Coty Inc. (COTY) has reported 47.42 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $46.80 million, or $0.06 a share in the quarter, compared with $89 million, or $0.25 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $223.30 million, or $0.30 a share compared with $154.20 million or $0.44 a share, a year ago.
Revenue during the quarter surged 89.73 percent to $2,296.70 million from $1,210.50 million in the previous year period. Gross margin for the quarter contracted 21 basis points over the previous year period to 61.15 percent. Operating margin for the quarter stood at negative 0.55 percent as compared to a positive 12.59 percent for the previous year period.
Operating loss for the quarter was $12.70 million, compared with an operating income of $152.40 million in the previous year period.
However, the adjusted operating income for the quarter stood at $308 million compared to $233.40 million in the prior year period. At the same time, adjusted operating margin contracted 587 basis points in the quarter to 13.41 percent from 19.28 percent in the last year period.
Camillo Pane, chief executive officer said, "It is my privilege to be leading the new Coty. It is clear to me that Coty has great future potential; the combination of our iconic and emerging brands, energized employees, and the comprehensive strategy we are laying out for the new organization will position us well to become a challenger and leader in beauty and drive sustained profitable growth over time."
Operating cash flow improves significantly
Coty Inc. has generated cash of $663.40 million from operating activities during the first half, up 28.29 percent or $146.30 million, when compared with the last year period.
The company has spent $342 million cash to meet investing activities during the first six months as against cash outgo of $543.70 million in the last year period.
Cash flow from financing activities was $299.20 million for the first six months, up 54.31 percent or $105.30 million, when compared with the last year period.
Working capital increases sharply
Coty Inc. has recorded an increase in the working capital over the last year. It stood at $771.50 million as at Dec. 31, 2016, up 238.82 percent or $543.80 million from $227.70 million on Dec. 31, 2015. Current ratio was at 1.25 as on Dec. 31, 2016, up from 1.13 on Dec. 31, 2015.
Cash conversion cycle (CCC) has increased to 15 days for the quarter from 10 days for the last year period. Days sales outstanding went down to 45 days for the quarter compared with 56 days for the same period last year.
Days inventory outstanding has decreased to 52 days for the quarter compared with 107 days for the previous year period. At the same time, days payable outstanding went down to 112 days for the quarter from 153 for the same period last year.
Debt increases substantially
Coty Inc. has witnessed an increase in total debt over the last one year. It stood at $6,495.10 million as on Dec. 31, 2016, up 77.63 percent or $2,838.60 million from $3,656.50 million on Dec. 31, 2015. Total debt was 29.67 percent of total assets as on Dec. 31, 2016, compared with 56.15 percent on Dec. 31, 2015. Debt to equity ratio was at 0.66 as on Dec. 31, 2016, down from 8.72 as on Dec. 31, 2015.
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