Strong sales see Oriflame end 2005 with a bang

By Simon Pitman

- Last updated on GMT

Related tags: Cent, United states dollar

Oriflame says that euro currency sales growth of 24 per cent in its
fourth quarter, ending in December - a strong end to a year marked
by restructuring and a major push into developing markets.

The company revealed that its final quarter sales grew from €197.3 million, to reach €244.7 million. Reflecting a tougher start to the year, full year sales were up 14 per cent in euro currency, to reach €765.7 million.

The direct sales company said that during the last quarter an increase of just 8 per cent on its sales force also reflected well in the results compared to the increase in sales, further emphasised by an 8 per cent jump in productivity.

Profit margins were also upm for the quarter, after significant investments in developing markets, particularly in Russia and China, ate into profits in the first nine months of the year.

EBITDA for the final quarter was up 21 per cent to reach €43.0 million, whereas for the full year, it remained virtually flat at €120.3 million.

For the fourth quarter sales in Latin America, CIS & Baltics, Central Europe & Mediterranean, Western Europe and Asia increased by 33 per cent, 20 per cent, 14 per cent, 11 per cent and 8 per cent respectively.

The company said that increases reflected the launch of additional catalogues that reflected the all-important Christmas period, combined with a strong product mix and motivated sales force.

Sales of colour cosmetics were particularly strong during the quarter, with its newly launched 500% Mascara proving to be a key driver on a global basis, supported by a strong media campaign.

Other key new products during the period proved to be Stretch and Curl Mascara, eye shadow duos and intense eyeliners, the company said.

Likewise fragrance continued strong sales growth, with Nomadic Him and Her proving particularly popular, while the skin care line was boosted by the new Rose Face Care and hair care was boosted by the Hair Solution Anti Ageing line.

Looking ahead, the company says that it is maintaining its goal of achieving sales growth of 5 - 10 per cent per annum over the course of the next five years, while maintaining a profit major of 15 per cent.

Operating margin has proved to be a key focus for the company as heavy investments over the past couple of years in the key developing markets has had its toll on this area of the business.

Earlier in the year the company farmed off its UK and Ireland direct sales operations in an effort to concentrate on sales growth in the developing markets.

In the course of the year the new investment will see the opening up of its operations in the China market, followed by further selective openings in other key developing markets.

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