Weak Euro boosts L’Oréal as sales in Asia recover

The company’s sales in Asia had been disappointing during the middle of 2015, as economic turbulence in the region impacted consumer spend, but the fourth quarter results underlined that sales had rebounded in the Asia to recover the earlier weakness.

According to the French firm’s results, revenue was €6.5 billion for the fourth quarter of 2015, representing a 4.2% increase on a like-for-like basis, and 9% on a reported basis due to a weaker euro; results which beat analyst estimates.

"In a year marked by a worldwide economic slowdown and increased international volatility, L'Oréal achieved strong growth in 2015, supported by a positive monetary effect, and outperformed the market in three of its four Divisions,”​ says Jean-Paul Agon, company CEO and chairman.

Speaking at a sales conference following the results announcement, the L’Oréal boss adds that he expects another year of sales and profit growth in 2016, commenting "this year the market's growth should be around 3.5%."​

”We are entering 2016 with the ambition to outperform the cosmetics market and achieve another year of sales and profit growth,"​ he says.

Luxe and North America shine through​

Much of the fourth quarter success has been down to significant sales gains in the Luxe division, as well as the North America region.

L’Oréal Luxe posted sales of €2.038bn for the fourth quarter, representing an increase of 6.8% on a like-for-like basis; translating to double-digit growth (13.5%) on a reported basis.

“L'Oréal Luxe delivered another year of robust growth, driven by the strength of its brand portfolio and its cutting-edge innovations,”​ says Agon.

North America was the standout region for L’Oréal in the past three months with sales reaching €1.7bn during the quarter, a 5% increase like-for-like, and an increase of 18.2% per cent on a reported basis.

Agon adds that the North America performance significantly strengthened through the course of the year with key brands, such as Urban Decay and Kiehl’s recording double-digit growth.

The beauty behemoth’s leadership in its main market in Europe was also further accentuated with sales eclipsing €2bn with 4.5% reported growth, while the Active Cosmetics and Professional Products divisions both saw steady growth.

Strong, challenging year​

For the year Group sales were up 3.9% like-for-like (12.1% reported) to €25.26bn with good momentum carrying on throughout the 12 months.

With Luxe performing very well, along with Active Cosmetics and Professional Products staying ahead of the market, Agon does point out that with sales growth of 2.5% for the year, the Consumer Products Division did not outperform its market, “but improved in the second half, thanks especially to the powerful acceleration in the make-up category.”​

The L’Oréal chief also points out that trends in the New Markets were more contrasted, “in a context that was challenging in some countries, such as Brazil and Russia.”​

E-commerce sales however, saw a big boost for the year, helped by the company’s increased focus on digital, with sales reaching €1.3bn, reflecting very rapid growth, and accounted for more than 5% of Group sales.

“In a volatile and uncertain economic environment, particularly in some emerging countries, the Group can rely on its balanced footprint across beauty categories, distribution channels and geographic zones,” ​adds Agon.