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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  L'Oréal    OR   FR0000120321

L'ORÉAL (OR)
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Luxury cosmetics boost fourth-quarter sales at L'Oreal

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02/08/2018 | 10:17pm CEST
View of the entrance of cosmetics company L'Oreal's new World hair research centre in Saint-Ouen

PARIS (Reuters) - Strong demand in Asia for L'Oreal's (>> L'Oréal) luxury cosmetics like Lancome fuelled sales growth in the fourth quarter, as the world's biggest beauty products maker faces more muted appetite for its mass market labels, especially in the United States.

PARIS (Reuters) - Strong demand in Asia for L'Oreal's (>> L'Oréal) luxury cosmetics like Lancome fuelled sales growth in the fourth quarter, as the world's biggest beauty products maker faces more muted appetite for its mass market labels, especially in the United States.

Make-up brands around the world are tapping into booming demand from a growing Chinese clientele and from young consumers often influenced by trends they spot on social media.

Demand for premium skin or hair care products is also on the rise alongside a broader revival in the luxury goods industry equally driven by Asian consumers.

L'Oreal and major rivals like U.S.-based Estee Lauder (>> Estee Lauder Companies) are reaping the benefits even though the French firm makes most of its money from its lower-end consumer products, like Garnier shampoo and Essie nail varnish.

L'Oreal's mass market business grew three percent in the fourth quarter, year-on-year, crimped by a tough U.S. market but up slightly from the third quarter. Meanwhile, the luxury business notched up near 10 percent growth on a like-for-like basis, which strips out currency swings and acquisitions.

CEO expects "significant growth"

The beauty industry "should remain dynamic and contrasted" in 2018, L'Oreal Chairman and Chief Executive Jean-Paul Agon said in a statement, adding he was confident of significant growth in like-for-like sales.

Operating profitability should increase, Agon said. It hit a record 18 percent in 2017, after L'Oreal sold off the Body Shop, where margins were low.

L'Oreal - which has previously not ruled out buying Nestle's (>> Nestlé) 23 percent stake in the firm should its Swiss shareholder want to sell - would have the resources to do so, Agon said separately on Thursday in an interview with the Financial Times.

"We have all the resources for that. We are cash rich," Agon was quoted as saying. He also pointed to L'Oreal's 9 percent stake in drugmaker Sanofi (>> Sanofi), which analysts have long said could be sold to fund such a purchase.

An agreement between Nestle and L'Oreal's biggest investors, the Bettencourt family, not to increase their stakes expires in mid-March, following the death last September of matriarch Liliane Bettencourt.

That stirred speculation Nestle could sell out or even look to launch a takeover of L'Oreal, though Agon has previously said the status quo was unlikely to change in the medium-term.

L'Oreal is due to hold an earnings news conference on Feb. 9.

ONLINE ON THE RISE

Overall, L'Oreal's sales rose by a better-than-expected 5.5 percent in the fourth quarter on a comparable basis, and revenues for the whole of 2017 reached 26 billion euros (22.89 billion pounds), up 4.8 percent like-for-like, compared to 4.7 percent growth in 2016.

The share of products sold online increased, reaching 7.7 percent of all sales at year-end, up from 5 percent two years earlier. Operating income grew 3 percent in 2017, to 4.7 billion euros.

L'Oreal shares closed down 2.16 percent at 171.8 euros on Thursday before it released earnings. They have fallen 7.1 percent so far this year, after rising 6.7 percent in 2017.

Many of L'Oreal's peers have also posted better-than-expected revenues or profits for the last three months of 2017, including Clinique owner Estee Lauder and U.S. cosmetics producer Coty (>> Coty).

(Editing by Adrian Croft and Elaine Hardcastle)

By Sarah White and Pascale Denis

Stocks treated in this article : L'Oréal, Sanofi, Estee Lauder Companies, Nestlé, Coty
Stocks mentioned in the article
ChangeLast1st jan.
COTY -0.30% 11.675 Delayed Quote.-39.42%
ESTEE LAUDER COMPANIES 0.28% 132.68 Delayed Quote.4.31%
L'ORÉAL 0.82% 208.2 Real-time Quote.11.65%
NESTLÉ 0.40% 80.96 Delayed Quote.-3.77%
SANOFI -0.87% 72.85 Real-time Quote.2.28%
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Financials (€)
Sales 2018 26 623 M
EBIT 2018 4 861 M
Net income 2018 3 897 M
Finance 2018 3 020 M
Yield 2018 1,84%
P/E ratio 2018 29,56
P/E ratio 2019 27,62
EV / Sales 2018 4,21x
EV / Sales 2019 3,94x
Capitalization 115 B
Chart L'ORÉAL
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Mean consensus HOLD
Number of Analysts 28
Average target price 202 €
Spread / Average Target -2,2%
EPS Revisions
Managers
NameTitle
Jean-Paul Agon Chairman & Chief Executive Officer
Alexis Perakis-Valat President-Consumer Products Division
Barbara Lavernos Executive Vice President-Operations
Christian Mulliez Chief Financial Officer & EVP-Administration
Laurent Attal Executive Vice President-Research & Innovation
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