L’Oréal results thrive thanks to strong demand from Chinese consumers

By Amanda Lim

- Last updated on GMT

L’Oréal results thrive thanks to strong demand from Chinese consumers
L’Oréal’s luxury beauty division has seen double-digit growth in China, helping the French cosmetics company to record its best year in a decade.

Overall, Asia-Pacific took a tremendous lead ahead of other markets, growing 26.2% in the fourth quarter and 24.1% at the end of 2018.

“The performance by geographic zone remained differentiated. In Western Europe, progress was held back by difficulties in some markets, while growth in North America improved compared with the previous year,”​ said Jean-Paul Agon, Chairman and CEO of L’Oréal.

He added: “The New Markets achieved their best performance since 2007, and the Asia Pacific Zone, driven by China, has now overtaken North America with sales exceeding ​€7bn ($7.9bn).”

The success in APAC helped to boost the firm’s overall sales, which rose 7.1% at the end of 2018 to €26.9bn ($30.5bn).

APAC performance

L’Oréal’s four divisions –L’Oréal Luxe, Consumer Products, Active Cosmetics, and Professional Products – posted healthy fourth quarter figures, which was attributed to the success of the Singles’ Day shopping festival in China.

L’Oréal Luxe sales grew 14.4%, outperforming the market and making 2018 a “historic year” for the division, said L’Oréal. The division was particularly strong in China where it had double-digit growth.

“L’Oréal Luxe is winning market share in Asia Pacific, particularly in China where growth is double-digit. The big brands are the star performers, particularly in the L’Oréal Luxe Division, where Lancôme sales crossed the 3 billion euro mark,”​ commented Agon.

L’Oréal attributed the success of Lancôme to robust skin care sales of its Génifique and Absolue lines.

The demand for skin care also boosted Active Cosmetics to achieve record growth in a decade, ending the year with 11.9% growth.

The company reported that Active Cosmetics brands such as Vichy, La Roche-Posay and CeraVe, are continuing to win market share globally, with growth remaining particularly strong in Asia and North America.

The Consumer Products division ended the year with 2.5% growth, but performance was mixed across the regions.

The portfolio, which consists of brands like L’Oréal Paris and Maybelline New York, accelerated sharply in China and India, boosting the division despite sluggish performance in Western Europe.

China and India also contributed to the growth of the Professional Products division in APAC. Overall, the division – home to Kérastase and L’Oréal Professionnel – grew 2% from the previous year.

No signs of slowing

Together with strong performance from rivals Esté​e Lauder and LVMH, L’Oréal’s latest results are helping to put down concerns of a slowing Chinese economy.

According to the company, the “dynamism of Chinese consumers​” was one of the main drivers of growth in APAC.

Additionally, the acquisition of Stylenanda in June strengthened the Group’s position in APAC, said the company.

“In an economic context that remains volatile and uncertain, we are confident, thanks to our innovations, powerful brands, digital excellence and in particular our outstanding teams all over the world, that we can pursue our corporate social responsibility commitments, outperform the beauty market in 2019 and achieve another year of growth in both sales and profits,” ​Agon concluded.

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