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L’Oréal Revenues Inch Ahead 1.8%

Gains fueled by business in Asia and the L’Oréal Luxury Products Division.

PARIS — L’Oréal on Monday reiterated its ambition to outperform the beauty market in 2011 and to achieve another year of sales and profitability gains.

This story first appeared in the November 8, 2011 issue of WWD.  Subscribe Today.

The French beauty giant reported third-quarter revenues rose 1.8 percent to 4.94 billion euros, or $6.99 billion, fueled by business in Asia and the L’Oréal Luxury Products Division. On a like-for-like basis, company sales in the three-month period ended Sept. 30 gained 4.8 percent.

“Looking toward the year’s end, we are conscious of the uncertainties in a number of economies. But we are also confident that the worldwide cosmetics market should remain favorable,” said chairman and chief executive officer Jean-Paul Agon during a conference call with financial analysts on Monday evening. He added the third-quarter numbers slightly exceeded L’Oréal projections at the end of August, thanks to the strong sell-in of some major product innovations, such as Lancôme’s Visionnaire, Garnier’s B.B. Cream and Diesel’s Loverdose.

“All in all, we believe that the fourth quarter should be more or less in the same vein as the third,” continued Agon.

In the first nine months of this year, L’Oréal’s sales increased 3.9 percent to 15.09 billion euros, or $21.23 billion. At constant group structure and currency exchange, revenues were up 5.1 percent.

Dollar figures are converted from the euro at the average exchange rate for the periods to which they refer.
Agon said the first point of satisfaction is that “the market has continued on a relatively similar trend as we saw in the first half,” at slightly above 4 percent.

“Clearly, it is led by luxury, driven by Asia, the Middle East, travel retail and North America,” he said. “The mass market is dynamic, too; the active cosmetics channel records moderate growth, but we still do not see any improvement in the professional products market.”

By operational division, L’Oréal Luxury’s revenues gained 6.2 percent in the nine-month period to 3.45 billion euros, or $4.85 billion. The Active Cosmetics division’s sales grew 3.3 percent to 1.12 billion euros, or $1.57. While the Professional Products division and Consumer Products division’s revenues rose 3 percent each to 2.11 billion euros, or $2.97 billion, and 7.43 billion euros, or $10.45 billion, respectively.

Sales at The Body Shop declined 0.6 percent to 503.2 million euros, or $708.1 million, and revenues from L’Oréal’s dermatology activity grew 13.7 percent to 479.1 million euros, or $674.1 million
Agon said there was also little change on a regional basis versus in the first half. He noted a “small deceleration” in certain Latin American countries that was offset by some recovery in Japan.

“The new markets contributed two-thirds of the growth,” continued Agon, referring to the zone that registered sales of 5.32 billion euros, or $7.49 billion, up 8.3 percent against the first nine months of 2010. “It is the very dynamic markets of Asia in which L’Oréal achieved the most significant share gains, driven by luxury in [China] and Korea, as well by the Consumer Products division across almost all markets — China, India and Southeast Asia.”

 

Agon described L’Oréal’s operations in North America, where revenues increased 1.1 percent to 3.28 billion euros, or $4.62 billion, as being on a “dynamic path, thanks to luxury and market-share gains in mass.” Positions were reinforced by well-received initiatives from Maybelline and Garnier plus the successful launch of Essie.

“Even in Western Europe we are achieving some growth — even if it’s modest — in a difficult and very contrasted market,” said Agon, of the region that notched up a 1.3 percent sales gain to 5.5 billion euros, or $7.74 billion. “It is worth noting that we have managed to reinforce our positions in key markets, such as France or Germany, which helped offset some of the weaknesses that we have in Southern European countries.”