Revlon 2Q profits rise, but US sales remain subdued

By Simon Pitman

- Last updated on GMT

Related tags Revlon Generally accepted accounting principles Us

Revlon second quarter profits rose significantly as restructuring costs ease, but US sales continue to fall, counterbalancing stronger international results.

Net sales increased by 1.8 percent, up from $321.8m to $327.2m, although this figure was negatively impacted by 0.5 percent due to currency translations that leaned towards a strong US dollar.

The company said that the performance was driven by strong sales of Revlon color cosmetics and Revlon ColorSilk, but offset by lower sales of Almay color cosmetics and Mitchum antiperspirant deodorant.

On a more positive note, net profit for the second quarter increased significantly, up from $0.2m in the corresponding quarter of 2009 to $16.4m.

Profits up as restructuring charges ease off

However this comparison is made more complicated due to the fact that restructuring charges of more than $18m were deducted during the second quarter of 2009, while there was also a provision for tax charges of $4.8m.

For the first six months of the financial year net sales increased by 1.3 percent to $633.2m, while currency translations meant that this figure was essentially flat. Net income for the period was $18.6m compared to $12.9m for the first six months of 2009.

“The economic environment remains challenging and we continue to manage our resources carefully, with a focus on the long-term, profitable growth of our brands,”​ said Revlon president and CEO Alan Ennis.

Geographical comparison underline US market challenge

On a geographical basis sales for the second quarter were hampered by a 3.7 percent decline in the United States, falling by $6.9m to $179.3m, a figure that was primarily attributed to lower Almay and Mitchum sales.

Results for the Canada market were reported separately for the quarter, with sales rising by 20.2 percent to $20.8m, a figure that was largely impacted by favorable currency translation.

In Asia Pacific sales were favorably impacted by currency translations, recording a 7.0 percent increase to $45.5m. The company pointed out that without the positive currency translation, sales would have been flat.

In Europe, the Middle East and Africa, sales rose by 10.1 percent to $50.2m, an increase of 7.2 percent when factoring in currency translation. This figure was primarily attributed to strong performance in the South Africa market.

Latin America leads the way

The Latin America market saw sales increase by 5.5 percent to $28.7m, a figure that represented an increase of 33.5 percent before factoring in unfavorable currency translations.

The strong result in the Latin America market was mainly driven by higher net sales of hair care and color cosmetics in Venezuela, where the result was also boosted by stronger market conditions and inflation.

The company said it will be hosting a conference call to discuss the financial results and outlook on July 29, a 9.30 am EDT.

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