Financial results underline effects of costs, currency and emerging markets

By Simon Pitman

- Last updated on GMT

Related tags: Personal care, United states dollar

The five biggest international finished goods manufacturers continue to post improved results, although rising costs, currency translation and sluggish developed markets continue to throw up challenges.

Without exception all the big international players reported higher overall sales on the back of strong international sales for the most recent quarter. The performances were were mainly derived from continued economic growth in the emerging and new markets of Latin America and Asia Pacific.

Breaking down the results for the world’s biggest cosmetic and personal care player, L’Oreal, the trend was down for its current second quarter compared to the stronger results for the previous quarter.

L’Oreal reported organic sales up 4.6 per cent to €4.64bn, a relatively modest performance compared to the 8.2 per cent increase in sales for the first quarter for the year.

The slowdown was put down to sluggish sales in the Eastern European market, which has been hit by the Euro debt crisis as well as rising consumer goods prices, particularly for food.

Beiersdorf's focus on skin care pays off

Another big European player, Beiersdorf, posted slower sales growth, although the trend is up as the company, which has been struggling on the back of falling European sales and an unfavourable product mix.

The company posted first half results up 2.6 per cent to €2.9bn, a figure that was hit by unfavourable currency exchange, which translated as an actual increase of 1.9 per cent.

The first half sales gains were underlined by a strong performance in the Americas region, mainly driven by the Latin American markets, where sales were up 14.3 per cent. But the performance was not so rosy in Europe, where sales were fractionally down at €1.5bn.

The company has been streamlining its business of late, reducing its business in the colour cosmetics arena to concentrate more on its mainstay Nivea skin care ranges.

Unilever increases personal care footprint

Meanwhile, Unilever has continued to extend its position in the personal care arena, as the category plays an increasingly important role for the Anglo-Dutch player.

The company reported second quarter group sales up 7.1 per cent to €11.9bn, which represented growth of 5.1 per cent taking into consideration currency translation. This figure included a 5.8 per cent growth in personal care sales to €3.8bn for the period, making the division by far its biggest business.

Analysts at investment bank Liberum Capital last week speculated that Unilever is gearing up to exit certain categories of its food business in an effort to re-invest further in higher growth potential categories in the personal care category.

P&G warns on slower outlook for developed markets

Unilever’s big US-based rival P&G posted even stronger fourth quarter results, partly driven by the fact that the dollar remains weak against international currencies.

Its group sales grew by 10 percent to reach $20.9bn (€14.7bn), while net income grew by 15 percent to $2.5bn, although the company did warn about future prospects, underlining the fact that consumers in developed markets are coming under increasing economic pressures.

Both grooming and beauty sales rose by 7 per cent to reach $2.1bn and $5.1bn respectively, performances that were both underlined by bigger gains in the emerging markets.

Major Japanese international player reported a healthy increase in its latest first quarter results on the back of big growth in its international markets.

Sales grew by 7.9 per cent to ¥157.3bn (€1.44bn), a figure that reflected growth of 2.6 per cent in the mainstay domestic market, to ¥89.6bn. Growth in the international markets was mainly boosted by gains in the US and China, while Europe has continued to show signs of recovery.

Related topics: Business & Financial

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