Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on L'Oreal. We currently have 8 research reports from 1 professional analysts.
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 8 research reports from 1 professional analysts.
Keywords Studios (KWS): Ticking every box (except valuation) (HOLD) | OptiBiotix* (OPTI): SlimBiome commercial update (CORP) | Surface Transforms* (SCE): Steady progress (CORP) | Gem Diamonds (GEMD): Recovery of high quality 115 carat diamond (BUY) | ClearStar* (CLSU): Record H1 driven by direct sales and medical business (CORP)
Companies: KWS OPTI SCE GEMD CLST
Advanced Medical Solutions (AMS LN) Interims in line, valuation out of kilter? | Alliance Pharma (APH LN) Interim results in line with expectations | Bagir Group (BAGR LN) Strategy on track, no further production line delays | Dunelm (DNLM LN) Confidence in expansion + ambition to double profit medium term | SQS Software Quality Systems (SQS LN) Currency headwinds on revenue but profit gains being made | StatPro Group (SOG LN) Contract extension for Delta service | Surgical Innovations Group (SUN LN) Interims in line, integration of Elemental on track | Touchstone Innovations (IVO LN) Solid FY results
Companies: AMS WIL SUN BAGR IVO SOG SQS DNLM APH
Having presented at the Barclays Back to School Conference in Boston on 5th September, Imperial Brands’ (IMB LN, BUY, T/P 5100p) will update investors further on 28th September with a trading update ahead of its 30th September 2017 year-end. In our view, the core business is still robust, next generation products have momentum and key cash conversion metrics remain attractive.
Companies: Imperial Brands
Following a strong first half driven in part by known product launches, this equally strong second half appears to show a more fundamental improvement resulting from sustained sales growth and improving mix together with margin and cash management in Focusrite’s international markets. These factors underpin our conviction that the company has sustainable independent strength.
Today’s FY17 pre-close trading update represents a positive profit surprise with management guiding that “in the second half of the year, revenue and profits have grown compared with the first half”. This update indicates therefore that our FY17 EBITDA forecasts of £11.4m will be beaten by at least +8% driven by the combination of; (1) better than expected sales growth, which we understand is broad-based across the two main product families, Focusrite and Novation; (2) good gross margin control; and (3) favourable fx translational benefits (recalling that c25% of FY16 sales were € based with few € costs). We also note net cash has risen to £14.2m, well ahead of our expectation of £10.4m, reflecting strong control of working capital, especially inventory. We raise our TP to 345p as our previous TP of 265p has now been comprehensively surpassed, reflecting strong investor demand as; (1) TUNE continues to convincingly demonstrate its credentials as an innovation-led growth company; (2) TUNE exhibits multiple other investment attractions (e.g. market leadership positions built on strong product innovation, sound balance sheet, and cash generation); and (3) TUNE shows strong momentum on numerous operational and financial levels. Reiterate BUY.
Anpario (ANP LN) Impressive growth highlights strategic initiatives bearing fruit | Augean (AUG LN) H1 results in line with expectations | Brady (BRY LN) Contract win | First Derivatives (FDP LN) Investment in Machine Learning | Northgate (NTG LN) In line AGM statement, but higher H2 weighting now expected | Sinclair Pharma (SPH LN) H1’s in line; growth expected to accelerate in H2 | Speedy Hire (SDY LN) H1 update slightly ahead of expectations driven by further cost savings | Swallowfield (SWL LN) Strong progress in FY17 and positive outlook | Yu Group (YU LN) Strong interim results – expectations increased
Companies: AUG NTG SPH SDY SWL FDP BRY ANP YU/
Warpaint’s interim results show that W7 has continued to grow sales in all regions and that the strategy for e-commerce and launch of new products has been implemented. As, when it was a private company, management remains focused on increasing margins/profits rather than sales. Thus, while we have slightly reduced our sales projections we have made no changes to our profit or dividend forecasts. With H2 2017 having started well and the infrastructure now in place to deliver global sales growth we keep our 300p TP and Buy rating.
