PG Procter and Gamble Co

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)

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