Three months ended 31 March 2025
- Euro sales decreased by 7% to €145.6m (€156.5m) and local currency sales decreased by 6%.
- The adjusted EBITDA amounted to €-1m (€6.7m) and the adjusted EBITDA margin was -1.4% (4.3%). The currency impact on the adjusted EBITDA was 30 bps negative.
- The adjusted operating profit was €-7.2m (€0.9m) and the adjusted operating margin was -5.0% (0.6%).
- The adjusted net profit was €6.5m (€-24.3m).
- The adjusted cash flow from operating activities was €-1.8m (€-1.0m) and the adjusted cash flow before financing activities was €-7.9m (€-6.0m).
- Additional non-recurring costs amounting to €17.7m (€0.6m) were recorded during the quarter and excluded from the adjusted EBITDA.
Strategic progress
- Sales remained below prior year, however with continued improvement in year-on-year sales progression, and ended -7% in Euro versus the same quarter previous year. As a comparison, the first quarter of the previous year ended -25% in Euro sales.
- Adjusted EBITDA ended with a minor loss mainly as a result of the lower sales, but also from higher selling and marketing expenses as a percentage of sales. Administrative expenses continued to decline as a result of previous restructuring and ongoing efforts to reduce the overhead cost base.
- The Beauty Community Model (BCM) was at the end of the quarter implemented in 48 markets representing more than 80% of the sales of the Group. The BCM is now considered to be an integrated and fully established setup within Oriflame and continues to show good results. The member segment reached 26% of the total community and continues to grow quarter on quarter.
- As a consequence of the BCM progress, total member community continues to show an encouraging trend and ended at -2% for the quarter compared to the same quarter previous year. This reinforces the belief that the company is on the right track with its turnaround initiatives.
- The launch of a new strategic initiative to transition European production from the Group’s current factory in Poland to a network of carefully selected, high-end European manufacturers was announced in the previous quarter, and the implementation is ongoing.
- The quarter ended with a cash balance of €56.2m compared to €62.0m at the start of the quarter. The Revolving Credit Facility (RCF) was drawn at €65.0m at the end of the quarter with a drawdown of €20.0m during the quarter.
Financial highlights
- Sales in Euro decreased by 7% and by 6% in local currencies. The largest region Europe & CIS showed a significantly improved trend versus previous quarters with a sales decline of 4% in both Euro and local currencies. While sales challenges remain in Latin America and Asia, the Türkiye & Africa region showed a healthy growth of 6% in Euro terms boosted by strong results in Nigeria.
- Adjusted gross margin decreased by 120 bps versus last year primarily reflecting the absence of a favourable VAT provision release in the prior year (100 bps). Excluding this, product margins were broadly flat as favourable price/mix benefits were offset by production and delivery cost inflation and FX.
- Adjusted EBITDA margin decreased to -1.4% mainly due to the lower sales, lower gross margins and higher selling and marketing expenses. Administrative costs continued to decrease from restructuring initiatives.
- Adjusted cash flow before financing activities was €-7.9m for the quarter versus €-6.0m in the same quarter last year where the reduction mainly derived from the lower adjusted EBITDA.
Significant events during and after the quarter
- The Company, the shareholders and a consortium of bondholders representing more than 91% of the outstanding Notes reached an agreement in March 2025, which will significantly reduce the Group’s existing debt and interest costs, as well as inject additional capital into the Group (the “Recapitalisation”). Subject to satisfaction of conditions precedent and approval from the Revolving Credit Facility (RCF) lenders, the transaction is now implementable consensually with the Company’s bondholders, without the requirement for an in-court process. Please refer to the separate announcements published on 18 March and 27 March 2025 for more details on the Recapitalisation.
- Although the Company is facing uncertainties as to its ability to continue as a going concern due to the Company’s challenging results during the past couple of years and current liquidity, management believes that such uncertainties will be significantly reduced by the Recapitalisation and by the measures taken to drive positive business performance. Please refer to note 2 in these unaudited condensed consolidated financial statements for more information on going concern.
- On 9 January 2025, Oriflame announced a new strategic initiative which will transition European production from its current factory in Poland to a network of carefully selected, high-end European manufacturers. The closure of the current Polish manufacturing facility will be carefully managed over the next two years to ensure continuity of supply. Existing orders will be fulfilled, in line with current terms and conditions, through existing facilities or transferred seamlessly to new partners.
“Adjusted” figures exclude non-recurring and purchase price allocation (PPA) related items. For additional information refer to the condensed consolidated income statements in the full Interim Management Statement 1 January – 31 March 2025.
Other
The company will not be hosting a conference call this quarter. The report in full together with a presentation of the first quarter results are available on Oriflame’s investor website: https://corporate.oriflame.com/investors/financial-reports/
The full report has not been audited by the company’s auditors.
For further information, please contact:
Janice Wood, IR@oriflame.com
