Avon Products (AVP) swung to a net profit for the quarter ended Sep. 30, 2016. The company has made a net profit of $36 million, or $ 0.07 a share in the quarter, against a net loss of $697 million, or $1.58 a share in the last year period. On an adjusted basis, earnings per share were at $0.02 for the quarter compared with a loss of $0.11 a share in the same period last year.

Revenue during the quarter went down marginally by 1.91 percent to $1,408.80 million from $1,436.20 million in the previous year period. Gross margin for the quarter contracted 18 basis points over the previous year period to 60.90 percent. Total expenses were 92.05 percent of quarterly revenues, down from 96.85 percent for the same period last year. This has led to an improvement of 480 basis points in operating margin to 7.95 percent.

Operating income for the quarter was $112 million, compared with $45.30 million in the previous year period.

However, the adjusted operating income for the quarter stood at $98.80 million compared to $55.30 million in the prior year period. At the same time, adjusted operating margin improved 316 basis points in the quarter to 7.01 percent from 3.85 percent in the last year period.

"Avon's third-quarter results reflect broad-based performance improvements resulting in local currency sales growth across our top markets and significant operating margin expansion versus the prior year," said Sheri McCoy, chief executive officer of Avon Products, Inc. "We have also taken actions to significantly improve our balance sheet and have accelerated the pace of our 2016 cost savings initiatives. I am pleased with our progress against the Transformation Plan as we continue to position Avon to deliver sustained long-term profitable growth."

The company has spent $67.80 million cash to meet investing activities during the nine month period as against cash inflow of $139.60 million in the last year period It has incurred net capital expenditure of $64.90 million on net basis during the nine month period, up 23.15 percent or $12.20 million from year ago period.

Cash flow from financing activities was $569.20 million for the nine month period as against cash outgo of $345.30 million in the last year period.

Cash and cash equivalents stood at $901.70 million as on Sep. 30, 2016, up 53.51 percent or $314.30 million from $587.40 million on Sep. 30, 2015.

Working capital increases sharply
Avon Products has recorded an increase in the working capital over the last year. It stood at $853.10 million as at Sep. 30, 2016, up 29.24 percent or $193 million from $660.10 million on Sep. 30, 2015. Current ratio was at 1.54 as on Sep. 30, 2016, up from 1.38 on Sep. 30, 2015.

Cash conversion cycle (CCC) has increased to 38 days for the quarter from 35 days for the last year period. Days sales outstanding went up to 34 days for the quarter compared with 32 days for the same period last year.

Days inventory outstanding has decreased to 59 days for the quarter compared with 137 days for the previous year period. At the same time, days payable outstanding went down to 131 days for the quarter from 134 for the same period last year.