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The cosmetics giant reported a 5.4% increase in sales to 7.61 billion euros for the first quarter of 2021. On a like-for-like basis, sales even grew by more than 10%, it said yesterday in a statement. As a result, the group says it is confident in its ability to grow its results this year. However, the share price fell by 1.7% after this announcement.
According to the FactSet consensus, analysts were expecting revenues of 7.73 billion euros on average.
“L’Oréal is on the offensive in terms of product launches and investment in drivers to support the growth of its brands. We are therefore confident in our ability to outperform the market and to achieve a year of growth in sales and results,” said Jean-Paul Agon, L’Oréal’s chairman and chief executive, quoted in a statement.
More specifically, L’Oréal Luxe, dedicated to high-end beauty products, posted a 12.4% increase to 2.77 billion euros, gaining “market share in almost all geographical areas”, the statement said.
The Professional Products division, which had fallen heavily in the same period last year due to the closure of hair salons, jumped by almost 13%.
The Active Cosmetics division grew by 21.8%, mainly due to online sales. E-commerce now accounts for more than a quarter (27%) of the group’s total sales and online sales performance grew by 47.2% in the first quarter on a like-for-like basis, outpacing the estimated 28% market growth.
By contrast, the main consumer products division fell by 6.2%.
In terms of regions, the group posted 23.8% growth in Asia Pacific, driven by mainland China (+37.9%) and a strong recovery in North America (+6.3%) on a like-for-like basis.
In Western Europe, sales declined by 2.4% like-for-like. “Business was again impacted by the closure of perfumeries, department stores and hair salons in several countries and restrictions on social interaction,” said L’Oréal.
Oddo confirms its recommendation on the share
Following the announcement of its results, L’Oréal’s share price fell by 1.7%.
Oddo therefore confirms its neutral advice on the stock with a target price of 278 euros after the announcement last night of the sales figures for the first quarter of 2021.
“After revising our EPS sequence by +3% over 2021-2022 and beyond, the 2021 P/E comes out at 43x. Such a multiple strongly values the efficiency of a pure player model that is operationally diversified in a dedicated strategic territory (Beauty) and that has demonstrated during this crisis its ability to accelerate its market share gains thanks to digital and the strength of its brand portfolio,” said the financial group.
The latter considers that with an organic growth of 10.2% in the first quarter of 2021, the beginning of the year is in line with expectations and the market reaction which should be relatively neutral.
“Put another way, investors should see enough momentum to support the current valuation level which is at a 20-year high”
The analyst believes that the organic growth level of +10.2% is slightly above his expectations of 9.8% but 1 point above consensus.
“The most important point is the continued market share gains in both retail and ecommerce (+47.2% in lfl and 26.8% of sales). We have revised upwards our organic growth forecast to +8.5% (6% ante) by raising our quarterly sequence.”
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