oriflame new markets developing fast - eastcapital.com seminar presentations...beauty products q3...

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


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


€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


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


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


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



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



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



• 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


oriflame new markets developing fast - eastcapital.com seminar presentations...beauty products q3...

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