Oriflame hits back over poor results claims

By Louise Prance

- Last updated on GMT

Related tags: Competition, Economics

Direct sales agents Oriflame has hit back at claims made by Swedish
newspaper Dagens Industri that the company is expecting lower
growth in the current year - despite the company's previous
statement that 2007 will be a positive financial year.

The financial newspaper said that the company had suggested increasing competition in CIS regions would dent sales figures for the current year, following previous highs that had resulted from market problems incurred by competitors. However, with many of the competing manufacturers now having resolved those issues, the newspaper report claimed that the company was in danger of falling behind the competition as the market heats up. Oriflame has responded to these claims, issuing a statement suggesting that, contrary to the reports, it is expecting the operation margin for 2007 to fall in line with 2006, excluding the effects of restructuring. The company refuted the claims by clarifying information formerly released in its 2006-year end report, stating its long-term financial targets are still on course to achieve local currency sales growth of 5-10 per cent and an operating margin of 15 per cent by 2009. Indeed, in its 2006 quarterly report the company stated that sustained market growth in the CIS and Baltic region helped push sales and profits both for the quarter and throughout the year, due mainly to a 23 per cent increase in the size of the sales force and a 15 per cent productivity improvement, compared to the same period last year. The claims come at a positive time for the company, after hitting the skin care market with a new anti-aging concept using tri-peptide complex to boosts the skins natural collagen levels. Collagen boosting techniques have arisen as a key market trend within the anti-aging market, as consumers striving to achieve the best results possible from anti-ageing treatments, instead of using more drastic plastic surgery methods.

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