UPDATE 2-L'Oreal's first quarter driven by North America, new markets

Thu Apr 18, 2013 2:23pm EDT

* L'Oreal Q1 sales 5.5 pct vs expectations of 5.2 pct

* Luxury products sales up 7.2 pct vs forecast 5.2 pct

* For 2013, aims to beat market, grow sales and profits (Adds details, analyst comment)

PARIS, April 18 (Reuters) - L'Oreal reported first quarter sales on Thursday slightly ahead of forecasts, driven by strong demand in North America and new markets.

The world's biggest cosmetics group said trading in Western Europe for luxury products remained lacklustre and trends were negative for its professional hair products in southern Europe.

But demand for its luxury products such as Armani and Lancome perfumes remained solid in North America, China and the Gulf states and trading at its mass market products division enjoyed "new dynamism" in Brazil and Russia.

The maker of Garnier shampoo and Yves Saint Laurent perfume generated revenue of 5.93 billion euros ($7.76 billion) in the three months to March 31, up 5.5 percent on a like-for-like basis, above analysts' expectations of 5.2 percent sales growth.

"The first thing that struck us was that, even though its growth remained below double-digits, new markets saw its best growth in a year and second best growth in two years, which contrasts to Nestlé's reporting from earlier today where we saw its worst emerging market growth in 4 years," Bernstein said in a note.

Nestle on Thursday reported slowing growth from its emerging markets after some retailers in Asia cut inventories and the destruction of a key Middle East factory in Syria slowed supplies.

ON TRACK TO MEET GOALS

For 2013, L'Oreal reiterated its target to outperform the market and increase both sales and profits.

L'Oreal's luxury division reported like-for-like sales up 7.2 percent in the first quarter, while analysts expected 5.2 percent growth.

Its professional products suffered flat growth during the period and dropped 0.4 percent on a reported basis while analysts expected like-for-like growth of nearly 3 percent.

Sales generated by the group's mass market consumer product division, its biggest in terms of revenue, rose 6.5 percent on a like-for-like basis, beating expectations of 5.7 percent.

L'Oreal Chief Executive Jean-Paul Agon said that the global cosmetics market had slowed down during the first quarter, generating an estimated growth of 3.5-4 percent against a 4.6 percent rise in 2012.

Looking at 2013, Agon said he expected the global market growth "to be more around 4 percent than 4.5 percent."

Agon said Eastern Europe was recovering, particularly in Russia, where it saw sales growth of 15 percent in the first quarter.

"We are confident that Eastern Europe is back to sustainable growth," Agon said in a conference call with analysts.

Mass market and luxury products sales in North America rose 8 percent during the period, Agon said.

($1 = 0.7644 euros) (Reporting by Astrid Wendlandt; Editing by Mark Potter and Elaine Hardcastle)