Coty reported a mixed but strategically meaningful Q4 FY2024, underscoring continued top-line resilience amidst a challenging near-term macro backdrop and a disciplined margin expansion trajectory. Revenue for the quarter was $1.3634 billion, with a gross margin of 60.7% and an operating margin of 2.67%, culminating in a net loss of $96.9 million (EPS -0.12). For the full year, however, Coty showcased meaningful profitability progression, delivering a FY24 adjusted EBITDA of $1,091 million (+12% YoY) and adjusted EPS ex swap of $0.48 (+26% YoY), supported by a 64.4% FY24 adjusted gross margin—well ahead of early-2020s targets and in line with its mid-60s gross margin ambition a year ahead of schedule. Cash generation remained solid, with FY24 net cash provided by operating activities of $176.5 million and free cash flow of $116.7 million, while leverage declined to ~3.3x on net debt of $3.6 billion (excluding the Wella stake).
Looking into FY25, management outlined a growth algorithm centered on 6%-8% like-for-like revenue growth (with Prestige expected to outperform), 9%-11% adjusted EBITDA growth, and ~20% adjusted EPS growth ex equity swaps, implying a two-year CAGR of roughly 19%-22% when compared to FY24, after factoring out one-time discrete tax benefits. The company expects continued gross margin expansion in FY25, driven by product premiumization and ongoing cost productivity, albeit with FX headwinds and a 1% scope headwind in H1 from the Lacoste license divestiture. Management signaled a deliberate deleverage plan toward ~2x by exit calendar 2025 and a longer-term target of ~2x, aided by higher profitability, cash flow expansion, and strategic asset sales (including potential Wella-related flexibility).
Overall, Coty’s QQ4 2024 results reinforce its strategic progression: a leading fragrance platform, a diversified consumer beauty portfolio, and a growth playbook centered on advocacy marketing, agile innovation, and expansion in high-potential growth engines and travel retail. While the near-term profitability remained challenged by one-off items and a net loss in Q4, the margin trajectory and long-term guidance suggest a constructive investment thesis anchored in structural margin improvement, a reaccelerating innovation calendar, and a deleveraging path.