S&P snips Oriflame Investment

S&P said it downgraded its ratings for Oriflame Investment Holding plc and its senior secured notes due 2026 to B- from B. The recovery rating of 3 on the notes is unchanged, indicating recovery prospects of 50%.

“For 2022, the company's adjusted EBITDA margin (excluding restructuring costs) was close to 9%–a very significant drop compared with the previous year's roughly 18%. The profitability deterioration is mainly explained by significant cost inflation, and Oriflame's limited ability to offset this with price increases, higher marketing expenses, and restructuring costs of close to €19 million.

“For fiscal 2023, although we expect some challenges will alleviate (thanks to a moderation in inflation and cost savings), we do not forecast significant margin improvement,” S&P said in a press release.

The agency noted Oriflame paid dividends of €30.5 million in January, which was not included in S&P’s previous base case.

S&P said it now expects Oriflame to take longer to recover than previously expected.

The outlook is stable.

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