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L’Oreal Confirms 2011 Targets as Quarterly Sales Rise 1.8%

Nov. 7 (Bloomberg) -- L’Oreal SA confirmed its 2011 targets after reporting third-quarter sales growth that met analysts’ expectations, helped by demand for Kiehl’s skincare and Lancome mascara.

Revenue at the world’s largest cosmetics maker climbed 1.8 percent to 4.94 billion euros ($6.79 billion), the Paris-based company said today in a statement after the market closed. That matched the average of nine analysts’ estimates compiled by Bloomberg. Excluding currency shifts and acquisitions, sales advanced 4.8 percent.

L’Oreal said it expects 2011 revenue to rise faster than the global cosmetics market as demand surges in Asia and predicted a gain in full-year profit, confirming an August forecast. New York-based rival Estee Lauder Cos. said last week that recent economic uncertainty hadn’t significantly affected its business after quarterly sales rose 18 percent.

“We are tackling the last quarter with confidence” even though the situation remains difficult in southern Europe, particularly Greece and Portugal, L’Oreal Chief Executive Officer Jean-Paul Agon said in today’s statement. The global market is growing a little over 4 percent, Agon said on a conference call with analysts.

Comparable sales at the luxury unit, whose products include Yves Saint Laurent and Giorgio Armani fragrances, climbed 8.8 percent. The increase reflects a “dynamic retail sales trend” amid the launch of new products such as Biotherm’s Skin Vivo Uniformity anti-aging line, the company said.

Colossal Cat Eye

“Management’s description of these results as good is stretching matters,” Andrew Wood, an analyst at Sanford C. Bernstein in New York, wrote in a note to clients. He has an “underperform” rating on the stock.

L’Oreal retreated 0.5 percent in Paris trading today, giving the maker of Maybelline make-up and Garnier deodorant a market value of 46.6 billion euros.

The company’s biggest shareholders are the Bettencourt family, which owned 30.9 percent at the end of 2010, and Nestle SA, which had 29.7 percent. Liliane Bettencourt, 89, is mentally unfit, a French judge said last month in a ruling that turned over management of her interests to her daughter and grandsons.

Revenue excluding currency shifts and acquisitions rose 1.1 percent in western Europe, 4.6 percent in North America and 8.8 percent in so-called new markets, led by the Asia-Pacific region.

Like-for-like sales declined 1.5 percent in eastern Europe. “In the dismal economic context, which has left no country unscathed, consumer confidence is weak and markets are proving difficult,” L’Oreal said, referring to the region.

Sales at the consumer-products division, L’Oreal’s largest source of revenue, rose 3.4 percent on the same basis, aided by L’Oreal Paris Sublime Mousse hair colorant and Maybelline’s Colossal Cat Eye mascara. The unit is gaining market share in North America, while the situation is gradually returning to normal in eastern Europe, L’Oreal said.

Comparable sales at the professional products division, which supplies treatments including Inoa hair colorant to beauty salons, rose 2.6 percent. Europe and the U.S. are “sluggish markets” for the category, L’Oreal said.

Active cosmetics sales gained 5.4 percent with La Roche Posay sun care maintaining its momentum across all markets, L’Oreal said. Body Shop revenue increased 2.4 percent as it introduced Extra Virgin Minerals foundations and extended travel retail to more than 40 countries. The dermatology division’s sales gained 8.1 percent, L’Oreal said.

To contact the reporters on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net; Dermot Doherty in Geneva at ddoherty9@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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