Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on L'Oreal. We currently have 9 research reports from 1 professional analysts.
Another dull quarter from L’Oreal. Group sales were up 5.1% lfl in Q3 to €6,098m. The performance was consistently differentiated between divisions and fuelled mainly by new markets. Luxury products edged up by a double-digit 11.2% lfl in Q3 to reach €2,024m. Consumer products, the largest contributor to sales, reported a modest rise of 2.3% lfl to €2,819m. Active cosmetics made a small step up, growing by 6.2% lfl to €475.7m. Professional Products edged up by a poor 0.5% lfl. For the first nine months, sales amounted to €19,510m (+4.5% lfl). Luxury stepped up 10.8% lfl ytd to €6,173m. Consumer products increased to €9,208m (+2% lfl). Professional products slowed down 0.3% lfl ytd to €2,519m. Active cosmetics were up 5% lfl to €1,611m. By region, growth was driven by new markets and particularly Asia Pacific which was up 14.7% to €1,421m. Western Europe and North America grew at low single-digit rates of 2.6% and 1.3% respectively.
L’Oréal experienced a slight deceleration in its pace of growth in Q2. Sales were up 4.3% lfl (+3.5% reported) to €6,564m. Reported figures exclude The Body Shop’s revenue which was accounted as held for sale business. Aside The Body Shop, operational divisions grew by 6.8% on a reported basis. The outperformance is driven by L’Oreal Luxe and Active Cosmetics which jumped by 8.9% and 6.7% lfl to €1,991m and €532m respectively. Consumer products were up 2.4% lfl to €3,160m. Professional products remained almost flat lfl at €881m. New markets were the growth drivers during the quarter, where Asia Pacific, Latin America and Eastern Europe edged up by 9.2%, 7.1% and 6% lfl to €1,464m, €510.3m and €427.1m respectively. Western Europe and North America grew by low single-digit rates lfl. H1 sales amounted to €13,412m (+4.3% lfl and 4% reported). L’Oréal Luxe generated sales of €4,149m (+10.5% lfl). Revenue of consumer products reached €6,389m (+1.9% lfl). The gross margin scaled back by 60bp to 71.8% with a gross profit of €9,631m. The operating margin inched up 60bp to 18.9% and operating profit amounted €2,530m (+7.1%). L’Oréal Luxe has consolidated its operating margin by 210bp to 23.4%. For the remaining divisions, margins have slowed down. Consumer products generated an operating profit of €1,267m followed by L’Oréal Luxe with €970m. Net profit was up 37.3% to €2,035m. Gross cash edged up by 6.8% to €2,634m. Investments amounted to €641m, i.e. 4.8% of sales, and net debt reached €1,492m.
L’Oreal managed to deliver healthy growth in Q1. Sales were up 5.1% at CER (+7.5% reported) to €7,045m. Organic growth was lower at 4.2%. A surprising dynamism in luxury products’ consumption has raised the sales of L’Oréal Luxe by 12.2% lfl to reach €2,157m. Active cosmetics displayed a modest performance of 2.8% lfl to €603.2m. Poor growth was posted by the mainstay consumer products (+1.4% lfl) to €3,229m. Professional products experienced a depressed momentum and retreated slightly by 1.8% lfl to €858.2m. As regards geographies, Eastern Europe and Asia experienced favourable market dynamism, edging up by 12.7% and 7.1% lfl respectively. Sales in Africa and the Middle East were cut 18.8% to €166.5m. Americas posted mid single-digit growth rates at 4.6% in Latin America (€474.7m) and 3.8% in the North America (€1,917m). Western Europe was the most depressed market, growing by 2.8% lfl (€2,136m). The Body Shop’s sales were up 2.3% lfl to €197.2m. The company is expanding its e-commerce which grew by 27% in Q1, contributing 6.8% to total sales.
