L’Oréal shares rise on strong H1 results

Investing.com – L’Oreal (EPA:OREP) shares were up on Wednesday after the company reported its first-half 2024 results, with sales of €22.12 billion marking a 7.3% like-for-like increase driven by volume and price increases.

Operating profit was at  €4.59 billion, translating to a 20.8% operating margin. While this represents a modest increase of 10 basis points, it signifies continued profitability. Consequently, net profit grew by 8.8% to €3.65 billion.

L'Oréal's organic sales growth was 5.3%, slightly below the consensus of 5.6%. However, the company’s diverse portfolio and geographic presence helped balance regional performance variations, Evercore ISI said in a note. 

“A large miss in Dermatological Beauty is concerning given its impressive momentum up till now. This caused overall Q2 organic sales growth to slightly miss expectations,” said analysts at RBC Capital Markets in a note. 

On a more positive note, the Luxe division showed signs of improvement, with growth accelerating from 1.8% to 2.8%. However, Luxe margins lagged behind consensus expectations (21.9% in H1 2024 versus Visible Alpha's expectation of 22.8%)

Europe exceeded expectations with 9.7% growth compared to the consensus of 8.3%, while North America and Latin America were broadly in line with expectations. North Asia missed expectations with -2.4% growth versus the expected 0%, though market issues had been flagged. 

The South Asia Pacific, Middle East, North Africa, and Sub-Saharan Africa region delivered a solid 14% growth rate, but marginally missed the anticipated 15.5%, indicating that while the performance was robust, it could have been even stronger. Despite this slight shortfall, the region continues to be a vital growth driver for L'Oréal

Guidance continues to be for L'Oréal to outperform the beauty market. It has previously said it expects the market to grow 4.5-5% this year, RBC added.