Cost controls put Revlon back in the black

By Simon Pitman

- Last updated on GMT

Revlon has reported fourth quarter results which saw it swing back
into profit following the withdrawal of its Vital Radiance color
cosmetics line and the introduction of cost saving initiatives.

The company said that its net profit jumped from a loss of $5.5m in the last quarter of 2006 to reach a positive figure of $40.8m for the latest quarter, results that were largely in line with market expectations.

Net sales for the quarter increased by just 1 percent to $382.6m, compared to a figure of $378.9m for the corresponding quarter in 2006 - a figure that was impacted by a significant downturn in the company's US sales.

However, despite the relatively slow sales growth, the company pointed out that continued benefits from its restructuring program and ongoing cost controls helped to buoy the results.

US sales held back the results In the US quarterly sales fell by 5 percent to reach $215.8m - a figure the company said was impacted by the withdrawal of the Vital Radiance line, which reduced the figure by $4.7m, further exacerbated by higher sales returns expenses and lower shipment of beauty care products.

International net sales during the quarter helped to counterbalance the results, increasing 9 percent to $166.8m - a figure that was significantly boosted by the positive impact of a weak dollar against global currencies.

Without the positive impact of currency fluctuations international sales rose by just 1 percent.

But despite the improved results, CEO David Kennedy acknowledged that the company still has work ahead of it to ensure that the turn around continues.

Still plenty of room for improvement "We fully recognize the need to further improve our performance, and enter 2008 with a continued focus on increasing the value of our company by building the Revlon brand and driving towards both profitable sales growth and positive free cash flow," Kennedy said.

For the full year 2007 the results showed that net sales grew 5.2 per cent to reach $1.40bn, which represented a 3.2 percent rise taking into effect currency fluctuations.

This represented a 5.2 percent increase in its US sales to $804.2m, while international sales were up 5.2 percent to $595.9m. Net loss for the full year came in at $16.1m, compared to a net loss of $251.3m in 2006.

Looking ahead to the rest of 2008, the company says it has a full lineup of new product launches, which it says will focus on the Revlon and Almay color cosmetic brands.

Likewise the business will also be looking to improve its international sales in the year ahead, as well as a continued focus to improve its business structure and organization.

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