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UPDATE 1-L'Oreal sees improved second half thanks to U.S. rebound
August 1, 2014 / 9:45 AM / 3 years ago

UPDATE 1-L'Oreal sees improved second half thanks to U.S. rebound

(Adds detail from conference call)

PARIS, Aug 1 (Reuters) - French cosmetics maker L‘Oreal said on Friday it expected business trends to improve in the second half, mainly thanks to a rebound in the United States.

The group, whose first-half results published after the market close on Thursday were broadly in line with forecasts, also said it had enjoyed the strongest growth in western Europe since 2007 in the first half, with sales up 2.8 percent on a like-for-like basis.

“We are confident that business trends will improve in the second half of the year and we will see an acceleration in the mass-market business,” L‘Oreal Chief Executive Jean-Paul Agon told analysts and journalists on a conference call.

L‘Oreal’s mass consumer products business, which includes Garnier shampoo and Essie nail polish, suffered from weak demand in North America in the first half, but Agon said the unit’s growth should pick up thanks to improving economic trends.

The group also pointed to a slowdown in emerging markets - once its biggest engine of growth - with weaker trends in Russia, India and China.

Agon said that for the moment the group was not affected directly by sanctions imposed on Russia in reaction to the crisis in Ukraine, while noting it was too early to reach a verdict on the longer-term impact.

Agon said Yves Saint Laurent’s repositioning as a “young, trendy and daring fashion brand,” led by designer Hedi Slimane, was delivering strong results, both for the owner of the fashion brand, Kering, and for L‘Oreal, which makes its perfume, make-up and skin care products.

Agon said the brand’s perfumes for men and skin care lines were also doing well, particularly in Asia. He estimated Yves Saint Laurent’s sales growth in the first half to be 6 percent, an acceleration against previous periods.

On the other hand, Agon said rival luxury brand Lancome, whose La Vie est Belle perfume is a best-seller in France and elsewhere in Europe, was enjoying growth of “low single digits.”

L‘Oreal’s luxury division was the fastest growing in the second quarter, with sales up 7.5 percent on a like-for-like basis.

Agon said the luxury division’s growth was less driven by duty-free sales than before, as the appreciation of the euro against currencies such as the yen and the rouble led buyers to favour buying at home than abroad.

The CEO estimated that travel retail represented about 20 percent of L‘Oreal’s total luxury products sales but only 5 percent for the entire group.

L‘Oreal shares were down 1.3 percent by 0855 GMT, in line with France’s CAC 40 index of blue chips, down 1.1 percent. (Reporting by Astrid Wendlandt; Editing by David Holmes)

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