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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Estée Lauder, the beauty company that owns Clinique and MAC Cosmetics, has cut its dividend and ditched its profit forecast as a sales slump in China deepens, prompting a 25 per cent plunge in its shares as trading opened in New York.

The New York-listed beauty group, which is in the midst of a turnaround and leadership transition, said on Thursday that a recovery in Chinese demand had proved slower than expected, with sales in the country falling by a double-digit percentage in the three months to the end of September.

As a result of the difficulty in forecasting when the Chinese market will recover, Estée Lauder said it was withdrawing its outlook for the rest of the year and reducing its dividend to a “more appropriate” level.

Fabrizio Freda, who will retire as chief executive in January after 16 years at the company, said Estée Lauder expected “still-strong declines” in demand in China as well as in tourist shopping in Asia in the near term, and “ongoing normalisation of growth in prestige beauty, most notably in North America”.

The beauty industry has taken a hit from the economic slowdown in China, which has been a major profit engine for Estée Lauder and its larger rival L’Oréal in recent years.

The dour outlook will be another challenge incoming chief executive Stéphane de La Faverie will have to contend with when he takes the reins at a time when the Lauder family that controls the beauty group is stepping back from day-to-day management.

The company is implementing a turnaround programme designed to cut costs and overheads while reinvesting in its brands and innovation. Freda said the reset had “delivered promising initial results”.

After underperforming peers during two years of falling sales and profits, Thursday’s outlook cut is another blow for a company whose shares are now down 55 per cent this year, reducing its market value to $23bn.

L’Oréal, the world’s biggest beauty company, last week missed quarterly sales expectations and flagged ongoing weakness in China and in travel retail. Its shares are down 23 per cent this year.

Estée Lauder reported a 4 per cent year-on-year drop in sales to $3.36bn in the three months to the end of September. It expects the rate of decline to accelerate to 6 to 8 per cent in the current quarter.

All of Estée Lauder’s divisions had falling sales this quarter, with skincare — its biggest by sales — down 8 per cent on a like-for-like basis. Losses in make-up, its second biggest, deepened in the quarter compared with the same period a year ago.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Trading and investment banking buoyed third-quarter results at BNP Paribas, helping offset weakness in commercial and retail operations at the Eurozone’s biggest bank.

The Paris-listed lender reported quarterly net income of €2.87bn, 5.9 per cent higher than a year ago, and a 2.7 per cent increase in revenues to €11.9bn. Both figures were in line with analysts’ expectations.

Gains were driven by BNP’s global markets business, with a particularly sharp uptick in demand for prime brokerage services as hedge funds sought to capitalise on volatile equity markets and uncertainty around major global events such as the US election.

Although investment banks across Europe and the US have reported strong performance in equities trading this quarter, BNP posted gains across both its equities and fixed-income trading businesses.

Revenues in BNP’s equity and prime services division were 13 per cent higher than a year ago at €820mn, while its fixed-income traders increased revenues by 12 per cent to €1.2bn.

The bank’s historic strength has been fixed income. But it is now benefiting from several years of investment in its equities business and from building up its prime brokerage offering, where it has taken over teams and clients from Deutsche Bank.

The bank also benefited from the tentative recovery in investment banking. Revenues in its global banking operations rose 5.9 per cent, driven by capital markets activity across Europe, Middle East and Africa and transaction banking in the Americas and the Asia-Pacific region.

This balanced out some weakness in commercial and retail banking which fell 2.6 per cent in the quarter — below consensus estimates from Oddo BHF — due to falling revenues from disposals of used cars at its long-term rental service Arval.

Shares in the French bank, which is seen as a proxy for the economy, sank after President Emmanuel Macron unexpectedly dissolved parliament and called elections in June.

However, they have recovered after the July vote delivered a hung parliament and are up more than 3 per cent this year for a market value of €74bn. They trail the Stoxx 600 banking index which has gained more than 20 per cent in the same period.  

“The third quarter illustrates corporate and investment banking’s capacity to gain market share and . . . strong business momentum especially in insurance and asset management,” said chief executive Jean-Laurent Bonnafé. He added that the commercial and retail banking operation “is likely to gradually benefit from the positive shift in the rate environment”. 

BNP said it had achieved €655mn in cost savings in the first nine months of 2024 against a target of €1bn, with a further €345mn expected in the final quarter.

The bank’s common equity tier one ratio fell 30 basis points in the three months to September 30 to 12.7 per cent, but the measure of financial resilience remains well above regulatory requirements and the banks own target.

“BNP remains very attractive in terms of risk [versus] reward as it is very diversified with a solid balance sheet,” analysts at Oddo BHF wrote ahead of the results. 

BNP affirmed its full-year guidance, including a target to increase revenues by at least 2 per cent over 2023 levels.