L’Oréal Group posted €18.36 billion in first-half revenue, a rise of +20.6% on a reported basis and +13.5% like-for-like.
Travel retail sales grew by an encouraging +30.1% on a like-for-like basis in the first half. L’Oréal Travel Retail’s performance was driven by the return of international air traffic in Europe (+425% versus the same period in 2021) and Hainan’s booming offshore duty free industry.
In related news, L’Oréal Asia Pacific Travel Retail’s operations relocated from Hong Kong to Singapore on 1 July.
Commenting on the beauty giant’s performance, L’Oréal CEO Nicolas Hieronimus said: “After two years of the pandemic, consumers confirm their desire to socialise and indulge themselves with innovative and superior beauty products, which in turn is fuelling the growth of the beauty market. L’Oréal grew twice as fast as the market and has strengthened its position as the world’s number one beauty company.”
Operating profit increased by +25.3% to €3,745.5 million and amounted to 20.4% of sales, an increase of 70 basis points compared with the first half of 2021. Net profit reached €3,254 million after non-recurring items after non-controlling interests, up +25.2% on H1 2021.
China and ecommerce outperform expectations
China sales grew +6% in the second quarter and China and Hainan combined climbed +13% in H1 compared to a year earlier. Notably, L’Oréal’s sales performance in North Asia alone stood out, climbing +40.5% versus 2019.
L’Oréal’s ecommerce sales grew +10.5% versus the same period in 2021.
“Our performance is increasingly balanced,” Hieronimus added. “Balanced between volume and value growth. Balanced between offline growth, with the reopening of retail outlets in most countries, and e commerce growth which continues at a double-digit pace. Balanced between geographic zones, all of which posted double-digit growth, with strong performance in emerging markets (SAPMENA–SSA, Latin America) and outstanding performance in mainland China in a very challenging context, thanks to our expertise in ecommerce.
“Balanced across our divisions, with our three selective divisions achieving double-digit growth and the Consumer Products Division recording a significant acceleration in the second quarter. Lastly, every major category achieved double-digit growth.”
Active Cosmetics reaches new heights
L’Oréal’s Active Cosmetics business posted strong like-for-like growth at +20.9%, growing faster than the global dermo-cosmetics market. The Active Cosmetics Division achieved double-digit growth across all zones, with strong performances in North America, Europe and SAPMENA-SSA (South Asia Pacific, Middle East, North Africa and Sub-Saharan Africa).
La Roche Posay was a strong growth driver for Active Cosmetics, driven by the Cicaplast and Effaclar brands, while CeraVe remained the division’s fastest-growing brand.
L’Oréal Luxe posted +15.3% growth on a like-for-like basis year-on-year. This was driven by super-premium brands Lancôme Absolue and Helena Rubinstein aongside newly acquired brands Takami and Youth to the People. Fragrances grew by +35%.
Professional products grew +14.3%, performing particularly well in India, China, North America and Germany. This performance can be attributed to L’Oréal’s omnichannel and ecommerce strategy and the launch of the SalonCentric distribution network, the world’s first ecommerce marketplace for beauty professionals.
Consumer products recorded +8% growth thanks to innovative launches from Nyx Professional Makeup, L’Oréal Paris and Maybelline.
Outstanding performance in emerging markets
The SAPMENA-SSA region grew sharply at +23% like-for-like, driven by a strong activation strategy. Latin America recorded +22.3% growth, led by Mexico, Brazil and Chile.
This was followed by Europe, which achieved +14.3% growth due to the lifting of public health restrictions in most countries. The Group resumed its activities in a limited capacity in Ukraine and continues to suspend all operations in Russia in accordance with European and American sanctions.
In North America, L’Oréal sales grew by +11.6%, while North Asia recorded +10.5% growth like-for-like year-on-year. L’Oréal Luxe recorded impressive market share gains thanks to activations from Lancôme, Helena Rubinstein and Yves Saint Laurent and the successful roll out of Urban Decay and Maison Margiela in the region.
While the beauty market in China was impacted by the resurgence of COVID in the second quarter, L’Oréal managed to achieve double-digit growth in June, buoyed by its ecommerce business.
L’Oréal’s performance in the first half came in the face of increasing global supply chain and logistics pressures due to the Russia/Ukraine war.
Commenting on how these geopolitical issues have impacted L’Oréal’s operations, Hieronimus said: “Our proven capacity to valorise our portfolio through innovation and control our costs allowed us to absorb the impact of higher raw material prices, mitigate supply chain pressures, and continue to invest efficiently in our brands, while improving profitability and creating sustainable value.”
L’Oréal For the Future
On 21 April, L’Oréal announced the launch of a Circular Innovation Fund to help scale breakthrough circular innovations globally. The company is contributing €50 million to the fund as part of its L’Oréal For the Future sustainability roadmap.
On 17 May, it launched its third Employee Share Ownership Plan, followed by the launch of the L’Oréal BOLD Female Founders Initiative on 25 May.
“Our L’Oréal for the Future programme reached an important milestone. After the United-States in 2021, we achieved carbon neutrality across all our sites in the North Asia Zone. In addition, the success of our third employee share ownership plan, rolled out in more than 60 countries, demonstrates the strong commitment of our employees worldwide,” Hieronimus said.
“Mindful of the current uncertainties and instability, we are convinced that our unique, balanced model, our incredible innovation capacity, our strong brand portfolio, the passion and agility of our teams and our financial strength are the assets that will enable us to pursue our profitable and sustainable growth strategy.”
Hieronimus concluded, “We remain optimistic about the outlook for the global beauty market and confident in our ability to outperform in 2022 and achieve another year of growth in sales and profits.”
