PARIS — French beauty giant L’Oréal posted 2008 net profits that fell 26.6 percent year-over-year to 1.95 billion euros, or $2.87 billion at average exchange.
The decline stemmed partly from a difficult comparison due to the sale of Sanofi-Aventis shares resulting in a capital gain of 643 million euros, or $945.2 million, in November 2007.
L’Oréal’s full-year revenues came in at 17.54 billion euros, or $25.81 billion, up 2.8 percent. On a like-for-like basis, the company’s sales increased 3.1 percent in 2008, which was below the 4 percent comparable revenue growth forecast made by the company in October. That forecast in turn had been lowered from a 6 percent target set in August.
At constant exchange rates, L’Oréal’s revenues grew 6.6 percent last year. Currency fluctuations negatively impacted the company’s business by 3.8 percent.
By geographic zone, the firm’s sales in North America dropped 6.6 percent to 3.74 billion euros, or $5.5 billion (and by 4.8 percent on a comparable basis); in Western Europe, sales rose 1.8 percent to 7.38 billion euros, or $10.86 billion (and declined 0.3 percent on a like-for-like basis), and in the rest of the world they registered a 12.5 percent uptick to 5.24 billion euros, or $7.71 billion. On a constant basis, that area’s growth was 13.8 percent.
“In an environment made very difficult in 2008 by the economic crisis, L’Oréal is proving resilient and is continuing to grow in terms of sales, net earnings per share and market share,” said Jean-Paul Agon, the firm’s chief executive officer. “With annual sales growth of 3.1 percent like-for-like and 6.6 percent at constant exchange rates, L’Oréal continued to strengthen its positions in 2008 and increased its worldwide market share.
“In a year when the downturn in markets was combined with the adverse impact of currency fluctuations and costs in raw materials, the group’s net profit held up well, and growth in net earnings per share of 3.8 percent based on reported figures [to 3.49 euros, or $5.13] and 6.8 percent at constant exchange rates is practically in line with the target announced in October,” continued Agon.
“We are tackling 2009 with realism, confidence and resolve,” he added. “Realism because the economic environment will certainly still be difficult and we are prepared for this. Confidence because the cosmetics market has always shown resilience at times of crisis, and because L’Oréal’s fundamentals are strong and our financial situation is robust. But also resolve, because thanks to our product innovation momentum, the unique quality of our brand portfolio, our possibilities for geographic expansion and our determination to strengthen our business drivers and control our costs, we are confident in L’Oréal’s ability to successfully weather this adverse economic climate and to even emerge stronger than before.”
Lindsay Owen-Jones, L’Oréal’s chairman, said, “The board of directors’ proposal to pay a dividend of 1.44 euros [or $1.84 at current exchange] expresses our confidence in the group’s solidity and our legitimate concern to achieve the right balance.”
In fourth-quarter 2008, L’Oréal’s revenues rose 4.7 percent to 4.63 billion euros, or $6.11 billion at average exchange for the period, versus fourth-quarter 2007. On a like-for-like basis, they fell 0.6 percent.
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