Interim Management Statement 1 January - 31 March 2024

2024-04-23 08:00

Three months ended 31 March 2024

• Euro sales decreased by 25% to €156.5m (€208.3m) and local currency sales decreased by 19%.
• The adjusted EBITDA amounted to €6.7m (€16.8m) and the adjusted EBITDA margin was 4.3% (8.1%). The currency impact on the adjusted EBITDA was 290 bps negative.
• The adjusted operating profit was €0.9m (€10.3m) and the adjusted operating margin was 0.6% (5.0%).
• The adjusted net profit was €-24.3m (€-6.8m).
• The adjusted cash flow from operating activities was €-1.0m (€-9.5m) and adjusted cash flow before financing activities was €-6.0m (€-16.2m).
• Additional non-recurring costs amounting to €0.6m (€1.5m) were recorded during the quarter and excluded from the adjusted figures.

Strategic progress

• Sales results during the first quarter remained challenging in all regions with results still negatively impacted by macroeconomic and geopolitical impacts including the ongoing Russia/Ukraine War. Adverse exchange rate movements in several key markets are having a further negative impact on sales and profits.
• The implementation of the previously communicated transformation programme is progressing according to plan with better than expected results on savings and working capital.
• The Beauty Community Model (BCM) is now implemented in more than 20 markets with initial promising results on KPIs. Several marketing investments were launched in key markets.
• Full focus is on turning around the sales and a sequential improvement on sales was seen throughout the quarter. Promising results in our UK incubation market is reinforcing our belief that ongoing actions will support sales going forward.

Operational highlights

• Sales development in Euro remained weak in all regions dropping by 25% mainly due to less members and activity in most of the markets. The uncertain macroeconomic and geopolitical situation and adverse exchange rate movements in several markets, e.g. Russia, had a negative impact on sales and profits. Sales in local currency dropped by 19%. Local sales decreased in all markets except for Türkiye & Africa where sales grew slightly. India saw an improved trend in the quarter, and both Türkiye and Nigeria showed good sales momentum in local currencies, supported by higher activity and price increases.
• Gross margin showed a substantial improvement from the last quarter but is still below prior year same quarter. If excluding the negative impact of FX, underlying gross margins improved versus the same quarter in the previous year from positive price/mix and a VAT provision release.
• Adjusted administrative expenses decreased by €8.8m versus the same quarter last year from restructuring programme savings and staff reductions.
• Adjusted EBITDA margin dropped from 8.1% to 4.3% where the drop in sales and gross margin negatively impacted the margin.
• Adjusted cash flow before financing activities was €-6.0m versus €-16.2m in the same quarter last year. The working capital was positive due to recent efforts to decrease inventory versus a negative trend during most of last year. The RCF was fully repaid during the quarter, while €7.5m was drawn down early April to support ongoing restructuring payments.

Significant events during and after the quarter

• The 2023 consolidated financial statements were authorised for issue by the Board of Directors on 22 April 2024. They are part of the Annual Report which is available on the Oriflame's corporate website alongside the Sustainability report.

• The Board approved to open several new markets in the European Union selling directly into the markets from our entity in the Netherlands. Denmark, Belgium, Luxemburg, Austria, Italy, France and Malta are all expected to open up for sales in the coming quarters.

The full report has not been audited by the company's auditors.
"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 2024.

Other
Conference call for the financial community:
The company will host a conference call on Tuesday 23, April, at 10:00 am CEST.

Participant access numbers:
Sweden +46 (0)8 5051 0031
United Kingdom: +44 (0) 207 107 0613
United States: +1 (1) 631 570 5613
Denmark: +45 3 272 7526
Finland: +358 94 2450051

The conference call will also be audio web cast in "listen-only" mode through Oriflame's website or through the following link creo-live.creomediamanager.com/8ec499f0-ceb7-4436-99c9-d16062e9d976

Hosts: Anna Malmhake, CEO and President, and Carl Rogberg, CFO.

For additional information, please contact:
Janice Wood, [email protected]

We are Oriflame
Founded in 1967, Oriflame is a social selling beauty company with sales in more than 60 countries. Its portfolio of Swedish, nature-inspired, innovative beauty products is marketed through more than 1.5 million members, generating annual sales of around 750 million Euro (2023). Respect for people and nature underlies Oriflame's operating principles and is reflected in its social and environmental policies. Oriflame supports numerous charities worldwide and is a Co-founder of the World Childhood Foundation.