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Avon Earnings Beat Estimates

The shares rise as sales jump 14%.

Avon Products

(AVP) - Get Free Report

posted a rise in fourth-quarter earnings Tuesday, beating analysts' consensus estimate by 4 cents a share. The company cited an increase in beauty sales, strong international operations and a positive impact from foreign exchange.

The company also forecast first-quarter earnings in line with analysts' projections, which helped send its shares up $1.05, or 1.7%, at $63.05 in morning trading.

In the period ended Dec. 31, the company earned $261.3 million, or $1.09 a share, which included a tax-audit settlement of 5 cents a share. Analysts were calling for $1.04 a share. This compares with the previous year's profit of $193 million, or 80 cents a share.

The quarter's earnings results were 5 cents to 6 cents ahead of the company's previous guidance, due to the positive impact of currency translation, stronger-than-expected operating results, lower net interest expense and lower-than-expected severance expense.

Total sales were $2.09 billion, up 14%. Excluding the impact of foreign currency translation, sales rose 9%. Sales of beauty products jumped a record 18%, the company said. Total sales rose 30% in Europe, or 18% excluding currency impacts.

Looking ahead, first-quarter earnings are seen at 50 cents a share, matching analysts' consensus, compared with 42 cents a share in the year-earlier period. Meanwhile, U.S. sales are on track for a 6% to 8% increase, the company said.

Operating profit in the first quarter is seen declining due to planned margin investment in inventory clearance, but Avon expects local-currency sales to increase about 10%.

The New York-based company continues to see 2004 earnings up 10% to 12% from 2003 levels. U.S. sales are seen rising in the mid-single-digits. Analysts are calling for $3.04 a share in full-year 2004, compared with a profit of $2.78 a share in full-year 2003.

Separately, the company said it increased its quarterly dividend to 28 cents per share from 21 cents per share. The new rate will be effective in the first quarter and payable March 1.

The company also announced a two-for-one stock split, in the form of a 100% stock dividend, payable on or about May 28. This would be Avon's third two-for-one stock split since 1996.