Sales in Q4 edged up 4.8% lfl (4.4% reported) to €6,789m. Growth was led by L’Oréal Luxe products and Active cosmetics growing by respectively 7.1% and 6.5% lfl. Consumer products sales increased by 4.2% and Professional products posted a modest 2.1% rise. The full-year sales were up 4.7% lfl to €25,837m (+5.1% at CER and +2.3% reported). Professional products edged up by low single-digit rate to €3,400m. Consumer products increased by a modest 4.4% lfl to €11,993m. Luxe products surged by 6.9% to €7,662m. Active cosmetics were up 5.7% to €1,861m. Body Shop products remained almost flat on a lfl basis at €920.8m (down 4.8% reported). Growth was driven by a favourable sales momentum in North America increasing by 5.8% to €7,099m and Asia Pacific edging up by 3.6% to €5,635m. The strong dynamism in Latin America and Eastern Europe raised sales to €1,838m (+11.1% lfl) and €1,571m (+10.4% lfl) respectively. The gross margin gained 40bp to 71.6% with a gross profit at €18,495m. Operating profit was up 3.5% to €4,540m, i.e. an operating margin of 17.6%. Most segments raised their operating margins, led by L’Oréal Luxe which increased its margin to 21.2% (€1,623m). Consumer products generated an operating profit of €2,417m. All regions raised their profit, led by North America where the operating profit was up by 10.8% to €1,392m. Western Europe generated an operating profit of €1,831m, still the highest margin at 22.9%. Dividends received from Sanofi increased slightly by 2.8% to €346.5m. Net profit retreated by 5.8% to €3,106m due to non-recurring charges of €541m net of tax, which corresponds mainly to the Magic and Clarisonic impairment impact. Gross cash surged by 7.2% to €4,717m. WCR remained almost flat and investments were consolidated to 5.4% of sales at €1,386m. The financial position remains strong with a positive net cash of €481m. The proposed dividend is €3.3, i.e. an increase of 6.45%.
L’Oreal experienced favourable market momentum in Q3 across all regions and all product categories. Group sales accelerated with organic growth of 5.6% to reach €6,153m (+4% on a reported basis). As regards products, Cosmetics edged up 5.6% lfl (€5,952m), underpinned by the outperformance of L’Oréal Luxe which surged 9.3% lfl to reach €1,858m. Consumer products’ sales amounted to €2,859m, i.e. a rise of 4.7%. Professional products posted almost flat sales (+0.9% lfl) at €808.5m. Active cosmetics’ sales were up 6.5% to reach €425.7m. The Body Shop division grew 2.8% lfl to €200.9m. By geography, the strong momentum in North America, which is the second largest market for L’Oreal, has underpinned the group’s performance with 7.5% organic growth and sales worth €1,755m. Sales in Western Europe grew slightly by 2.2%, while in Eastern Europe they jumped 11.7%. In Asia, sales posted a single-digit growth rate of 3.2% to reach €1,324m. Over the first nine months, group revenues amounted to €19,048m, i.e. an increase of 4.7% lfl (+4.9% at CER and +1.6% on a reported basis). E-commerce sales edged up 32%.
Q1 sales were up 4.2% lfl (vs +4% in Q1 15). Revenues were up 1.8% on a reported basis (+4.6% at CER). On a comparable basis, sales increased 6.1% in new markets, 4.3% in North America and 2% in Europe.
Q4 sales were up 9% (+4.2% lfl) and FY15 sales +12.1%, (lfl +4.1%) including Consumer Products lfl +3.1% in Q4 (FY15 +2.5%) and L’Oréal Luxe +6.8% lfl (FY15 +6.1%).
Q3 sales were up 10.1% (+ 3.7% lfl), including Consumer Products +8.7% (+3.3% lfl) and L'Oréal Luxe +13.8% (+4.2% lfl)
Research Tree provides access to ongoing research coverage, media content and regulatory news on L'Oreal. We currently have 9 research reports from 1 professional analysts.
This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.
Companies: 7DIG ALT AMO ARTA BOTB BLTG CTP CFHL CYAN ISL DTC DOTD ELCO ESV FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE SRT STR TAP TAX TEP TPOP TRAK UNG VIP ZOO
Iofina* (IOF): Operational and market update (CORP) | President Energy* (PPC): Puesto Flores work programme commences (CORP) | Victoria (VCP): Acquisition and placing (U/R) | MotifBio (MOTB): Sensible signing of $20m debt facility (BUY)
Companies: IOF PPC MTFB VCP
FY17 results are another positive profit surprise, with adj. EBITDA of £13.1m vs our expectations of £12.3m. We therefore raise our recently upgraded FY18 EBITDA estimate by a further 5% to £13.7m to reflect the combination of rolling-over the FY17 ‘beat’ and management’s commentary around current trading/momentum. Since its IPO in December 2014, TUNE has demonstrated its ability to grow EBITDA (FY15-17 CAGR of +19%), thereby continuing its impressive longer track record of unbroken revenue growth (+28% CAGR) and EBITDA growth (+33.5% CAGR) since FY09. The divi of 2.7p has grown +50% since FY15, also helping to drive TUNE’s share price to >300p from the 126p IPO price. And there is still much more to come, in our view. The new CEO is building on TUNE’s undoubted new product innovation prowess, firstly through the increased commercialisation of TUNE’s product initiatives that has been a key feature of FY17, and, secondly through a multi-faceted expansionary strategy (i.e. entering new categories and markets) in the coming years. We raise our TP to 365p (from 345p). Maintain BUY.
