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Renewed 'dynamism' in Europe helps drive L'Oreal

By Simon Pitman , 26-Jan-2007

L'Oreal has met its targets for 2006 after reporting a strong fourth quarter results, driven by renewed vigour in the Western European markets and a continued strong performance in new markets such as Russia and China.

The company said that quarterly like-for-like sales increased by 6.5 per cent , helping to grow total like-for-like sales for 2006 by 5.8 per cent compared to 2005, to reach €15.79bn.

Changes in consolidation during the financial year amounted to 3.1 per cent, which the company said was chiefly down to the addition of the Body Shop, which the company completed in the first quarter of the financial year.

 

"The strong growth of our sales at the end of the year enabled us to achieve the announced growth target for 2006," said Jean-Paul Agon, Chief Executive Officer of L'Oréal.

 

"This growth was achieved thanks to renewed dynamism in Western Europe and the remarkable performance in the new markets, particularly in Brazil, Russia, India, Mexico and China. The Body Shop delivered a good second half performance, strengthening the group's growth. Overall, the organic growth of our brands and the significant contribution made by the acquisitions led to a strong increase in the group's sales of 8.7 per cent," he said.

 

The figures meant the CEO was able to confirm that it had achieved its profit target for the year, of which the figures are due to be confirmed within the next month.

 

Looking at the performance by division, it remains clear that it is the growth of the company's smallest division - Active Cosmetics - that is still leading the pack. Sales for the year grew 12.2 per cent on a like-for-like basis, to reach €1.13bn.

 

This figure was backed up by the €7.90bn sales achieved by the company's largest division, consumer products, which recorded healthy growth of 5.8 per cent.

 

On a geographic basis, Agon was keen to point out that the performance at the company's all-important Western European market has picked up, following a prolonged period of stagnation.

 

Sales in the region came in at €6.99bn, an increase of 3.5 per cent on a like-for-like sales, and a significant increase on the performance during 2005, when sales only increased by 0.1 per cent.

 

The company said this was boosted by a return to growth in France, Germany and Italy, while strong growth continued in the UK and Spain.

 

[Popular brands with European consumers proved to be professional products such as Redken and Matrix in France, Belgium and Spain, while skin care ranges including Men Expert, Fructis and Garnier brands, proved to be particularly popular in Spain and the UK.

 

Of the other regions, the strongest growth was found in the Eastern European region, where sales increased 22 per cent to reach €850m. This figure was driven by an exceptionally strong performance in Russia, as well as the company's newly created Ukraine subsidiary.

 

Like-for-like sales in Asia rose by 7.9 per cent to reach €1.47bn, boosted by growth of 21.2 per cent in China on the back of strong consumer product sales for skin care lines such as Blanc Expert and UV Expert.

 

In Latin America like-for-like sales were up 16.1 per cent to reach €1.02bn, driven by particularly strong performances in Brazil and Mexico, where the launch of the NutriGloss line proved a big success.

 

North America saw the slowest performance, hampered by keen competition and a slow retail market, with like-for-like sales growing by 12.7 per cent.

 

Meanwhile The Body Shop recorded second-half net consolidated sales growth of 9.7 per cent, reflecting strong sales in the UK, Norway and Japan - further boosted by the launch of its Aloe Vera skincare range and the Neroli Jasmin fragrance.

 

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