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Posting its first quarter 2013 results, L’Oréal reports a solid quarter that saw €5.93 billion in sales, which represent growth of 6.5% (excluding currency fluctuations) and 5.5% like-for-like growth, with 5.1% growth based on reported figures.
Highlights from the report include strong growth in the consumer products, L'Oréal Luxe and active cosmetics divisions, while the professional products market weakened. Also, the company saw new records for market shares in Western Europe and North America, as well as sustained dynamics in new markets, and it has confidence in another year of sales and profit growth.
Commenting on the figures, L'Oréal chairman CEO Jean-Paul Agon said, “L'Oréal has made a solid start to the year, with good organic growth, along with really significant market share gains. The consumer products, L'Oréal Luxe and active cosmetics divisions are growing strongly, driven by major innovations such as Olia by Garnier, L'Oréal Paris Advanced Haircare, La Vie est Belle by Lancôme, or Idéalia by Vichy. All our brands are on the offensive, and this has enabled the group to post new records for market shares, especially in Western Europe and North America. Growth trends in the new markets are homogeneous and sustained. The professional products division meanwhile is still being held back by the very difficult market context, particularly in Southern Europe. These strategic advances, together with the quality of initiatives across all divisions, both in developed countries and the new markets, make us confident in our ability to outperform the market in 2013, and to achieve another year of growth in both sales and profits."
By division, at end the end of March, the professional products division was stable in like-for-like terms, posting -0.4% based on reported figures. Markets in mature countries remain difficult, particularly in Southern Europe, and salon visits in the U.S. have contracted. The dynamic trend of the new markets also is continuing. The division, historically exposed to mature markets, is above all feeling the effects of economic sluggishness in Italy, Spain and Portugal, with a very sharp fall in salon visits. In the new markets, the division is strengthening its positions in Russia, and is growing strongly in India, Indonesia and Africa-Middle East.
The consumer products division achieved growth of 6.5% like-for-like and 5.5% based on reported figures, driven by the success of its major product initiatives and significant market share gains in key countries. Innovations enabled the division to make breakthroughs in hair care, hair colorants and facial skin care, both in Western Europe and North America. In the new markets, growth is improving, thanks especially to the new dynamism in Brazil and Russia.
L'Oréal Luxe advanced by 7.2% like-for-like and 8.1% based on reported figures, including the first time consolidation of the Urban Decay brand. L'Oréal Luxe is growing faster than the market, thanks to good growth trends for the major brands in the portfolio, and its performances in the new markets and in North America. While Western Europe remained lackluster for the division, the U.S., China and the Gulf States are growing strongly.
Also in the first quarter, the sales of the active cosmetics division clearly accelerated at 7.2% like-for-like (6.2% based on reported figures), thanks to the recovery of Vichy and the continuing strong growth of La Roche-Posay. The first part of the year was marked by a very good start in Western Europe, where the division wins market share, even in Southern Europe, and trends in North America and South America remain robust, as well.
L'Oréal posted growth of 6.3% like-for-like and 8.5% based on reported figures in North America. The results are continuing in the consumer products division, andL'Oréal Luxe also produced a solid performance, thanks to Clarisonic, Kiehl's, Yves Saint Laurent and Viktor&Rolf, together with Urban Decay, which was consolidated for the first time. Vichy and SkinCeuticals made a good start to the year in active cosmetics.
In Asia-Pacific, L'Oréal recorded growth of 7.7% like-for-like and 5.7% based on reported figures. If Japan is excluded, like-for-like growth came out at 8.9%. The group is continuing to gain market share here, thanks especially to L'Oréal Luxe. There are contrasting trends in markets in this region: South Korea is strongly negative, but China, India and the ASEAN countries remain buoyant. For L'Oréal Luxe the first quarter reflected continuing strong growth in China. The consumer products division posted, with L'Oréal Paris, good performances in China and India, and proved dynamic in Indonesia and Thailand.
Eastern Europe posted growth of 9.2% like-for-like and 8.2% based on reported figures. Growth in this zone is driven by Russia and Ukraine, while the other countries, such as Poland, are still sluggish. The consumer products division's turnaround is continuing, the professional products division is actively pursuing its conquest of hair salons, and L'Oréal Luxe has made a good start to the year.
For Latin America, L'Oréal has started the year with an increase in sales of 11.8% like-for-like and 5.8% based on reported figures. Brazil is accelerating, driven by market share gains in hair care, thanks to Elsève at L'Oréal Paris, and in hair colorants, thanks to Mini Kit Nutrisse Cor Intensa by Garnier. Market share is also increasing in Mexico and Chile. The active cosmetics division is continuing to grow very strongly in this zone.
And the Africa-Middle East zone made a solid start to 2013 with growth of 15% like-for-like and 11.8% based on reported figures. Saudi Arabia and Egypt are growing strongly, and the same is true of Turkey. In sub-Saharan Africa, the group is strengthening its positions with the acquisition of the hygiene and beauty business of Interconsumer Products Limited (ICP) in Kenya.
The Body Shop recorded sales growth of 1.8% like-for-like, and 0.8% based on reported figures. The Middle East and Southeast Asia posted good growth while sales in mature markets are being affected by the depressed economic environment. Internet sales are clearly proving to be a strategic channel for recruiting new consumers.
And Galderma sales decreased by 0.4% like-for-like, and increased 2.1% based on reported figures. The first quarter was affected by a combination of negative factors, especially pressure from generics in Europe which, as announced, is impacting Tetralysal (acne). Loceryl (fungal nail infections) is also experiencing stiffer competition in Germany and Russia. Sales of prescription products are increasing. Epiduo, the world's first prescription treatment in the topical acne market, and Clobex (psoriasis) are growing strongly, especially in North America. Medical solutions in aesthetic and corrective dermatology are continuing to advance, driven by the strong growth of Azzalure (muscle relaxant), particularly in Asia-Pacific.