Interim Management Statement 1 January - 30 September 2023

2023-10-24 08:00

Three months ended 30 September 2023

• Euro sales decreased by 26% to €161.7m (€220.0m) and local currency sales by 15%.
• The adjusted EBITDA amounted to €4.1m (€24.7m) and the adjusted EBITDA margin was 2.5% (11.2%).
• The adjusted operating profit was €-1.7m (€17.2m) and the adjusted operating margin was -1.1% (7.8%). The currency impact on the operating profit was 420 bps negative.
• The adjusted net profit was €-54.2m (€5.2m).
• The adjusted cash flow from operating activities was €-6.9m (€30.8m) and adjusted cash flow before financing activities was
  €-13.9m (€23.3m).

Nine months ended 30 September 2023

• Euro sales decreased by 17% to €551.9m (€661.0m) and local currency sales by 11%.
• The adjusted EBITDA amounted to €32.8m (€68.7m) and the adjusted EBITDA margin was 5.9% (10.4%).
• The adjusted operating profit was €14.5m (€45.9m) and the adjusted operating margin was 2.6% (6.9%). The currency impact on the operating margin was 170 bps negative.
• The adjusted net profit was €-62.2m (€31.1m).
• The adjusted cash flow from operating activities was €-12.2m (€22.1m) and the adjusted cash flow before financing activities was €-31.7m (€0.7m).

Strategic progress

• As announced in a press release of August 15th, Oriflame launched a comprehensive cost and efficiency program to increase profitability and secure long-term growth, while at the same time ensuring continued strategic investments in product and market development. The program aims to deliver annual cost savings of approximately €45m once fully completed and will affect around 20 percent of the number of positions in the company across all levels and geographies. A €22.7m non-recurring restructuring cost has been booked during the quarter, which is the estimated total impact of the full program.

• A new operating and organisational platform was launched with lead markets, scale markets and a venture division consisting of smaller markets, replacing the existing regional management structure. The new platform is intended to remove organisation layers for faster and more agile decision making and will be built on a market categorisation where support and resources will be provided based on each category's needs and market conditions. Several initiatives are under way and a transformation journey has started to address identified challenges, including increased focus on brand and marketing investments, a new Beauty Community Model and product portfolio rationalisation.

• In August, Chief Operating Officer and deputy CEO, Jesper Martinsson announced his intention to leave his position within Oriflame and pursue his career outside the company. At the same time, Niclas Palmquist was promoted to Chief Commercial Officer, CCO. Niclas has long experience from various leadership positions in Oriflame. Most recently he has been Vice President of Business Technology and Digital Experience, where he has ensured rapid and significant business technology improvements for the company. During the quarter, a new Group Management team was formed.

Significant events during and after the quarter

• laria Resta has announced that she will leave the Board of Directors on 1 January 2024, as she assumes her new position as CEO of Audemars Piguet.

• In 2020 Oriflame Partners Ltd - the ultimate parent company of the Oriflame Group - established a Management Investment Program (MIP) where certain key management staff invested in shares and warrants in the Oriflame Group. After the departure of several previous key management members and significant reorganisation during the last months, Oriflame Partners Ltd repurchased shares in the existing MIP with a net cash outflow of €4.6m. Since the program is held outside of the Oriflame Group, the same amount has been provided to Oriflame Partners Ltd as a dividend during the quarter to be used for the sole purpose of financing the share repurchases in accordance with the terms of the Oriflame Group's debt documents.

• During the quarter, Oriflame sold the FX related part of its cross-currency interest rate swaps (CCIRS) on the $550m bond maturing in 2026, resulting in an extraordinary cash inflow of €12.9m. The sale was executed in order to take advantage of the positive market value of the swaps and to improve short term liquidity. The hedged interest rate part of the CCIRS remains in place.

Other

Conference call for the financial community

The company will host a conference call on Tuesday 24 October 2023 at 10.00 CEST.

Participant access numbers:

Sweden: +46 (0)8 5051 0031
United Kingdom: +44 (0) 207 107 06 13
United States: +1 (1) 631 570 56 13

Denmark: +45 3 272 7526
Finland: +358 94 245 0051

The conference call will also be audio web cast in "listen-only" mode through Oriflame's website: www.oriflame.com or through the following link creo-live.creomediamanager.com/fa23171e-bdda-4c98-b86e-9ba09f16c1af

For further information, please contact:

Anna Malmhake, Chief Executive Officer, Tel: +44 747 680 81 81

Carl Rogberg, Chief Financial Officer, Tel: +44 773 899 87 37

Vanessa Wendle, [email protected], Tel: +41 799 220 173