Posted: July 31, 2014
In its announced financial results for the first half of 2014, L’Oréal found solid results with a good operating profitability progression, as well as growth contrasted by divisions. The company saw sales of €11.17 billion, representing an operating profitability at 18.2% of sales and 3.8% growth in like-for-like figures. However, reported figures were down 1.5%.
Commenting on the figures, Jean-Paul Agon, chairman and CEO of L’Oréal, said,“A good progression in operating profitability was once again achieved in the first half, at 18.2% of sales, further illustrating the robustness of L’Oréal’s strong value-creating business model. First-half sales showed contrasts by distribution channel. L’Oréal Luxe is growing rapidly, driven by the vitality of the novel brands Urban Decay, Kiehl’s and Clarisonic and by the success of fragrances with Lancôme, La Vie est Belle, and Giorgio Armani, Sì. The active cosmetics division also delivered a very good performance thanks to La Roche-Posay, which this year once again is growing very strongly, the continuing recovery of Vichy, and the roll-out of SkinCeuticals. The professional products division is confirming its gradual improvement across all its brands. The consumer products division’s growth is held back by a sluggish American market and, to a certain extent, by a slowdown in the new markets, but remains solid in Western Europe. In an uncertain economic and monetary environment, we are confident in the group’s ability to once again outperform the market in 2014 and to post another year of like-for-like sales growth, improved profitability and increased net earnings per share. Following the finalization on July 8, 2014 of the strategic transaction between L’Oréal and Nestlé, the group will record this year a capital gain of more than €2 billion. The cancellation of 48.5 million shares will have an accretive impact of more than 5% on net earnings per share on a full year basis.”
For the company’s professional products division, L’Orèal recorded sales of €769.9 million for Q2 2014 and €1.5 billion for the second half of 2014. It was growth of 3% like-for-like and -1.7% based on reported figures for the half year. The division’s growth was weaker in Asia, but has been confirmed in Western Europe and the United States. Hair care and hair colorants are the main contributors to growth, while styling also is growing strongly. And the return to growth in mature markets has been confirmed. The division also is maintaining good momentum in the new markets (excluding Japan), which are still dynamic, especially in India, Russia and Brazil.
For the consumer products division, the company saw Q2 2014 sales of €2.7 billion and €5.4 billion for the first half of 2014. For the half year 2014, the division recorded growth of 2% like-for-like and -4.2% based on reported figures. Well-positioned to benefit from the gradual improvement in European markets, it was nevertheless held back by an American mass market that has been slow to pick up, and, to a certain extent, by slower growth of the market in the emerging countries. Recent launches, which have provided a strong boost in hair where the division is continuing to win market share, have been less effective in facial skin care in the first part of the year. The division is maintaining its very good momentum in hair care, particularly in China, Europe and the U.S., and in makeup, L’Oréal Paris is expanding well. Among the geographic zones, North America has been held back by a sluggish market and a high comparison base. However, the division has posted solid growth in Western Europe and Brazil and continues to be dynamic in Southern Asia, Eastern Europe and Africa, Middle East, where it is gaining market share.
L’Orèal Luxe recorded Q2 2014 sales of €1.4 billion and €2.9 billion for the first half of 2014, with the half year numbers representing a growth of 7.4% like-for-like and 2.7% based on reported figures. Urban Decay is recording very strong growth, and the same is true of the American alternative brands Kiehl’s and Clarisonic. Giorgio Armani, Yves Saint Laurent and Ralph Lauren are maintaining their dynamism, and Lancôme’s fragrance La Vie est Belle is now number one, both in the French market and in the five major European markets combined. The luxe division also is expanding in all its strategic categories and is gaining market shares across all geographic zones, particularly in the new markets, notably China, and in the U.S. and Western Europe.
For its active cosmetics division, the company recorded Q2 2014 sales of €413.5 million, and half year 2014 sales of €920.9 million. In the first half, active cosmetics continued its sustained growth at 8.1% like-for-like and 3.2% based on reported figures. The first-half headline was the very good start made by sun protection, both at Vichy and at La Roche-Posay. La Roche-Posay has posted once again double-digit growth on every continent, and RogerGallet successfully launched a new fresh fragrance, Gingembre Rouge, in the second quarter. Also, all the geographic zones are contributing to growth, with strong market share gains in France, Russia, Brazil and China.
The Body Shop recorded Q 2014 sales of €187.4 million and first half 2014 sales of €363.8 million. It recorded sales of -1.7% like-for-like and -1.4% based on reported figures for the first half of 2014. Business in Europe, North America, the Middle East, Africa and Brazil was driven by innovations, and strategic priority given to skin care is delivering, driving growth in this category. Asia is still facing challenges in certain markets that are affecting performances, however. At June 30, 2014, The Body Shop has 3,041 points of sale, including those of Emporio Body Store.