L’Oreal sales rise on demand for haircare and fragrances
The US beauty group has seen its shares tumble since confirming talks with Spain’s Puig Brands last month over a possible combination
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L’OREAL sales climbed as customers snapped up its Kerastase shampoos and La Roche-Posay skin creams, suggesting a rebound is taking hold at the world’s largest beauty group.
Like-for-like revenue rose 7.6 per cent in the first quarter, the French company said on Wednesday (Apr 22). All four divisions showed gains, led by professional products and dermatological beauty, which both grew by double digits.
Under CEO Nicolas Hieronimus, L’Oreal has proven more resilient to the broader consumer slowdown than peers, helped by its broad range of offerings, from specialist skincare products to mass-market makeup and pricey soaps. It completed the four billion euros (S$6 billion) acquisition of Kering’s beauty unit, including perfume maker House of Creed, last month.
L’Oreal’s American depositary receipts rose as much as 7.7 per cent in New York following the results. The shares are 5.9 per cent lower so far this year in Paris, compared with the 28 per cent drop in Estee Lauder to Tuesday.
The US beauty group has seen its shares tumble since confirming talks with Spain’s Puig Brands last month over a possible combination.
L’Oreal sales climbed in Europe and North America in the first quarter, while the region that includes China – once a growth engine – posted a like-for-like decline of 4 per cent. Consumption in the Middle East has been negatively affected by the conflict there, notably in UAE, the company said.
Revenue at the Luxe division, with high-end brands including Lancome and Yves Saint Laurent, rose 5.2 per cent on a like-for-like basis, while consumer products – the largest unit – climbed 5.8 per cent, L’Oreal said.
The French company said that like-for-like sales rose 6.7 per cent on an adjusted basis in the period, taking into account the impact of its IT transformation.
L’Oreal said that it was facing logistics and material costs linked to the high price of oil following the outbreak of the Middle East conflict. If oil prices remain at around US$90 to US$100 a barrel, the impact to the business could be in the range of 90 million euros to 100 million euros, L’Oreal told analysts on a call.
Long-term inflation may result in the business raising prices later this year, said chief financial officer Christophe Babule. BLOOMBERG
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