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L'Oreal upbeat for 2015 after fourth quarter sales beat forecasts
February 12, 2015 / 5:21 PM / 3 years ago

L'Oreal upbeat for 2015 after fourth quarter sales beat forecasts

PARIS (Reuters) - L‘Oreal (OREP.PA) on Thursday posted forecast-beating fourth-quarter comparable sales growth, driven in part by strong demand for its luxury fragrance and cosmetics brands such as Yves Saint Laurent and Armani.

The logo of French cosmetics group L'Oreal is seen on the company's building in Clichy, near Paris February 11, 2014. REUTERS/Benoit Tessier

The world’s biggest cosmetics group, whose growth at the end of the third quarter had slumped to its lowest point since 2009, said trading had picked up towards the end of the year and it aimed to outperform the market again in 2015.

Its mass consumer products division behind Garnier shampoo and L‘Oreal face cream also enjoyed improving trends with sales up 3 percent on a like-for-like basis during last year’s quarter, reversing a 0.4 percent drop the previous three months.

It added that its Maybelline make-up line “was now growing again in the United States” with the launch of Nudes Palette.

L‘Oreal’s like-for-like sales rose 4.9 percent in the fourth quarter, overshooting analysts’ expectations of 3.4 percent.

In luxury products, growth of 8.6 percent outpaced a rise of 4.9 percent the previous quarter.

The group’s total revenues rose 3.7 percent in 2014 to 22.53 billion euros (17 billion pounds), beating a ThomsonReuters I/B/E/S forecast of 22.45 billion.

“L‘Oreal reported a solid finish to the year with like-for-like growth in the fourth quarter well ahead of expectations with particularly strong contributions from Luxury, which beat Estee Lauder (EL.N) and LVMH (LVMH.PA), active cosmetics and a solid recovery in consumer,” said UBS analyst Eva Quiroga.

One dark cloud in L‘Oreal’s full-year results was Body Shop which saw its operating margin drop to 7.5 percent in 2014 from 8.6 percent the year before.

However, the beauty brand, which has been struggling in recent years, also saw an improvement in sales growth in the fourth quarter with like-for-like sales up 6 percent, up from 1.2 percent in the third quarter.

The 2014 operating profit of 3.89 billion euros came broadly in line with forecasts and operating margin gained 30 basis points to 17.3 percent for 2014.

L‘Oreal proposed a dividend of 2.7 euros a share for 2014, up 8 percent from the prior year.

The group is expected to provide more details about its performance and outlook on Friday at a conference for analysts and journalists starting at 8:00 a.m..

Reporting by Astrid Wendlandt, editing by Ruth Pitchford and Elaine Hardcastle

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