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Blemish-Free L’Oréal Eyes 19th Year of Double-Digit Net Growth

L’Oréal said it is on track to post double-digit profit gains for 2003, as it reported that first-quarter sales on a like-for-like basis rose...

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Lindsay Owen-Jones

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Giorgio Armani's Sensi.

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PARIS — It might be a tough period for beauty, but L’Oréal is bucking the trend.

Despite uncertain times, the French beauty giant is on track to post double-digit profit gains for 2003 — its 19th consecutive year — said Lindsay Owen-Jones, L’Oréal’s chairman and chief executive officer, at the firm’s yearly analyst meeting, which took place Thursday at L’Oréal’s corporate headquarters.

While Owen-Jones said that first-quarter sales figures are not a basis for extrapolation, he noted that they are "very encouraging."

For the three months ended March 31, L’Oréal posted sales of $3.97 billion, down 1.1 percent year-on-year. The dip resulted from a minus 11.7 percent currency fluctuation in the period. On a like-for-like basis, sales for the firm rose 10.4 percent.

Dollar figures have been converted from the euro at current exchange rates.

"The comparison base, particularly relating to the dollar, has declined throughout 2002, which should mean that this impact will gradually be reduced over the coming months," said Owen-Jones.

Analysts were upbeat about the quarterly turnout.

"I believe the first-quarter figures are very strong and impressive," said Susanne Seibel, industry analyst at UBS Warburg in London. "The most important aspect is the impressive growth in L’Oréal’s consumer and professional divisions, which is a good indication of margin progression, as they’re said to be the most profitable categories in the group’s portfolio."

In terms of divisions and at comparable structure and constant exchange rates, L’Oréal’s professional products’ sales increased 9.8 percent, mass market items’ sales spiked 14.2 percent, luxury products rose 2.5 percent and active cosmetics registered 11.2 percent growth.

By branch, cosmetics sales in the period were down 0.9 percent on a consolidated basis, and up 10.5 percent on a like-for-like basis. Dermatology sales fell 12.6 percent on a consolidated basis and rose 5.7 percent on a like-for-like basis.

Seibel also said L’Oréal’s sales growth on a region-by-region basis is a sign of good health. Sales in Western Europe were up 8.5 percent, 9.4 percent in North America and 19 percent in the rest of the world.
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