L'Oreal Shares Slide on 2Q Slowdown

   By Anthony Shevlin 
 

Shares in L'Oreal SA (OR.FR) fell in early trade Wednesday after the company reported its first-half results after market on Tuesday.

The French cosmetics and consumer-goods company recorded its strongest first-half like-for-like growth in more than a decade, but net profit came in slightly below analyst expectations.

Crucially, L'Oreal's organic growth in the second quarter came in below 7%, which appears to have spooked investors who are wary of a potential slowdown in the company's growth.

At 0742 GMT shares in L'Oreal traded 4.1% lower at 237.20 euros ($264.05).

Citi analysts said L'Oreal's first-half provided another "quality" update but warned its premium valuation could be at risk after second-quarter organic growth slightly missed consensus expectations.

"Any sign of sequential deceleration could naturally reduce the massive premium versus peers," Citi said, adding that investors may worry about L'Oreal's increasingly difficult comparison bases.

L'Oreal's sales in the second quarter were 7.26 billion euros ($8.08 billion), up 6.8% on a like-for-like basis. Sales for the first half rose 7.3% to EUR14.81 billion.

In the first quarter, L'Oreal recorded a 7.7% increase in sales to EUR7.55 billion. This was ahead of analyst expectations.

Bernstein analysts expected the French company's stock to suffer after the first-half update as L'Oreal trades on its top-line growth.

"When 2Q sales are strong, but miss expectations...this is more important than meeting margin/EPS expectations," Bernstein said.

Write to Anthony Shevlin at [e-mail]; @anthony_shevlin

(END) Dow Jones Newswires

July 31, 2019 04:15 ET (08:15 GMT)

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