No change in the near future for L’Oréal as growth slows


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No change in the near future for L’Oréal as growth slows

Related tags Europe Eastern europe

L’Oréal CEO Jean-Paul Agon has stated that he does not expect any change in the next twelve months for the global cosmetics market after the French firm posted its third-quarter sales in which growth has slowed.

For the quarter, ended 30 September 2012, revenue reached €5.52 billion ($7.07 billion), a climb of 4.6 per cent; however this has slowed from the 9.4 and 11.6 per cent growth reported in the first two quarters respectively.

The cosmetics maker’s quarterly growth is also weaker than some of its major beauty rivals, including Unilever and Estee Lauder, whose beauty divisions grew 8 per cent and 6 per cent respectively.

Keep calm…

Speaking in a conference call, the L’Oréal boss remained defiant that the company will improve in the fourth quarter and stated his belief that the growth of the global cosmetics market next year will follow the same path.

"Today, we have no reason to believe that the growth of the market next year will be very different compared to this year,"​ said Agon.

"We are anticipating a fourth quarter that will be slightly better than the third quarter,"​ he said, adding that a growth of "around 4 percent​" was forecast for the global cosmetics market in 2012 and "slightly below 4 percent​" in the second half of the year, meaning L’Oréal are on course.

Professional ‘low point’

The professional products division’s performance was “a low point​” according to Agon although this is expected to return to form in the fourth quarter along with the rest of the business.

The market in Asia, which had been a positive for the first half of the year, also saw a slowdown, whilst both the Southern and Western European markets posted negative growth.

North America continues to be the most improved performer this year as sales rose 7.1 per cent; building on the sustained growth it showed in the first half of the year.

Showing ambition

“Despite the market slowdown observed in Asia and in travel retail, L’Oreal Luxe is proving highly dynamic,”​ continued Agon. “We confirm our targets for 2012, and our ambition to achieve another year of growth in sales, results and profitability.”

Revenue increased 6.6 per cent in the luxury division, 5.6 per cent in the active cosmetics segment, and 4.9 per cent in consumer products.

"In a market which reflects highly contrasting trends in different geographic zones and distribution channels, L'Oréal is maintaining its course. Eastern Europe is gradually recovering, and Latin America is accelerating. The figure for Western Europe reflects good performances in several major countries, and the difficult situations in the southern countries,”​ Agon concluded.

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