=Coty (COTY) reported earnings on Wed 11/9/16 (b/o)

Coty misses by $0.10, misses on revs; sees improvement in 2H17; reaffirms synergy and 2020 EPS target  :

• Reports Q1 (Sep) earnings of $0.23 per share, excluding non-recurring items, $0.10 worse than the Capital IQ Consensus of $0.33; revenues fell 2.9% year/year to $1.08 bln vs the $1.14 bln Capital IQ Consensus. 
• The reported net revenue decline reflects a 1% negative foreign exchange impact and an 8% decline in the underlying business, impacted by company resources shifting to support the closing of the P&G Specialty Beauty Business merger, partially offset by the contribution of the Brazil Acquisition. The 2% decline in constant currency revenues was driven by a 9% decline in Fragrances, a 7% decline in Color Cosmetics, a 5% decline in Skin & Body Care, and a 6% contribution from the Brazil Acquisition.
• As expected, the extensive work over the last 15 months on closing the transaction and merging the two businesses has come at a cost. As discussed prior to the closing, the resources which normally work on the business, have also been working on closing the transaction, and setting up and preparing for the future of the combined company. The resulting distraction as well as the recent change in management teams in our headquarters, regions and countries, have contributed to a decline in Coty stand-alone revenues and profits in Q1.
• While Coty is anticipating similar revenue trends in Q2, the Company is committed not only to real improvement in the trend in the second half, excluding divestitures, but also to achieving further improvement for the combined company in the following fiscal years. This combined company 2017 outlook replaces all prior fiscal 2017 outlooks. Coty continues to target the total four-year synergies and working capital benefits of $750 million and $500 million, respectively, with no change to the operating costs to realize both. Coty also remains committed to its previously communicated adjusted EPS target of at least $1.53 for fiscal 2020 despite the profit impact of the current decline in revenues.