Oriflame reports 5% sales increase for the first nine months

Three months ended 30 September 2011

Local currency sales increased by 3% and Euro sales decreased by 4% to €321.6m (€336.6m). Excluding Oriflame’s business in Iran, sales growth was 4% in local currency.

Average size of the sales force increased by 1% to 3.4m consultants and closing sales force was down by 2%.

EBITDA amounted to €32.6m (€22.7m).

Adjusted operating margin was 8.3% (8.0%) resulting in an adjusted operating profit of €26.7m (€27.1m).

Adjusted net profit amounted to €15.1m (€7.1m) and adjusted EPS after dilution amounted to €0.26 (€0.12), negatively affected by €3.4m in foreign exchange losses compared to losses of €12.4m last year.

Cash flow from operating activities amounted to €-3.4m (€-11.5m).

Completion of a $195m and €25m issue of private placement notes.

Nine months ended 30 September 2011

Local currency sales increased by 5% and Euro sales increased by 1% to €1,085.1m (€1,073.5m). Excluding Oriflames business in Iran, sales growth was 7% in local currency.

EBITDA amounted to €131.7m (€116.3m).

Adjusted operating margin was 10.3% (10.0%) resulting in an adjusted operating profit of €111.8m (€107.2m).

Adjusted net profit amounted to €70.7m (€73.8m) and adjusted EPS after dilution amounted to €1.24 (€1.29).

Cash flow from operating activities amounted to €45.1m (€32.3m).

Adjusted outlook for 2011: Operating margin is expected to be around last year’s level at current exchange rates and sales are expected to grow in local currency. Previous outlook: Operating margin is expected to improve compared to 2010 while sales growth for 2011 is expected to be 5-10% in local currency.

CEO Magnus Brännström comments: "Nine months in line with outlook. The first half of 2011 turned out more or less as planned for Oriflame. In the third quarter we had good results from the continued focus on improving operating margin, supported by price increases and consistent execution of key initiatives. Weaker recruitment in CIS together with unstable market conditions lead to adjusted outlook In the third quarter we faced an even more competitive environment, especially in our core market CIS after several quarters of outperforming competition. Poor recruitment campaigns in the end of the quarter were clearly disappointing and give us reason to expect a slowing down in sales in the fourth quarter, leading to a short term effect on margins. Consequently, we adjust our full year outlook."

Solid strategy and positioning going forward

"We remain confident in our strategy and the geographic footprint supporting growth, with Asia increasing its importance for the group. I am pleased to see a continued positive trend in EMEA and the recovered growth in Latin America. We take on the current challenges in our core markets with the commitment to support both growth and improved profitability."