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L’Oréal expects good 2013 as strong performance and emerging markets bring home 2012

By Andrew MCDOUGALL , 12-Feb-2013

Double-digit growth in earnings and a strong performance in the emerging markets has prompted cosmetics giant L’Oréal to look to the future with a great deal of positivity following its full-year 2012 results.

Compared with its leading rivals globally, L’Oréal has performed very well, as Unilever’s personal care division also posted double-digit increases ; whilst Procter & Gamble lagged slightly behind based on fourth quarter results for its beauty and grooming division.

According to the 2012 results, the French firm saw net profit rose by 17.6 per cent last year to €2.87 billion and announced that it expects performance to continue to improve in 2013.

“We are facing the future with optimism and confidence,” CEO Jean-Paul Agon said in the statement. “The group is thus well prepared to outperform the market in 2013, and to achieve another year of sales and profit growth.”

Market share

In what was a difficult year for the market in general, L’Oréal has a lot to be happy with as it still managed to gain market share in Western Europe and the US; an Achilles heel for many.

But it was in the emerging markets that the company excelled having placed a key focus on these regions; one which paid off as it eclipsed Western Europe as the company’s top geographic zone.

"2012 also marked a milestone in the acceleration of the Group's internationalisation, as the 'New Markets' became the number one geographic zone,” added Agon.

Fourth-quarter like-for-like sales increased 8.2 per cent in the new markets division, with Africa and the Middle East performing best, and a strong sales performance in Latin America.

Asia blooming

But it is in Asia-Pacific that the Paris-headquartered firm will find the most joy.

L’Oréal has made no secret of its increased efforts in the region with new research and manufacturing facilities erected in the region in the last few months.

China is now becoming a key market for L’Oréal as it looks to take on its fiercest rivals in a tough market.

All-in-all, sales rose in the Asia-Pacific region by 9.6 per cent on a like-for-like basis and 18.4 per cent on a reported basis.

Business

Revenue gained 7.3 per cent in North America, while growth in Western Europe was more understated at 1.4 per cent, with the Eurozone crisis really taking its toll.

Active cosmetics, L’Oreal’s smallest unit, was its best performing business, growing sales 7.1 per cent in the last three months of 2012.

Sales of consumer products, the company’s largest unit, climbed 5.8 per cent, while revenue at The Body Shop chain gained 4.1 per cent and dermatology sales rose 0.9 per cent.