PARIS — L'Oréal reached its financial objectives for 2007 and is bullish on 2008.
The French beauty giant registered its 23rd consecutive year of double-digit net earnings per share growth with a 13 percent increase. And, as reported, its revenues gained 8.1 percent, or 8 percent on a like-for-like basis, to 17.06 billion euros, or $23.39 billion at average exchange. In August, company chief executive officer Jean-Paul Agon had raised the company's organic yearly sales growth target range to 7 to 8 percent, from 6 to 8 percent.
L'Oréal's net profits after minority interests — which take into account nonrecurrent items, principally the capital gain on the disposal of Sanofi-Aventis shares, worth about 1.55 billion euros, or $2.26 billion at current exchange, on Nov. 14, 2007 — rose 28.9 percent to 2.66 billion euros, or $3.64 billion. Dollar figures are at the average exchange rate.
Commenting on the annual turnout in a statement, Agon said L'Oréal's growth clearly outpaced that of the worldwide cosmetics market.
"All divisions gained market share, and the group improved its positions on all continents," he said. "The group's results have once again advanced substantially and are of a very high quality."
L'Oréal's operating profit increased 11.3 percent to 2.83 billion euros, or $3.88 billion, in the period. Agon noted that on a comparable structure, excluding The Body Shop and L'Oréal's professional U.S. hair salon distribution business, operating profit of 2.76 billion euros, or $3.79 billion, grew by 90 basis points to 17.1 percent. This was thanks to an improvement in gross profit and strict cost control.
"All divisions and zones contributed to this achievement," continued Agon. "The profitability of the 'rest of the world' zone has increased considerably; in absolute value, it is at the same level as North America."
In 2007, L'Oréal's operating profit in the rest of the world was 774 million euros, or $1.06 billion, whereas in North America, it was 773 million euros, or $1.059 billion.
Agon highlighted that despite a negative impact of currency fluctuations, which amounted to negative 3.5 percent during 2007 and was more pronounced in the fourth quarter, net earnings per share growth reached 13 percent to 3.36 euros, or $4.61. On like-for-like exchange, gains would have hit 15.9 percent."As for 2008, we are optimistic despite the uncertainties of the economic environment," said Agon. "In fact, our business has always proven extremely resilient during periods of crisis. We intend to continue strengthening our positions and grow faster than the market. And the large proportion of our sales now made in new and very fast-growing markets is providing a powerful relay for our global growth. We are confident, therefore, about our ability in 2008 to once again achieve sales growth in our target range of 6 to 8 percent, like-for-like."
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