PARIS — L’Oréal’s first-half net profits rose 21.2 percent to 1.32 billion euros, or $1.75 billion at average exchange.

This story first appeared in the August 26, 2010 issue of WWD. Subscribe Today.

For the six months ended June 30, the French beauty giant’s operating profits grew 21.4 percent to 1.67 billion euros, or $2.21 billion, representing 17.3 percent of sales. The company called this “a record half-year figure.” L’Oréal’s gross profits increased 11.9 percent to 6.89 billion euros, or $9.14 billion, representing 71.3 percent of revenues, versus 70.2 percent in the same prior-year period.

The firm said numerous factors had a positive impact, including improvement in manufacturing costs and the reduction of inventory and physical distribution costs. Meanwhile, the increase in promotional offers to customers and currency fluctuations had a negative effect.

As reported, L’Oréal’s first-half sales gained 10.2 percent to 9.67 billion euros, or $12.82 billion. On a comparable basis, revenues rose 6.3 percent.

“The strong organic growth of our four divisions, all geographic zones and all categories is bearing out our major strategic choices: concentrating on high value-added innovations at accessible prices, opening up new product categories, accelerating international expansion and determined investment in advertising and promotion and in [research and development],” stated Jean-Paul Agon, chief executive officer of L’Oréal.

“The results have also increased strongly, although once again, it is important to emphasize that half-year figures are not particularly representative,” he continued. “Operating profit has grown twice as fast as sales, enabling margins to reach a record level. The significant improvement in gross profit and the very strict control of selling, general and administrative expenses reflect the efforts made over the last two years to achieve a thorough transformation, and have enabled increased investments in R&D and in the advertising and promotion business drivers, which are paving the way for the future.

“We are tackling the second half with confidence and intend over the full year to keep on strengthening our worldwide positions and the profitability of our businesses,” stated Agon.

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