Previous Story
Positive outlook for L’Oreal after it beats market expectations in it’s results
Northern, WI 02/12/2013 (avauncer) - The world’s largest cosmetics maker L’Oreal SA reported a 12% increase in the annual profits. The company states it is “prepared” to outperform the beauty market’s growth in the year ahead.
Yesterday the Paris based manufacturer of Biotherm blue therapy serum disclosed its 2012 operating profits rose to 3.7 billion Euros i.e. equivalent to $4.96 billion it said. The average of analysts’ estimates was was 3.69 billion Euros. Excluding the impact of one off items like disposals, acquisitions and foreign exchange movements sales climbed 5.3% during the fourth quarter.
The company achieved its 2012 target to make China its largest cash generating unit and outpaced the industry growth, said CEO Jean-Paul Agon, last month.
Alex Howson , a London based analyst at Jefferies International Ltd. Said he expects shares to go “up” in today’s trading session in Paris. Despite a worse than expected decline in gross margins of 50 basis points, the company managed to beat the consensus forecast of 16.4% for operating profits as a percentage of revenues which is a a “broadly positive” statement, he said.
The earnings from operations (G.P.)were 70.7% of sales during 2012 which barely missed Howsion’s forecast of 71%. The Gross profit for last year was 71.2% of sales last year. The shrinking margin was attributed to a weakening Euro and trade discounts to customers. The company also took Clarisonic, a sonic skin care device maker on board this year; that collaboration also impacted the margins, L’Oreal’s said in its statement.
On the other hand, operating profits were 16.5% of sales as against 16.2% due to the decline in advertising and promotion costs per unit sold. Selling and general administrative expenses also decreased. The stock has gained 2.9% during this year and the company’s market value grew to 65.6 billion Euros.
The company has decided to increase dividends payable in May, by 15% to 2.3 Euros per share on May 10. A share repurchase scheme to buy 500 million Euros, will also be put forth for approval by shareholders at the next annual general meeting.
Howson, said he expects the new share repurchase plan to be “well received” and leave “scope” for more of its kind in the later half of the year.
According to the annual result for the 12 months ended December 31st, net income grew to 2.87 billion compared to a profit of 2.44 billion Euros for the last year. Revenues grew 10% over this period to 22.5 billion Euros.
Agon further said his company is poised to face the future with “optimism and confidence” and “outperform the market in 2013”.
Like for like sales within the new markets division consisting Middle East and Africa, increased 8.2% in the 4th quarter. Revenue grew 7.3% in the North American region while growth in Western Europe was more pacified at 1.4%.
The L’Oreal (EPA:OR) shares were up by 3.94% to close at 112.20 Euros.
