oriflame holding ag - reports.oriflame.com · • oriflame has implemented ifrs 15 revenue from...

Magnus Brännström, CEO

Gabriel Bennet, CFO

Nathalie Redmo, Sr. Manager IR

May 4, 09.30 CET

Oriflame Holding AGFIRST QUARTER 2018

INVESTOR PRESENTATION

• Oriflame has implemented IFRS 15 Revenue from Contracts with Customers from

1st January 2018. An early adoption of IFRS 16 Leases has been made to allow for

all changes being implemented at the same time.

• To facilitate the comparison with the 2017 figures, the company has prepared fully

adjusted 2018 figures, excluding the impact of IFRS 15, IFRS 16 and related

accounting alignments. The fully adjusted figures are comparable with the already

reported 2017 figures.

• Where not stated differently, the figures, graphs and comments in this presentation

are based on the fully adjusted 2018 figures, to facilitate the comparison with the

2017 figures.

IMPORTANT CLARIFYING INFORMATION IFRS

©Oriflame Cosmetics AG, 2018 2


FIRST QUARTER

HIGHLIGHTS


Sales €334.1m (340.1m) -2% in €, +8% in lc

Strong performance in Asia & Turkey

Notable slowdown in Russia

Stable development in Latin America

Q2 update: -2% QTD lc sales, negative timing

Operating margin 9.2% (8.8%)

Currency impact -320 bps

Net profit €18.7m (€19.5m)

Strong net financial position

€50m issue of Euro denominated US private

placement notes

Q1 HIGHLIGHTS

Price/mix +14%

Unit decline -6%

Registered actives +1%

Lc productivity +7%

Double-digit growth in Skin Care and Wellness:

Introduction of NovAge Men

Innoage Youth Preserve launched in China

Continued progress of sustainability initiatives:

Micro plastics no longer produced

Strong online development

960,000 active users of the Oriflame app

OPERATIONAL HIGHLIGHTS



Asia &Turkey

Europe & Africa

Q1 Regional Split

CIS

SALES REGISTERED ACTIVES OPERATING PROFIT

REGIONS

Latin America

10%

(11%)

24%

(24%)

26%

(30%)

40%

(35%)

9%

(9%)

25%

(27%)

28%

(30%)

38%

(34%)

8%

(7%)

17%

(23%)

21%

(24%)

54%

(46%)

Sales force and productivity

Registered actives -1%

Lc productivity +1%

€ productivity -7%

Stable development in Mexico

Lower consumer confidence

Solid growth in Ecuador, weak in Colombia

Operating margin +280 bps

Price increases

Lower selling and marketing expenses

Negative currency movements


LATIN AMERICAQ1’18* Q1’18 Q1’17 Change

LTM,

April’17 -

March’18

LTM,

April’16 -

March’17

Change YE’17

Sales, €m 34.0 32.5 35.3 (8%) 154.7 154.5 0% 157.5

Lc sales - - - 0% - - 4% -

Operating profit, €m

5.2 4.0 3.3 19% 21.5 22.4 (4%) 20.8

Operating margin

15.2% 12.3% 9.5% - 13.9% 14.5% - 13.2%

Registered actives ‘000

264 264 266 (1%) 264 266 (1%) 280

€m

*Figures following the adoption of IFRS 15 and IFRS 16

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

160

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Net Sales LTM Op Margin % LTM


0%

5%

10%

15%

20%

25%

100

150

200

250

300

350

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Net Sales LTM Adj. Op Margin % LTM



Lc productivity +4%

€ productivity +3%

Stable sales in Central Europe

Healthy development in Poland and Romania

Performance in Western Europe remained weak

Challenging quarter for Africa

Macroeconomic difficulties

Operating margin -200 bps


Sales deleverage

Price increases


EUROPE & AFRICA

€m

Q1’18* Q1’18 Q1’17 Change

LTM,

April’17 -

March’18

LTM,

April’16 -

March’17

Change YE’17

Sales, €m 79.3 78.5 81.3 (3%) 321.9 328.3 (2%) 324.7

Lc sales - - - (2%) - - 2% -


10.3 8.5 10.4 (19%) 43.3 48.5 (11%) 45.2

Operating margin

12.9% 10.8% 12.8% - 13.5% 14.8% - 13.9%


750 750 802 (6%) 750 802 (6%) 783


0%

5%

10%

15%

20%

25%

0

100

200

300

400

500

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Net Sales LTM Adj. Op Margin % LTM



