L'Oreal Gets New French CEO

PARIS -- L'Oreal SA, the world's largest beauty products company, has a Frenchman at its helm for the first time in almost two decades after shareholders on Tuesday approved the appointment of Jean-Paul Agon to succeed departing British CEO Lindsay Owen-Jones.

Agon, 49, who has headed L'Oreal's U.S. arm since 2001, joined the Paris-based company _ whose brands include Garnier, Maybelline and Lancome _ after graduating from France's HEC management school in 1978.

The appointment of Agon, named to be Owen-Jones' successor early last year, was formally approved at the company's annual shareholder meeting in Paris.

Picking up where Owen-Jones left off, he faces a formidable challenge. The outgoing boss, who stays on as non-executive chairman, transformed the company from a France-focused cosmetics company to an international powerhouse and has presided over 18 of its 21 straight years of double-digit pretax profit growth.

But maintaining that kind of performance may not be easy for a company that has already pushed rapidly into Asia and the United States, and whose Western European home markets are saturating, analysts say.

European sales were flat last year, and global revenue posted disappointing growth of below 5 percent, excluding the effect of selloffs, acquisitions and currency effects.

"Agon's challenge is to ensure that slower growth in Western Europe doesn't get in the way of an overall good top-line result for the company," said Sandhya Beebee, an analyst with HSBC in New York.

L'Oreal has traditionally measured its own performance against revenue targets, but Agon could do well to focus on improving cost efficiencies _ for instance in procurement and IT systems _ as the company faces tough competition at home from mass-market rivals like Procter & Gamble Co., Beebee said.

"Since top-line results will be harder to go for than in the past, Agon should bring investors' attention to the cost opportunity," she said. "That can supplement a more moderate top-line performance, so that the company's overall earnings results could still be very attractive."

Acquisitions could also boost L'Oreal's international expansion, Beebee added. But there is a question mark over the scarcity of "opportunities for L'Oreal to make meaningfully sized acquisitions without encountering antitrust problems."

L'Oreal acquired Chinese skin care and makeup brands Mininurse and Yue-Sai in 2003 and 2004, before relaunching the Yue-Sai line early last year.

Other recent acquisitions include Dallas-based SkinCeuticals, Sara Lee Corp.'s Delial suncare brand and Britain's Body Shop International PLC, which it agreed to buy last month for 652 million pounds ($1.14 billion).

Speaking at the company's results presentation in Feb. 16, Agon said he did not rule out further purchases. He also sounded upbeat about finding new sources of growth in Europe, by creating new brands aimed at men and older people who tend to buy fewer cosmetics and skin care products.

L'Oreal shares closed 0.9 percent higher at 74.10 euros ($92.07) in Paris on Tuesday, 2.8 percent below their late-February high of 76.25 euros ($90.77).