PARIS — L’Oréal reported Thursday its net profits for first-half 2008 increased 6.4 percent versus first-half 2007 to 1.26 billion euros, or $1.92 billion at average exchange.

This story first appeared in the August 29, 2008 issue of WWD. Subscribe Today.

At constant exchange, the French beauty giant’s net income rose 10.1 percent.

L’Oréal posted operating profits up 3.9 percent (and 8.5 percent at constant exchange) in the period to 1.5 billion euros, or $2.29 billion, representing 17.3 percent of sales, a 40 basis-point on-year gain — a company record.

As reported, L’Oréal registered revenues of 8.65 billion euros, or $13.23 billion at average exchange, in first-half 2008, a 1.6 percent rise or 5.3 percent uptick in like-for-like terms. Excluding currency fluctuations, the sales growth was 7.1 percent.

Last month, L’Oréal cut its annual sales growth forecast to 6 percent on a like-for-like basis from 6 to 8 percent because of a slowdown in its second-quarter 2008 results.

In the meantime, L’Oréal executives remain bullish.

“The first-half results are very encouraging,” stated Jean-Paul Agon, L’Oréal’s chief executive officer. “In view of the scale of the currency fluctuations noted since the beginning of the year, performance should be considered on a comparable exchange-rate basis. With a progression of 7.1 percent in sales at constant exchange rates, L’Oréal has continued to gain market share worldwide and is making progress, according to our estimates, significantly ahead of the cosmetics market.”

Agon added that L’Oréal’s continued efforts in product-value enhancement and productivity have enabled the company to make up for increases in the prices of raw materials and energy. “These results, combined with a slight reduction in the tax rate, enable us to achieve a substantial increase in our net profit,” he said.

“This performance, achieved in what everyone recognizes is a difficult economic environment, confirms the solidity and the dynamism of the L’Oréal business model,” added Agon. “In view of these achievements, the extensive launch program up to the end of the year, and our continuing efforts to keep costs under strict control, we look forward with confidence to achieving double-digit growth in net earnings per share, at constant exchange rates, for 2008.”

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