LRLCY Loreal Co (PK)

By Giulia Petroni

L'Oreal's shares rose on Friday after the company reported a strong beat in third-quarter sales across the board, suggesting operating leverage would more than compensate for cost inflation.

The French cosmetics and consumer-products company's quarterly sales were up 13.1% organically, compared to consensus expectations of 7.6%. The beat was driven by the active, professional and luxe divisions.

At 0725GMT, shares trade 6.5% higher at EUR393.30.

According to analysts at Citi, the quarterly performance shows the company is able to rebalance its growth drivers geographically, with a broadbase expansion category-wise that should lead to a volume/mix run-rate in the mid teens by the end of the year.

The bank forecasts L'Oreal's organic sales growth at 9.4% in the fourth quarter and 15.6% in the full year, with margin at 19.6%.

"We expect a clear positive share price reaction, led by consensus earnings upgrades and lack of inflation-related margin worries given the operating leverage," says Citi.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

October 22, 2021 03:43 ET (07:43 GMT)

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