L'Oréal as one of the value creation champions
L’Oréal has been ranked in second position amongst major French companies in terms of economic value added by financial weekly Le Revenu.
According to the magazine, "L’Oréal (…) achieves, year after year, an extremely positive gap between economic value added and cost of capital. It has clearly not usurped its status as a defensive stock".
The ranking covers all companies in the CAC 40 index except for banking groups. With a value creation ratio of 18.2% (return on capital employed/cost of capital), L’Oréal is one of only six companies with a ratio of more than 10%. Eight companies in the rankings are considered to be "value-destructive".
"This excellent ratio of course reflects the high level of its results, but also the success of a strategy which focuses on organic growth rather than paying over the odds for large acquisitions of competing groups", concludes Le Revenu.
January 21, 2008
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