Cosmetics giant is still living in the shadow of Covid-19, but balance sheets make for promising reading
Sales at cosmetics owner Coty have continued their upward trajectory after a troublesome year during which it was severely unbalanced by the Covid-19 pandemic.
For Q4, ended 30 June, the beauty conglomerate’s revenues were up like-for-like 80% on 2020’s results, with net revenues at US$1.06bn for the period.
However, Coty’s results for last year’s three month period were significantly down as the western world battled through an exponential rise in Covid-19 infections, triggering country-wide lockdowns globally.
The US and China were standout markets for year-on-year growth throughout the quarter.
The American region grew 67%, and 6% for the fiscal year 2021; while China, a market that Coty has specifically targeted to accelerate its operations, saw double-digit growth, and outperformed other markets in the prestige beauty category with triple-digit growth.
EMEA also showed signs of recovery with sales more than doubling for the quarter, in spite of many countries remaining under restrictions due to the pandemic.
Meanwhile, Coty’s consumer brand Covergirl, which it set about “rejuvenating and repositioning” in April this year, achieved a brand milestone by gaining market share for three consecutive months – a first for the legacy brand in five years.
Coty’s MaxFactor and Rimmel brands have also undergone a restructuring over the summer and contributed to an increase of 38% for Coty’s mass beauty revenues.
“Today marks the completion of transformational year for Coty as we advance on our journey in strengthening Coty’s position as a global beauty powerhouse,” said Sue Nabi, Coty’s Chief Executive.
“Over the last 12 months we have built a leadership team of beauty and transformation experts, unveiled and began executing on our multi-year strategy, completed the divestiture Wella, significantly improved our leverage profile and over-delivered on our savings, revenue and profit objectives.”
But despite a period of standout results, the effects of the coronavirus pandemic are still visible in Coty’s rear view mirror.
Net revenues for FY21 declined 2% and 3.5% like-for-like; while operating loss stands at US$48.6m for the cosmetics giant.
Financial net debt also increased by $121m to $5.2bn due to Coty’s refinancing costs as the beauty owner tries to improve its debt maturity profile.
In a bid to support growth for its overall personal care category and its Brazilian affiliate, Coty is pursuing a partial IPO in the country, in which it will retain a controlling share, however, it is yet to be accepted by CVM, Brazil’s Security Commission, which regulates capital markets.
Nabi, however, said she was “extremely encouraged” by the momentum the business is seeing during the first two months of FY22 – particularly in fragrance.
“In the market, we are seeing strong fragrance demand across the US and China, some early signs of recovery in Europe and Travel Retail, and improving cosmetics trends,” she added.
“And we are capitalising on this more favorable demand backdrop with a line-up of strong launches in each core area of the business.
“As we continue to make tangible progress in each of our focus areas, I am more confident than ever in the growth and value creation path in front of Coty.”