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L’Oréal said fourth-quarter sales climbed 8.1 per cent like-for-like to €10.3 billion, beating analyst expectations as it managed to maintain momentum in China, where persistent Covid-19-related challenges have posed a problem for the broader industry.
“All eyes are on China, where the company says they ‘grew appreciably’,” writes Bruno Monteyne, senior analyst, personal care at Bernstein, who points out that L’Oréal competitor Estée Lauder reported a decline in the region. Last week, Estée Lauder Companies said total organic sales were down 11 per cent to $4.62 billion in its second quarter. LVMH’s Perfumes & Cosmetics division reported 5 per cent organic sales growth to €2.1 billion in the fourth quarter.
In L’Oréal’s fourth quarter, active cosmetics led the growth (up 19.4 per cent). “The beat was particularly strong in professional (up 8.1 per cent versus consensus of 2.9 per cent). This category is where we would expect to see cyclicality. The fact that we don’t see any of that bodes well for consumer resilience,” writes Monteyne. Overall, sales growth was led by North America (9.4 per cent) and Europe (8.1 per cent), while sales in North Asia grew 4.9 per cent.
For the full year, L’Oréal’s sales grew 10.9 per cent to €38.26 billion. The company stressed that the L’Oréal Luxe division (up 10.2 per cent year on year) outperformed the global luxury beauty market. “In an unsettled environment, particularly in the second half of the year with the drastic slowdown of the Chinese market, the division confirmed the strength of its geographic footprint, which has allowed it to reinforce its global market share since 2019. The division grew in step with the market in Europe and significantly increased its position in North Asia,” the statement reads.
“We have emerged stronger from 2022 and reinforced our position as the world’s leading beauty company,” L’Oréal CEO Nicolas Hieronimus said in a statement. “Mindful of the current uncertainties, we remain ambitious for the future, optimistic about the outlook for the beauty market, and confident in our ability to keep outperforming the market and achieve in 2023 another year of growth in sales and profits.”
Bernstein’s Monteyne writes: “The story of L’Oréal continues: diversified growth engines deliver high-single-digit top line, with steady margin progression, and a strong balance sheet.”
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