Coty Profit Falls on P&G Merger Costs -- Update
February 04 2016 - 11:12AM
Dow Jones News
By Anne Steele
Coty Inc. on Thursday said its profit tumbled 29% in the
most-recent quarter as the beauty-products maker recorded costs
tied to its merger with Procter & Gamble Co.'s beauty
brands.
Still, adjusted earnings beat Wall Street expectations, sending
shares up 11% to $27.37 in early trading.
Interim Chief Executive Bart Becht said revenue trends were
muted in its second quarter and the company expects those trends to
continue for the remainder of the fiscal year.
Coty said it is on track to close the merger with Procter &
Gamble's beauty brands in the second half of 2016 and that it has
received antitrust approval from the U.S., among other countries,
and is actively engaged in discussions with European Union
authorities.
"We have also materially advanced on structuring and staffing
our future organization and are in the middle of plans to integrate
the businesses from a supply and systems point of view," Mr. Becht
said.
Also on Thursday, Coty said its board authorized a $500-million
share-repurchase program as it had exhausted its $700 million
buyback plan, buying 24.9 million shares.
For the quarter ended Dec. 31, Coty reported a profit of $89
million, or 25 cents a share, down from $125.4 million, or 35 cents
a share, a year earlier. Adjusted earnings fell to 38 cents a share
from 45 cents a year before. The latest quarter included $45.5
million in acquisition-related costs, compared with $1.6 million in
the year-earlier quarter.
Revenue fell 3.9% to $1.21 billion.
Analysts polled by Thomson Reuters had forecast earnings of 34
cents a share on $1.21 billion in revenue. Gross margin rose to
61.4% from 59.6%.
The New York company announced in July that it would buy
P&G's beauty brands for $13 billion, adding items such as
Clairol hair dyes and CoverGirl makeup to its portfolio.
Then in November Coty said it would buy beauty and personal-care
business Hypermarcas, the latest in a string of acquisitions that
include nail-polish company OPI Products, skin-care-products brand
Philosophy and digital marketing platform Beamly. The company said
the deal--which was reported closed on Monday--provides a platform
to integrate Coty's beauty business in Brazil with P&G's brands
in that country.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
February 04, 2016 10:57 ET (15:57 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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