Lc productivity +1%


Positive timing of catalogues

Russia lc sales -14%

Weak catalogues, high prices in some categories

External price pressure

Measures are being taken

Continued improvements in Ukraine and Kazakhstan


Lower distribution and infrastructure expense

Positive timing of selling and marketing expense

Negative exchange rates

CIS


€m

Q1’18* Q1’18 Q1’17 Change

LTM,

April’17 -

March’18

LTM,

April’16 -

March’17

Change YE’17

Sales, €m 82.2 84.6 99.5 (15%) 341.9 338.6 1% 356.8

Lc sales - - - (5%) - - 2% -


10.1 10.6 11.1 (5%) 44.9 35.8 25% 45.4

Operating margin

12.3% 12.5% 11.2% - 13.1% 10.6% - 12.7%


836 836 889 (6%) 836 889 (6%) 859



Registered actives +15%

Lc productivity +9%


Solid performance in China, Indonesia, Turkey

and Vietnam

Leadership

Online activity

Skin Care and Wellness


Favourable geographical mix

Sales leverage

ASIA & TURKEY

€m

Q1’18* Q1’18 Q1’17 Change

LTM,

April’17 -

March’18

LTM,

April’16 -

March’17

Change YE’17

Sales, €m 128.4 131.6 118.2 11% 523.6 448.6 17% 510.2

Lc sales - - - 25% - - 26% -


29.4 27.7 21.1 31% 116.9 89.5 31% 110.3

Operating margin

22.9% 21.1% 17.8% - 22.3% 19.9% - 21.6%


1,184 1,184 1,034 15% 1,184 1,034 15% 1,145


0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

300

350

400

450

500

550

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18



FINANCIALS


0%

5%

10%

15%

20%

25%

0

200

400

600

800

1000

1200

1400

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18


Sales mix

Unit sales -6%

Price/mix +14%

Gross margin 72.5% (71.6%)


Positive price/mix effect


Negative currency impact 320 bps

Lower selling and marketing expenses

Lower distribution and infrastructure expenses

Net profit €18.7m (€19.5m)

Diluted EPS €0.32 (€0.34)

350 bps withholding tax on intra group dividends


Q1 INCOME STATEMENT

€m

Q1’18* Q1’18 Q1’17 Change

LTM,

April’17 -

March’18

LTM,

April’16 -

March’17

Change YE’17

Sales, €m 330.8 334.1 340.1 (2%) 1,357.1 1,283.7 6% 1,363.1

Lc sales - - - 8% - - 11% -


34.8 30.6 29.8 3% 159.9 127.8 25% 159.0

Operating margin

10.5% 9.2% 8.8% 11.8% 10.0% 11.7%


3,034 3,034 2,991 1% 3,034 2,991 1% 3,067


GROUP CURRENCY IMPACT ON SALES SINCE 2010


Average

9%

PRICE/MIX IMPACT ON SALES

7%

4%

0%

3% 3%

5%

9%

5%

4%

7% 7%

9% 9%

14% 14%

15%

16%

12%

11%

12%

11%

7%

9%

10%

14%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Q1 '1

2

Q2 '1

2

Q3 '1

2

Q4 '1

2

Q1 '1

3

Q2 '1

3

Q3 '1

3

Q4 '1

3

Q1 '1

4

Q2 '1

4

Q3 '1

4

Q4 '1

4

Q1 '1

5

Q2 '1

5

Q3 '1

5

Q4 '1

5

Q1 '1

6

Q2 '1

6

Q3 '1

6

Q4 '1

6

Q1 '1

7

Q2 '1

7

Q3 '1

7

Q4 '1

7

Q1 '1

8

-6

-4

-2

0

2

4

6

8

OP Margin vs. PY


(16%)

Oriflame has made certain assumptions to make/calculate an estimate of

the effects of currency, price/mix, etc. on the operating margin.

