Challenges, 4 June 2018

L’Oréal posted 6.8% revenue growth in the first quarter, driven by luxury and emerging markets (+21%). This growth was not only the best since 2010 but also exceeded the consensus, which expected 5%. L’Oréal has managed to update its offering and adapt it to the consumption patterns of emerging countries. The company also announced a licensing agreement with the Italian fashion house Valentino. The stock’s valuation is relatively high (30x earnings), but the leadership and growth premium justifies it. The dividend continues to grow. We remain long-term buyers and are taking advantage of any decline of the stock towards €200 to add to the position.

Aymeric DIDAY
Head of Discretionary Portfolio Management