Companies: Warpaint London
Full year results confirm substantial progress being made in both Manufacturing and the enlarged Owned Brand business, where Brand Archtekts is delivering strong growth and profitability. In line with forecast, ‘underlying’ PBT increased by 193% and FD EPS by 82%. A positive outlook statement and confidence in future growth underpins a final dividend increase of 52%. A slightly better margin performance in FY17, and evidence Swallowfield’s increasingly differentiated products and formulation capability are resonating with existing & new clients, will provide reassurance. We make no changes to forecasts which point to 370p intrinsic value.
In the September edition of the Hardman Monthly Newsletter, Dr Martin Hall - based partly on his personal experiences as a long-standing investment analyst - addresses various accounting issues that are highly relevant to today's investors. In particular, he concludes that measuring company cash flow - and especially projecting future cash flows - is pivotal to undertaking rigorous financial analysis, irrespective of how individual companies may present it.
Companies: ABZA AVO AGY APH ARBB AVCT BUR CMH COS DNL EVG MCL MUR NSF OBT ODX OXB PPH NIPT PHP PURP RE/ RGD SCLP SCE TRX VAL
The ongoing results season is giving investors a better idea of how companies are faring as well as an indication of the prospects for the rest of the year. So far, the majority of announcements have been as anticipated, with some surprises. The various market indices have regained their positive momentum over the last fortnight. Brexit negotiations continue (to progress?). Add to this, the major party conferences are only three-four weeks away! In Share News & Views, we comment on recent results/news from Braemar*, Churchill China, EU Supply*,James Fisher, Goodwin* and ProPhotonix*.
Companies: CRPR ECSC EUSP FDM GETB PCF PPIX SNX SPRP SQS TCN W7L
City of London Group (COLG) - Sch 1—RTO of Milton Homes Limited, an equity release provider which has a UK residential property portfolio of 586 properties with a market value of approximately £77 million as at 30 June 2017. Offer TBA. Due 5 Oct | 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 raising £150m at £1 with market cap of £166m. 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 Sep.
Companies: EEP SCE JDG EKT BGO SWL EYE PCA IEH RBW
Bagir has reported flat H1 EBITDA, in line with expectations at $0.8m, and $7.0m net cash. There have been no further delays to production line timetables since revising guidance in July. Trading and execution has progressed in line with expectations since then and management has reiterated its confidence in the strategic plan. Its approach to marketing, new customer wins, innovation and market leading production costs (incl. Ethiopia) are on track, albeit there is risk of orders slipping into Q1. Trading close to tangible asset value in Ethiopia, and on 3.3x cal18 EV/EBITDA, the market is clearly overlooking the prospect of a return to growth in FY18.
Companies: Bagir Group
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Companies: AMO APF FDEV FCRM IDEA MAI PAF PHD SCS TAP
Through its success with Skinny Tan, management has created a blueprint for acquiring seemingly end-of-life brands at attractive valuations and subsequently scaling and monetising them through sophisticated, creative and targeted social media campaigns and distribution agreements. This experience can be applied to the other acquired brands Leimo, Prolong, Stevie K and Charles + Lee alongside brands created in-house such as Roots Double Effect, Skinny Bright and Body Glow. We forecast 3-year sales CAGR of 61% and 3-year adj. PBT CAGR of 165% and initiate with a price target of 400p per share, valuing the group on 31x FY18E earnings and 19x FY19E earnings.
Prelims confirm a highly successful year, whereby revenue grew by 75% to £37.4m and EBIT more dramatically, from £1.2m to £7.8m: comfortably ahead of previous guidance of “at least £7.2m”. Such strong growth in revenue and profit was achieved thanks to the launch of Planet Coaster (PC), with estimated sales of c.£20m. Now the development of Jurassic World Evolution (JW) is well underway and a further two titles in the early planning stages, we look forward to similar (and potentially more exaggerated and more frequent) step-ups in profit as Frontier looks to accelerate its strategy of launching and then maintaining carefully selected titles. We leave our forecasts essentially unchanged in both periods, but lift our target price to 1,332p.
Companies: Frontier Developments