Business & Financial News

L'Oreal reported a slowdown in organic growth in the second quarter compared to the first, despite a very strong sales growth in emerging countries.

The global cosmetics giant has seen its sales climb 12.4% to 4.945 million euros, slightly above the consensus of analysts interviewed by the editor of Reuters (4.897 million euros) and has benefited from the positive effects the decline of the euro against major currencies.

Organic growth stood out for its 5.2% against 5.6% forecast by analysts, on average, marking a slowdown from 7.4% in the first quarter had benefited from more favorable basis for comparison (- 4.3% in the first quarter 2009 and -2.1% in the second).

Bombarded with questions during a teleconference on the effects of currency fluctuations on the results of the first semester (published Aug. 25), Jean-Paul Agon, CEO of the group, simply stated that "strategic priority remains brand development, growth and internationalization. "

L'Oreal, which has about one billion customers worldwide, expects to double that number by ten years.

Citing "important breakthrough" in the new markets, including China, Brazil, Russia, India and Indonesia, he said "turn to the second half with confidence."

At the publication of annual sales in the first quarter, L'Oreal had said it expected a "good organic sales growth and its results in 2010.

EMERGING COUNTRIES STILL POINT

While sales in Western Europe have increased modestly (+1.1% on a comparable basis), they increased by 4.2% in North America and, especially, have jumped from 11.1% in emerging countries, with increases of 11% in Asia and 18.4% in Latin America.

These are the sales of luxury products (Lancome, Armani, Helena Rubenstein and Yves Saint Laurent Beauty) who signed the largest increase (+7.6%) of the four major divisions.

"Oddly enough, sales of luxury are very well kept. It is a very good news," commented Jean-Paul Agon.He said that Yves Saint Laurent Beauté, PPR bought in 2008 and has undergone significant restructuring, had grown "two figures throughout the first half."

Sales of consumer products (L'Oreal Paris, Garnier, Maybelline-Gemey), which account for more than half of group turnover, rose by 4.1%. These professional products for hair salons have increased by 4.7% and the products sold in the drugstore have risen 6.7%.

Against the trend, The Body Shop has seen sales stagnate (-0.1%), the chain of cosmetics afflicted by its absence in emerging markets with very strong growth.

The L'Oréal closed Monday down 0.86% to 82.09 euros on the Paris Bourse.The market capitalization thus amounted to 49.2 billion euros.

The sign value up 5.2% since January, while the CAC down 9.37% over the period and the diverse European index of consumer goods ahead of 12.05%.

The Bundesrat, the upper house of German parliament approved a new law Friday banning naked short selling of certain securities and bonds denominated in euro, after the approval last week from the lower chamber.

The unilateral decision of Berlin in May, but impose an immediate ban on partial-selling expose has created strong turbulence in financial markets.Last month, the German government has finally extended the measures to all German shares.

The naked short selling, that Germany had originally banned for its biggest banks for government bonds denominated in euro and the credit default swaps (CDS) shareholders can sell securities without hold or even borrow the underlying asset. The goal is to buy them back later at a lower price.

The bill must now be submitted for signature of President Christian Wulff.

The European stocks finished at their highest level for ten days, supported by statistics and by encouraging the growth of the banking sector so that the terms of "stress tests" are becoming clear.

In Paris the CAC 40 closed up 54.81 points, or 1.57% at 3538.25 points. The FTSEurofirst 300 index closed in the green for the third consecutive session after losing more than 7% during the previous two weeks.

The items on the activity of several European companies have also helped reassure investors whose appetite for risk returns.The index VDAX-NEW volatility fell to lowest in more than two weeks.

Bank stocks were particularly sought again.

The Committee of European Banking Supervisors (CEBS) released Wednesday a list of 91 banks participating in the "stress test" designed to restore confidence in the European banking sector.

Natixis has been 3.64%, 4.05% Dexia and Deutsche Bank 3.27%. The European sector index was up 1.66%.

Among other values, Renault has closed up 2.91%. The French carmaker Thursday raised its outlook for the global automotive market and EU in 2010, after publishing an increase in its sales and market share in the first half to support the launch of new models.

Sodexo has raised its 2009-2010 after the first nine months of the year in which organic growth reached 1.9%, buoyed by an acceleration of industry "solutions motivation," especially in Latin America.

The group now estimates that organic growth of its sales, exchange rates and constant perimeter, could be around 2% for the full year, compared with the objective of a zero growth presented last November.

The world number two behind the UK catering Compass has also raised its annual target for operating income, which should be understood to be 780 and 800 million, excluding currency effects, in terms of a previous range of between 770 and 790 million euros.

