Strong Q1 figures leave L'Oréal licking its lips

By Andrew McDougall

- Last updated on GMT

The global cosmetics giant reported strong growth for the first quarter of the year thanks to the power of brands in Consumer and Luxury Products as well as accelerated growth in the US.

Based on reported figures, the group's sales at March 31, 2011 amounted to €5.16bn, an increase of 9.3 per cent on last year's results.

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Jean-Paul Agon, CEO of L'Oréal, said: “The start to this year is encouraging, as it confirms the group’s good dynamics, to which all divisions are contributing, particularly Consumer Products and Luxury Products, driven by the vitality of their major brands: L’Oréal Paris and Maybelline on the one hand, and Lancôme, Giorgio Armani and Kiehl’s, on the other.”

Consumer and Luxury Products hauling in the money

The Consumer Products Division achieved sales of €2.58bn, a growth of 9.4 per cent, and is continuing to advance well in North America and in the New Markets.

L'Oréal pointed out that its L'Oréal Paris range aided this with new products in skin care hair care and make up, as well as new hair and body lotions in the Garnier range.

The Luxury Products Division recorded growth of 10.3 per cent with sales reaching €1.12bn, significantly affected again by sales in the US, and the new markets.

Lancôme​launched its new skin care lines, Giorgio Armani launched its new women’s fragrance and strengthened its men’s lines, whilst Kiehl’s also continued its global expansion thanks to its facial skin care lines.

US and New Markets accelerating growth

“In geographic terms, North America is accelerating strongly. Growth continues to be robust in the New Markets, particularly in Latin America, in Asia excluding Japan, and in Africa, Middle East,” continued Agon.

In the first quarter, North America achieved growth of 11.9 per cent with figures of €1.12bn, and all divisions recording positive growth. The Luxury Products Division made a good start to the year, in particular with a rebound at Lancôme, while the Consumer Products Division made clear market share gains in all categories.

The New Markets amassed sales of €1.83bn, an increase of 17.2 per cent.

“However, the situation remains more contrasting across Europe. These performances reflect the quality of our innovations, the force and diversity of the brand portfolio, and the right balance in our geographic positions,” Agon explained.

In a globally flat market, the group achieved growth of 1.5 per cent, thanks in particular to the UK, Northern Europe, and continuing dynamism in Travel Retail. L'Oréal also pointed out that the situation is more uncertain in some South European countries.

Good omen for a strong year

Following a positive first quarter, L'Oréal said the figures have bolstered confidence in the company's ability to strengthen its global position.

“Although it is not possible to extrapolate from these figures, and despite an uncertain exchange rate environment, the first months of the year give us confidence in our ability to outperform the market in 2011, strengthen our worldwide positions, and achieve another year of growth in both sales and profits,” concluded Agon.

In 2010, the cosmetics firm posted a net profit of €2.24bn on sales of €19.5bn.

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