PARIS -- French beauty behemoth L'Oreal posted nearly a 20 percent increase in net profits in 2001, the 17th year in a row it had managed double-digit income growth.
It reported Thursday that net profits before capital gains and losses and after minority interests for 2001 were up 19.6 percent, to $1.07 billion, versus the prior year. All figures are converted from the euro at current exchange rates.
"Numerous brand-related initiatives combined with the strong momentum of international growth have compensated for the impact of world events," said Lindsay Owen-Jones, L'Oreal's chairman and chief executive officer, in a statement. "Robust internal growth, together with a further increase in profit margins, has enabled L'Oreal to enjoy a very good year in 2001 and to begin 2002 with confidence."
L'Oreal's adjusted operating profit increased by 12.7 percent, to $1.46 billion, in 2001, representing 12.1 percent of consolidated sales, versus 11.7 percent the previous year. The company said its margins improved due to a heightened focus on strategic brands, international expansion and on controlling industrial costs.
Adjusted operating profits for cosmetics reached $1.4 billion and for dermatology $54 million, representing 12 percent and 21.2 percent of total sales, respectively.
As reported, L'Oreal posted consolidated net sales for 2001 of $11.97 billion.
The company explained growth was bolstered by targeting new demographics, establishing a presence in new market segments and developing targeted products to meet local needs.
By geographic zone, sales in China grew by 26 percent; by 52 percent in Russia; by 27 percent in South Africa; 26 percent in Thailand; 21 percent in India, and 20 percent in Mexico.
L'Oreal said its most recent acquisitions, including Matrix, Carson and Kiehl's, "were very swiftly integrated in their respective divisions" and represented $457.2 million in sales, "in line with group forecasts." The company said the impact of the acquisitions is "positive, ahead of our objectives."
"For me, the numbers are in line at the net level, but a bit disappointing at the EBIT level for the second half of the year," said Jacques-Franck Dossin, a luxury goods analyst at Goldman Sachs in London."The company was reassuring that the growth model has not changed, that it will be similar for '02 versus '01 in terms of like-for-like sales growth, and that there will be some EBIT margin expansion."
L'Oreal shares closed up 1 percent Thursday, to $67.71, on the Paris Bourse.
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