Coty’s aims to get in shape before bulking up with Procter & Gamble Co. beauty brands next year.

The company moved from red to black in the fourth quarter, reporting net income of $21 million, or 5 cents a diluted share, compared with a loss of $20.1 million, or 5 cents a share, in the year-ago period. Adjusted net income was $29.7 million, compared with $9.9 million in the year-ago period. Coty’s net revenues for the three months ended June 30 declined 1.9 percent to $1.02 billion, compared with $1.04 billion in the year-ago period.

For the year, net income attributable to Coty was $232.5 million, or 64 cents a diluted share, compared with a net loss attributable to Coty of $97.4 million, or 26 cents a share a year earlier. Net revenues were $4.40 billion, compared with $4.55 billion a year earlier.
The company said it’s charging ahead on its efforts to wring out costs, or its Global Efficiency Program, and to date has saved $130 million of its original $200 million goal. On Thursday, the company said it raised its target, and now aims to deliver annualized savings of $270 million by fiscal 2017.

“We made meaningful progress on our strategy of driving revenue growth on power brands, while fueling profit growth behind efficiency programs,” said chairman and interim chief executive officer Bart Becht. “During the year, power brand net revenue growth, while still modest, was in the low single digits like for like, driven by Marc Jacobs, Chloé, Sally Hansen, Rimmel and Philosophy.”

He acknowledged, “We still have work to do in returning Coty to top-line growth. But the strong progress in increased savings target for our Global Efficiency Program…should give us the flexibility to invest additional capital in our business and very gradually, reignite growth.”

The company also said it will continue its share repurchase program with $700 million authorized by the board.

As reported, more change is ahead at the beauty firm. In July, Coty said it had signed a definitive agreement with P&G to merge 43 brands across fragrance, color cosmetics and hair color into Coty through a Reverse Morris Trust transaction. The deal, which will push Coty’s revenues over $10 billion, is expected to close next year. “We believe we will not just create a pure-play global leader in challenging the beauty industry with approximately $10 billion in revenues, but it will also offer material costs and cash savings, as well as longer-term enhanced growth opportunities.”

When asked by an analyst if Coty has selected certain P&G beauty executives for its management ranks, Becht said the team will likely be determined over the next couple of months. He noted that both P&G and Coty have appointed transition teams, which meet on a weekly basis. “They’re working very cooperatively together in terms of getting the deal closed and getting the business integrated.”

Becht was asked by several analysts about the fragrance licenses it was acquiring from P&G, and whether the companies involved — including Hugo Boss, Dolce & Gabbana and Gucci — planned to keep those licensing deal with Coty. Becht said the discussions with the licensors have been positive but noted, “It is early days and no paper has been signed.”

Stifel analyst Mark Astrachan wrote in a research note on Thursday, “Overall, we believe the quarterly result is solid, indicating productivity initiatives are resulting in savings the company can use to reinvest to improve sales trends, consistent with the expectation for modest year-over-year sales growth in fiscal 2016. We also think incremental announced cost savings were modestly higher than anticipated…and allow further opportunity for reinvestment.”

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