| L'Oreal's Net Slips 8%, Aims For 2010 Growth |
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16/02/2010 10:51 (726 Day 00:21 minutes ago) | |||||
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The FINANCIAL -- L’Oreal SA, the world’s largest cosmetics maker, Monday reported an 8% drop in 2009 net profit and said profitability decreased in all of its main markets as demand for makeup and perfume declined.
The Paris-based company reported an 8 percent drop in full- year profit to 1.79 billion euros ($2.44 billion), according to a statement late yesterday, Bloomberg reports. That missed the 1.89 billion-euro average estimate of 17 analysts surveyed by Bloomberg. Fourth-quarter sales fell 3.5 percent as the recession forced U.S. and European consumers to buy fewer personal-care products or switch to cheaper brands. Operating profit as percentage of sales fell across all of L’Oreal’s geographic zones as the company invested into advertising and research.
“The market might not be recovering as quickly as many investors hoped,” Andrew Wood, an analyst at Sanford C. Bernstein & Co., said in an e-mailed note after the figures were released, the same source informs.
According to Reuters, the Paris-based group, which also sells Garnier shampoo and Vichy face creams, said it had come out of 2009 stronger and had "prepared itself well for a return to sales and results growth in 2010". L'Oreal's October-December like-for-like sales rose 1.5 percent, missing market expectations of 2.4 to 4 percent growth.
"L'Oreal spent a lot of money in advertising (last year) but clearly that did not help its sales enough," one Paris-based analyst said, declining to be named, the same source reports. Revenues from luxury products, which also include Shu Uemura lipstick and Kiel's herbal remedies, fell 4.7 percent on a comparative basis during the fourth quarter, while many analysts had expected a rise, some by as much as 4 percent.
The company's revenue for the year edged lower to EUR17.47 billion from EUR17.54 billion a year ago, below analyst expectations of EUR17.58 billion, according to a Dow Jones Newswires poll, according to The Wall Street Journal. There were some signs of improvement in luxury product sales in some regions, including France and the U.K. over the crucial holiday period, the company said.
Improvement in luxury products had been widely expected after competitor Estee Lauder Cos. (EL) reported better-than-expected sales in Asia and from its travel retail business at the end of the year, the same source reports. L'Oreal said travel retail sales grew in the fourth quarter, but declined for the full year.
According to Reuters, L'Oreal posted a 5.4 percent fall in full-year 2009 earnings before interest and tax (EBIT) to 2.578 billion euros ($3.5 billion) for 2009, in line with expectations for 2.594 billion based on Thomson Reuters I/B/E/S estimates.
The group proposed raising the dividend 4.2 percent to 1.5 euros, the same source reports. Its shares closed barely changed on Monday at 76.75 euros, valuing the company at 45.8 billion euros, before its results.
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