L'Oréal reported its annual financial results for 2012, which saw sales of €22.46 billion, a 10.4% increased based on reported figures and a 6.2% increase with currency fluctuations. It also represented a 5.5% like-for-like increase over 2011’s results.
Commenting on the results, Jean-Paul Agon, chairman and CEO of L'Oréal, said, “2012 was a good year for L’Oréal on many fronts. The Group achieved strong sales growth, and once again demonstrated its ability to outperform the beauty market, and to gain market share, even in the more difficult markets of Western Europe and the United States. 2012 was also a very good vintage in terms of innovations—amongst the most remarkable in the industry—in each of our divisions and major business segments. 2012 also marked a milestone in the acceleration of the group’s internationalization, as the ‘new markets’ became the number one geographic zone. Lastly, the profits and cash flow have grown very strongly, reaching record levels, and confirming the power of our business model.
“In view of these successes and improvements, we are facing the future with optimism and confidence. Confidence in the positive dynamics of our market. Confidence in the strength of our ‘Beauty for all’ mission, in our universalization strategy, and in our ambition to conquer one billion new consumers. And finally, confidence in the fundamentals of L’Oréal: its research, its ability to innovate and create high quality products, its outstanding portfolio of brands, its business model, which creates both value and cash flow, and lastly the unique strength of its teams. The group is thus well prepared to outperform the market in 2013, and to achieve another year of sales and profit growth,” Agon concluded.
For its professional products division, the market was affected by the slowdown in southern European countries, and with the low weight of the new markets, it posted +2.1% like-for-like and +6.7% reported growth in 2012. In the technical products category, the new-generation long-lasting hair colorant ODS2 (Oil Delivery System) was rolled out worldwide under the brands INOA2 by L’Oréal Professionnel, Chromatics by Redken and, at the end of the year, ColorInsider by Matrix. Hair care is growing strongly, boosted by hair oils, and by the rising momentum of the division’s luxury brands: Kérastase, with Cristalliste and with the recent launch of Initialiste, along with Pureology and Shu Uemura Art of Hair. The professional products division is making progress in Germany, France and the U.K., but sales have receded in southern Europe because of a decline in salon visits. In the U.S., the year was marked by SalonCentric’s supply chain reorganization. The division’s positions are rising strongly in the new markets in Eastern Europe, Asia and the Middle East.
The consumer products division achieved sales growth of +5% like-for-like and +8.9% based on reported figures, driven by strategic advances in Western Europe and North America, along with major product initiatives. Hair care is growing strongly, thanks to the good results of the renewal of Elvive by L’Oréal Paris, its new Arginine Resist for fragile hair, and hair oils. In hair colorants, the year-end was marked by the launch of Olia by Garnier, the first home-use hair colorant to feature ODS technology. This initiative, which marks a breakthrough in the market, is making a strong start in Western Europe, and will then be rolled out worldwide. The facial skin care category also is growing, thanks to the worldwide success of Revitalift Laser byL’Oréal Paris, an anti-aging innovation with a high concentration of Proxylane, and BB Cream by Garnier, whose success has effectively created a completely new category And, the makeup category was enlivened by the innovative Volume Express Mega Plush mascara by Maybelline and by the start of the internationalization of the Essie brand. The division also set a new all-time record for market share in Western Europe, notably in France, along with North America. In the new markets, the division is improving its positions in Mexico, Chile, Indonesia, Thailand and Turkey.
In 2012, L'Oréal Luxe sales grew by 8.3% like-for-like and +16% based on reported figures. In each of the four quarters, the division significantly outperformed market growth, thanks especially to the dynamism of Lancôme, and the good performances in Asia and North America. The Lancôme brand grew strongly, driven by innovations in facial skin care with Génifique Yeux Light Pearl, and in fragrances with the launch of La Vie est Belle, and thanks to the brand’s new premium luxury positioning, with Absolue L’Extrait. The year 2012 also brought a change of status for Yves Saint Laurent, which is significantly gaining strength, and the strategic facial skin care category is growing strongly. The successes of Lancôme are backed up by the powerful worldwide growth of Kiehl’s and the expansion of Clarisonic in instrumental cosmetics in the U.S. Women’s fragrances are also being supported by the launch of Ralph Lauren’s Big Pony Collection for Women and by the rising momentum of Flowerbomb by Viktor & Rolf. In makeup, the end of the year was notable for the launch of Maestro foundation by Giorgio Armani, with a remarkably innovative formula, and finally for the acquisition in December of the Californian makeup brand Urban Decay. The division also outperformed the market in all the major zones and in travel retail.
