Coty has reported flat sales revenues for its last quarter of the financial year on a struggling North American market, while profits bow under the weight of restructuring.
For the fourth and final quarter ending in June net revenues were down 0.7% to $1.04bn, which represented a fall of 1.6% on a reported basis, while adjusted net income was flat compared to the previous year at $9.9m.
For the full financial year, net revenues fell by 1.6% to $4.55bn, a fall of 2.1% on a reported basis, while adjusted net incomes was $316.2m, compared to $323.2m in the prior year.
Emerging market rise, while North America dips
Although CEO Michele Scannavini pointed out that the company had made significant gains in the emerging markets during the course of 2014, particularly in Asia Pacific and EMEA, this was offset by a softer performance in the North American market, where the nail category was particularly hard hit in a competitive market.
“As we look to fiscal 2015, we are targeting to return to revenue growth, through competitive innovations, continuous expansion in the emerging markets and by improving our mass business in North America,” said Scannavini.
“The implementation of our global efficiency plan, which is expected to generate over $200 million in annual savings within the next three years, should further contribute to fuel our growth and expand our margins."
2014: mixed regional performances
In North America, the company’s performance beyond the color cosmetics was slightly cushioned by modest growth in the fragrance, skin and body care segments, which all experienced 1% like-for-like gains, against a 7% decline for color cosmetics.
However, overall the US market revenues fell by 9% on a like-for-like basis to reach $1.70bn.
However the stronger like-for-like growth of 3% to $2.30bn of the EMEA stemmed further losses, with the UK market, travel retail, Eastern Europe, South Africa and the Middle East all be singled out as providing solid returns.
The Asia Pacific market grew 7% to $544.9m on a like-for-like basis, driven by strong momentum in the Southeast Asia and Australia.
Driven by many of the Asia Pacific markets, Eastern Europe and Latin America, overall sales in the emerging market grew by 10% during the financial year, helping to account for 29% of the company’s total revenues.
Outlook for 2015
Looking ahead the company says it is targeting growth in fiscal 2014, thanks to its restructuring program, known as a ‘competitive innovation program’.
Predicting a progressive growth in North America, particularly in the nail business, the company says it should achieve modest growth in the first half of the year, but did not give any indication beyond that point.