L’Oréal recently revealed its financial results for the third quarter. The global beauty industry giant is showing an impressive organic revenue growth of 11.1%. This reflects its resilience in the face of global economic challenges and market fluctuations.
L’Oréal is outperforming LVMH. The global cosmetics giant reported a 4.5% increase in third-quarter revenue to €10 billion on Thursday, surpassing expectations.
“In an uncertain economic and geopolitical context, we remain confident in our ability” to outperform the market and “achieve another year of revenue and earnings growth in 2023,” said L’Oréal’s CEO, Nicolas Hieronimus.
L’Oréal, which had seen double-digit sales growth for several quarters, dipped below the 10% mark in the second quarter of 2023, with revenue reaching €10.193 billion (+9.5%). Over the first nine months of 2023, the company posted a 9.4% increase in revenue, totaling €30.57 billion.
“Despite the slower-than-expected recovery of the beauty market in mainland China, L’Oréal continued to make strong progress,” said Mr. Hieronimus.
Decline in sales in China
However, the drawback of this performance is the decline in sales in North Asia, mainly in mainland China. During the third quarter, the group saw a 15% drop in sales in North Asia, totaling €2.04 billion, a 4% reduction over the first nine months. This decline is attributed to a “slow recovery in China” and a change in “travel retail” policy.
These results are below analysts’ expectations, who had anticipated organic growth in North Asia of 14.4% over the first nine months.
Nonetheless, L’Oréal maintained its growth thanks to solid performances in Europe and the United States. Sales in North America increased by 11%, reaching €8.3 billion, with growth in “all divisions.” Europe saw a 15.3% increase over nine months, with sales reaching €9.74 billion. This growth is spread across all countries, with particularly strong momentum observed in the “Germany-Austria-Switzerland and Spain-Portugal” regions, “the United Kingdom, the Nordic countries, and Eastern Europe.”
Latin America showed the highest growth (+27.4%) and reached €2.29 billion in sales. Additionally, the South Asia, Pacific, Middle East, North Africa, and Sub-Saharan Africa region recorded a 15.6% growth, surpassing €2.5 billion in sales.
Support from brands and emerging markets
The luxury division, including brands such as Lancôme, Yves Saint Laurent, and Giorgio Armani, saw its sales decline by 3% to €3.5 billion. However, revenue over nine months maintained a growth of 2.9%, totaling €10.8 billion.
In contrast, consumer products, including brands like Garnier, Maybelline, and L’Oréal Paris, recorded a 10.8% growth over nine months, reaching nearly €11.5 billion. This growth was driven by Europe and “emerging markets,” particularly Mexico and Brazil.
L’Oréal’s recent acquisition of the Aēsop brand marked a turning point, expanding its portfolio of high-end brands and opening new growth opportunities, particularly in China and the Travel Retail sector.
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Featured photo : ©L’Oréal
