Coty Clocks 1% Top-Line Growth In Q1; Sees Strong Demand Growth Across Nearly All Markets

Coty Inc COTY reported first-quarter FY23 sales growth of 1% year-on-year to $1.39 billion, beating the consensus of $1.37 billion.
Like-For-Like (LFL) revenue increased 9% Y/Y, driven by a 7% increase in Prestige and a 12% increase in Consumer Beauty.
Revenue in the Americas rose 4% Y/Y, EMEA decreased 3%, and Asia-Pacific climbed 6%.
The gross margin expanded 70 basis points Y/Y to 63.9%, and the gross profit rose to $888.7 million.
The adjusted operating margin was 18%, and the adjusted operating income increased 24% to $249.6 million.
Adjusted EBITDA of $307.9 million increased 11% Y/Y, resulting in an adjusted EBITDA margin of 22.2%, 190 basis points expansion versus 3Q22.
Adjusted EPS was $0.11, missing the analyst consensus of $0.12.
Cash from operating activities for Q1 totaled $163.2 million, with a free cash flow of $88.2 million. The company held $215.7 million in cash and equivalents as of September 30, 2022.
The company’s financial net debt as of September 30, 2022, totaled $4.2 billion.
Outlook: Coty anticipates FY23 adjusted EPS growth in the mid-teens to $0.32 - $0.33 versus the $0.32 estimate.
The company expects adjusted EPS growth acceleration in FY24 and beyond, fueled by lower interest expenses.
It sees FY23 adjusted EBITDA of $955 million - $965 million.
Coty expects FY23 revenues for the core business, adjusting for the impact of the Russia exit, to grow 6-8% LFL.
Coty continues to expect modest gross margin expansion in both Q2 and in FY23, despite the elevated inflationary environment.
Price Action: COTY shares are trading higher by 2.44% at $7.15 in premarket on the last check Tuesday.
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