L’Oreal Sales Rise as Sluggish Europe Fails to Halt Progress

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L’Oreal SA reported a 14 percent increase in first-quarter sales as a weaker euro helped compensate for “sluggish” growth in western Europe, sending shares of the world’s largest cosmetics maker higher.

Revenue reached 6.44 billion euros ($6.92 billion), the Paris-based maker of Maybelline eye shadow said Monday in a statement after markets closed. Analysts predicted 6.35 billion euros, according to the median of estimates compiled by Bloomberg. The strength of currencies such as the dollar boosted the value of revenue from abroad.

L’Oreal, which has made a dozen acquisitions since 2013, is benefiting from the euro’s slump after currencies weighed on performance in the past two years. Sales growth, which was led by the luxury and active-cosmetics divisions in the first quarter, will probably accelerate this year as the consumer unit starts to feel the effects of a rebound in North America, Chairman Jean-Paul Agon said on a call with analysts.

The report led analysts such as Alex Howson at Jefferies to raise their full-year earnings estimates. The biggest boost came from foreign exchange, according to Howson, who added 2.1 percent and 3.3 percent to per-share predictions for the current financial year and the one following that, respectively.

The shares rose 2 percent to 180.75 euros at 9:40 a.m. in Paris, extending their gain this year to about 30 percent.

Excluding acquisitions, disposals and currency swings, sales climbed 4 percent in the quarter. The median analyst estimate was for growth on that basis of 3.9 percent.

All divisional sales came in ahead of estimates on a like-for-like basis, except the consumer-products unit, where a 1.7 percent gain was shy of the 2.6 percent predicted by analysts. L’Oreal attributed the underperformance at the unit that makes Garnier shampoo to Europe.

Europe, the source of about a third of revenue, “has had a difficult start to the year,” L’Oreal said, citing a slight decline in the mass market in the region.

“In an economic context that is still volatile, we confirm that we are confident in our ability to outperform the market this year, once again, and to achieve growth in sales and profit,” L’Oreal also said.

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