Estée Lauder profits up as cost savings kick in
The company said that sales for the quarter were up 2 percent to $179.8m. Excluding the negative effect of foreign currency translations, the rise in sales was 3 percent.
Net profits were up 37 percent to $178.8m, which excluded a figure of $28.8m related to charges associated with the company’s ambitious restructuring program. Including this figure, the net profits were up 19 percent on the corresponding period last year.
Profits positively impacted by cost savings
The profits were positively impacted by savings of approximately $29m during the quarter, realized through the restructuring program.
“Adjusting for the shift of sales orders related to our Strategic Modernization Initiative (SMI) implementation, our local currency sales increased more than five percent,” said Fabrizio Freda, president and CEO.
“Despite macroeconomic headwinds, particularly in Southern Europe and Korea, and short term global supply planning issues related to SMI, we delivered solid growth ahead of the industry and a 20 percent earnings per share increase.“
Global prestige beauty market 'mixed'
Prestige beauty continued to see mixed results in global markets, which has led to an overall slowdown in the market. Most of this slowdown is attributable to the continued economic challenges in Europe, particularly in southern countries where unemployment continues to mount.
Breaking the figures down to the five principle categories, the best gains were seen in the make-up and hair care divisions, where sales were up 5 and 6 percent respectively, while fragrance was the slower with sales up just 1 percent, while sales in mainstay skin care category were stagnant.
On a geographic basis, sales in both the Asia Pacific and Americas regions were slowest, with sales on a reported basis up 1 per cent.
Middle East and South Africa buoy sales
In Europe, the Middle East and Africa, sales were up 3 percent, boosted by a stronger performance across the Middle East region as a whole, as well as the South African market. Sales in Europe were impacted by lower results in Spain, France and the Balkans.
“Looking at the remainder of fiscal 2013, we are on track to deliver another record year of solid sales and a double-digit increase in earnings per share,” said Freda.
“In our fiscal fourth quarter, we expect an acceleration of our top-line growth. For the full fiscal year, we are expecting sales growth of approximately 6 percent in local currency.”