe and Asia more than offsetting an estimated 10% profit decline in Latin America, where currency translation continues to hurt results.

For 2003, Avon is forecasting “significant” improvement in margins as the benefits of its restructuring initiatives accelerate. Avon said it is again targeting double-digit earnings-per-share growth before items for 2003. Cash flow from operations is forecast to be within the company’s predicted range of $500 million to $550 million annually.

“Looking ahead, we are confident in the future of our business,” Andrea Jung, chairman and chief executive, said in a statement.

The company, which announced an overhaul of operations last year, has been booking quarterly restructuring charges to cover the costs of its “business transformation.”