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Oriflame – New markets developing fast
Magnus Brännström
CEO and President, Oriflame Cosmetics SA
New markets
developing fast
Oriflame Cosmetics S.A.
Magnus Brännström
CEO & President
Presence in more than 60 markets
11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA
Mission – To fulfil dreams
Direct selling cosmetics company
Founded in Sweden in 1967
Listed on Nasdaq OMX Stockholm – market
cap ~€1b
Annual sales ~€1.4b
~3.5m Oriflame Consultants
Wide portfolio of Swedish, nature-inspired, innovative
beauty products
Q3 regional split
The Oriflame Brand
11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA
A brand promise that integrates our two offers
Beauty Offer Business Opportunity Offer
0
200
400
600
800
1 000
1 200
1 400
1 600
1990 - 2013: CAGR sales of 13% Average annual local currency sales growth 2009-2013 of 5%
A Long Term Growth Company With some periods of slowing growth
11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA
€m
1998-1999
Russian crisis
2004
Strategic
repositioning and
momentum dip
2008-2009
Negative FX
2011-2013
Macro challenges
and momentum dip
Growing Markets Beauty and Personal Care: Oriflame markets size 2013
and CAGR 2013-2018
11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA
Latin America
2013
€15,967m
Turkey, Africa &
Asia 2013
€54,592m
CIS 2013
€14,399m Europe 2013
€40,881m
+7%
+12%
+3% +6%
Source: Euromonitor, Market Sizes | Historic/Forecast | Retail Value RSP | € m | Current Prices | Fixed 2013 Exchange Rates
Excludes Sets & Kits – Accessories, Wellness, Footcare and Home Fragrances
Transformation of Oriflame Business Model
11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA
1960’ -1970’s 1980’s 1990’s 2000’s
Home parties Person to person
catalogue selling
Network
marketing
Online social
selling...
2010’s
...and e-
commerce
8 11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA
Q3 2014 Highlights
Global Business Area
Turkey, Africa & Asia
0%
5%
10%
15%
20%
0
50
100
150
200
250
300
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14
Net Sales LTM Op Margin % LTM
• Sales force and productivity
– Active consultants +6%
– Lc productivity +14%
– € productivity +9%
• Continued overall strong sales
development
– China particularly strong
– India and Indonesia continued
strong performance
• Operating margin +210 bps
– Lower sales and
marketing costs
– Operating leverage
11/11/2014
Turkey, Africa & Asia
Copyright ©2014 by Oriflame Cosmetics SA
Q3’14 Q3’13 Change LTM' 14 YE' 13
Sales, €m 70.1 61.0 15% 297.2 291.0
Lc sales - - 20% - -
Operating profit, €m
7.4 5.2 42% 41.0 36.4
Operating margin 10.6% 8.5% - 13.8% 12.5%
Active Consultants ‘000
895 843 6% 895 959
€m
Turkey
• New strong catalogue center in
Istanbul
• Strong focus on merchandizing
• Local sourced ACC
• Regional Management in
Istanbul reporting directly to
Global Office
11/11/2014
Turkey, Africa & Asia
Copyright ©2014 by Oriflame Cosmetics SA
Africa
• North Africa (Egypt, Morocco,
Algeria, Tunisia)
• East Africa (Kenya, Tanzania,
Uganda)
• Nigeria
• Need for locally adapted
products
• Various religious movements
• Weak infrastructure
• Legal and cash expatriation
challenges
• Product registration challenges
11/11/2014
Turkey, Africa & Asia
Copyright ©2014 by Oriflame Cosmetics SA
South Asia
• India, Pakistan, Sri-Lanka
• Huge low-priced mass market
• Gross margin challenges: price, tax
duties
• Challenging demographic segmentation
of Sales Force
• Large Muslim community
• Weak infrastructure
• English language
• Federal structure
Asia Pacific
• Indonesia, Vietnam, Thailand,
Myanmar
• Indonesia – largest Muslim population
on the planet
• Logistical challenges - Islands
• European margin levels
• High Internet penetration
• Vietnam – more than 80 mln people
• Thailand – competitive
Greater China
• Shorter product offer (set)
• Adapted remuneration plan
• Regional differences
• Opportunities in
neighbouring countries
• Local production demand
• Focus on Wellness products
and skincare
11/11/2014
Turkey, Africa & Asia
Copyright ©2014 by Oriflame Cosmetics SA
• Young population
• Muslim opportunities – Halal
– Female entrepreneurship
• Online – Social Media revolution
• Direct selling culture – The wish to be self-employed
– The wish to do business with those I trust and know
11/11/2014
Oriflame opportunities = Emerging World Opportunities
Copyright ©2014 by Oriflame Cosmetics SA
11/11/2014 Copyright ©2014 by Oriflame Cosmetics SA