Coty Reports Full-Year Results

Coty’s net revenues for the fiscal year ended June 30, 2015 were $4.39 billion, which was flat like-for-like and down 3% as reported from the prior-year, with strong like-for-like growth in color cosmetics offset by declines in fragrances and skin and body care.
 
The fragrance and beauty company was able to turn a profit in the fiscal fourth quarter, buoyed by a large tax benefit.  Fourth quarter net income was $21.0 million, according to Coty.

“2015 was a good year. We made meaningful progress on our strategy of driving revenue growth on power brands, while fueling profit growth behind efficiency programs,” said Bart Becht, chairman and interim CEO. “During the year, power brand net revenue growth, while still modest, was in the low single digits like-for-like, driven by Marc Jacobs, Chloe, Sally Hansen, Rimmel, and Philosophy. On profits and margins, we made material progress over the last 9 months resulting in full year adjusted diluted EPS being up by 22%.

An 8% like-for-like revenue increase in the color cosmetics segment was driven by power brands, Sally Hansen and Rimmel, according to the company.
  
Fragrances revenues declined 2% like-for-like driven by declines in celebrity brands and a lower level of new launch activity in select brands.
 
Skin and body care declined 5% like-for-like, driven primarily by lower net revenues from body care brands Adidas and Playboy, offsetting growth in Philosophy.
 
By geographic region, Coty said modest like-for-like growth in the Americas was tempered by flat like-for-like results in EMEA and Asia Pacific. Americas net revenues grew 1% like-for-like, reflecting the contribution from the commercial distributor relationship with Avon in Brazil and a stable business in the U.S. EMEA revenues were flat like-for-like, as growth in Eastern Europe, the Middle East and South Africa, and consistent results in Germany and Southern Europe, were offset by declines in the U.K. and Travel Retail.
 
Asia Pacific net revenues were flat like-for-like, reflecting growth in Australia and Travel Retail, consistent revenues in Southeast Asia, and declines in China in part due to a change in business model. Emerging markets grew 4% like-for-like during the year, accounting for 29% of net revenues in fiscal 2015 compared to 28% of net revenues in the prior year on a like-for-like basis.
 
Regarding the acquisition of P&G’s Fragrances, Color Cosmetics, and Hair Color businesses, Becht commented, “We remain very excited about this transaction's potential for Coty. We continue to believe that it will not just create a pure-play global leader and challenger in the beauty industry, with approximately $10 billion in revenues, it will also offer material cost and cash savings as well as longer term enhanced growth opportunities.”
 
In terms of driving profit growth behind efficiency programs, Becht said the firm has identified additional opportunities. “As a result, we are increasing the savings target for our Global Efficiency Program by 35% to $270 million by fiscal year 2017. These additional savings should allow us to continue to drive margin expansion, while also re-investing part of these savings to gradually improve the growth trajectory of the overall business.