PARIS — Net profits at French beauty giant L’Oréal rose 11.6 percent in the first half to 1.47 billion euros, or $2.06 billion, boosted by solid growth in the emerging markets of Asia and Latin America.
“For 2011, we confirm our ambition to outperform the market and improve the group’s profitability,” stated Jean-Paul Agon, chief executive officer of L’Oréal.
In the six months ended June 30, operating profits grew 2 percent to 1.7 billion euros, or $2.39 billion. All dollar figures are calculated at average exchange rates for the period in question.
The operating margin stood at 16.8 percent of sales, versus the record level of 17.3 percent recorded at the same time last year. The 50 basis point decrease was due mainly to increased investments in research and development, in addition to advertising and promotion business drivers, the company said.
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L’Oréal’s gross profits were up 5.4 percent to 7.26 billion euros, or $10.18 billion, representing 71.5 percent of revenues, versus 71.3 percent in the same prior-year period.
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L’Oréal’s first-half sales rose 5 percent to 10.15 billion euros, or $14.24 billion. On a like-for-like basis, revenues were up 5.2 percent. Sales in Latin America rose 18 percent during the first six months of the year, compared with a 13.5 percent progression in Asia-Pacific, a 3.1 percent rise in North America and a 1.4 percent increase in Western Europe. Eastern Europe was a dark spot with a 3.8 percent drop.
“The first-half results are up, solid and of good quality,” Agon said. “Gross profit is improving, despite the higher cost of raw materials. Operating margin is at a high level, and net profit is growing strongly.
“These performances reflect the quality and solidity of the L’Oréal business model, based on powerful innovation, the vitality of our brand portfolio and a vast potential for internationalization. In an uncertain economic environment, these fundamentals make us more confident than ever in the group’s ability to build sustainable and profitable growth,” he added.