Earnings Release • Oct 30, 2008
Earnings Release
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+7.4% at constant exchange rates*, +4.4% like-for like, +2.2% based on reported figures
* * *
Like-for-like, i.e. based on a comparable structure and identical exchange rates, the increase in the sales of the L'Oréal group was +4.4%.
The net impact of changes in consolidation, mainly as a result of the acquisitions of YSL Beauté, of PureOlogy, Beauty Alliance, Maly's West, Columbia Beauty Supply, CollaGenex Pharmaceuticals in the United States and of Canan in Turkey, amounted to +3.0%.
Currency fluctuations had a negative impact of -5.2% (at current exchange rates, the impact would be - 3.7% for the whole of 2008).
Growth at constant exchange rates was +7.4%.
Based on reported figures, the group's sales, at September 30th 2008, amounted to 12.912 billion euros, an increase of +2.2%.
Commenting on the figures, Mr Jean-Paul Agon, Chief Executive Officer of L'Oréal, said:
"We had anticipated that the growth at the end of June would continue in the 3rd quarter; however, since September, we have noted a clear slowdown in some markets in Western Europe and North America, and have been confronted with a contraction of purchasing by some distributors in view of the current economic crisis.
With like-for-like 9-months sales growth of +4.4%, and +7.4% at constant exchange rates*, we are continuing to increase our worldwide market share; our 4th quarter will be bolstered by numerous initiatives developed by our brands, which are off to a good start.
In view of this tougher environment which remains uncertain, we now consider it more prudent to forecast 2008 like-for-like sales growth close to that reached at 9 months- i.e. approximately +4%.
Nevertheless, we have made the decision to maintain strong advertising and promotional support for our brands in the 4th quarter in order to prepare for 2009 in the best possible conditions.
As a result, our target for 2008 is now to achieve net earnings per share (1) growth of approximately +7% to +8% at constant exchange rates*. This represents a further significant improvement compared with 2007, particularly allowing for the dilutive impact of the consolidation of Yves Saint Laurent.
Confident in our development strategy, we are looking ahead to 2009 with realism, but also with the determination to continue strengthening our worldwide position thanks to the quality of our innovations and the richness of our brand portfolio."
* based on constant translation rates:
2008 data at 2008 rates / 2007 data at 2008 rates
(1) excluding non-recurrent items
| Sales by operational division and geographic zone |
|---|
| --------------------------------------------------- |
| 3rd quarter 2008 | At | September 30th 2008 | ||||
|---|---|---|---|---|---|---|
| Growth | Growth | |||||
| €m | Like-for-like | Reported | €m | Like-for-like | Reported | |
| By operational division | ||||||
| Professional Products | 599.4 | + 0.2% | - 2.7% | 1,848.4 | + 2.6% | + 4.5% |
| Consumer Products | 1,995.4 | + 2.3% | - 0.9% | 6,302.1 | + 4.6% | + 0.2% |
| Luxury Products | 1,082.7 | + 2.5% | + 15.3% | 2,893.9 | + 4.0% | + 4.4% |
| Active Cosmetics | 281.9 | + 5.4% | + 5.1% | 1,020.0 | + 4.7% | + 3.6% |
| Cosmetics total | 3,978.2 | + 2.1% | + 3.4% | 12,112.5 | + 4.0% | + 2.1% |
| By geographic zone | ||||||
| Western Europe | 1,744.6 | - 1.8% | + 3.9% | 5,539.6 | + 0.3% | + 1.1% |
| North America | 925.7 | - 5.7% | - 10.8% | 2,729.6 | - 2.3% | - 8.0% |
| Rest of the World, of which: | 1,308.0 | + 15.0% | + 15.6% | 3,843.3 | + 15.5% | + 12.5% |
| - Asia - Eastern Europe - Latin America - Other countries |
432.9 337.6 312.2 225.3 |
+ 15.2% + 27.5% + 7.6% + 9.3% |
+ 13.9% + 29.6% + 6.9% + 13.1% |
1,310.7 1,031.1 842.6 658.8 |
+ 18.1% + 26.4% + 5.7% + 9.1% |
+ 12.2% + 26.4% + 2.8% + 7.6% |
| Cosmetics total | 3,978.2 | + 2.1% | + 3.4% | 12,112.5 | + 4.0% | + 2.1% |
| The Body Shop | 176.2 | + 8.1% | - 2.2% | 510.1 | + 7.6% | - 2.0% |
| Dermatology(1) | 111.5 | + 17.9% | + 16.4% | 289.8 | + 17.7% | + 13.6% |
| Group total | 4,266.0 | + 2.7% | + 3.4% | 12,912.3 | + 4.4% | + 2.2% |
(1) Group share, i.e. 50 %
In skincare, the success of Skin Genesis from L'Oréal Paris is continuing, with roll-out in the Rest of the World zone, and the launch of cleansing products. At Garnier, the launch of Eye Roll-on Caffeine, a new eyecare routine, is proving highly successful.
In make-up, the excellent start of Volume Collagene mascara and Infallible powder from L'Oréal Paris, together with Superstay PowerGloss lipstick from Maybelline, should be confirmed in the 4th quarter.
At the end of September, the group achieved like-for-like growth of +0.3% in Western Europe, in a market whose growth has slowed.
North America had a difficult 3rd quarter, with -2.3%, like-for-like, at the end of September, in the context of a negative 3rd quarter market trend, and stock reductions by distributors.