Michel Landel, the Chief of Sodexo, however, observed in a statement that "the global environment remains volatile and always encourages us to be cautious in our outlook."

However, he asserts that "the growth potential of our markets remains considerable – to 780 billion euros – (he) remains fully confident in our ability to take advantage thanks to the relevance of our solutions offerings and Sodexo's presence in 80 countries, and particularly in Asia and Latin America.

On a reported basis, turnover in nine months of fiscal year 2009-2010 has increased by 1.3% – taking into account a negative impact of exchange of 2% and external growth of 1.4% – to 11.543 million euros.

Sales of core business, food and services, today labeled "on-site service solutions", have reached 11.049 million (+1.5%) with organic growth of 1.6%.

These checks and cards services (restaurant vouchers, gift vouchers) now "motivated solutions" totaled 580 million (-4 +% as reported and 6.9% organic).

On February 28, 2010, closing date of the first half of 2009-2010, the rate of net debt to equity was 42%. This debt level remained stable at 31 May 2010.

By geographical areas, organic growth was 1.6% in North America, 1.2% in continental Europe and 6% in the rest of the world. But in the United Kingdom and Ireland, Sodexo shows a decrease of 3.3%.

The French services sector posted a growth still strong in June, albeit at a slower rate than the previous month while recording the largest increase in new contracts since the beginning of the year, according to the PMI survey published Monday by Markit Economics.

The PMI services, announced at 61.6 in flash estimate on June 23, finally emerged to 60.8 against 61.4 the previous month but still well above the 50 mark from which he makes account expansion.

The composite index – which includes services and industry – stands for his final 59.6 in 60.1 in cons flash estimate as in May

"The growth momentum French retains a strong pace in June, concluding the second quarter on a strong note," said Jack Kennedy, economist at Markit, in a statement.

"A strong rise in employment in the services sector, the strongest since April 2008, promotes the labor market and, consequently, consumption," he says.

"Overall, the recovery seems to proceed at a significant rate, despite recent signs of slower growth in manufacturing.

For the first time in two years, employment has shown an upward trend in June for the second consecutive month due to capacity constraints and business prospects.

The volume of new contracts in June recorded its strongest increase since the beginning of the year.

Strong employment growth in services allows the corresponding composite index to remain above the threshold of 50 to 50.9 against 50.5 in flash estimate and 50.2 in May

The average price buyers have continued to grow at a strong pace in June, the inflation rate gradually approaching from the month of May, the peak of a year and a half in April.

The competitive pressures that prevent businesses from passing their higher costs to their customers, they have practiced awards for the twenty-second consecutive month.

Toyota Motor could recall up to 270,000 vehicles worldwide to solve a technical defect in their engines, which could cost a manufacturer up to 20 billion yen (181 million euros) by the newspaper Asahi.

Toyota, which continues to increase safety checks on their vehicles after a series of recalls, said Monday that Japan will formalize a callback request which will cover 90,000 sedans.

An official with the Japanese Minister of Transport said it had been informed that the world's largest automaker was also considering a recall of vehicles in North America and Europe.

The leaders of Toyota North America have stated that motor control would be undertaken next week, without specifying if vehicles would be recalled.

Toyota has also refused to confirm the estimated cost of such an operation, which could amount to 74,000 yen per vehicle.

Since last September, Toyota has already had to recall more than 10 million vehicles worldwide, mostly for problems of accelerator.Approximately 7.3 million vehicles were called in the U.S., the largest market manufacturer.

The title, however, Toyota has stood firm on Friday, closing up on 0.33% to 3020 yen, development in line with the Topix Index.

"The title has already dropped such a level that further cuts seem difficult," said Fumiyuki Nakanishi, a manager at SMBC Friend Securities.

"Investors felt that Toyota had established a meticulous quality control, then the market is wondering.The manufacturers often recall in vehicles, but this does not necessarily know. "

The last potential security flaws involved seven Lexus and Toyota Crown sedan, whose engines are likely to stall due to poor suspension valves.

About half of the vehicles, model GS 350, GS 450h, GS 460, IS 350, LS 460, LS 600h and LS 600hL, were sold in the United States.

No accidents or injuries were reported, said Toyota.

If effective, this recall would be the second on the Lexus luxury brand since last Friday, when the group had announced suspension of sales and recall 17.HS 000 Lexus 250h in North America, due to possible gas leaks discovered during a test conducted by the U.S. government.

Again, the builder said no accidents or injuries have yet been reported.