PARIS — Swedish direct beauty seller Oriflame’s stock dropped as much as 6.7 percent in trading Tuesday on news that police had seized papers at its headquarters and two factories in the Moscow area as part of an ongoing tax investigation in Russia.
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The stock closed down 2 percent to 144 Swedish krona, or $22.08, in Stockholm — leaving it with a decline of 27 percent for the year so far.
“The event came as a complete surprise to the company, as it has been fully cooperating with the authorities since the beginning of the investigation,” Oriflame said.
“Basically, they were the same documents that had already been given to the tax authorities,” an Oriflame spokeswoman continued. “So there was nothing new, really, in their request.”
Russian tax authorities are looking into the possibility of the company’s nonpayment of taxes between 2006 and 2010.
While Oriflame does not break out numbers on a case-by-case basis, its contingent liability for potential litigations in 2013 amounted to 19 million euros, or $25.2 million at average exchange, according to its annual report.
The Russian market is key to Oriflame, generating more than half of its overall business. In the first quarter, 54 percent of the company’s operating profits came from the Commonwealth of Independent States.
At 2:20 p.m. CET, Oriflame’s stock was trading down 1 percent to 145 Swedish krona, or $21.08 at current exchange.
“So far the investigations have not led to a final opinion from the tax authorities, and the company remains confident in this investigation as well as in its tax position in Russia in general,” Oriflame said.