1Q16 RESULTS
L’Oréal, a France based cosmetic products manufacturer and retailer, reported 1Q16 revenue growth of 1.8%, to €6.55 billion, beating a consensus of €6.48 billion. Revenue growth at constant exchange rates was 4.6%, while comps (sales based on comparable structure and identical exchange rates) were 4.2%, versus a consensus of 3.9% for the three months ending March 31.
The company’s management commented that the group made a solid start in the first quarter, with growth in all divisions and geographies, and with the Consumer Products Division—which grew by 0.9% in reported currency and 3.9% in comps—recording its best quarter in almost three years.
PERFORMANCE BY DIVISION
The Cosmetics Divisions grew 1.7% in reported currency and 4.2% in comparable sales, to €6.4 billion. L’Oréal Luxe was the fastest growing of the Cosmetics Divisions, growing at 4.4% in reported currency and 5.5% in comps, to €1.8 billion.
The Body Shop, L’Oréal’s retailing division, grew 4.0% in reported currency and 2.1% in comps, to €200.1 million.
PERFORMANCE BY GEOGRAPHY
North America was the fastest growing geography, growing by 5.8% in reported currency and 4.3% in comps, to €1.7 billion.
Western Europe, L’Oreal’s main market, grew by 1.3% in reported currency and 2.0% in comps, to €2.1 billion.
New Markets, which includes all the other geographies, declined by 0.5% in reported currency but increased by 6.1% in comps, to €2.5 billion. Within New Markets, Asia Pacific, the main market for the company outside Western Europe and North America, grew by 2.3% in reported currency and 4.5% in comps, to €1.5 billion.
Africa and the Middle East was the fastest growing segment within New Markets, growing by 5.4% in reported currency and 8.0% in comps, to €199 million.
GUIDANCE
L’Oréal expects to outperform the cosmetics market in 2016 and to achieve sales and profit growth during the fiscal year.
Analysts estimate that the company will generate €25.8 billion in revenue in FY16 and €3.6 billion in net income before exceptional items.
