L’Oréal expecting continued growth following positive H1, says Agon

By Andrew MCDOUGALL contact

- Last updated on GMT

L’Oréal expecting continued growth following positive H1, says Agon

Related tags: Western europe, Europe, Developed country, Giorgio armani

The L’Oréal boss says he expects a positive second half of the year after Western Europe and North America continued their improvement and the company sees ‘significant growth’ in 2015.

The Paris-based cosmetics maker saw first half sales rise by 14.7% to €12.8 billion thanks to positive effects of the exchange rate and growth in all of its divisions, with a year-on-year increase of 15.3% in second quarter sales.

"At the end of June, our reported growth is the strongest recorded for the last twenty years, with a very positive currency effect,”​ comments company CEO, Jean-Paul Agon.

It is not 100% good news for the beauty behemoth however, as it’s like-for-like 3.6% sales growth year-on-year in the second quarter was slightly below market expectations of 4%, although Agon has moved quickly to say that this is down to a difficult economic situation in Brazil, while improvements in Europe and the US leave a lot to feel positively about.

“Among the geographic zones, sales are improving in Western Europe and North America,”​ he says. “The New Markets are experiencing solid momentum, excluding Brazil where the economic context is very unfavourable.”

“The strong increase in sales has been achieved alongside good quality first-half results. As announced, operating profit growth is very strong and our operating profitability is practically stable at a high level.”

Regional growth returns

Growth in Western Europe has understandably been gradual at 1.9% like-for-like and 4.5% based on reported figures; given that this is one of the firm’s most developed markets this is positive result.

L'Oréal Luxe is a stand out performer in this region, while it still appears challenging in the mass market, although Germany and the UK are making large market share gains.

North America perhaps stands out further for L’Oréal  in the first half of the year with 2.7% like-for-like growth and 26.8% based on reported figures, thanks to L'Oréal Luxe, the Active Cosmetics, and Professional Products Divisions all driving growth, while the Consumer Products Division is continuing to strengthen its positions in make-up.

“L’Oréal Luxe is significantly outperforming a dynamic worldwide market with a double-digit growth of its brands Giorgio Armani, Yves Saint Laurent and Kiehl’s. Professional Products are showing a clear rebound thanks to the performance at L’Oréal Professionnel and the success of Redken,”​ continues Agon.

The Active Cosmetics Division is also greatly strengthening its worldwide position, driven in particular by its La Roche-Posay brand, whose success is continuing in all regions.”

Even though results are being dragged down by Brazil, Agon says he is still confident the company will continue to outperform the market and gain share in countries such as Russia, Turkey, South Africa, Saudi Arabia, and the US.

Expectation and investment

He also points to the ‘significant’ investments the company continues to make in accelerating the digital transformation and development of its brands.

“Thanks in particular to a rich innovation portfolio, prospects of rapid e-commerce growth and the continuing roll-out of recently acquired brands, we are projecting an acceleration in growth in the second half,”​ adds the L’Oréal chief.

“We are confident in our ability to outperform the beauty market and achieve a year of significant growth in both sales and profits."

Related topics: Business & Financial

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