Estée Lauder joins a growing number of companies, including Colgate-Palmolive and Procter & Gamble, to be hurt by the most recent currency re-measurement initiative to be introduced by the Venezuelan government.
Despite the fact that revenues grew at a strong rate, and a promising innovation pipeline led the company to up its full-year forecasts, the company posted a net profit figure that was below analysts’ expectations.
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.
Net income still well up, despite the problems in Venezuela
This performance also 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.
However, the company also stressed 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 accrued in Venezuela, the company said that net profit would have been approximately $251.7m.
Fragrance and Asia Pacific are the growth highlights
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.
On a regional basis, revenues in the Americas were up by 8% to $1.07bn, in Europe, the Middle East & Africa they were up 13% to $959.4bn and in the Asia Pacific region the figure was up by 14% to $2.55bn.
For the nine months up to March 31st, revenues increased by 6% to $8.24bn, while net earnings were up by 2% to $946.4m.