Coty Q2 financial results look good but the P&G beauty brands need more work
“Fiscal 2018 continues to be a year of stabilization and this is what our results have shown so far,” Camillo Pane, CEO at Coty, tells the press.
“While I am pleased with our performance,” he says, “there is still much work to be done before we achieve the consistency that we seek as we still need to relaunch many brands, deliver our synergies and continue with our integration of the P&G Beauty business.”
Results by region and segment
In North America Coty, reported net revenue of $743.5m for the quarter, that figure is up 6.1% year-over-year (or 5.6% in constant currency). This growth was “driven primarily by the contribution from Younique and the on-going success of Tiffany & Co. and Gucci Bloom, partially offset by declines in the U.S. Consumer Beauty division,” according to the release.
Looking at the numbers by business segment, Coty did well across the board: reporting net revenues up 13.9% in luxury at $951.2m; up 13.7% in consumer beauty to $1,138.6m; and up 19.1% in the professional segment at $547.8m.
The lift in Coty’s consumer business is attributed to an 11.1% contribution from Younique, the cosmetics and skin care ecommerce platform the company invested in early in the 2017 calendar year. Growth in Wella Retail, Max Factor, and Monange also helped boost the consumer business, according to the release. In the professional segment ghd gets credit for an 11.6% contribution and OPI was a leading brand for the underlying business this quarter.
This quarter, the recently passed tax reform act is impacting companies. As Coty’s press release about the company’s Q2 financials explains, “The Tax Act significantly revises the U.S. corporate income tax system by, amongst other things, lowering corporate income tax rates, implementing the territorial tax system and imposing a one-time deemed repatriation tax on un-repatriated earnings of foreign subsidiaries.”
And it’s expected to be a wash by the end of the fiscal year: “The Company has performed a preliminary analysis and estimates the overall impact on our recurring tax rate to be neutral from both a cash and financial statement perspective for Fiscal 2018. The Company expects to fully offset the cash and financial statement impacts of the one-time deemed repatriation tax with tax attributes (e.g. net operating loss carryforwards, foreign tax credits, etc.).”
Deanna Utroske, CosmeticsDesign.com Editor, covers beauty business news in the Americas region and publishes the weekly Indie Beauty Profile column, showcasing the inspiring work of entrepreneurs and innovative brands.