Developing markets help drive Oriflame sales growth

By Simon Pitman

- Last updated on GMT

Related tags Sales growth

Oriflame Q2 results show a big leap in sales boosted by developing markets in Asia and Latin America, together with positive currency translations.

The Sweden-based company said that local currency sales increased by 9 per cent and by 19 per cent in Euros, up from €315.5m in Q2 last year to €375.0m.

The direct sales company said that the sales growth was primarily driven by a 5 per cent increase in the average size of the workforce during the quarter, which helped boost productivity by 4 per cent.

Local sales increased by 24 per cent in Asia to €39.2m, 20 per cent in Latin America to €22.4m, 12 per cent in the CIS and Baltic region to €208.0m, while in the EMEA region sales fell by 2 per cent to €100.5m.

EMEA sales hit by decrease in productivity

The fall in local sales in the EMEA region, Europe, North Africa and Turkey, was attributable to a 3 per cent decrease in productivity, while sales in terms of Euros increased by 2 per cent on account of positive currency translations.

The company said that within the region, sales growth was strong in Turkey, Morocco and Egypt while most of the Central European and Nordic countries were weak.

In the CIS and Baltic countries, sales were particularly strong in Russia, Belarus, the Baltics and Ukraine, while in Latin America sales growth was reported to be strong in all countries.

In Asia, the company said that sales growth was strong in all markets, but also pointed out that in Iran, which currently represents 20 per cent of total sales in that division, it was reconsidering its options on account of deteriorating business conditions.

Key brands drive growth

Oriflame said that on the products side, sales of fragrances were boosted by the launch of the summer range Savannah, while the Wellness brand is now one of the company’s top ten sellers, and the Triple Core Lipstick has helped to recover some of the lost ground experienced in the colour cosmetics category as a whole.

The increase in the company's global sales helped to drive net income, with the figure rising 30 per cent compared to the corresponding quarter last year, to €29.5m, while EBITDA rose 14 per cent to €44.3m.

Looking ahead to the full financial year Oriflame said its outlook remains unchanged, with sales growth still in line with its long-term target of around 10 per cent in local currency and operating margins expected to be above 12 per cent at current exchange rates.

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