L'Oréal share price dips on Q4 results
But overall prospects are far from bleak
L'Oréal's share price dipped on the Paris Bourse after the company's publication of fourth quarter results and an operating margin for the second half of 2010 below analysts' expectations.
Some market observers had expected internal growth of at least 5.3% in the final quarter. However, overall prospects for the cosmetics major are far from bleak. L'Oreal's low level of debt and its clear intention to move this year along the acquisitions trail with some investment houses speculating that Avon Products might be in the line of fire. Director general Jean-Paul Agon has also made clear that the company does not need to make acquisitions to achieve its other strategic aim of increasing its presence in emerging markets.
At least part of the temporary share price reaction was due to L'Oréal's entry into the Egypt and Pakistan markets. The company also aims to establish a presence in Colombia and Nigeria. Sales in China topped €1bn in 2010 and the current estimate is that emerging markets as a whole will come to account for 50-60% of total sales over the next ten years compared with some 40% at present.