Corporate Press Releases

Avon Raises First Quarter Earnings Expectation to $.59 Per Share-Up 40%

First Quarter Sales Growth Tracking to Record 19%; Local Currency Sales Growth Accelerating to 13%

Full-year EPS Projected to Rise 14-15% to $3.18-$3.20

Mar 25, 2004

Avon Products, Inc. (NYSE: AVP) today raised its earnings outlook for the first quarter and full year 2004.

Avon said it expects earnings in the first quarter of 2004 to be $.59 per share, versus $.42 per share in the first quarter of 2003, due primarily to exceptional strength in operations. Given this strong performance, Avon increased its outlook for full-year 2004 earnings per share to a range of $3.18-$3.20, 14-15% above 2003 earnings per share of $2.78 and ahead of its previously stated forecast of 10-12% growth in earnings in 2004.

Sales in the first quarter are tracking to a 19% increase, driven by a record 22% growth in Beauty. Sales growth excluding the impact of foreign currency is expected to accelerate to 13% from 9% growth in 2003's fourth quarter. Units should increase 10% due in part to a strong volume recovery in the company's Brazilian operation.

Operating profit should expand at least 35%, and the company's operating margin should increase by at least 150 basis points in the first quarter.

The improved earnings per share outlook reflects strong operational performance across every geographic region, with exceptional strength in Latin America and Europe. In addition, the quarter's results will benefit from lower net interest expense, more favorable foreign currency exchange rates and a more favorable tax rate than earlier anticipated.

Commenting on the outlook, Andrea Jung, Avon's chairman and chief executive officer, said, "We're very pleased to start off the year with such a strong quarter. On the strength of our worldwide operations, sales growth this quarter is shaping up to be the highest in Avon's recent history. The broad-based nature of our projected first quarter performance supports our confidence that we can meet our newly raised earnings per share target for 2004."

First Quarter Outlook by Region

Avon said that the U.S., its largest market, is projected to resume healthy sales growth of approximately 7% in the first quarter. As planned, U.S. operating profit should be somewhat below the prior-year level due to inventory clearance activity in the quarter.

In Latin America, sales in the quarter are tracking ahead of earlier expectations with growth above 20% in dollars and in the mid-to-high-teens in local currency. Brazil's unit volume is projected to increase double digits following adjustments to its merchandising mix implemented in late 2003. The region's operating profit growth is expected to increase at least 30%.

In Europe, first quarter sales should exceed earlier forecasts with dollar sales growth over 30% and local currency sales growth in the range of 20%. Operating profit is expected to increase over 60%. Europe's growth continues to be driven by Central and Eastern Europe as well as by strong double-digit sales growth in the U.K. due in part to its very successful launch of the company's blockbuster Anew Clinical anti-aging treatment.

The Asia region is performing as expected with projected sales growth in the high teens in dollars and double digits excluding the effect of foreign currency. Operating profit is projected to rise in the range of 25% including benefits from Business Transformation initiatives.

Avon management will review its business and strategies at the Merrill Lynch Retailing Leaders, Household Products and Cosmetics Conference today at 10:30 a.m. New York time. The conference will be webcast live, and instructions for accessing the webcast can be found on the Avon Investor website, The company expects to report financial results for the first quarter on Friday, April 30, 2004.

Avon is the world's leading direct seller of beauty and related products, with $6.8 billion in annual revenues. Avon markets to women around the world through 4.4 million independent sales Representatives. Avon product lines include such recognizable brand names as Avon Color, Anew, Skin-So-Soft, Avon Solutions, Advance Techniques Hair Care, Avon Naturals, Mark, and Avon Wellness. Avon also markets an extensive line of fashion jewelry and apparel. More information about Avon and its products can be found on the company's web site

Cautionary Statement under the Private Securities Litigation Reform Act of

Statements in this release that are not historical facts or information are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's reasonable current assumptions and expectations. Such forward- looking statements involve risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or achievement of Avon Products, Inc. ("Avon" or the "Company") to be materially different from any future results expressed or implied by such forward-looking statements, and there can be no assurance that actual results will not differ materially from management's expectations. Such factors include, among others, the following: general economic and business conditions in the Company's markets, including social, economic and political uncertainties in Latin America, Asia and Central and Eastern Europe; the Company's ability to implement its business strategies and its Business Transformation initiatives, including the integration of similar activities across markets to achieve efficiencies; the Company's ability to achieve anticipated cost savings and its profitability and growth targets; the impact of substantial currency fluctuations on the results of the Company's foreign operations and the cost of sourcing foreign products and the success of the Company's foreign currency hedging and risk management strategies; the Company's ability to implement its information systems initiatives; the impact of possible pension funding obligations and increased pension expense on the Company's cash flow and results of operations; the effect of legal, regulatory and tax proceedings, as well as restrictions imposed on the Company, its operations or its Representatives by foreign governments; the Company's ability to successfully identify new business opportunities; the Company's access to financing; and the Company's ability to attract and retain key executives. Additional information identifying such factors is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the SEC. The Company undertakes no obligation to update any such forward-looking statements.

SOURCE: Avon Products, Inc.

CONTACT: Media, Victor Beaudet, +1-212-282-5344, or Investor, Renee
Johansen, or Rob Foresti, +1-212-282-5320, all of Avon Products, Inc.

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