The Professional Products Division is strengthening its hair colourant positions by conquering new salons. Salon retail sales have been slower, affected by a sharp drop in salon visits. Kérastase, Shu Uemura Art of Hair and Mizani are maintaining high growth rates in top-end salons.
The Consumer Products Division trend was negative in the 3rd quarter, partly because of additional invoicing of Maybelline and Garnier products at the end of June. In a highly competitive context, the Division's facial skincare breakthrough is continuing, and it is strengthening its leadership in make-up.
Dynamic growth is continuing in the Rest of the World zone at +15.5%, where the group continues to strengthen its positions significantly.
Over the first nine months, growth in the Asia zone amounted to +18.1%, with +22.0% outside Japan. The group is winning market share not only in Northern Asia, but also in China and the countries of South-East Asia.
The Eastern Europe zone has again been highly dynamic, with like-for-like growth of +26.4%.
Sales in Latin America advanced in the 3rd quarter, reaching +5.7% at the end of September, with contrasting situations from one country to another:
The Other Countries zone achieved like-for-like growth of +9.1%.
The like-for-like sales of The Body Shop increased by +7.6%.
Retail sales (1) increased by +5.0%. With a comparable store base (2), the increase in sales amounted to +0.3%.
The brand has recorded significant successes in Russia, the Middle East and Asia, but is having to cope with lower consumption in its stores in the United Kingdom and the United States as a result of the economic environment.
With a new communication approach and new visual media in sales outlets, The Body Shop is reasserting its philosophy as a natural and ethical brand: "Nature's way to beautiful".
65 stores have been opened since the start of the year, taking the total to 2,491.
(1) Retail sales: total sales to consumers through all channels.
(2) Retail sales with a comparable store base: total sales to consumers by stores which operated continuously from January 1st to September 30th 2007 and over the same period in 2008.
Galderma's like-for-like sales increased by +17.7%. Contribution from several strategic brands - Differin® (acne), Oracea® (rosacea), a key product from the 2008 acquisition of CollaGenex, Rozex®/Metro® (rosacea), Clobex® (psoriasis), Cetaphil® (therapeutic skin care product line), and Dysport® (hyperfunctional facial lines) - was well balanced.
Epiduo®, the new combination treatment for acne, which was recently launched in several European and Latin American countries, provided additional growth.
Differin® 0.1% gel was approved as the first retinoid for acne in Japan, the world's 2nd largest market in dermatology, where the product is highly anticipated.
Under the share buyback programme decided by the Board of Directors on June 19th 2008, 4,351,000 shares were acquired between July 1st and September 30th 2008 for a total amount of €301.9 million.
In accordance with the 8th resolution approved by the Annual General Meeting on April 22nd 2008, the Board of Directors decided, on August 28th 2008, to cancel 8,410,400 shares. The share capital of L'Oréal is fixed at €120,482,562, divided into 602,412,810 shares of €0.2 each.
YSL Beauté has been consolidated since June 30th 2008. Its consolidation will have a dilutive impact of slightly more than 1% on 2008 net earnings per share.
Contacts at L'ORÉAL (Switchboard: +33.1.47.56.70.00)
Individual shareholders Financial analysts and
and market authorities Institutional investors Journalists Mr Jean-Régis CAROF Mrs Caroline MILLOT Mr Mike RUMSBY Tel: +33.1.47.56.83.02 Tel: +33.1.47.56.86.82 Tel: +33.1.47.56.76.71
[email protected] [email protected] [email protected]
For more information, please contact your bank, broker or financial institution (I.S.I.N. code: FR0000120321), and consult your usual newspapers, and the Internet site for shareholders and investors, http://www.loreal-finance.com, or its mobile version on your cell phone, http://mobile.lorealfinance.com; alternatively, call +33.1.40.14.80.50.
"This news release does not constitute an offer to sell, or a solicitation of an offer to buy L'Oréal shares. If you wish to obtain more comprehensive information about L'Oréal, please refer to the public documents registered in France with the Autorité des Marchés Financiers, also available in English on our Internet site www.loreal-finance.com.
This news release may contain some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or projected in these statements."
(€ millions)
| 2007 | 2008 | |
|---|---|---|
| First quarter: | ||
| Cosmetics | 4 030 | 4 118 |
| The Body Shop | 169 | 168 |
| Dermatology | 69 | 73 |
| First quarter total | 4 268 | 4 359 |
| Second quarter: | ||
| Cosmetics | 3 984 | 4 016 |
| The Body Shop | 172 | 166 |
| Dermatology | 90 | 105 |
| Second quarter total | 4 246 | 4 287 |
| First half: | ||
| Cosmetics | 8 014 | 8 134 |
| The Body Shop | 341 | 334 |
| Dermatology | 159 | 178 |
| First half total | 8 514 | 8 646 |
| Third quarter: | ||
| Cosmetics | 3 849 | 3 978 |
| The Body Shop | 180 | 176 |
| Dermatology | 96 | 112 |
| Third quarter total | 4 125 | 4 266 |
| Nine months: | ||
| Cosmetics | 11 863 | 12 112 |
| The Body Shop | 521 | 510 |
| Dermatology | 255 | 290 |
| Nine months total | 12 639 | 12 912 |
| Fourth quarter: | ||
| Cosmetics | 4 045 | |
| The Body Shop | 266 | |
| Dermatology | 112 | |
| Fourth quarter total | 4 423 | |
| Full year | ||
| Cosmetics | 15 908 | |
| The Body Shop | 787 | |
| Dermatology | 368 | |
| Full year total | 17 063 |
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