By  on September 17, 2007

PARIS — During the presentation of Groupe Clarins' first-half profits for financial analysts Friday, company executives fielded numerous questions. Yet the one at the forefront of everyone's mind — whether Clarins is about to be bought out by L'Oréal — was gracefully preempted at the outset.Olivier Courtin-Clarins, Clarins' vice president of research and development, opened the session by explaining that his brother, Christian (who is the company's president and chief executive officer), would be absent for personal reasons."He does not have a meeting with Jean-Paul Agon," said Courtin-Clarins with a smile, referring to L'Oréal's ceo. "Nor is he with competition."As reported, a rumor circulating the industry that L'Oréal might bid for Clarins caused a lather of excitement this week and largely contributed to the company's stock price spiking more than 8 percent during trading Wednesday. Since then, the stock closed down 1.7 percent on Thursday to a unit price of 59 euros, or $81.74 at current exchange, and down 1.6 percent on Friday to 58.08 euros, or $80.47.In the meeting, Pierre Milet, Clarins' secretary general, confirmed the company is on the lookout for acquisitions. In the U.S., for instance, where Clarins lacks critical mass in the perfume market, the company could be interested in buying a fragrance brand."But there are not many companies for sale, and when there is one, it's way too expensive," he said.Milet also said Clarins and L'Occitane — through their joint venture via which they plan to purchase companies and further investigate alternative distribution channels to selective retailing — have identified two small target companies. However, no negotiations have begun, he said.As reported, the joint venture would be split evenly between Clarins and L'Occitane and have about 500 million euros, or $692.7 million, at its disposal.Company executives said Clarins' operating margin should return to 12 percent after 2008. It declined 2.9 points in first-half 2007 to 8.1 percent, due to numerous factors, including a negative currency effect. There was also a lower gross margin, thanks to the effect of a stronger euro and a less favorable product mix; significant marketing and commercial efforts by Clarins' beauty division, and losses in the U.S. market resulting from a decline in department store orders as the company took measures to boost sales involving restructuring expenses and significant A&P expenses.As reported, Clarins posted first-half net profits of 36.7 million euros, or $48.8 million at average exchange, down 12.4 percent over the prior-year period. At constant exchange, it decreased 6.1 percent.Net sales hit 494.6 million euros, or $658 million, up 4.2 percent year-on-year. At constant exchange, they rose 6.9 percent.

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