L'Oreal full year results

L'Oreal reported results last evening: 2014 ANNUAL RESULTS. Remembering that these are in Euro's, the ADR price is one fifth in Dollars, i.e. the ADR price that you see (closing at 37.35 Dollars last evening) is one-fifth of the Paris price. In simplest English, for each five ADR's (American depositary receipt) that you hold, that is the equivalent of one share of L'Oreal in Pairs. Got that? First things first, this company is controlled by Lilliane Bettecourt's historic shareholding and Nestle, the Swiss giant who have the shares historically too. Recently Nestle have been a seller, they sold a stake back to the company. In fact, there are 23 million shares less in issue, shares in issue have fallen from 608 million to 585 million, average over the period, there are NOW 561 million shares. Fewer shares always equals higher earnings.

The second half of the year has boosted the full year numbers, the end of the year in the US was better, the company has grown their market share in Europe. They want to continue to take market share, this year is going to (according to the country) be a little better than last year. The CEO cited lower energy prices as being a positive for their core consumer in Europe and North America, they should have more money in their pockets, feel better about the year ahead and all in all more spending power. The consumer is in better shape across the globe.

The L'Oreal share price is trading at a 52 week high in Paris as we speak this morning, earnings of 5.34 Euros on a share price of 161.35 Euros means that the stock is hardly cheap on 30 times historic earnings. The dividend is expected to be 2.7 Euros (the French government take a whack out of that), which means that the company is pretty generous pre the tax, roughly 1.9 times cover. Why own this company then if the price is pretty aggressively priced, at face value? This is a growth company, they have been going through a pretty poor patch, the Euro moving all over the show does not help the Dollar price. The company is growing strongly in their existing markets, much faster in their emerging markets (which are smaller in terms of sales), up 13,5 percent in Asia and up a whopping 20.3 percent here in Africa and the Middle East. Both those juiced up by worse currencies relative to the Euro. Asia is going to continue to be key for the short term growth prospects, as is Latin America (less than 9 percent). Good business, luxury is a fabulous investment, richer middle income people across the globe boosted their sales, we continue to buy the business.