L'Oreal Shares Slide on 2Q Slowdown
July 31 2019 - 4:30AM
Dow Jones News
By Anthony Shevlin
Shares in L'Oreal SA (OR.FR) fell in early trade Wednesday after
the company reported its first-half results after market on
Tuesday.
The French cosmetics and consumer-goods company recorded its
strongest first-half like-for-like growth in more than a decade,
but net profit came in slightly below analyst expectations.
Crucially, L'Oreal's organic growth in the second quarter came
in below 7%, which appears to have spooked investors who are wary
of a potential slowdown in the company's growth.
At 0742 GMT shares in L'Oreal traded 4.1% lower at 237.20 euros
($264.05).
Citi analysts said L'Oreal's first-half provided another
"quality" update but warned its premium valuation could be at risk
after second-quarter organic growth slightly missed consensus
expectations.
"Any sign of sequential deceleration could naturally reduce the
massive premium versus peers," Citi said, adding that investors may
worry about L'Oreal's increasingly difficult comparison bases.
L'Oreal's sales in the second quarter were 7.26 billion euros
($8.08 billion), up 6.8% on a like-for-like basis. Sales for the
first half rose 7.3% to EUR14.81 billion.
In the first quarter, L'Oreal recorded a 7.7% increase in sales
to EUR7.55 billion. This was ahead of analyst expectations.
Bernstein analysts expected the French company's stock to suffer
after the first-half update as L'Oreal trades on its top-line
growth.
"When 2Q sales are strong, but miss expectations...this is more
important than meeting margin/EPS expectations," Bernstein
said.
Write to Anthony Shevlin at anthony.shevlin@dowjones.com;
@anthony_shevlin
(END) Dow Jones Newswires
July 31, 2019 04:15 ET (08:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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