Aug 27, 2010
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L'Oreal H1 operating profit rises 21 pct

Aug 27, 2010

L'Oréal Paris
Jean-Paul Agon, CEO L'Oréal. Photo : Corbis
PARIS, Aug 25 (Reuters) - L'Oreal (OREP.PA) posted forecast-beating first-half results on Wednesday, helped by growth in demand for its cosmetics, an upturn in consumer spending and cost cuts.

Operating profit rose 21 percent to 1.67 billion euros ($2.1 billion), the company said in a statement, ahead of the average forecast in a Reuters poll of 11 analysts of 1.59 billion.

L'Oreal said an improvement in manufacturing costs, inventory and distribution cost reduction, a higher portion of sales of more expensive products helped to lift profit. Promotions and currency fluctuations had a negative impact.

"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," Chief Executive Jean-Paul Agon said.

L'Oreal, which sells Garnier shampoo and Vichy facial creams, does not provide annual forecasts. However, it has pledged to return to growth this year.

L'Oreal said in July that second-quarter revenue climbed 5.2 percent to 4.945 billion euros on a like-for-like basis, slightly ahead of analysts' expectations of 4.897 billion euros, helped by emerging markets and a weaker euro.

The French government said earlier this month that stronger-than-expected consumer spending, a rise in inventories and a rebound in business investment helped France's economic growth rise 0.6 percent in the second quarter.

L'Oreal is the biggest shareholder in Sanofi-Aventis (SASY.PA), which sources have said is interested in buying U.S. drugmaker Genzyme (GENZ.O).

L'Oreal's billionaire heiress, Liliane Bettencourt, meanwhile, is embroiled in a furore over alleged illegal political donations which is rocking France's government.

Swiss group Nestle (NESN.VX) owns a 30 percent stake in L'Oreal and has the right to bid for Bettencourt's 31-percent stake, if her family wants to sell. ($1=.7901 Euro)

(Reporting by Nina Sovich; Editing by James Regan)

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