L’Oreal posts 7.7 per cent increase in first-half operating profit

The results, which were released on August 29, also show an improvement in margins and profitability and an increase in market share across all divisions and zones.

Analysts credit the company's performance to strong R&D and innovation, wide geographical reach and good coverage of different pricing ranges.  

Euromonitor analysis​

Oru Mohiuddin, senior home and personal care analyst at Euromonitor International, said that a combination of factors were responsible for L’Oreal's performance, including a strong beauty focus with deep R&D capabilities and coverage of a wide range of pricing and geographical spectrums.

She said: "L'Oreal are increasingly associating beauty with science. They have developed 130 active ingredients and molecules over the last 40 years. They also try to incorporate it into their product development and marketing campaigns."​

"If companies like Nivea and Garnier are operating in the same pricing range, then L'Oreal will have the advantage of advanced formulation and will be able to claim that there are no other products which can produce the same effects on the market."​

She also said that the company's ambitious goal of reaching one billion customers in new markets was "realistic"​, but the company should also focus on expanding its coverage in deodorant.

The future​

L’Oreal’s strategy of diversifying and focusing on emerging geographical regions seems to have paid off, with its new markets division already earning more than either its North American or European branches.

CEO and Chairman Jean-Paul Agon commented: “These performances demonstrate the relevance of our business model and the quality of our fundamentals: the ability of our research to create major innovations and stimulate the market, and the vitality and quality of our brand portfolio.”​

New markets power L’Oreal rocket ​

The company’s overall like-for-like cosmetics sales grew by 5.7 per cent, with new markets posting a particularly impressive 10.3 per cent increase.

Standouts in these regions were Latin America and the MENA countries, which had respective growth of 15.2 and 15.1 per cent.   

The mature and competitive markets of North America and Europe, on the other hand, had respective increases of 4.5 per cent and 1.7 per cent.

The market leader’s strongest overall growth was in the Active Cosmetics brand, which had an 8.6 percent increase in like-for-like sales.