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Avon reports total beauty sales rise 7% for Q2

20 Jul '05

7 min read

In terms of regional performance for the third quarter, the company said that the U.S. revenue trendline is improving, with revenue expected to be down slightly from the prior year.

U.S. operating profit is forecast to decrease mid-to-high teens, with the majority of the decline due to reversal of 2004 bonus accruals in the prior year. Europe's revenue is projected to increase double digits and operating profit is forecast to rise in the mid-single digits.

In Latin America, revenue is anticipated to grow in the high teens and operating profit is forecast to increase around 10 percent.

Asia Pacific's revenue is expected to be up at least mid-single digits while operating profit for that region is projected to be down high-single digits, including a more than doubling of advertising in China.

Looking ahead to the second half, the company said that it anticipates revenue growth of 7-8 percent (6-7 percent in local currency), double the first-half local- currency growth rate, but below the company's previous expectation. As a result, Avon expects full-year earnings to be in the range of $2.03-$2.08, up from 2004 earnings of $1.77 per share.

This EPS guidance reflects the second-quarter tax benefit of $.20 per share, partially offset by an impact of $.02 per share from a revised higher effective tax rate in the second half. The company said that additional tax settlements are possible during 2005, which could result in further benefits. Additionally, cash flow from operations is projected to be approximately $900 million for the full year.

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