Avon Products, Inc. (AVP) saw its loss narrow to $10.70 million, or $0.04 a share for the quarter ended Dec. 31, 2016. In the previous year period, the company reported a loss of $333.40 million, or $0.76 a share. On an adjusted basis, net profit continuing operations for the quarter was $9 million, when compared with $0.70 million in the last year period.
Revenue during the quarter went down marginally by 2.44 percent to $1,568.10 million from $1,607.30 million in the previous year period. Gross margin for the quarter expanded 161 basis points over the previous year period to 60.32 percent. Total expenses were 93.18 percent of quarterly revenues, down from 96.09 percent for the same period last year. This has led to an improvement of 291 basis points in operating margin to 6.82 percent.
Operating income for the quarter was $107 million, compared with $62.90 million in the previous year period.
However, the adjusted operating income for the quarter stood at $114.20 million compared to $96.80 million in the prior year period. At the same time, adjusted operating margin improved 126 basis points in the quarter to 7.28 percent from 6.02 percent in the last year period.
"We made good progress in the first year of our Transformation Plan, exceeding our cost savings targets, improving our profit margin, and significantly strengthening our balance sheet. However, the financial results for the fourth quarter were disappointing, largely due to the decline in Active Representatives and an unexpected increase in bad debt expense," said Sheri McCoy, Chief Executive Officer, Avon Products Inc. "As we move into 2017, we are taking actions to deliver more consistent performance across our markets, with Representative engagement remaining a key priority in our growth plan, while navigating continued challenging global economic and political headwinds."
Operating cash flow drops significantly
Avon Products, Inc. has generated cash of $60.40 million from operating activities during the year, down 46.12 percent or $51.70 million, when compared with the last year.
The company has spent $177.30 million cash to meet investing activities during the year as against cash inflow of $138.30 million in the last year. It has incurred net capital expenditure of $79.70 million on net basis during the year, down 5.34 percent or $4.50 million from year ago.
Cash flow from financing activities was $137 million for the year as against cash outgo of $445.50 million in the last year period.
Cash and cash equivalents stood at $654.40 million as on Dec. 31, 2016, down 4.73 percent or $32.50 million from $686.90 million on Dec. 31, 2015.
Working capital increases sharply
Avon Products, Inc. has recorded an increase in the working capital over the last year. It stood at $506.60 million as at Dec. 31, 2016, up 246.99 percent or $360.60 million from $146 million on Dec. 31, 2015. Current ratio was at 1.34 as on Dec. 31, 2016, up from 1.07 on Dec. 31, 2015.
Debt comes down
Avon Products, Inc. has recorded a decline in total debt over the last one year. It stood at $1,893.90 million as on Dec. 31, 2016, down 14.14 percent or $311.80 million from $2,205.70 million on Dec. 31, 2015. Total debt was 55.40 percent of total assets as on Dec. 31, 2016, compared with 56.86 percent on Dec. 31, 2015. Interest coverage ratio improved to 2.95 for the quarter from 1.95 for the same period last year.
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