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PARIS, France — L'Oreal SA reported second-quarter sales that trailed analysts' estimates as a slowdown in emerging markets led to a worse-than-expected performance in its mass- market and high-end beauty products divisions.
Sales excluding acquisitions, disposals and currency swings grew 3.6 percent, Paris-based L’Oreal said Thursday after European markets closed. Analysts predicted 4 percent, according to the median of 23 estimates compiled by Bloomberg.
Emerging markets such as Asia and Latin America have shifted from a boon to a burden for many consumer-product companies as sputtering economies have damped spending on everyday items like shampoos and face creams. Business slowed in Hong Kong while a tax on cosmetics weighed on growth in Brazil, L’Oreal said.
“New markets have disappointed,” Exane BNP Paribas analysts said in a note, due to “weakness in both Asia Pacific and Latin America.” Sales increased 5.1 percent in so-called new markets, trailing the 7.3 percent gain analysts expected.
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Asia-Pacific sales rose 4.1 percent, below the first quarter’s 5.8 percent clip, while Latin American growth declined from 10 percent to 1.5 percent. In Brazil, “the economic context is very unfavorable,” L’Oreal said. The maker of Maybelline makeup said it expects growth across the company to pick up in the second half of the year.
Sales at L’Oreal’s Luxe unit, which includes Lancome fragrances and Kiehl’s skincare, rose 5.8 percent, missing analysts’ estimates for a 7 percent increase. The active cosmetics and consumer products divisions also missed analysts’ growth estimates.
The French company confirmed it expects to outperform the market in 2015 and increase sales and profit. First-half operating profit rose 14.5 percent to 2.3 billion euros, meeting analysts’ estimates.
By Andrew Roberts; editors: Matthew Boyle, Jim Silver.
