L’Oréal Shows Strong Growth In Asia-Pacific, Africa

by Trefis Team
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L’Oreal (PINK:LRLCY) released its sales for the fiscal year on February 11. [1] Revenues grew 5.5%, on a like-for-like basis. The growth was supported by strong performance in the Asia-Pacific, Africa and Middle East markets. The strong performance in these regions mitigated the negative impact of a slowdown in sales growth from Western Europe. Western Europe accounts for about 35% of the company’s sales and the macro-economic conditions there were expected to negatively impact the results there. The company’s luxury products marketed under the Lancôme and Yves Saint Laurent brands performed particularly well in the year. Consumer products and active cosmetics segments reported solid performance too, with sales growing 5% & 5.8% respectively. However, sales of professional products were negatively impacted by a slowdown in the Southern European countries. On the back of its steady performance, the company now expects to outperform in the beauty products market in 2013.

L’Oreal is the leading cosmetics and beauty care player globally and competes with Revlon (NYSE:REV), Estée Lauder (NYSE:EL) and Avon Products (NYSE:AVP).

View our detailed analysis for L’Oreal here

L’Oréal Luxe Leads Sales Growth

L’Oréal Luxe sales grew by 8.3% like-for-like in 2012. The division outperformed market growth in each of the four quarters as a result of good performance in Asia and North America. Thanks to new product launches and its high-end customer experience, the Luxe brand gained market share worldwide. The company launched several new products under the Yves Saint Laurent brand, which helped the brand win the ‘Prestige Brand of the Year’ award from the American magazine WWD. [2] The brand has increased its focus on innovation which has helped drive its growth. Efforts in the direction saw the company strengthen its multi-business segment presence. The launch of Forever Youth Liberator in facial skincare, Vernis à Lèvres in make-up, and Manifesto, a women’s perfume were well received and underlined the trend.

Accelerated Growth For Active Cosmetics Segment

The active cosmetics division reported a sales growth of 5.8% during the year. The growth was roughly twice as fast as growth in the dermocosmetics market. The growth was supported by the re-branding of Vichy and the successful launch of skin care products under Idéalia. The La Roche-Posay brand became the top dermocosmetics brand in Brazil as it gained acceptance with approximately 25,000 dermatologists. The year 2012 was the first-ever year in which the division made more than 50% of its sales outside Western Europe. Besides growth in emerging markets, the division’s growth was also supported by expansion in the United States where it opened new sales outlets at Walgreen drug stores.

The Dermatology Segment Maintains Steady Growth

The Dermatology segment recorded a 5.9% like-for-like sales growth in 2012. The growth reflects the impact of competition from generics in prescription products in the United States. Besides the U.S, the segment reported strong growth in Asia and Latin America. Sales of over-the-counter (OTC) products increased strongly, driven by Cetaphil (a hydrating and cleansing skincare range). Within the prescription products category, Epiduo (Acne) and Oracea (rosacea) continued their growth. Epiduo is currently the world’s leading prescription production for topical acne treatment.

We will be revising our Trefis price estimate of $26 for L’Oreal after the company releases the detailed earnings report today.

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  1. Annual Results 2012, L’Oréal Finance, February 2013 []
  2. Brand of the year: Prestige, WWD, December 2012 []
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