1H19 Results

L’Oréal reported 1H19 adjusted EPS of €4.38, up 7% year over year and in line with the consensus estimate of €4.40. Total revenues grew 11% year over year to €14.8 billion, meeting the consensus estimate of €14.82 billion.

By division, L’Oréal luxe sales increased 17.3% and active cosmetics 15.1%, year over year. L’Oréal luxe continued to post strong growth in Asia Pacific, particularly in China. In the active cosmetics division, growth was led by big brands, with La Roche-Posay continuing to accelerate in anti-aging and reporting double-digit growth. Consumer product net sales grew 6.4% year over year, while the professional products division reported sales growth of 5.1% year over year. Within the consumer products division, L’Oréal Paris and Maybelline New York performed well in 1H19. Its professional products division continued to win market share in the US and Asia Pacific.

Comparable sales were up 7.3% in 1H19, driven by the active cosmetics division, which posted comparable sales growth of 13.6%, and L’Oréal luxe, with 13.2% comparable sales growth. The professional and consumer product segments recorded a same-store sales growth of 2.5% and 3.1%, respectively.

E-commerce continued to be a powerful growth driver, posting 48.5% year-over-year growth and now accounts for 13.2% of the company’s total revenues. Travel retail sales increased 21.2% year over year in 1H19.

By region, Asia Pacific reported remarkable comparable sales growth of 24.3% and has now overtaken Western Europe to become the company’s largest region with sales of €4.6 billion. Growth in Asia Pacific region was driven mainly by Chinese consumers. L’Oréal also posted double-digit growth in India, Indonesia, Malaysia and Vietnam. In 1H19, North America sales were flat on a comparable basis, while Western Europe sales grew 1.0% on a comparable basis.

Key Events in 1H19

On June 26, Business Opportunities for L’Oréal Development (BOLD), a corporate venture capital fund launched by L’Oréal in December 2018, acquired a minority stake in Carbios, a developer of enzymatic bioprocesses to recycle plastic packaging. On July 2, L’Oréal announced it had entered into an exclusive negotiation with French cosmetics company Clarins group to acquire the latter’s fragrance and fashion divisions, including the Mugler and Azzaro brands.

On July 12, L’Oréal announced three key appointments in its executive committee:  Fabrice Megarbane, President of L'Oréal China, joined the company’s executive committee on July 1; Alexandra Palt, Chief Corporate Responsibility Officer and EVP of the Fondation L'Oréal and Vincent Boinay, General Manager for Travel Retail Worldwide will both join September 1.

Outlook

For FY19, L’Oréal expects to “outperform the beauty market…and achieve another year of growth in both sales and profits.” For FY19, analysts expect the company to grow revenues by 10% year over year to €29.52 billion. Consensus calls for EPS growth of 10% in FY19.