L’Oréal recorded a historically high net profit of €1,506 million in the first-half of fiscal 2011 . Additionally, the company achieved improvement in gross profit at 71.5%, sustained investments in R&D and advertising and promotion, and an operating margin of 16.8%.
“Organic growth in the first half of 2011 has confirmed the good dynamics of the group, which is further strengthening its worldwide positions, particularly in North America, in Latin America and in Asia-Pacific," said Jean-Paul Agon, chairman and CEO. “These performances reflect the quality and solidity of the L’Oréal business model, based on powerful innovation, the vitality of our brand portfolio and a vast potential for internationalization. In an uncertain economic environment, these fundamentals make us more confident than ever in the group’s ability to build sustainable and profitable growth. For 2011, we confirm our ambition to outperform the market and improve the group’s profitability.”
In sales by operational division, professional products saw €704.6 million in the second quarter 2011 and €1,420.2 million in the first half of 2011, which represents 1.2% and 2.1% like-for-like growth respectively. However, it was also noted that the Professional Products division is operating in a difficult market this year, and its profitability has edged down from 21.2% to 19.8%.
In consumer products, a like-for-like increase of 4% lead to second quarter sales of €2,453.6 million, and a like-for-like increase of 5.2% to €5,037.3 million in sales for the first half 2011. The profitability of this division at 20.1% is slightly down on the first half of 2010, but is considerably higher than the full-year 2010 figure of 18.5%.
The luxury sales division saw second quarter sales of €1,133.3 million, up 9.5%, and first half sales of €2,249.8 million, a rise of 8.5%. Additionally, the profitability of L’Oréal’s luxury products is at 18.9%. Active cosmetics had sales of €352.6 million, an increase of 1.2%, in second quarter 2011 sales, and for first half 2011, the division saw a 3.2% increase to €797.7 million in sales. It too recorded very high profitability (26.3%).
In geographic regions, the strongest sales was in Western Europe, with €1,854.9 million in sales second quarter 2011 and €3,765.3 million in first half 2011. However, the North American market’s sales grew 4.5% in the second quarter 2011 and 5.8% growth in first half 2011, for €1,066.2 million and €2,183.4 million in sales, respectively. Additionally, new markets accumulated €1,772.9 million in sales in the second quarter 2011 and €3,556.3 million in the first half 201, with Asia-Pacific contributing the largest dollar amount, followed by Latin American, then Eastern Europe, and finally Africa and the Middle East.
Also, the group’s The Body Shop recorded a 4.9% increase in sales in second quarter 2011 (€167.9 million) and a 2.6% increase in first half 2011 (€337.4 million). The profitability of The Body Shop, which is mainly achieved in the second half of each year, came out at 2.8%. And the Dermatology division sales made €177.5 million in second quarter 2011 (+4.5%) and €307.2 million in first half 2011 (+5.3%). However, the division saw a decline in profitability as a result of two factors: competition from generics for Differin 0.1% gel and cream and for Loceryl, and negative exchange rate effects.