Higher international sales help boost Avon Q4

By Simon Pitman

- Last updated on GMT

Related tags Local currency Local currency terms Revenue

Avon Products has reported a 13 percent hike in fourth quarter sales, with Western, Central and Eastern Europe providing a much needed boost to a difficult financial year.

The company reported that the quarterly sales grew to $3.2bn, which represented an 8 per cent increase in local currency terms, while net profit was €269m, an increase of 16 percent compared to $232m in the corresponding quarter last year.

“Against the backdrop of the global economic crisis, our growth strategy to leverage our smart-value product offering and representative earnings opportunity paid off to deliver robust active representative growth and beauty market share gain in the quarter,”​ CEO Andrea Jung.

Sales force increase boosts results

In line with its policy to grow its direct sales representatives during the economic downturn, the company increased is sales force by 11 percent during the quarter across all regions, a major contributing factor to the sale growth.

The sales result was driven by the whole of the European region, which accounted for 30 per cent of the company’s total turnover and grew by 15 per cent, while sales in the Latin America region also continued to grow at an industry-leading rate of 14 percent in local currency.

However, the strong results in Latin America and Europe, were counterbalanced by a fall in sales of 9 percent in local currency in the North American market, which was hit by a low consumer spend and a nearly double-digit decline in beauty sales.

Personal care sales boom

On a divisional basis the company reported that beauty sales were up 15 per cent, while fragrance, color cosmetics and personal care sales were up 11 percent, 27 percent and 19 percent respectively.

The fourth quarter results helped to buoy an otherwise difficult year for the company, with net sales in 2009 falling by 3 percent to $10.28bn – but up 7 percent on a local currency basis – while net income slid 29 per cent to $625.8m.

Likewise spend on advertising and marketing fell by $38m to $353m during the year, as the company benefited from a softness in advertising prices and improved productivity.

Results likely to be driven by restructuring in 2010

Looking ahead to the current financial year, the company says it is likely to benefit further from its restructuring program, in particular its product line simplification program, which is likely to give way to further investments in top line growth and product innovation.

“Overall, despite continuing economic uncertainties around the world and currency devaluation in Venezuela, our strong business fundamentals and momentum should continue,”​ Ms. Jung added.

“This bodes well for another year of at least mid-single digit local-currency revenue growth and operating margin improving on the way to reaching mid-teens levels by 2013.”

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