PARIS — L’Oréal’s fourth-quarter 2015 sales, buoyed by positive currency exchange rates, business in North America and luxury products, beat analysts’ expectations.
The world’s largest beauty company, which released numbers after the close of the bourse here on Thursday, posted revenues in the three months ended Dec. 31 of 6.5 billion euros, or $7.11 billion, up 9 percent versus the same prior-year period. On a like-for-like basis, company sales advanced 4.2 percent, outperforming analysts’ consensus forecasts of 3.6 percent and marking the highest quarterly growth last year.
“All businesses and regions beat expectations except The Body Shop, which had a terrible quarter [with a 5.8 percent decline in comparable terms] and dragged down the overall results,” wrote Andrew Wood, an analyst at Sanford C. Bernstein & Co., in a research note.
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Another analyst highlighted that organic top-line gains in the quarter excluding the Body Shop accelerated to 4.8 percent, calling it “in line with management guidance, but reassuring in a global context that remains challenging to say the least.”
The analyst further noted that on-year comparisons were at their toughest in the fourth quarter, “which makes this even more reassuring.”
Wood also emphasized the 5 percent like-for-like revenue rise in North America, where luxury product sales were particularly strong, and the 6.5 percent growth in new markets, where business had improved after two consecutive lackluster quarters.
Overall, sales in the luxury products division advanced 6.8 percent on a like-for-like basis in the period, bolstered by products like Yves Saint Laurent Beauté’s Black Opium, Lancôme’s La vie est belle and double-digit growth at Kiehl’s.
For the full year, L’Oréal registered net profits of 3.3 billion euros, or $3.66 billion, down 32.8 percent versus 2014, due to an exceptional, non-recurrent factor: The company had sold Galderma for close to 2 billion euros, or $2.22 billion. In comparable terms, net income rose 11.7 percent.
Last year L’Oréal’s operating profit advanced 12.8 percent to 4.39 billion euros, or $4.87 billion, on sales of 25.26 billion euros, or $28.02 billion, up 12.1 percent. At similar group structure and constant exchange rates, revenues gained 3.9 percent.
Dollar figures are converted at average exchange for the period to which they refer.
“In a year marked by a worldwide economic slowdown and increased international volatility, L’Oréal achieved strong growth in 2015, supported by a positive monetary effect, and outperformed the market in three out of its four divisions,” stated Jean-Paul Agon, chairman and chief executive officer of L’Oréal, referring to the Luxe, Active Cosmetics and Professional Products activities.
Meanwhile, the Consumer Products Division improved its performance in the second half of the year, particularly due to the acceleration of the makeup segment.
“Across the geographic zones, L’Oréal has further accentuated its leadership in Europe, and significantly strengthened its performance in North America through the course of the year,” continued Agon. “Trends in the new markets were more contrasted, in a context that was challenging in some countries, such as Brazil and Russia.”
L’Oréal’s e-commerce sales were 1.3 billion euros, or $1.44 billion, with very rapid growth. They generated more than 5 percent of overall company revenues.
“In a volatile and uncertain economic environment, particularly in some emerging countries, the group can rely on its balanced footprint across beauty categories, distribution channels and geographic zones,” Agon said. “We are entering 2016 with the ambition to outperform the cosmetics market and achieve another year of sales and profit growth.”
“The outperformance of the top line is likely to please the market, and we expect a positive stock reaction” on Friday, wrote Wood.
In other L’Oréal news, the company’s board of directors has chosen to set up a share buyback plan of up to 500 million euros, or $567 million at current exchange, in the first half of this year. That decision will be voted on at the annual general meeting slated for April 22.