L'Oréal sales boosted by luxury brands
But company is cautious for 2012
The L'Oréal group has reported an overall improvement in margins but lower 2011 sales in Europe. Group sales rose 4.3% last year to €20.3bn, helped by market growth of its luxury end products including YSL Beauté, Lancôme and Giorgio Armani. The luxury sector alone posted growth of 8.2% with sales up 6.9% in fourth quarter 2011 alone. However, this represented a sharp slowdown after the company achieved growth of 8.6% in the first nine months of last year.
Cosmetics and fragrances consumption turned down in the European market with organic sales falling 9%.In addition, mass market products represented by L'Oréal Paris, Maybelline and Garnier, saw slower growth in fourth quarter - 4.1% compared with 4.6% in the first nine months of 2011.
In contrast, sales of professional products to hair care salons improved in fourth quarter, up by 3.2% against 2.3% in the nine month period.
Operating profits went up 7.7% to €3.2bn last year in line with market forecasts and margin rose from 15.7% in 2010 to 16.2% last year as cost cutting continued. Net earnings grew by 8.9% to €2.5bn.
The concern from market analysts over the European results - group west European sales inched up 0.6% in fourth quarter - is due to the region accounting for nearly 50% of L'Oréal's overall profitability. Meanwhile, the company has remained cautious over forecasts for 2012, commenting only that it remains well equipped to enter a new year of growth in sales and profits.