PARIS ― French cosmetics giant L’Oreal said on Tuesday its sales and profits rose during the first half of the year despite a drop in China.
Overall, sales at the company that owns the Maybelline New York and Garnier brands climbed 7.5 percent to 22.1 billion euros ($23.9 billion), while net profits rose 8.8 percent to 3.65 billion.
“Our continued strong momentum in emerging markets, Europe and North America allowed us to more than offset the depressed beauty market in mainland China,” chief executive Nicolas Hieronimus said in a statement.
North Asia sales fell by 3.1 percent to 5.47 billion euros.
China has for years been a key source of sales growth for luxury firms for years, and the sluggish performance of the world’s second-largest economy has taken a hit on their earnings.
Hieronimus said L’Oreal had originally hoped the Chinese market would rebound this year, but instead, it contracted in the second quarter.
“In our forecast for the rest of the year, we believe the Chinese market will remain slightly negative, that Chinese consumers lack confidence and are paying much more attention to their spending,” he told AFP.
Hieronimus said he remains positive and ambitious about China, however.
“There are 400 million consumers there who could buy our products, and we’re selling to only 100 million,” he said.
Hieronimus said to do that, L’Oreal needs to raise its game and pointed out that its luxury cosmetics brand Saint Laurent was experiencing double digit growth in China and that its Aesop cosmetics shops there were performing well.
However, the 4.0 percent growth in the luxury division, L’Oreal’s second largest, trailed the 8.3 percent expansion posted by the larger consumer products division.
With 8.7 percent growth, North America edged out North Asia as L’Oreal’s top sales region.
Sales in Europe, Latin America and South Asia all grew by double digits.
The company expressed confidence for the rest of the year, saying it expects to post sales and profit growth for the year.
It announced a 500-million-euro share buyback.
Be the first to comment