L’Oreal Leaps in Paris as Sales Beat Estimates on Make-Up Growth

  • Consumer unit reports fastest quarterly growth in three years
  • CEO sees sales growth accelerating from second quarter

L’Oreal SA shares rose the most in almost seven months after revenue at the world’s largest cosmetics maker beat estimates on strong North American demand for NYX and other makeup brands.

The stock climbed as much as 5.3 percent to 169 euros, the steepest intraday gain since Sept. 25. It was trading up 4.6 percent as of 9:03 a.m. in Paris.

Like-for-like sales advanced 4.2 percent in the quarter, compared with the 3.5 percent gain estimated by analysts. Growth at the consumer unit, L’Oreal’s largest, was the strongest in almost three years at 3.9 percent. North America helped compensate for slowing sales of luxury cosmetics in Hong Kong, where fewer Chinese shoppers are traveling, and weakness in Brazil, where demand surged last year before a tax increase.

“The biggest positive surprise was the performance of consumer,” said Andrew Wood, an analyst at Sanford C. Bernstein. Though the active-cosmetics and professional-products units trailed estimates, “consumer is much more important.”

L’Oreal reiterated a forecast for sales and profit growth in 2016, even “in an economic and monetary environment that remains volatile.” The company said it’s confident of outperforming the cosmetics market’s expected expansion of about 3.5 percent.

Full-year revenue will increase faster than in the first quarter, Chief Executive Officer Jean-Paul Agon said on a conference call. The operating margin will probably also widen, said Chief Financial Officer Christian Mulliez.

In a separate statement, L’Oreal said Asia chief Alexis Perakis-Valat will succeed Marc Menesguen as head of the consumer division in September. Menesguen, who has worked for the company for three decades, will retire at the end of this year, Agon said.

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