PARIS — Groupe Clarins’ results were heavily impacted by foreign exchange rates in the first half of 2008.
This story first appeared in the September 2, 2008 issue of WWD. Subscribe Today.
The company reported Friday net profits dropped 34.6 percent to 24 million euros, or $36.7 million at average exchange, versus first-half 2007. (All first-half 2007 numbers are on a pro-forma basis, excluding the Stella Cadente beauty business, the license for which Clarins no longer holds.) At constant exchange, Clarins’ net profits declined 13.8 percent.
The company’s operating income fell 32 percent to 27.8 million euros, or $42.5 million. At constant exchange, it dipped 6.6 percent, “reflecting primarily efforts devoted to promote sales combined with a relative weakness of activity in the perfume division and the reorganization of the group,” the company said. Currency exchange had a negative effect of 10.4 million euros, or $15.9 million, on the firm’s operating income.
As reported, for the first half of 2008, Clarins posted sales of 485.8 million euros, or $743.5 million, down 1.8 percent. At constant exchange, revenues rose 4.1 percent in the period. Exchange rate changes negatively affected the firm’s revenues by 28.9 million euros, or $44.2 million.
“Given the sluggishness of cosmetics markets and the general worldwide economic slowdown, Clarins Group anticipates full-year sales growth of 4 percent at constant exchange rates,” the company said. “Results for the period should still be adversely affected by unfavorable foreign exchange trends, the continued worldwide economic downturn and the group’s strategy of maintaining the level of its advertising and promotional efforts.”
As reported, Clarins projected in July that due to the unfavorable economic environment providing limited visibility, its full-year revenues should grow 4 percent at constant exchange, which was at the low end of its former guidance of 4 to 6 percent.
Financière FC, the holding company of the Courtin-Clarins family — majority shareholders in Clarins — is in the midst of a tender offer, started Aug. 6, to take Clarins private. Through Sept. 16, it will pay 55.50 euros, or $81.42 at current exchange, per share for the stake it doesn’t own in the firm.