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L’Oreal Profits Down in First Half

L’Oréal’s net profits declined 13.7 percent to 1.086 billion euros, or $1.448 billion at average exchange, in first half 2009.

Jean-Paul Agon

PARIS — L’Oréal’s net profits declined 13.7 percent to 1.09 billion euros, or $1.45 billion at average exchange, in first-half 2009. Meanwhile, the French beauty company foresees a gradual improvement in sales over the year.

The firm’s net profits excluding nonrecurrent items after minority interests reached 1.21 billion euros, or $1.61 billion, down 3.6 percent in the six months ended June 30.

“Achieved in a particularly difficult context, the group’s economic performance in the first half is robust and encouraging,” stated Jean-Paul Agon, L’Oréal’s chief executive officer.

As reported, the firm’s first-half revenues gained 1.4 percent to 8.77 billion euros, or $11.69 billion. On a constant basis, sales fell 3.2 percent. L’Oréal’s operating profits declined 8.3 percent to 1.37 billion euros, or $1.83 billion.

Operating profits for the company’s luxury products division decreased 36.4 percent to 225.3 million euros, or $300.4 million; rose 8.6 percent to 195.2 million euros, or $260.2 million, for its active cosmetics branch; decreased 11.6 percent to 232.5 million euros, or $309.9 million, for the firm’s professional products category, and dipped 6.2 percent to 911.6 million euros, or $1.22 billion, for its consumer products division.

L’Oréal’s cash flow from operating activities jumped 38 percent to 1.24 billion euros, or $1.66 billion.

“The sales trend has remained positive overall and is reaccelerating in the new markets,” continued Agon. “Following on from last year’s record levels, the financial results are solid and of good quality, in terms of operating profits, net profits and operating cash flow, which has grown strongly.”

Agon added the results reflect preliminary effects of the “anticrisis” strategy L’Oréal has adopted, including “accessible innovation, opening up new categories, accelerating globalization, ensuring sustained advertising and promotional investments and reducing costs.

“With prospects of a gradual improvement in sales and despite the continuing uncertainty of the market context, we are tackling the second half with confidence and the determination to keep on strengthening our positions,” said Agon.