Oriflame opens personal care production facility in Russia

Swedish beauty products maker Oriflame has commissioned a new €150m facility in Noginsk, Russia, to integrate all its production activities in the country.

Initially, the facility will manufacture Oriflame’s personal and hair care products and will expand its production during the coming quarters.

Oriflame plans to consolidate its production activities in Russia at the plant, which is close to important markets. The facility is also expected to provide logistics and business processes benefits to the company.

Oriflame CEO and president Magnus Brännström said: "Oriflame is proud to increase its presence in Russia through this €150m investment into the new facilities in Noginsk.

"This is an important milestone for Oriflame’s business and long-term commitment to the region, as it further improves the service to our consultants while creating employment opportunities in Russia and in particular in the Noginsk area."

The company has moved equipment for the production of colour cosmetics from its existing factory in Krasnogorsk to the new facility.

Previously this year, Oriflame sold the Krasnogorsk factory to Russian retail company X5 Retail Group. It also divested in manufacturing sites in Ekerö, Sweden. The two transactions provided the company with €38m in cash, with a major part of it coming from Krasnogorsk plant sale.

Meanwhile, Oriflame has been ordered by the Russian authorities to pay RUB1bn (€17.5m) relating to royalty payments including income tax, VAT and penalty for the years 2009 and 2010.

Oriflame said in a statement: "The decision is surprising and disappointing as such court decision implies that there is no recognition of royalty charged for commercial values that are created elsewhere in the group and that are necessary for the local Russian entity to carry out its operations."

The company said that it will appeal the verdict in the Supreme Court and also consider initiating international investment arbitration.

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Image: Oriflame will begin production at the new plant with personal care products. Photo: courtesy of Oriflame.