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Avon CEO pleased with Q4 performance
06 Feb '10
5 min read
Fourth-quarter 2009 operating profit was $408 million compared with $372 million in the prior-year quarter. The company's fourth-quarter 2009 operating margin was 12.8%, compared with 13.3% in the fourth quarter of 2008. Costs to implement restructuring initiatives lowered 2009's operating margin by 110 basis points and lowered 2008's operating margin by 20 basis points. Additionally, unfavorable foreign exchange lowered operating margin by an estimated 90 basis points (approximately 160 of that from unfavorable foreign-exchange transaction offset by approximately 70 from favorable foreign-exchange translation) year over year.
The effective tax rate in the fourth-quarter 2009 was 30.8% compared with 2008's rate of 32.3%. The decrease in the effective tax rate resulted primarily from one-time adjustments associated with tax refunds and changes in statutory tax rates.
Net income in the fourth-quarter 2009 was $269 million, or $0.62 per share, compared with $232 million, or $0.54 per share, in the year-ago quarter.
At year end, Avon's total debt had decreased by $42 million to $2.4 billion compared to year-end 2008, and cash had increased by $207 million to $1.3 billion, resulting in a reduction in our net debt (total debt less cash) of $249 million. Despite the challenging environment in 2009, net cash provided by operating activities was $782 million for the full year, compared with $748 million of cash provided by operating activities in the same period of 2008. Capital expenditures of $297 million in 2009 were at the lower range of the company's expectation of $300 - $325 million and well below the $381 million of capital expenditures the company incurred in 2008.
Andrea Jung, Chairman and Chief Executive Officer, commented, "As we reflect on 2009, we believe that the growing momentum and strong finish to a very challenging year underscore the benefits of our advantaged business model and our proven ability to execute our turnaround strategies. Given this momentum, we enter 2010 with renewed confidence and a continuing committed focus on delivering long-term sustainable, profitable growth. In line with this, in 2010 we expect to realize further benefits and savings from our Product Line Simplification, Strategic Sourcing and restructuring initiatives, which give additional flexibility to further fuel reinvestment in top-line growth and continued product innovation.
"Overall, despite continuing economic uncertainties around the world and currency devaluation in Venezuela, our strong business fundamentals and momentum should continue," Ms. Jung added. "This bodes well for another year of at least mid-single digit local-currency revenue growth and operating margin improving on the way to reaching mid-teens levels by 2013."
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The effective tax rate in the fourth-quarter 2009 was 30.8% compared with 2008's rate of 32.3%. The decrease in the effective tax rate resulted primarily from one-time adjustments associated with tax refunds and changes in statutory tax rates.
Net income in the fourth-quarter 2009 was $269 million, or $0.62 per share, compared with $232 million, or $0.54 per share, in the year-ago quarter.
At year end, Avon's total debt had decreased by $42 million to $2.4 billion compared to year-end 2008, and cash had increased by $207 million to $1.3 billion, resulting in a reduction in our net debt (total debt less cash) of $249 million. Despite the challenging environment in 2009, net cash provided by operating activities was $782 million for the full year, compared with $748 million of cash provided by operating activities in the same period of 2008. Capital expenditures of $297 million in 2009 were at the lower range of the company's expectation of $300 - $325 million and well below the $381 million of capital expenditures the company incurred in 2008.
Andrea Jung, Chairman and Chief Executive Officer, commented, "As we reflect on 2009, we believe that the growing momentum and strong finish to a very challenging year underscore the benefits of our advantaged business model and our proven ability to execute our turnaround strategies. Given this momentum, we enter 2010 with renewed confidence and a continuing committed focus on delivering long-term sustainable, profitable growth. In line with this, in 2010 we expect to realize further benefits and savings from our Product Line Simplification, Strategic Sourcing and restructuring initiatives, which give additional flexibility to further fuel reinvestment in top-line growth and continued product innovation.
"Overall, despite continuing economic uncertainties around the world and currency devaluation in Venezuela, our strong business fundamentals and momentum should continue," Ms. Jung added. "This bodes well for another year of at least mid-single digit local-currency revenue growth and operating margin improving on the way to reaching mid-teens levels by 2013."
Click here for more details.
Avon Products Inc
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