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Aug 29, 2012
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L'Oreal profits rise in first-half, confirms annual targets

By
Reuters
Published
Aug 29, 2012

L'Oreal posted an 11.4 percent increase in its first-half operating profit helped largely by its luxury products and still expects to outperform the market and grow profits and sales this year.



Photo: L'Oreal


The world's biggest cosmetics group earlier reported slower sales in the second quarter with like-for-like growth - weighed down by the economic crisis - slowing across all regions in the luxury segment.

Earnings before interest and tax (EBIT) reached 1.897 billion euros ($2.38 billion) while the operating margin widened to 16.9 percent from 16.8 percent in the same period a year ago, the French group said in a statement on Tuesday.

A Thomson Reuters I/B/E/S poll showed estimates for EBIT at 1.918 billion euros, a margin of 17.25 percent and net profit at 1.643 billion euros.

Operating profit across all of L'Oreal's divisions rose. Mass consumer goods, such as the Garnier shampoo and Maybelline mascara, rose 6.7 percent but its margin slipped. Operating profit for luxury products, which includes the Cacharel and Lancome brands, climbed 21.4 percent and yielded a margin of 19.5 percent.

Sales at L'Oreal, whose competitors include U.S. cosmetics maker Estee Lauder and Anglo-Dutch consumer goods group Unilever, grew to 11.21 billion euros in the first half.

L'Oreal confirmed it expected this year to do better than the overall cosmetics market, which it estimated in July would grow by about 4 percent.

It also said that by the end of this year it would buy back shares worth a maximum of 500 million euros, which it would then cancel.

L'Oreal, which is almost 30 percent owned by Swiss food group Nestle, will detail its first-half earnings on Wednesday and analysts will mostly focus on how the group expects the second half of the year to evolve.

Its shares closed 0.15 percent lower at 101 euros on Tuesday, taking gains to about 25 percent so far this year and beating a 18 percent rise in the European personal and household goods index .SXQP.

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