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North America Helps L’Oreal Post Gain in 1Q

PARIS — L’Oreal’s first-quarter sales rose 1.6 percent as strong sales in North America were offset by a decline in Western Europe.

Sales for the quarter came in at 3.54 billion euros, or $4.65 billion. Dollar figures are at...

PARIS — L’Oreal’s first-quarter sales rose 1.6 percent as strong sales in North America were offset by a decline in Western Europe.

Sales for the quarter came in at 3.54 billion euros, or $4.65 billion. Dollar figures are at the average exchange rate. At comparable group structure and a constant exchange rate, sales gained 3.1 percent. On a like-for-like basis sales grew 5.4 percent.

The figures, reported by the French beauty giant Thursday, were compared with 2004 sales, and are adjusted to comply with International Financial Reporting Standards. L’Oréal has been using the standards since Jan. 1.

Currency fluctuations had a negative impact of 1.6 percent on results, while changes in consolidation following the acquisition of China’s Yue Sai brand had a positive impact of 0.1 percent on sales.

By region, L’Oréal’s cosmetics sales in Western Europe dropped 3.1 percent to 1.77 billion euros, or $2.32 billion, while sales grew 2.8 percent in North America to 893 million euros, or $1.17 billion. On a like-for-like basis sales in Western Europe grew 1.1 percent, while those in North America increased 1.7 percent. As for the “rest of the world,” which includes Asia, Latin America and Eastern Europe, sales spiked 11.8 percent to 819 million euros, or $ 1.07 billion. On a like-for-like basis sales for the rest of the world showed a gain of 20.5 percent.

“The promising start in sales in the United States and continuing rapid growth in new markets are very positive factors,” said Lindsay Owen-Jones, L’Oréal’s chairman and chief executive officer, in a statement. “In Western Europe, sluggish consumer spending made distributors cautious in their purchasing patterns, while our own product launch calendar was a little less intense during that period.”

Owen-Jones said it was important to emphasize, “as we do every year at this time, that the significance of the growth rate for a single quarter is limited because of the volatility of launch programs. Growth in Western Europe should gradually become positive during 2005, enabling the group to achieve full-year sales growth fairly similar to that of 2004,” he said.

By cosmetics segment, professional products generated sales of 499 million euros, or $654.9 million, up 1.6 percent year-over-year. Consumer products gained 2.1 percent to 1.86 billion euros, or $2.44 billion, while luxury products declined 2.4 percent to 799 million euros, or $1.05 billion. Active cosmetics increased 11.1 percent to 300 million euros, or $393.7 million.

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The Dermatology division, of which L’Oréal owns 50 percent, generated sales of 57 million euros, or $74.8 million, an increase of 1.3 percent year-over-year.

L’Oreal said in the statement that IFRS accounting procedures resulted in the reclassification of some operating costs, which are deducted from sales.  The firm’s 2004 consolidated sales, which totaled 14.53 billion euros, or $18.6 billion, under French accounting standards amount to 13.64 billion euros, or $17.5 billion, based on IFRS standards, the statement said, adding that the changes do not impact profits.