PARIS — L’Oréal had a banner year in 2002. The French beauty giant said Thursday that innovation and internationalization drove organic growth in a period beleaguered by adverse currency effects.For the year ended Dec. 31, L’Oréal posted consolidated sales of $15.4 billion, up 8.9 percent on a like-for-like basis year-on-year. It’s a turnout the company calls "record" and in-line with expectations. On a consolidated basis, sales rose by 4 percent. All dollar figures are converted from the euro at current exchange rates."Overall, these figures should enable us to confirm our estimates of results for the full year," said Lindsay Owen-Jones, L’Oréal’s chairman and chief executive officer, in a statement. In other words, double-digit net profit gains are expected for 2002 — the 18th consecutive year."I thought the underlying results were very solid and very good," said Eva Quiroga-Thiele, a vice president at Morgan Stanley in London. "The performance was quite strong across all markets," concurred Sandhya Raju, a vice president at Merrill Lynch in London.However, there was one major blip. "The impact of currency fluctuations has been very adverse," said Owen-Jones. "But, on the other hand, the like-for-like sales growth rate was a pleasant surprise." Exchange effects on the conversion of sales of L’Oréal’s foreign subsidiaries were minus 2.5 percent for the first six months of 2002 and minus 4.8 percent for the entire year. Industry experts said the only major surprises in the results were that some expected higher actual sales numbers — $15.5 billion versus $15.4 billion— and the news that L’Oréal’s external charges as a percentage of sales were stable year-on-year.By division, sales of cosmetics generated $15 billion, up 8.7 percent at constant group structure and current exchange rates and 4.2 percent on a consolidated basis. On a like-for-like basis, active cosmetics’ sales rose by 10.5 percent; professional products and consumer products’ sales rose by 9.2 percent each, and luxury products’ sales rose by 6.7 percent. By region, also at constant group structure and current exchange rates, Western Europe’s sales were up by 6.1 percent, "considerably higher than in previous years," with increases of 12 percent in the U.K., 9 percent in Spain and 5 percent in France. North America’s sales were up by 5.6 percent, a level on a par with that in 2001, and the rest of the world’s spiked by 21.8 percent. The latter grouping includes Asia, with growth of 21.1 percent; Latin America, up 22.5 percent, and Eastern Europe, up 30.3 percent.L’Oréal also highlighted strong growth in China and Russia, with 61 percent increases each; Brazil, with 50 percent, and South Korea, with 30 percent.L’Oréal’s dermatology business, in which it holds a 50 percent stake, registered sales of $345.6 million, an increase of 17.8 percent on a like-for-like basis and 9.9 percent on a consolidated basis over 2001.Analysts said they consider L’Oréal’s fourth quarter stellar. On a constant basis its sales rose 10 percent. Exchange rates in the period negatively impacted the period’s sales by minus 8.1 percent, causing consolidated sales to come in up 2.3 percent. "The division that showed marquee performance was prestige," Raju said. L’Oréal’s luxury products division boasted sales up 10.8 percent on a like-for-like basis in the period.Analysts also lauded the firm’s North American activities, which spiked by 10.3 percent at constant group structure and constant exchange in the quarter.L’Oréal said technological advances and product innovation contributed to its success last year. Among the items it highlighted were L’Oréal Paris’s Visible Results, Garnier’s Skin Naturals, Biotherm’s Skin Loving Colors and Lancôme’s Juicy Tubes. Many of L’Oréal’s major launches took place in the last three months of 2002. "These brands will develop in 2003 as they get distributed in additional markets," said Quiroga-Thiele. "On that basis, L’Oréal is probably set for two or three quarters of very solid growth."The company’s stock closed at $68.47, down 3 percent, on the Paris bourse Thursday.

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