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Apr 25, 2010
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L'Oreal bullish on 2010 as growth returns

By
Reuters
Published
Apr 25, 2010

L'Oréal Paris
Photo : L'Oréal Paris

PARIS, April 22 (Reuters) - French cosmetics giant L'Oreal (OREP.PA) said it was confident about 2010 after luxury spenders took to the shops again and returned the company to growth in the first quarter.

Quarterly revenue rose 7.4 percent on a like-for-like basis to 4.72 billion euros ($6.35 billion), the company said in a statement on Thursday 22 April, beating the average forecast of 4.67 billion euros from 10 analysts in a Reuters poll.

"The first quarter was very encouraging as it marks a clear return to growth, even though the figures must be seen in the context of a weak comparison base, and continuing uncertainties in some markets," Chief Executive Jean-Paul Agon said.

"The first months of the year give us confidence for the full year 2010," he added.

L'Oreal was expected to benefit from having kept its advertising spend high throughout the downturn and introducing more accessibly priced creams and hair products.

The group's luxury products, which were severely hit by the spending slump last year, achieved an 11.8 percent rise in like-for-like sales in the first quarter, L'Oreal said. Consumer products, the biggest division, achieved a 6.9 percent rise.

"(Sales were) a little bit better than people were looking for, but outperformance looks to have been driven by division by consumer products and, by geography, by 'rest of world', predominantly emerging markets," RBS analyst Iain Simpson said.

Earlier this month rival LVMH (LVMH.PA), the world's biggest luxury group, posted a forecast-beating 13 percent rise in comparable sales for the first quarter, helped by a strong rebound in the United States and Europe.

The group later cautioned it might not sustain the powerful level of growth seen in the first quarter. ($1=.7439 Euro) (Reporting by James Regan, Lionel Laurent and Marie Mawad, editing by Will Waterman)

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