PARIS — L’Oréal’s net profits declined and its sales dipped slightly in 2009. Meanwhile, the French beauty giant said it is poised to return to growth this year.
L’Oréal posted net profits of 1.79 billion euros, or $2.5 billion, in the 12 months ended Dec. 31, down 8 percent on the same prior-year period.
Its operating profits decreased 5.4 percent to 2.58 billion euros, or $3.59 billion. L’Oréal’s research and development expenses were 3.5 percent of sales, versus 3.3 percent in 2008. Advertising and promotional expenditure was 30.8 percent of revenues, against 30 percent during the previous year. Selling, general and administrative expenses were 21.4 percent of sales, down 10 basis points on-year.
L’Oréal registered a 0.4 percent revenue decline in 2009 to 17.47 billion euros, or $24.37 billion. On a like-for-like basis, sales fell 1.1 percent.
Dollar figures are converted at average exchange rates for the period.
In fourth-quarter 2009 versus fourth-quarter 2008, L’Oréal’s sales dipped 3.5 percent to 4.47 billion euros, or $6.6 billion.
The company’s total cosmetics business declined 4 percent to 4.08 billion euros, or $6.02 billion. Within that, the professional products divisions’ revenues fell 6.7 percent to 581.6 million euros, or $859.1 million. Sales from consumer products were down 0.2 percent to 2.07 billion euros, or $3.1 billion. The luxury products division posted revenues of 1.16 billion euros, or $1.71 billion, a 9.1 percent decrease, while active cosmetics generated 260.1 million euros, or $384.2 million, a 3.4 percent dip.
In Western Europe, sales of L’Oréal’s cosmetics dropped 6.9 percent to 1.71 billion euros, or $2.53 billion. They fell 10.4 percent to 904.6 million euros, or $1.34 billion, in North America, and in the rest of the world, they rose 4.5 percent to 1.46 billion euros, or $2.15 billion.
Also in the fourth quarter, The Body Shop registered sales of 240.9 million euros, or $355.8 million, a 2 percent decrease. L’Oréal’s revenues from its dermatology business gained 10.3 percent to 151.2 million euros, or $223.3 million.
“After a difficult start to the year due to a contraction in sell-out and drastic inventory reduction by the trade, the cosmetics market has gradually improved and ended up slightly positive. In this context, L’Oréal has weathered the crisis well and confirmed its position as the world leader in beauty,” stated Jean-Paul Agon, the company’s chief executive officer, who highlighted L’Oréal’s innovation, dynamism in the consumer products division, the inclusion into of a large number of new hair salons and fast growth in new markets.
“We have also devoted the year to preparing for the future with three major strategic changes: the broadening of the consumer base with the target of winning a billion new consumers, a thorough transformation of the company to make it stronger and more flexible and, finally, a determined increase of investments in R&D and advertising and promotion to accelerate growth,” continued Agon. “Overall, L’Oréal has emerged from 2009 stronger and has prepared itself well for a return to sales and results growth in 2010.”
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