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Asia focus paying off for L’Oréal, now for more of the same

By Andrew MCDOUGALL , 14-Feb-2013
Last updated the 13-Feb-2013 at 15:56 GMT

Having made Asia-Pacific one of the key emerging markets it is focusing on, cosmetics maker L’Oréal is reaping the rewards as sales in the region boosted the company’s year performance.

According to the 2012 results, the French firm saw net profit rise by 17.6 per cent last year and expects performance to continue to improve in 2013.

Emerging markets were the clear champion however, becoming the beauty behemoth’s top geographic zone, eclipsing Western Europe, with like-for-like sales increasing 8.2 percent.

Investment

L’Oréal has made no secret of its increased efforts in Asia-Pacific and sales rose in the region by 9.6 per cent on a like-for-like basis and 18.4 per cent on a reported basis.

The company has also invested significantly into localizing its products to cater the tastes of the local market over the past year; something which is reflected in the fully-year figures.

The Kiehl’s and Garnier producer has increased its focus on the Asian market with a new research facility in India , as well as the construction of its largest factory in Indonesia .

The customization of products to the local population’s tastes has boosted the popularity of L’Oréal products while local production has meant it can take advantage of the low labor and material costs.

Comparison

Luxury fragrance and cosmetic combatant Estée Lauder also saw its focus on the Asia-Pacific region pay off, seeing similar results to L’Oréal.

Overall sales in the region for the US-based firm increased by 11 percent on a reported basis; the biggest jump in any of the three geographic regions the company is divided into, and also helped offset a much slower performance in Europe.

China seems to be the key market for region dominance at present, with both cosmetics rivals seeing big boosts in the country, particularly with skin care.

Elsewhere…

Elsewhere for L’Oréal, revenue gained 7.3 per cent in North America, while growth in Western Europe was more understated at 1.4 per cent, with the Eurozone crisis really taking its toll.

Active cosmetics, L’Oreal’s smallest unit, was its best- performing business, growing sales 7.1 per cent in the last three months of 2012.

Sales of consumer products, the company’s largest unit, climbed 5.8 per cent, while revenue at The Body Shop chain gained 4.1 per cent and dermatology sales rose 0.9 per cent.

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