GKN has issued another warning in relation to its Aerospace US business. A review of working capital has been initiated across all Aerospace plants in North America. While this review is not yet complete it is likely to result in a further write-off estimated to be between £80m and £130m, much of which built up before 2017. We cut our EPS forecast for 2017 to 23p and we now expect no final dividend to be paid. Our new target price is 230p (300p).
Totally (TLY) - Sch 1 for £11m RTO of Vocare, a provider of integrated urgent care services to the NHS throughout the UK. £76.8 million rev in the year ended 31 March 2017. Totally to address Care Quality Commission concerns. Due 24 Oct. Central Asia Metals (CAML) -RTO of Lynx Resources. Anticipated market capitalisation at Admission: £404.8m. Raising £113m at 230p. Acquiring the SASA zinc-lead mine in Macedonia from Solway Industries. Due 15 Dec. Springfield Properties—Scottish housebuilder. “Our turnover exceeded £100 million for the first time this year and now we employ around 500 people. This IPO is the next step in our growth.” Expected Mid October. Offer TBA. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. Orogen plc, to be renamed Sosandar plc on Admission. Sosander is an online womenswear brand specifically targeted at a generation of women who have graduated from younger online and high street brands, and are looking for affordable clothing with a premium, trend-led aesthetic. Offer to raise £5.3m with market cap of £16.1m, expected 2 November 2017 OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected late october .
Companies: AUR SDX GPX ZOL VLTY SLN SCPA TEF AVAP
Belluscura— Provider of premium medical devices at value prices to address part of the global unmet need for affordable, premium quality medical devices. Raising £7.5m to £10m. Offer TBA. Due early Dec Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising . 2016 rev £0.7m and £7.3m operating loss. Offer TBA Keystone Law Group— full service law firm with over 250 self-employed lawyers . Due 27 Nov. Raising £10m at 160p. Mkt Cap £50m. Revenue of £25.6 million and EBITDA of £2.1 million. In FYJan17. Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level. City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer TBA.
Companies: FRR BOD SKIN ARTL AGTA BMN MERC ANGS WAND WAND SIM
InnovaDerma* (IDP): AGM update (CORP) | Fulcrum (FCRM): On track for increased asset ownership (BUY)
Companies: Innovaderma Fulcrum Utility Services
Further evidence that the shrewder investor prefers a smaller company, the Nobel Prize in Economics was awarded to Professor Thaler, an avowed fan of the smaller brethren. Back down to earth, all markets continue to make headway, with the smaller company indices continuing to lead the way. Despite the apparent deadlock in the Brexit process, life appears to carry on. The MPC meeting on 2 November and the Budget on 22 November may offer greater insight. In Share News & Views, we comment on recent updates from Cropper*, Halstead, Norcros, Tricorn* Walker Greenbank and Wincanton.
Companies: APC BMS CRPR ECSC EUSP FDM GETB PCF PPIX SNX SPRP SQS TCN W7L
‘The $64,000 Question’
Companies: ABBY BDEV BWY BKG BVS CRN CSP CRST GLE INL MCS PSN RDW TW/ TEF WJG
Springfield Properties—Scottish housebuilder. Intention to float. Offer TBA “Our turnover exceeded £100 million for the first time this year and now we employ around 500 people. This IPO is the next step in our growth.” | Warehouse REIT - The Company will invest in a diversified portfolio of UK warehouse assets located in urban areas. The Company is targeting a dividend yield of 5.5p equivalent to a yield of 5.5 percent. for the year ending 31 March 2019. Issue price 100p. Offer TBA. Due 20 Sep | OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. | People’s Investment Trust—Objective of sustainable wealth creation. Also to list on the Social Stock Exchange. Targeting £125m raise on 17 Oct. No performance fees or executive bonuses in order to focus on long term rather than short term performance. | Charter Court Financial Services Group—Intention to float. Specialist lender serving the UK residential mortgage market. The net mortgage loan book stood at £4.4 billion as at 30 June 2017 growing at a compound annual growth rate of 92 percent since 31 December 2014. Part vendor sale and £20m primary raise. | ContourGlobal LP—Report on Bloomberg that the thermal energy power generator is considering a London listing. | Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017
Companies: PHSC AGY EHP RST LWRF NSCI GHE AGL K3C PROX
The VW Group increased deliveries just about everywhere by a total of 8.2% to 0.94m vehicles in the last month which brought the ytd number to 8.75m (+3.2%). The German market continued to be relatively weak (+0.8% to 103,400 in October and -1.6% to 1.08m ytd) as was Western Europe (excluding Germany: +1.8% to 180,900 and +3.0% to 1.94m, respectively). Nafta (+6.6% to 81,700) and LatAm (+54% to 45,500) both showed strong recovery numbers in October. The same is true for China where deliveries were up by 9.4% to 398,100 in the last month and 2.3% to 3.29m ytd. However, the group’s situation in Asia outside China remains dismal. October deliveries fell by 1.9% to a mediocre 25,900 units and ytd deliveries to clients in this region were down by 6.5% to 265,700. Both numbers are of about equal size to the Brazilian delivery numbers, a country which seems only now to be getting out of its dismal economic situation. Audi’s deliveries remained relatively weak. Its deliveries were up by 5.3% to 158,700 in October but down by 1.3% to 1.54m ytd and the growth rates of the VW brand were very much in line with group numbers (+7.7% to 550,900 and +3.2% to 5.04m, respectively). The star performers so far this year and in October have been Seat (+23% to 40,200 in October) and the two truck brands Scania (+16% to 8,500) and MAN (+23% to 10,700).
