Slipping margin takes the shine off L’Oreal profit

FRENCH cosmetics giant L’Oreal posted first-half operating profit slightly below forecasts and a lower operating margin, hit by higher advertising and research expenses.

The provider of Garnier shampoo, Lancome creams and Yves Saint Laurent perfume posted earnings before interest and tax of €1.7bn (£1.51bn), compared with an average estimate of €1.77bn in a poll of analysts.

First-half operating margin at the world’s largest cosmetics group fell to 16.8 per cent from 17.3 per cent last year.

L’Oreal, which operates in 130 countries, repeated that it aimed to beat the growth of the global cosmetics market and improve profits this year.

It has struck endorsement deals with celebrities including Penelope Cruz and Jennifer Aniston and has benefitted from the widespread perception among customers that its products are either essential or affordable luxuries.

L’Oreal heiress Liliane Bettencourt was last week among a group of 16 of France’s richest people who urged the government to tax them more to help solve the country’s financial problems.