UPDATE 2-L'Oreal to buy back shares after sales rise

Mon Feb 11, 2013 1:58pm EST

* To spend 500 mln euros on share buyback in H1

* Q4 sales up 5.3 percent

* Q4 luxury sales up 6.2 percent, pointing to slowdown (Adds detail, analyst comment)

PARIS, Feb 11 (Reuters) - French group L'Oreal is to spend about 500 million euros ($669 million), or a third of its cash, buying back shares, it said when reporting quarterly like-for-like sales growth accelerated to 5.3 percent.

The world's biggest cosmetics group spent about 500 million euros last year buying back shares after a break since 2008, signalling it was not looking at a large acquisition.

Several analysts had expected L'Oreal to buy back more shares. UBS said on Monday the size of the programme was "unlikely to excite the markets".

L'Oreal had 1.575 billion euros net cash at the end of 2012, up from 504 million a year earlier, after dividend payments and settling the acquisitions of Urban Decay make-up and Cadum soap.

It also posted a full-year operating profit of 3.7 billion euros, against a forecast for 3.66 billion in a Thomson Reuters I/B/E/S poll. Full-year revenue of 22.5 billion euros, compared with a forecast for 22.3 billion. Its operating margin rose to 16.5 percent from 16.2 percent in 2011.

"The results are quite good and margins have improved but not in the luxury division," a Paris-based analyst said, declining to be named.

The maker of Lancome creams and Garnier shampoo said turnover in the three months to December was helped by strong demand in North America and solid growth in the Asia-Pacific region.

It did not give a specific forecast for 2013 other than it aimed to outperform the market and increase profit and sales.

L'Oreal's fourth-quarter sales compared with 4.6 percent in the prior quarter, 5.7 percent in the second quarter and 6.4 percent in the first.

The results pointed to a continued slowdown at its luxury arm which makes Kiehl's and Biotherm creams.

The luxury unit saw revenue growth slow to 6.2 percent from 6.6 percent in the third quarter, 8.7 percent in the second and 12.2 percent in the first quarter.

Last week, U.S. rival Estee Lauder raised its full-year profit forecast on the back of expectations that strong demand at home and in China would help make up for weaker markets in southern Europe and South Korea.

L'Oreal raised its dividend 15 percent to 2.30 euros.

It said it also planned to renew the board membership of Fran├žoise Bettencourt Meyers - daughter of L'Oreal heiress Liliane Bettencourt - and propose the appointment of Virginie Morgon, chief investment officer at investment firm Eurazeo . ($1 = 0.7474 euro) (Reporting by Astrid Wendlandt; Editing by Helen Massy-Beresford and Dan Lalor)

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