By Astrid Wendlandt and Pascale Denis
PARIS (Reuters) - French cosmetics giant L'Oreal (PA:OREP) on Friday said it expected the weak euro and slump in oil prices to boost consumption in many regions such as Western Europe and help it increase profits substantially this year.
The maker of Lancome cream and Yves Saint Laurent perfume said sales in Western Europe, where it made a third of revenue, enjoyed their strongest growth last year since 2007, mainly thanks to a rebound in southern Europe.
"In light of the current exchange rates, we intend to build 2015 around a substantial increase in profit and a moderate increase in profitability," Finance Director Christian Mulliez said at a presentation of the group's annual results.
L'Oreal late on Thursday posted forecast-beating sales, lifted in part by strong demand for its luxury products such as Armani's Si perfume and Lancome's La vie est belle, which is now the world's fourth best-selling fragrance.
Agon said he expected low oil prices to help replenish consumers' pocket books and free up cash for beauty products this year.
The group's comments came as Germany's Beiersdorf (DE:BEIG), behind Nivea and La Prairie skin cream brands, said it expected sales growth to accelerate in 2015 thanks to increased market share and resilience in emerging economies.
Agon said he expected growth of the global beauty market in 2015 to be similar to the 3.5 percent seen in 2014 and "even a bit better if there is an acceleration in the United States and some recovery in Western Europe."
But he cautioned first-quarter growth, particularly in the group's biggest business of mass consumer products such as Garnier shampoo, could be slightly below the average of the rest of the year.
Agon also gave details on the ongoing turnaround of Body Shop, L'Oreal's problem child for years. He said the group had revamped the brand's product range, modernised the look and feel of shops, bought back some franchisees and it was closing down shops in the United States with low growth potential.
As a result, this would be a transition year for Body Shop and its profitability was "unlikely to improve" in 2015.
L'Oreal shares, which have gained more than 13 percent since Jan. 1 and opened up more than 3 percent, were relatively flat by mid-day trading.