L'Oreal's 2Q Slowdown Overshadows Strong 1st Half -- Earnings Review
July 31 2019 - 7:28AM
Dow Jones News
By Anthony Shevlin
L'Oreal SA (OR.FR) posted its first-half results after market
close on Tuesday and recorded its strongest first-half
like-for-like growth in more than a decade, but its first-half net
profit came in slightly below analyst expectations.
Shares in the cosmetics and consumer-goods company are down in
trading on Wednesday as investors react to a slowdown in growth in
the second quarter, missing analyst forecasts.
SALES: L'Oreal posted first-half sales of 14.81 billion euros
($16.51 billion) compared with EUR13.39 billion the year prior--and
in line with a forecast provided by FactSet.
NET INCOME: The French company's first-half net profit came in
slightly below analyst expectations. Net profit for the six months
ended June 30 rose 2.3% to EUR2.33 billion, but it missed a FactSet
forecast of EUR2.46 billion.
WHAT WE WATCHED:
-Eyes were on L'Oreal's luxe division which posted sales of
EUR5.15 billion in the first half, a rise of over 13% on a
like-for-like basis.
-Analysts expected L'Oreal's organic growth to continue its
strong momentum, with Bernstein forecasting growth of 7.6% in the
second quarter. However, L'Oreal disappointed with growth of 6.8%.
"When 2Q sales are strong, but miss expectations... this is more
important than meeting margin/EPS expectations," Bernstein
said.
-The company's performance in Asia Pacific remained strong,
implying continued strength in the crucial China market. L'Oreal's
performance in other markets was subdued, however, notably in North
America. Bryan Garnier said the company's consumer products
division was penalized by the U.S. makeup market.
Write to Anthony Shevlin at anthony.shevlin@dowjones.com;
@anthony_shevlin
(END) Dow Jones Newswires
July 31, 2019 07:13 ET (11:13 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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