Estée Lauder supplier Intercos targets $200 million US expansion

Cosmetics producer Intercos SpA is engaged on at the very least one acquisition within the US to develop its pores and skin and hair care enterprise on this planet’s largest magnificence market.

The Italian firm, a supplier to manufacturers together with Estée Lauder Cos. and Dolce & Gabbana, is focusing on income within the $100 million to $200 million vary, its chief govt officer, Renato Semerari, mentioned in an interview. He has recognized one buyout candidate and mentioned others are on his radar, although he declined to supply particulars.

“We are proactively trying to buy a company in the skin and hair care sector in the US,” Semerari mentioned. “There is a gap in our industrial footprint in that segment.”

The contract producer has two make-up crops within the US, however it lacks the capability in hair or skincare to win over the most important manufacturers or rising trendsetters, the CEO mentioned. In the Western world, he famous, these have a tendency to return “mostly from the States.”

Due diligence for the potential acquisition hasn’t began, and a deal is unlikely to be closed by year-end, Semerari mentioned.

Brianza-based Intercos was based in 1972 by its 82-year-old chairman, Dario Ferrari, who holds a couple of 32% stake. The firm, with a present market worth of roughly €1.17 billion ($1.38 billion), serves as a strategic companion for main manufacturers, creating, producing, and packaging magnificence merchandise.

“Ferrari established a new business model in the beauty industry,” Semerari mentioned. “His mother was a chemist active in the skincare industry. He understood that makeup was an impulse-purchase market, so he started investing in research and development to provide clients with innovative products.”

His massive breakthrough got here when Ferrari fashioned a strategic partnership with magnificence large Estée Lauder, Semerari mentioned. “Ferrari’s team created a cosmetic powder that ended up in the hands of Leonard Lauder, who fell in love with the formula,” he mentioned. Lauder then summoned Ferrari to New York to arrange a three way partnership.

Tariff response

The US, with its huge shopper base, is the main international marketplace for magnificence merchandise, in accordance with the Cosmetic, Toiletry & Perfumery Association. While tariffs are rising, Intercos hasn’t felt the pinch as a result of it has shielded its shoppers from increased duties by relocating manufacturing amongst crops in international locations corresponding to South Korea, Italy, and the US, Semerari mentioned.

In August, Intercos mentioned it expects income this yr to rise at a “more moderate pace” than the 5% to 7% vary it had beforehand forecast at fixed alternate charges. First-half gross sales grew 5% to €525 million from a yr earlier, whereas adjusted earnings earlier than curiosity, taxes, depreciation and amortization jumped 17% to €75 million.

For the total yr, Intercos is forecast to generate adjusted Ebitda of €154.9 million, based mostly on the typical estimate of analysts polled by Bloomberg. Semerari mentioned he’s assured the corporate will meet present Ebitda estimates, regardless of trade softness.

“Consumers are worried about inflation and global uncertainty,” he mentioned. “In such phases, consumers tend to reduce discretionary spending.”