L’Oréal Earnings: Derma Skincare and Fragrances Buoy Sales, but Asia Luxury Weakness Persists  

Wide-moat L’Oréal posted solid results for the first half, reaffirming our confidence in its long-term outlook underpinned by trusted brands, research strength, and a balanced mix of premium and mass offerings. Revenue grew 7.3% like for like, led by derma skincare strength and improved haircare and makeup products for the mass segment, and operating profits rose 8%. We think our 2024 estimates for sales and operating profits to grow by 9% and 11%, respectively, remain achievable, and there is no change to our 10-year forecasts for high-single-digit sales growth and operating margins in the low 20s. We maintain our EUR 410 fair value estimate, and shares look slightly undervalued.