PARIS — L’Oréal’s first-quarter revenues — bolstered by positive performances of its Consumer Products Division and Latin America, helping mitigate softer sales in Asia — beat analysts’ expectations.
Revenues at the world’s largest beauty company, which published numbers after the close of the bourse here on Monday, gained 1.8 percent to 6.55 billion euros, or $7.23 billion at average exchange, in the three months ended March 31. On a like-for-like basis, L’Oréal’s sales advanced 4.2 percent, outpacing analysts’ consensus forecast of 3.4 percent.
“The biggest positive surprise was the performance of Consumer — [up] 3.9 percent — which saw its fastest growth since [second-quarter] 2013,” wrote Andrew Wood, an analyst at Sanford C. Bernstein & Co., in a research note, referring to gains on a comparable basis at the division, whose brands include L’Oréal Paris, Maybelline, Garnier and NYX Cosmetics.
“I was quite reassured by the solid performance across the four divisions, all of which were firmly in positive territory,” said another analyst who requested anonymity.
Sales on a comparable basis gained 5.5 percent at the L’Oréal Luxe Division, which grew two times faster than the Chinese market; 4.5 percent at the Active Cosmetics Division, and 2.5 percent at the Professional Products Division.
Jean-Paul Agon, L’Oréal chairman and chief executive officer, told financial analysts and journalists during a conference call on Monday that revenues at the Professional Products and Active Cosmetics Divisions should strengthen over the coming quarters.
Also in the first quarter, sales advanced by 2.1 percent at The Body Shop, which posted its best growth since first-quarter 2015.
Regarding regional performances, the analyst said she was encouraged, “although emerging markets continue to be a bit of a drag, which is due to Asia [because of] Hong Kong, while Latin America seems to be back on track, which is reassuring — all the more so that Brazil continues to be weak.”
In like-for-like terms, the Asia, Pacific zone posted 4.5 percent growth, while sales in Latin America were up 8.5. Including Brazil, Latin American revenues declined 11.1 percent.
On a comparable basis, sales in L’Oréal’s New Markets gained 6.1 percent, 2 percent in Western Europe and 4.3 percent in North America.
The net impact of consolidation changes, particularly due to the integration of Niely Cosmeticos in Brazil, was plus-0.4 percent. And currency fluctuations negatively impacted L’Oréal sales by 2.8 percent.
L’Oréal’s e-commerce revenues advanced an estimated 35 percent in like-for-like terms, including its own brands’ Web sites and its retailers’ online platforms.
Agon confirmed that “the total year 2016 should be stronger than this first quarter,” and that the general cosmetics market is anticipated to grow 3.5 percent. L’Oréal expects to outperform that pace and achieve another year of sales and profit growth.
Sanford C. Bernstein’s Wood wrote that prior to the release of the first-quarter results, it expected L’Oréal would register 4.2 percent like-for-like gains for 2016, 35 basis points margin growth and earnings per share to advance 4 percent. It’s unlikely those projections will change.
“However, we would expect a positive reaction from these better-than-expected results,” he added.
In other news, L’Oréal said Marc Menesguen, president of the Consumer Products Division, has opted to retire starting in 2017 after 30 years at the company. Agon acknowledged the executive for his major contribution to the group’s success.
“I am happy that he will be able to retire at the moment when we will see the reacceleration of the Consumer division,” Agon said.
Menesguen will be succeeded by Alexis Perakis-Valat, currently executive vice president of the Asia-Pacific zone, who is to take on the title of executive vice president of the Consumer Products Division.
Agon called Perakis-Valat “one of our brightest talents at L’Oréal.”
Jochen Zaumseil, who is currently executive vice president of the Western Europe Zone, will succeed Perakis-Valat. Zaumseil, in turn, will be replaced by Vianney Derville, general manager of the Consumer Products Division North America, who will also join L’Oréal’s executive committee on Sept. 1.