PARIS — L’Oréal stock traded higher on the Paris Bourse Tuesday, closing up 3.8 percent the day after the French beauty giant published its 2012 results.
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It was the CAC 40’s biggest gainer on Tuesday, when the company’s shares finished at 112.05 euros, or $150.81 at current exchange.
Jean-Paul Agon, L’Oréal chairman and chief executive officer, said he expects the firm to outperform the cosmetics market again in 2013. He estimated the beauty industry grew 4.6 percent in 2012 and could rise 4 percent to 5 percent this year. Agon additionally anticipated that L’Oréal will increase profits and sales in 2013.
He addressed financial analysts and journalists gathered Tuesday morning during a three-hour meeting at L’Oréal’s offices in the Paris headquarters at Clichy.
As reported, the company’s 2012 net profits were up 17.6 percent to 2.87 billion euros, or $3.69 billion. Its operating income rose 12.3 percent to 3.7 billion euros, or $4.75 billion, while sales increased 10.4 percent to 22.46 billion euros, or $22.88 billion. On a like-for-like basis, L’Oréal revenues advanced 5.5 percent.
Dollar figures were calculated at average exchange for the 12-month period.
L’Oréal also revealed a share-buyback plan amounting to 500 million euros, or $673.1 million at current exchange, for the first half of this year.
The company’s net cash level more than tripled by year-end 2012, when it reached 1.58 billion euros, or $2.03 billion at average exchange.
Agon said L’Oréal is open to a strategic acquisition.
“If there is a serious [acquisition target] on the market that makes sense for L’Oréal, we will have both the wherewithal and the guts to go and do it,” he said, adding later: “We only want to make acquisitions when we feel that there is a strategic reason for it.”
In 2012, New Markets (grouping geographic zones such as the Asia-Pacific region and Eastern Europe) for the first time generated more sales than Western Europe and North America. However, New Markets’ growth on a like-for-like basis was 9.2 percent over 2011, representing a slowdown versus prior years.
“We’re starting 2013 with the intention of returning to double-digit growth in New Markets,” maintained Agon.
Over in North America, L’Oréal’s 2012 sales gained 18.3 percent in reported terms to 5.21 billion euros, or $6.7 billion.
Frédéric Rozé, president and ceo of L’Oréal USA, said: “The U.S. presents a growth opportunity because our market share in the region is still lower than that of Western Europe. Across divisions, we have 14 percent market shares against 20 percent in Europe.”
He described the American market as “very dynamic” in 2012 and predicted it will remain so.
Another growth driver for L’Oréal overall has been e-commerce, whose sales grew about 30 percent last year.
Meanwhile, the cost of digital represented 9.5 percent of L’Oréal’s net media expenses in 2012, against 8 percent in 2011 and approximately 5 percent in 2010, according to Christian Mulliez, the company’s executive vice president of administration and finance.
Looking ahead, Agon said L’Oréal is prepared for the March 11 ban on the import and sale of animal-tested cosmetics products and ingredients in the European Union.
“We have rolled out, discovered new processes to replace tests that were mandatory on ingredients, using alternative methods, and we’ve also organized ourselves upstream in order to meet this regulatory change,” he said. “We’ve anticipated, so that it doesn’t weigh on our innovation capabilities.”
Agon reiterated L’Oréal is looking to the future, and 2013 in particular, “with optimism and confidence.”