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No time for L’Oréal to rest on laurels as it continues to target growth

By Andrew McDougall+

05-Apr-2013

Despite being in a good financial position and maintaining its position as one of the leading cosmetics companies, L’Oréal has continued to seek out growth, in what has already been an active 2013.

The French firm posted double-digit growth in earnings for 2012 , with a strong performance in the emerging markets and rising profit prompting the company to look ahead with positivity.

Compared with its leading rivals globally, L’Oréal has performed very well due to its sole focus on the cosmetics market; whilst Unilever also posted double-digit increases, it is at the disadvantage of having a broad offering.

Procter & Gamble also struggles due to its diluted focus and lagged slightly behind based on fourth quarter results for its beauty and grooming division.

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

Acquired strength

For some, having a strong year in such a difficult climate may be an excuse to take it easy, but not for the beauty behemoth and Agon has announced the company are open to acquisitions to further strengthen.

"[L’Oréal is] ready to make important acquisitions when the opportunity presents itself,” said Agon, adding that there would be a means to bolster the company's brand portfolio in terms of different consumers or distribution channels.

The acquisition route is a tried and tested one for L’Oréal having bought Clarisonic which has grown by 50 per cent year-on-year in volume terms in 2012, whilst the acquisition of Urban Decay has added a premium colour cosmetics brand to its arsenal.

L’Oréal also acquired Colombian colour cosmetics brand Vogue allowing it to take advantage of the growing bricks-and-mortar retailing channel in Latin America.

Busy, busy, busy…

On top of this, the company also invested in the world’s largest hair colour facility in Mexico and opened up a Saudi Arabia subsidiary to expand its presence in that market, at the end of last year.

There was no let-up in the New Year either, as L’Oréal unveiled its new research and innovation centre in Mumbai as it attempts to quadruple sales in India.

And now, the focus is firmly on China as the company’s Shanghai research centre embarks on the development of specialised cosmetics for the Chinese market as it attempts to gain a greater share of the market from its rivals on the region.

Analysts still believe that there is a lot of potential for L’Oréal in China, and coupled with the company’s healthy position, it could be another year of further growth for the cosmetics giant.

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