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Tuesday, August 21, 2018

=Coty (COTY) reported earnings on Tue 21 Aug 18 (b/o)

Coty beats by $0.01, reports revs in-line; guides FY19 EPS below consensus 
Nearly two years after Coty Inc. paid $12 billion to acquire Procter & Gamble Co.’s beauty business, the deal remains a drag on the struggling beauty giant. Weak performance of former P&G brands, including names like CoverGirl makeup and Clairol hair dye, drove down sales in the most recent quarter, Coty said Tuesday. A trucker strike in Brazil also contributed to a loss of $181.3 million, or 24 cents a share, compared with a loss of $304.8 million a year ago.
  • Reports Q4 (Jun) earnings of $0.14 per share, $0.01 better than the S&P Capital IQ Consensus of $0.13; revenues rose 2.6% year/year to $2.3 bln vs the $2.31 bln S&P Capital IQ Consensus.
  • Co issues downside guidance for FY19, sees EPS of 0.74-0.78 vs. $0.81 S&P Capital IQ Consensus.
  • Commentary on Outlook:
    • For FY19, co is targeting well over 100 bps of adjusted operating margin expansion, which, combined with our target of flat to modest LFL net revenue growth would deliver mid-teens adjusted operating income growth.
    • FY19 EPS target of $0.74 - 0.78 is fully consistent with this level of adjusted operating income growth.
    • Financial performance across quarters in FY19 will not be linear. The peak of the impact of the supply chain disruptions due to our logistics and manufacturing consolidation will come in 1Q19, with a smaller tail end in 2Q19. This will have a significant impact on both top and bottom line, and together with the impact of our brand rationalization program, is expected to drive a low teens decline in our 1Q19 adjusted operating income year over year.
    • Having said that, co does not expect that these business integration related impacts will be largely over by the end of first half 2019 and FY19 targets take these disruptions into consideration.
Coty CFO Patrice de Talhout resigns to pursue other opportunities
Patrice will remain CFO through mid September 2018 and assist with transition thereafter. Coty is retaining an executive search firm to conduct a search for a successor.

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