Oriflame scraps dividends this year as Russia, Ukraine weigh
today Feb 11, 2015
STOCKHOLM, Sweden - Swedish cosmetics maker Oriflame said on Wednesday it would pay no dividends in the next four quarters because uncertainty remained in its key markets, despite posting fourth quarter earnings slightly higher than expected.
Oriflame warned two weeks ago its operating margin excluding one-offs would decline to just below 8 percent in the fourth quarter from 12.6 percent a year earlier as currency swings weighed and investments in former Soviet states had become more costly than anticipated.
Nevertheless, the company's adjusted operating profit in the quarter reached 29.8 million euros ($33.7 million) and adjusted operating margin fell to 8.4 percent from 12.6 percent, slightly above the forecast.
Analysts had expected an adjusted operating profit of 28.0 million euros, according to Reuters poll.
Oriflame said so far during this quarter, underlying sales have risen around 1 percent in local currencies.
"The slower local currency sales development in the first quarter (so far) reflects the continued external challenges and uncertainties we are likely to be faced throughout 2015," Chief Executive Magnus Brannstrom said in a statement.
Oriflame, which generates a third of its sales in Russia, said the board would not seek a mandate to pay dividends for the next four quarters after failing to pay dividends in the last three quarters due to political tensions in Russia and Ukraine.
The company said the number of active consultants was unchanged at 3.5 million in the fourth quarter compared to the same quarter in 2013.
Shares in Oriflame, which recently opened a large production facility close to Moscow, have fallen almost 40 percent in the past year as the economy in Russia and Ukraine deteriorated.
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