Coty Q2 earnings slide as debt falls after Wella sale

Core Viewpoint - Coty reported mixed second-quarter results, with lower earnings offset by significantly reduced debt following strong cash generation and the completion of its Wella divestment [1][4]. Financial Performance - For the three months ending December 31, 2025, Coty recorded net revenue of $1.67 billion, a 1% increase year-on-year on a reported basis but a 3% decline on a like-for-like (LFL) basis [1]. - Reported operating income fell 45% to $148.2 million, while shareholders faced a net loss of $126.9 million compared to a net income of $20.4 million a year earlier, resulting in a 7.6% loss margin [1]. - Adjusted EBITDA decreased 15% to $330.2 million, although adjusted diluted earnings per share improved to $0.14 [2]. - For the first half of the fiscal year, revenue dropped 3% to $3.25 billion, with operating income falling 34% to $333.2 million, and the group posted a net loss of $62.3 million compared to a net income of $100 million in the prior year [2]. - Free cash flow totaled $513.1 million for the quarter and $524.3 million for the half [3]. Debt and Cash Flow - At the end of the quarter, total debt was $3.04 billion, down from $4.06 billion on September 30, 2025, while financial net debt was $2.60 billion compared to $3.20 billion at the end of September 2025 [3]. - Quarterly operating cash flow reached $559.7 million, lifting year-to-date inflows to $624.9 million [2]. Strategic Developments - Coty completed the sale of its remaining 25.8% Wella holding to KKR for $750 million upfront, with most proceeds directed towards long-term debt reduction [4]. - The company withdrew full-year EBITDA and free cash flow guidance, projecting mid-single-digit LFL revenue falls in the third quarter and adjusted EBITDA of $100 million to $110 million [5]. Leadership Changes - Markus Strobel became executive chairman and interim CEO on January 1, 2026, after a long career at Procter & Gamble [3][6].