Oriflame to sell Russian lipstick plant, to merge production

MOSCOW, Russia - Swedish cosmetics firm Oriflame plans to sell a lipstick factory in Russia as it moves to consolidate production in one location in the country, a real estate consultant and the company said on Tuesday.

The move may help the company to reduce costs at a time when Western sanctions on Russia over the Ukraine crisis are exacerbating an already weak economy and the lower rouble is threatening to curtail consumer spending.

In May, Oriflame scrapped third-quarter dividends because it was facing "very tough conditions" in Russia and Ukraine, its two biggest markets, due to the geopolitical situation and said it was focused on mitigating the negative impact on profitability through reduced cost levels.

Ads

Vladislav Ryabov, regional director of warehouse, land and industrial department of property consultancy Colliers International, said that Oriflame had put its lipstick factory and a warehouse near Moscow up for sale. Colliers International is managing the sale.

Oriflame confirmed plans to sell the factory and said it would move lipstick production to its new bigger plant in another part of the Moscow region over time.

The plant has not stopped lipstick production yet.

The company announced plans in 2010 to invest up to 175 million euros ($235 million) in the construction of a second factory in Russia. The plant, scheduled to launch at the end of 2014, will produce skin and hair care items but the range of products will be widened in the future, Oriflame said.

$1 = 0.7455 euros