L’Oréal posted first quarter sales of 5.16 billion euros, or $7.02 billion Tuesday, a 9.3 percent rise in revenues compared with the same period last year.
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In like-for-like terms, stripping out the effects of currency fluctuations, the company’s sales grew by 5.8 percent during the period. All dollar figures have been calculated at average exchange rates for the three months to March 31.
“The start to this year is encouraging, as it confirms the group’s good dynamics, to which all divisions are contributing, particularly consumer products and luxury products, driven by the vitality of their major brands,” said Jean-Paul Agon, chairman and chief executive officer of L’Oréal.
L’Oréal’s luxury products division, which includes the beauty brands Lancôme, Yves Saint Laurent and Giorgio Armani fragrance and cosmetics, registered the strongest sales growth, rising 10.3 percent to 1.12 billion euros, or $1.52 billion during the period. The company said the division registered particularly strong sales in North America. Sales at L’Oréal’s consumer products division — which houses brands including Maybelline and L’Oréal Paris — rose 9.4 percent to 2.58 billion euros, or $3.94 billion.
Meanwhile, the company registered growth across all geographic markets, with particularly strong sales rises in new markets — sales in Latin America surged 31.5 percent to 404 million euros, or $549.4 million, and sales in Africa and the Middle East grew 18.4 percent to 158 million euros, or $214.8 million. Sales in North America were also strong, growing 11.9 percent to 1.12 billion euros, or $1.52 billion. However, sales in Western Europe were flatter, growing 1.5 percent to 1.91 billion euros, or $2.59 billion during the period. Agon said during a conference call Tuesday that while L’Oréal had seen growth in European countries such as the U.K. and France, he described sales in countries such as Portugal and Greece as “difficult.”
The company said that at the end of March, sales in Japan were down 5.9 percent on a like-for-like basis, stripping out currency fluctuations, in the wake of the earthquake in Sendai. L’Oréal underlined that its employees and facilities in the country had not been directly affected, but said it is “too early” to evaluate the impact of the disaster on the full fiscal year.
Sales at The Body Shop, calculated as a separate division, rose 3.2 percent during the period to 170 million euros, or $231.2 million. L’Oréal said The Body Shop is recording “very strong growth rates” in new markets, such as the Middle East, Eastern Europe and Southern Asia, though cautioned that the brand is “feeling the impact of an environment seriously affected by natural disasters in Japan and Australia.”
Agon said, “Although it is not possible to extrapolate from these figures, and despite an uncertain exchange rate environment, the first months of the year give us confidence in our ability to outperform the market in 2011, strengthen our worldwide positions and achieve another year of growth in both sales and profits.”
Following the results Tuesday, L’Oréal’s shares closed up 3.22 percent on the Euronext exchange in Paris Wednesday evening at 85.88 euros, or $122.54 a share.
Meanwhile in other L’Oréal news, L’Oréal heiress Liliane Bettencourt told the French daily Le Figaro Wednesday that she wanted to remain an administrator at the firm, and reiterated she was against selling her family’s shares to Nestlé. “I have always been opposed to getting rid of L’Oréal. I don’t think that Nestlé has any positions that run contrary to the interests and independence of L’Oréal,” she told the paper in an interview.
Bettencourt also said that she has put order into her finances following her reconciliation with her daughter, after the scandal that exposed irregularities in the financial holdings of the world’s second wealthiest woman. Her affairs are now being handled by Pascal Wilhelm, a lawyer who is working with French tax authorities to settle any outstanding tax debts, she said. And although Bettencourt and her daughter have abandoned all the legal proceedings they initiated in the affair, French judges continue to investigate several criminal allegations that sprang from the scandal. The cases were transferred to Bordeaux, France, from the Paris suburb of Nanterre last November in the interest of securing a fairer hearing. A court of appeals in Bordeaux was due to examine on May 26 whether recordings secretly taped by Bettencourt’s former butler should be allowed as evidence in court, the daily Le Monde said Wednesday.
Meanwhile on Monday, Liliane Bettencourt’s daughter Françoise Bettencourt Meyers rejected allegations by France’s Le Journal du Dimanche Sunday that she used a fiscal maneuver to reduce the tax the family pays on its income from L’Oréal. Bettencourt Meyers said in a statement issued Sunday that she “categorically denies” the allegations printed in the Journal du Dimanche, which suggested Tethys, one of the holding companies through which Bettencourt Meyers and her mother hold their stake in L’Oréal, took out a loan equivalent to the total value of the shares — 341 million euros, or $492 million — in a bid to escape paying taxes.
Bettencourt Meyers stated that Tethys implemented the capital reduction at the beginning of 2011 and while she acknowledged that she “personally benefitted” from the transaction, said that it “resulted in the due payment of taxes and in no way involved any bank debts.” She added, “The comments in [the Journal du Dimanche] article are regrettable and are simply a case of jumping to conclusions.”