BAT’s (BATS LN, HOLD, T/P 5300p) interim results were in line with expectations. BAT’s reported organic cigarette volume fell 5.2%, below Bloomberg’s consensus estimate of 4.9%. Organic revenue growth in H1 increased 2.5%, slightly ahead of consensus. Adjusted EPS at current FX was 134p, beating consensus.
Companies: British American Tobacco
Over the last three years, Leclanché has been transformed into a vertically integrated group. It has begun work on a multi-million contract for one of the world’s largest stationary battery energy storage systems to date, supplying not only the battery modules but also the system integration and engineering, procurement and construction (EPC) work. It has also established a presence in the e-transport sector, for example partnering with Skoda Electric on battery solutions for e-buses. Completion of the ongoing financing round is required to enable the group to deliver against its pipeline totalling over 450MWh of energy storage, scheduled for delivery during FY17, FY18 and FY19.
Order variability was referenced in H1 results, but latterly intake patterns have weakened. This has affected UK premium brands, following through into manufacturing activity also. We have reflected this in lower earnings estimates (c 10% for this year and next, with a smaller reduction for FY20) ahead of greater clarity on consumer behaviour in this segment. This news has been received harshly – judging by a sharp negative share price reaction – but feels overdone in our view.
Companies: Walker Greenbank
Highlights this quarter: Economics: Generally, the data points to modest growth continuing, with a more positive trend in PMI surveys suggesting decent m manufacturing momentum over the next six months. Currency weakness continues to be a double-edged sword for U K manufacturers, with exporters gaining competitiveness while input prices have risen. There has recently been a divergence of sterling’s performance against the euro and the USD. Those in commodity or competitive product areas may well have seen margin erosion, while many in intermediary goods have already passed on price increases to their customers. With low unemployment, the prospect of tighter labour markets post-Brexit and public sector pay caps starting to come off also signals the potential for some labour inflation, long absent from the UK industrial scene. Topic of the quarter: We believe that powerful macro and sectoral pressures will drive further significant changes to the manufacturing supply chain over the next few years. We investigate some of these pressures, with the move to outsource suppliers to low- cost centres, like China, now seeing a slight reverse flow with some restoring to shorten complex and often inflexible supply chains. We see systems technology facilitating greater supply-chain control and efficiency. Brexit will present challenges to the UK supply chain with price and time to market barriers likely to rise, presenting challenges to the UK’s highly integrated and time-sensitive supply chain. Slick distribution infrastructure and greater information sharing with suppliers are likely to prove winning strategies in optimising logistics and gaining stock efficiencies. Sector valuation: The industrials sector has continued to exhibit strength, with small-cap industrials outperforming by 2 % on last year and larger cap industrials by 17%. Currency and improving economic data have been a positive for the sector. While some other sectors have seen a pick-up in profit warnings over recent months, industrial technology companies have announced generally positive or in-line trading updates that have helped to drive the small-cap Industrials to an EV EBITDA of 8.4x and a P/E of 16.7x with the traditional small-cap discount narrowing.
Companies: SIXH ACL AXS AMPH ALU AEP AVG CAPD CAR FENR FLO RAD GHH HDD IOF MPE RE/ RNO RBN SOLI SOM SCE TRT TRI VANL VEL ZAM