Coty generated substantially higher free cash flow during fiscal 2026 despite weaker underlying earnings and a significantly wider reported net loss, highlighting a divergence between the beauty company’s cash generation and income-statement performance.
Full-year free cash flow increased approximately 25% to $348.2 million from $277.6 million.
Operating cash flow increased to $537.8 million from $492.6 million, even as several of Coty’s key profit measures weakened.
Adjusted EBITDA declined 22% to $846.9 million from $1.08 billion, with adjusted EBITDA margin contracting 380 basis points to 14.6%.
Coty attributed the decline primarily to lower sales and gross profit.
The GAAP picture was weaker.
Coty’s reported net loss widened to $618 million from $381.1 million, while reported net loss margin deteriorated to 10.6% from 6.5%. Adjusted net income was $185.1 million, compared with $188.8 million a year earlier.
Full-year revenue declined 2% to $5.81 billion. The company also recorded a $115.8 million negative mark-to-market impact from its equity swap, compared with a $248.1 million negative impact in the prior year.
Fourth-quarter trends showed some stabilization. Revenue increased 1% on a reported basis to $1.27 billion, although like-for-like sales declined 1%. Reported revenue benefited from approximately three percentage points of foreign-exchange impact.
Coty is also reshaping its portfolio and balance sheet.
The company agreed to sell its remaining Wella stake for $750 million and reached an agreement to transition the Gucci Beauty license back to Kering for $400 million plus additional inventory proceeds. Coty plans to use the proceeds for debt reduction, investment in its core prestige fragrance and beauty brands and organizational changes.
Financial net debt declined to $2.91 billion at fiscal year-end from $2.96 billion at the end of the third quarter, producing a financial leverage ratio of 3.4 times adjusted EBITDA.
KEY QUOTES:
“We closed FY26 on a stronger note, delivering sales and profit ahead of our targets, growing free cash flow even in the face of business headwinds.”
Markus Strobel, Executive Chairman and Interim Chief Executive Officer of Coty
