Oriflame lifts pre tax profits to £19.9m

ORIFLAME, the manufacturer of cosmetic products which has its main plant in Dublin, increased its pre tax profit by 25.6 per cent from £15.8 million sterling to £19.9 million in the year ended March 31st, 1996. This represents its sixth consecutive year of double digit profit growth.

The Dublin plant operates from the Sandyford Industrial Estate, employs 280 people and carries out 75 per cent of the group's production. Oriflame also uses over 400 sales consultants in Ireland.

Output from the Dublin plant increased by 45 per cent to 48 million units and this required additional capital investment of £1 million. Controlled by the Swedish Af Jochnick family with a 40 per cent stake, its shares are quoted on the London Stock Exchange. Fidelity has an 8 per cent interest.

Oriflame recorded a 12 per cent rise in sales from £81 million to £90.8 million. Royalty income improved from £3 million to £4.6 million. Reflecting real growth, earnings per share went up from 25.2p to 30p. In addition, the shareholders are to receive a higher payout, with an increased final dividend from 9.4p to 10p making a total of 15p compared with 14p previously.

The sales growth is attributed to buoyancy in Finland, Portugal, Chile and Spain and a new market in Peru. Sales in Finland were 12 per cent better. Spain made a "very positive start", the group said. Portugal had a "very strong sales and profit growth".

Chile is described as a "very important market". Peru, in its first year, contributed £3.5 million to sales. Moreover, sales in Mexico increased despite local economic difficulties.

The results would have been better but for start up cost of £0.9 million in India, Ecuador and Brazil and the £0.7 million spent on building up its employment in South America. This expenditure is expected to bring benefits in the future.

The share of profits from associated companies increased from £2.3 million to £4.6 million, reflecting the performance of its 25 per cent owned ORESA which operates in eastern Europe. The sales from this company increased by 60 per cent to £92 million, while pre tax profit grew - even faster at 80 per cent to £18 million.

This growth is attributed to business in Poland - where a new factory was established in October 1995 - Russia and the Ukraine. The Dublin plant is to continue to be a major supplier to, ORESA.

New markets were opened in Greece, Bulgaria and Lithuania.

ORESA has established new subsidiaries in Lithuania, Romania and Germany and new markets are planned for this year.

Oriflame remains in a strong financial position. Gearing is a mere 8.3 per cent compared with a net cash position in the previous year.