Sales vs. PY

Q1 SALES AND OPERATING MARGIN ANALYSIS

%%

Units Price / mix

(10%)

14%

€

Sales

(2%)

(6%) 0

2

4

6

8

10 9.2%0.6%

OM

Q1 2

018

(0.1%)

Dis

trib

. &

Infr

a.

Adm

in.

0.8%

Selli

ng &

Mark

eting

Oth

er

incom

e

(0.4%)

Pro

duct cost

OM

Q1 2

017

(3.2%)

Price / m

ix

2.9%8.8%

FX

(0.2%)

LC

Sales

8%

FX

* Adjusted for fair value movements of the USD private placement notes

Net debt at hedged values €-5.4m (€28.0m)

Net debt €16.3m (€92.7m)

Net debt at hedged values/ EBITDA (LTM) -0.03 (0.2)

Net debt/EBITDA (LTM) 0.1 (0.6)

Interest cover (Q1): 7.5 (8.2)

Interest cover (LTM): 11.2 (7.5)

COVENANT DISCLOSURE

Consolidated Net Debt to Consolidated EBITDA: 0.1

(covenant at ≤ 3.0 times)

Consolidated EBITDA to Consolidated Finance costs: 18.3

(covenant at ≥ 5.0 times / 4.0 times for RCF)

Consolidated Net Worth: €221.6m (covenant at ≥ €120m /

N/A for RCF or in 2017 and 2018 Euro denominated private

placement notes )


€m

FINANCIAL POSITION

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

-20

0

20

40

60

80

100

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Net Debt at hedged values* Net Debt at hedged values* / EBITDA LTM

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Interest cover (LTM)

Q1 operating cash flow €24.9m (€-1.5m)

Net profit before tax €-0.1m

Non-cash items in net profit before tax €+7.2m

Impact from changes in working capital and

provisions €+26.3m

Inventories €+1.9m

Receivables, prepaid exp., asset derivatives €+15.4m

Payables, accrued exp., liability derivatives €+7.8m

Provisions €+1.2m

Interest, charges, taxes €-7.0m


Q1’18* Q1’18 Q1’17 LTM’18 YE ’17

Net profit before income

tax, €m30.3 27.3 27.4 133.1 133.2

Op. profit before changes

in wc, €m41.2 41.4 34.3 185.0 177.9

Change in working cap.

and provisions, €m(3.1) 2.9 (23.4) 26.4 0.1

Operating CF, €m 24.9 24.9 (1.5) 149.1 122.7

CF Investing Activities,

€m(3.1) (3.1) (3.0) (15.9) (15.8)

*Figures calculated as per the new IFRS 15 and 16 standards

0

50

100

150

200

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Total inventory€m

0

25

50

75

100

125

150

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Operating cash flow LTM Capex LTM€m

CASH FLOW


CONCLUSIONS AND GOING FORWARD

Yet another successful quarter:

Improved sales and margins

Increased number of registered actives

Strong growth in Skin Care and Wellness

Continuously strong in Asia & Turkey

Q2 QTD sales development:

Notable slowdown in Russia

Negative timing of conferences and catalogues

Measures taken where challenges are met

Confidence in our long-term strategy


CONCLUSIONS AND GOING FORWARD


CAUTIONARY STATEMENT

Some statements herein are forward-looking and the actual outcome could be materially different.

In addition to the factors explicitly commented upon, the actual outcome could be materially affected by other factors like,

for example, the effect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of

competing products and their pricing, product development, commercialisation and supply disturbances.

oriflame holding ag - reports.oriflame.com · • oriflame has implemented ifrs 15 revenue from...

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