Coty Inc

Latest Results (07.08.2024):

Net Revenue Growth

In 3Q24, Coty Inc's Consumer Beauty net revenues increased by 6% on both a reported and like-for-like (LFL) basis. On a year-to-date basis, Consumer Beauty revenues saw an 8% increase on a reported basis and a 7% increase on an LFL basis. This growth was driven by strong performance in color cosmetics, mass fragrances, and mass skin & body care across most countries, which offset market weakness in U.S. mass cosmetics.

Regional Performance

In 3Q24, Coty Inc's Americas net revenues rose by 8% on a reported basis and 11% on an LFL basis. This growth was driven by strong double-digit percentage increases in Latin America, Canada, and the Travel Retail channel, despite a 2% negative impact from foreign exchange (FX) and a 1% headwind from the divestiture of the Lacoste license. EMEA's net revenues increased by 7% on a reported basis and 9% on an LFL basis, supported by growth across most markets and the Travel Retail channel.

Gross Margin and Operating Income

Coty Inc delivered strong gross margin expansion in 3Q24, with reported and adjusted gross margin reaching 64.8%, an increase of 190 basis points year-over-year. The improvement was driven by premiumization, carryover pricing, easing inflation, and supply chain productivity savings. The company generated a reported operating income of $77.8 million, up 79% year-over-year, resulting in a 220 basis point expansion in reported operating margin to 5.6%.

Net Income and EBITDA

In 3Q24, Coty Inc reported a net income of $0.5 million, a decrease from $105.1 million in the prior year. Adjusted net income was $43.8 million, down from $168.1 million. The decline was primarily due to mark-to-market losses from forward repurchase contracts in the current period compared to gains in the prior period. Adjusted EBITDA grew by 10% year-over-year to $199.9 million, driving a 30 basis point increase in adjusted EBITDA margin to 14.4%.

Cash Flow and Debt

In 3Q24, Coty Inc's cash flow from operating activities was $(170.0) million, and free cash flow was $(234.3) million, consistent with the company's seasonally weaker cash flow period. On a year-to-date basis, cash flow from operating activities was $438.1 million, and free cash flow was $252.7 million. Total debt at the end of the third quarter was $3,972.3 million, with financial net debt totaling $3,712.1 million, resulting in a financial leverage ratio of 3.4x.