Estée Lauder at full power on the back of strong Asia Pacific sales
Group revenues for the third quarter were up by 11% to $2.55bn, compared to $2.29bn last year, a figure that came in at 12% growth when factoring in the positive impact of currency translations.
In the Asia Pacific region, sales grew the fastest, delivering a 14% increase to $518.4m, a result that reflected a constant currency increase in revenues in almost every market the company covers in the region.
China leads the way with accelerated retail sales
Although results were down in Thailand, Korea and the Philippines, the company particularly highlighted the performance in China, which it said was driven largely by accelerated retail orders.
This increase in group revenues positively impacted net earnings, which rose 19% to $213.2m. But despite the surge in profits, the unexpected impact of currency re-measurement in Venezuela mean that profits came in below expectations.
“Our excellent results this quarter reflect our multiple engines of growth across product categories, countries and channels, enabling us to achieve strong local currency sales growth in every geographic region,” said Fabrizio Freda, President and chief executive officer.
Venezuela currency re-measurement impacts results
However, Estée Lauder joins a growing number of companies, including Colgate-Palmolive and Procter & Gamble, to be hurt by the currency re-measurement initiative introduced by the Venezuelan government.
Despite the fact that revenues grew at a strong rate and a promising innovation pipeline has led the company to up its full-year forecasts, the company posted a net profit figure that was below analysts’ expectations.
The company said that the currency re-measurement in Venezuela impacted results to a total sum of $38.3m, which in turn impact the bottom line and share payouts.
Excluding the charges for accrued in Venezuela, the company said that net profit would have been approximately $251.7m.
Fragrance adds impetus to the strong results
In skin care sales were up 12% to $1.13bn, while make-up was up 10% to $1.01bn, fragrance was up 16% to $270.5m and hair care was up 4% to $120.8m.
In the other regions, revenues in the Americas were up by 8% to $1.07bn, mainly driven by stronger sales in the Latin American region and online, whereas in Europe, the Middle East & Africa they were up 13% to $959.4bn led by double-digit gains in the UK, Germany, Switzerland, France, Turkey and Russia.
For the nine months up to March 31, revenues increased by 6% to $8.24bn, while net earnings were up by 2% to $946.4m.