Source: Company reports/Fung Global Retail & Technology

1H16 RESULTS

French cosmetics group L’Oréal reported 1H16 revenue of €12,895 million, up 0.6% and up 4.5% on a constant-currency basis.

SALES BREAKDOWN

The company noted an increase in sales across all divisions and geographies. Below, we break out L’Oréal’s sales results by division. Unless otherwise stated, all growth figures are for comparable sales at constant exchange rates. The Cosmetics division grew sales by 4.4% in total, broken down as follows:

• Consumer Products: L’Oréal said this division outperformed the market, with growth accelerating to 4.3%, helped by initiatives in makeup and haircare. Sales grew in all geographic regions, although the company noted that “the situation in France remains very difficult.” It saw “dynamic trends” in the UK and Spain and “strong expansion” in the US and new markets.
• L’Oréal Luxe: The company said this division continued to deliver “sustained growth” of 5.6%, despite difficulties in travel retail and in France. The company noted “good performances” in China, Japan, North America and Eastern Europe.
• Professional Products: Sales grew by 2.2%, with signs of a “gradual recovery.” The company noted that India, Russia and the UK were the top contributors to growth.
• Active Cosmetics: Sales grew by 5.0%, and L’Oréal said this division grew market share in a slowing dermocosmetics market. Western Europe held back performance due to an “unfavorable season.”

Elsewhere, The Body Shop’s sales fell by 0.6%. The company pointed to an impact from economic slowdowns in Hong Kong and Saudi Arabia. The company noted the following overall regional performances (figures are for comparable sales at constant exchange rates):

• Western Europe posted growth of 1.7%, with good performance in all markets except France, where trading was difficult “in all distribution channels.”
• North America sales grew by 4.6%; the Consumer Products division was said to have outperformed the market.
• New Markets:
  • Asia-Pacific sales increased by 4.6%, driven by Southern Asia. Northern Asia performance is being held back by lackluster demand in Hong Kong and by difficulties faced by the Magic facial skincare brand in China. However, L’Oréal Luxe grew strongly in China.
  • Latin America sales grew by 10.8%, although currency effects mean that reported revenues declined by 9.1%. Brazil was noted as returning to growth.
  • Eastern Europe sales increased by 8.9%, with the Professional Products and L’Oréal Luxe divisions growing strongly. Consumer products performed well in Russia, but the division’s sales slowed in Turkey.
  • Sales grew by 9.7% in the Africa and Middle East region. The company observed that the market was slowing.

OUTLOOK

The company said that first-half performance strengthened its confidence that it would outperform its market, and that it anticipates sales and profit growth in FY16.