* L'Oreal shares jump after results beat forecasts
* CEO says ready to make a strategic acquisition
* Says not looking to buy back shares for now
(Adds details, CEO comments)
PARIS, Aug 28 L'Oreal (OREP.PA) shares jumped on
Friday after the world's biggest beauty products group posted
forecast-beating first-half profits and said it believed the
worst of retailers' order trimming of luxury products was over.
L'Oreal Chief Executive Jean-Paul Agon also said the group
was ready to make a strategic acquisition but had not yet
identified a target.
"There is nothing really on the market in terms of potential
acquisitions but ... we are really ready to make a strategic
acquisition if it presents itself," Agon told shareholders at
the group's results presentation.
The shares, which had gained 12 percent since Jan. 1, were
up 6.3 percent at 68.75 euros at 0955 GMT, among the top gainers
Late on Thursday, the maker of Biotherm and Lancome creams
posted a smaller-than-expected 8.3 percent drop in first-half
profit to 1.37 billion euros, beating the average forecast of
1.29 billion in a Reuters poll of analysts. [ID:nLR107325]
"Perhaps management has become more cost-conscious than we
had given them credit for?" Citi wrote in a note.
Agon said the benefits of cost-cutting would be more notable
in the second half. Sellling, general and administrative
expenses fell 3.1 percent during the first six months of the
In February, the Paris-based group introduced its first
hiring freeze since 1974 and said it had cut 500 jobs in the
United States. At the time, it also said it would try to keep
margins stable this year.
However, the group saw its first-half operating margin slip
to 15.7 percent from 17.3 percent at the end of June 2008, in
part because L'Oreal kept advertising and research expenses high
even though sales declined during the period.
The operating margin of luxury products fell to 11.9 percent
from 19.6 percent, a drop Agon blamed on "brutal order cuts by
"We think that the bulk of destocking is behind us," he said
during the news conference.
Earlier this month, U.S. rivals Estee Lauder (EL.N) and
Elizabeth Arden RDEN.O forecast weaker-than-expected 2010
profits as they expect women to keep their purse strings tight
until they see tangible signs of economic recovery.
Agon repeated that he expected the world cosmetics market to
be slightly up this year against 2008 even though it estimated
it fell between 1 and 2 percent in the first half to June.
He also said it was too early to start buying back shares
(Reporting by Astrid Wendlandt; editing by Will Waterman and