Bottom Line: Beauty and booty

TWELVE months ago the Independent recommended that readers should buy shares in Oriflame International, the door-to-door seller of cosmetics.

Good figures yesterday prompted a 6p improvement in the shares to 270p, up 20 per cent since last June, twice the market average.

Most of Oriflame's profit is earnt selling cosmetics via a network of agents in the UK and western Europe.

But the main attraction is Oriflame's ventures into the emerging markets of Eastern Europe and South America.

Political and economic revolutions in these countries have allowed the company to meet pent- up demand for beauty products. Oriflame has been able, at the same time, to widen its distribution network by offering local people the chance to work as sales agents.

Pre-tax profits climbed 17 per cent to pounds 14m and the profit margin widened from 14 to 16 per cent. Emerging markets accounted for 10 per cent of Oriflame's business, but this year it could be a quarter.

Oriflame is unusual in that it is quoted in London, the company is registered in Luxembourg, its management is based in Sweden and most of the manufacturing takes place in Ireland.

Shares are trading on a prospective price/earnings ratio of 10, and the yield is 6 per cent. Continue buying.

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