...Temporary Peak in Leverage: L'Oreal SA finalised the buyback of 48.5 million of its own shares from Nestle SA (AA+/Stable) in July 2014, paying partly by transferring its 50% stake in Swiss dermatology company Galderma (valued at EUR2.6bn) and the remainder with a EUR3.4bn cash disbursement. In addition, it completed four acquisitions for a total outlay of EUR1.2bn in the year, leading overall to a temporary peak in leverage with funds from operations (FFO) gross leverage reaching 1.5x in 2014 (2013:0.9x). Robust Performance: L'Oreal posted a strong 2014 performance, reporting mid-single-digit organic sales growth with all the regions contributing, and some margin improvement. The company's free cash flow (FCF) in 2014 stayed at 2013 level of EUR1.2bn representing a healthy margin of 5.6%. Fitch Ratings projects FCF will remain strong at approximately EUR1.0bn-1.2bn, which should ensure a rapid reduction in debt, with leverage falling towards a more comfortable 1.0x in 2015. Consolidating...
