Intercos Group Reports Strong Sales, Profit Gain in 2021 – WWD

MILAN — The listing on the Italian Bourse propelled Intercos Group’s financial performance in 2021.

In the 12 months ended Dec. 31, the cosmetics manufacturer’s revenues totaled 673.7 million euros, an increase of 11.1 percent — or 11.8 percent at constant currency — compared to 2020. The company reported gains especially in the Americas and Asia regions, as well as in the skin care and makeup categories.

Excluding nonrecurring costs, adjusted earnings before interest, taxes, depreciation, and amortization hit 101.1 million euros, up 16.3 percent compared to 2020, thanks to improved sales and the ongoing recovery of productivity, especially in the second half of the year. The adjusted EBITDA margin on net sales was 15 percent.

The group’s adjusted net profit gained 57.7 percent to 41.2 million euros, while the net debt as of Dec. 31 was 126.6 million euros, down 67.3 million euros compared to the previous year.

“These results assure us of the strength of the group’s medium-term strategies,” said Intercos Group’s chief executive officer Renato Semerari. “Our business model’s originality, supported by a constant drive towards innovation, places us as the only international ODM [original design manufacturer] with a global focus capable of serving nearly all beauty segments. The group therefore continues to consolidate, among other areas, its makeup segment leadership with a more than 10 percent market share.”

Sales of makeup were up 12.5 percent to 417.5 million euros last year, while skin care climbed 26.9 percent to 128.9 million euros.

The former’s growth was due to the progressive recovery of lipstick and powder sales as well as robust performances in the Americas and Asia, while the latter’s increase was boosted by the acquisition the company made in South Korea in 2020, when it took over the joint venture it created with fashion and beauty retailer Shinsegae International by purchasing the remaining 50 percent of Shinsegae Intercos Korea Inc.

This partially influenced the breakdown of the different product categories of the business, with makeup accounting for 62 percent of total sales and skin care 19.1 percent last year, whereas it accounted for 16.8 percent in 2020. The hair and body business unit generated 127.3 million euros in sales in 2021, decreasing 4.9 percent compared to the previous year, when it saw exceptional sales of hand sanitizers in light of the pandemic.

Overall, sales accelerated toward the end of 2021, as in the fourth quarter Intercos revenues gained 12.2 percent to reach 188.3 million euros compared to the same period in 2020.

Dario Ferrari and Renato Semerari ringing the bell at the market opening ceremony on Tuesday.

Intercos Group’s founder Dario Ferrari and CEO Renato Semerari ringing the bell at the market opening ceremony last November.
Marco Barbieri/Courtesy of Intercos Group

Broken down by region, last year sales in Europe, Middle East, and Africa still made up almost half of total revenues, even if they were flat at 327 million euros. Asia and the Americas registered double-digit increases, with sales up 36.2 percent to 130.6 million euros and 16.9 percent to 216.1 million euros, respectively.

While Semerari underscored the strong performance of the U.S., which drove the Americas’ figures, he also highlighted that expansion in Asia will continue, as telegraphed by the acquisition of a manufacturing facility in Dehradun, India, last November. According to the executive, this plant “will improve the group’s access to new markets, benefiting also in this region from changing demographics and per-capita consumption.”

“But today India is still a marginal contributor,” continued Semerari during a call with analysts on Wednesday at the end of trading. “We’re serving one client…but working to bring the technology we need and start to expand our client base.”

Last year Intercos gained 40 new clients, working with 720 international players. There were no significant changes in the client split, though, as multinationals still accounted for half of total sales, growing 12 percent to 335.3 million euros in 2021.

Emerging brands and retailers increased 10.9 percent to 210.3 million euros and 8.9 percent to 128.2 million euros, respectively.

In addition to underscoring that many emerging brands were acquired by multinationals, therefore boosting the sales of that segment, Semerari also addressed new clients that could begin to collaborate with Intercos this year, including Dolce & Gabbana.

Last month the cosmetics supplier confirmed the beginning of negotiations for a commercial agreement with the fashion house, which earlier this year abandoned the licensing model, brought its beauty business in-house and appointed Gianluca Toniolo – previously global travel retail managing director for perfumes and cosmetics at LVMH Moet Hennessy Louis Vuitton – to helm that division.

“We’re in the final stages of the contractual agreement with them,” confirmed Semerari, forecasting the beginning of production for late 2022 or early 2023 at the latest. “And that is not going to be a small client,” he added.

The executive expressed satisfaction for the order intake so far, too. As the company reopened the doors of its physical showroom after two years to present the 2023 beauty trends IRL to more than 100 clients, it has been receiving promising feedback from customers, which signals a return of the makeup segment to pre-pandemic levels.

Last month Intercos’ order intake — excluding the hair and body business unit — grew 39 percent to 117 million euros compared to 2021, with makeup accounting for 97 million euros, increasing 43 percent and 13 percent on the same period in 2021 and 2020, respectively.

“February was the highest month ever in terms of order intake and March is shaping up to be pretty solid, too,” said Semerari, adding that “all the big multinationals are projecting solid growth for the year, so all in all the outlook is positive.”

Yet there’s a lack of visibility in the supply chain, where crises might delay the conversion of orders into sales.

In addition to the rising prices of raw materials, transportation and packaging experienced in the second part of 2021, the recent, sharp increase in the cost of energy represents another concern for the entire cosmetics industry, further limiting visibility on when these inflationary dynamics will normalize.

For this reason, Semerari was cautious about projections for 2022, forecasting a growth in sales between 10 percent and 15 percent for the year.

Still, the group is gearing up to celebrate a milestone as this year will mark its 50th anniversary. Founded by visionary entrepreneur Dario Ferrari, the company counts 5,200 employees across 11 research centers, 15 production plants and 15 sales offices located in three continents.

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