2012 was a particularly good year for the active cosmetics division, with sales growth of 5.8% like-for-like, and 7.5% based on reported figures, which is roughly twice as fast as the trend in the dermocosmetics market. 2012 brought a new start for Vichy, driven by its new brand identity, and strong initiatives such as Idéalia, in skin care, and Dercos Neogeni. The La Roche-Posay brand, strongly established with 25,000 dermatologists, is maintaining its strong growth rate, and has in fact become the top dermocosmetics brand in Brazil. Its latest innovation, Redermic-R is extremely promising. The division’s relay brands are making a strong contribution to its success. SkinCeuticals, the premium medical and professional brand, is continuing its internationalization. Lastly, 2012 was the first-ever year in which the division made more than 50% of its sales outside Western Europe. It also made a breakthrough in North America, and is maintaining its strong dynamism in Latin America.
The European context saw the decline of markets in the southern countries, particularly in hair salons and the luxury segment, and the resilience of the rest of Europe. At 12 months, L'Oréal sales increased by +0.6% like-for-like, and +2.1% based on reported figures, thus raising its market share, particularly in the consumer products division, which consolidated its number one position. The group performed well, particularly in France, where the acquisition of Cadum fully played its part, in the U.K., in Germany and in Northern Europe.
In North America, L'Oréal ended 2012 with growth of 7.2% like-for-like and 18.3% based on reported figures. The good results seen in 2011 were surpassed in 2012. The consumer products division became number one in its segment, thanks to strong growth at Garnier, Maybelline and Essie. The end of the year was marked by the strategic launch of L'Oréal Paris Advanced Hair Care. L'Oréal Luxe outperformed its market, thanks especially to Clarisonic. The active cosmetics division significantly increased its presence in drugstores.
In the Asia Pacific region, L'Oréal achieved annual growth of +9.6% like-for-like and +18.4% based on reported figures. The group is increasing market share in the region. While the selective channel context slowed in the second half, particularly in South Korea and in Travel Retail, L'Oréal strengthened its positions thanks to initiatives by Lancôme, Kiehl's and Yves Saint Laurent. In China, the group grew faster than the market, especially with L'Oréal Luxe, Maybelline and L'Oréal Paris Men Expert. India, Indonesia and Thailand are particularly dynamic, driven by local initiatives such as Colossal Kajal by Maybelline, and the Garnier Men range.
For Eastern Europe, there was sales growth of +3.9% like-for-like and +5.1% based on reported figures, and the group is continuing its recovery, and is once again growing faster than the market. The turnaround is being driven by the professional products division, with its conquest of new hair salons, particularly in Russia and Poland, and by the consumer products division, thanks to the success of Elvive Arginine by L'Oréal Paris and Garnier ColorSensation hair colorants.
For Latin America, L'Oréal achieved like-for-like growth of +10.4% and +8.7% based on reported figures, with increased growth in the second half. In 2012, L'Oréal became a market leader in Mexico, and expanded its positions in Chile, Argentina and Uruguay. L'Oréal accelerated its roll-out in the countries of Central America, and in Colombia, with the acquisition of the Vogue brand in Colombia. In Brazil, the initiatives of Elvive Arginine Resist, hair oils and hair colorants led to an improvement in positions. The dynamism of the active cosmetics division in this zone is also worth noting.
With growth of +14.7% like-for-like and +17.6% based on reported figures, the Africa Middle East zone recorded very good performances in Turkey, the Gulf States and the Levant. 2012 was notable for the rising momentum of new subsidiaries in Egypt and Kenya, and the opening of a new subsidiary in Saudi Arabia.
2012 also was a year of acceleration for The Body Shop, whose sales grew by +4.9% like-for-like and +11.4% based on reported figures. The brand unveiled its new "Beauty with Heart" identity in 2012, and started rolling out the new Pulse store concept. In addition, The Body Shop continued its multi-channel approach with a strong increase in e commerce. In 2012, the brand strengthened its offering in skin care categories, with the success of the Chocomania body care range, and in facial skin care, with the innovative Drops of Youth. The Body Shop also achieved dynamic sales in the Middle East and in southeast Asia, while recording solid scores in Europe.
Galderma sales increased by +5.9% like-for-like and +12.9% based on reported figures, with a fourth quarter which, as announced, reflected the impact of competition from generics in prescription products, especially in the U.S. Epiduo (acne) and Oracea (rosacea) are continuing to grow in the prescription products category. And sales of over-the-counter (OTC) products increased strongly, driven by Cetaphil, a hydrating and cleansing skin care range. The strong growth of the Restylane range (dermal filler) and the success of Azzalure (muscle relaxant) have this year once again helped to make Galderma one of the world leaders in the aesthetic and corrective dermatology market. Asia and Latin America are also growing strongly.