Earnings Release • May 6, 2009
Earnings Release
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Commenting on the figures, Mr Jean-Paul Agon, Chief Executive Officer of L'Oréal, said:
"The quality of the innovations, the strength of our brands, the group's balanced presence across the major global markets, and the acquisition of YSL Beauté have enabled us to achieve a very slight increase in sales in the first quarter.
As we had anticipated, performances across the divisions are extremely differentiated: Consumer Products, Active Cosmetics and The Body Shop are proving resilient. The Professional Products markets have continued to slow. As for the Luxury Products Division, its sales have felt the strong impact, particularly in Western Europe, of very large inventory adjustments by distributors, after a disappointing end-of-year holiday period. Meanwhile, Galderma is continuing to record a remarkable growth rate.
To weather this crisis and indeed emerge stronger than before, the group is implementing 5 main strategic thrusts: developing accessible innovation to broaden the consumer base, opening up new product categories, accelerating globalisation, ensuring sustained advertising and promotional investments, and lastly reducing costs.
Thanks to the quality of its fundamentals and the implementation of these 5 major strategic thrusts, the group should gradually improve its performances in the course of 2009."
* based on constant translation rates: 2009 data at 2009 rates / 2008 data at 2009 rates
Like-for-like, i.e. based on a comparable structure and identical exchange rates, the sales trend of the L'Oréal group was -4.3%.
The net impact of changes in consolidation, mainly as a result of the acquisitions of YSL Beauté and CollaGenex Pharmaceuticals, amounted to +3.9%.
Currency fluctuations had a positive impact of +0.7%.
Growth at constant exchange rates was -0.4%.
Based on reported figures, the group's sales, at March 31st 2009, amounted to 4.37 billion euros, an increase of +0.3%.
| € million | Quarterly sales | Growth | ||
|---|---|---|---|---|
| 1st quarter 2008 | 1st quarter 2009 | Like-for-like | Reported | |
| By division | ||||
| Professional Products | 620 | 601 | -5.3% | -3.2% |
| Consumer Products(1) | 2 159 | 2 193 | +1.0% | +1.6% |
| Luxury Products | 930 | 926 | -17.5% | -0.4% |
| Active Cosmetics | 408 | 392 | -2.1% | -3.9% |
| Cosmetics total | 4 118 | 4 112 | -5.0% | -0.2% |
| By geographic zone | ||||
| Western Europe | 1 939 | 1 834 | -9.3% | -5.4% |
| North America | 893 | 968 | -5.0% | +8.3% |
| Rest of the World, of which: | 1 286 | 1 310 | +1.8% | +1.8% |
| - Asia | 464 | 574 | +4.8% | +23.6% |
| - Eastern Europe | 359 | 293 | -4.6% | -18.2% |
| - Latin America | 243 | 230 | +9.7% | -5.2% |
| - Africa-Orient-Pacific | 220 | 212 | -4.4% | -3.9% |
| Cosmetics total | 4 118 | 4 112 | -5.0% | -0.2% |
| The Body Shop | 168 | 162 | +2.5% | -3.3% |
| Dermatology(2) | 73 | 96 | +18.6% | +32.0% |
| Group total | 4 359 | 4 370 | -4.3% | +0.3% |
(1) 1st quarter 2008 sales include the group's share of Club des Créateurs de Beauté
(2) Group share, i.e. 50%
In the context of a sharp slowdown in hair salon activity, the Professional Products Division's 1st quarter like-for-like sales trend was -5.3%, and -3.2% based on reported figures, which was better than the estimated market trend. Thanks to its brand portfolio and the dynamism of its anti-crisis initiatives, the division was able to recruit a record number of salons and thus strengthen its leadership. The growth-relay countries are continuing to play their part.
The affordable brand Matrix is growing strongly outside North America, particularly in Western Europe and the new markets. Its new skincare line Biolage Rejuvathérapie, for mature women, is proving highly successful.
Pureology is strengthening its position as the number 1 professional colour care brand in the United States, thanks to the successful launch of Essential Repair. The brand is beginning its global roll-out in Europe.
Redken made a good start to the year across all continents, particularly in technical haircare.
At L'Oréal Professionnel, the new styling range Texture Expert is making a very good start, and Majirel hair colourant is taking advantage of the resilience of salon technical services.
Kérastase is innovating with its unique hair slimming technology, Oléo-Relax Slim.
All the division's brands have introduced a pro-active promotional offer policy, making innovation more affordable, and a policy of strengthening the appeal of professional hairdressing services.
In geographic terms, sales have contracted in the mature countries but increased in the growth-relay countries, particularly in Brazil, India, China, the Philippines and Poland. In Western Europe, the good results in Germany, where the division is continuing to win market share, are worth noting.
In North America, the division is winning market share in salon sales and is continuing to successfully apply its anti-diversion policy.
The Consumer Products Division achieved like-for-like growth of +1%, proving resilient in the North American and West European markets, and making significant market share gains in the Rest of the World. The division's impetus comes in particular from the good performance of Garnier.
In North America, the market remained stable in the 1st quarter. The division's overall market share proved resilient, with gains in facial skincare both for L'Oréal Paris and Garnier. L'Oréal Paris launched Ever Pure, the first mass-market sulphate-free shampoo and haircare range, and Excellence to Go, a 10-minute permanent hair colourant. Maybelline launched the lengthening mascara Lash Stiletto and Dream Liquid Mousse foundation. The promotional activity of the division has been sustained.
In the Rest of the World, the strong growth rate has continued. In Asia, the division recorded doubledigit growth and is continuing to make market share gains. In Latin America, Brazil, Argentina and Chile have started the year well, particularly in haircare. In Russia and India, 1st quarter growth was encouraging. South Africa has posted double-digit growth. In North Africa the division has launched Garnier Color Naturals, particularly in Morocco and the new Egyptian subsidiary.
The 1st quarter of 2009 was sharply hit by distributor inventory reductions, following disappointing end-of-year sales, by a sharp fall in air traffic which affected Travel Retail, and by a very large drop in consumption in countries such as Russia and Dubai. Inventory reduction has a disproportionate impact on sales in the 1st quarter, when sales are traditionally at their lowest. In this context, the sales of the Luxury Products Division contracted by -17.5% like-for-like, and by -0.4% based on published figures, thanks to the consolidation of YSL Beauté. A strengthened launch plan, greater commercial aggressivity, the conquest of alternative distribution channels and a growing focus on young-lifestyle, affordable brands have enabled the division to defend its positions.
With the recent launch of the Génifique skincare line, Lancôme has marked the dawn of the era of genomics and proteomics, and is enjoying unprecedented success particularly in the United States, the United Kingdom and France. The brand's performance has also been boosted by the success of Ôscillation powermascara with micro-oscillation, a phenomenal success in the United States, and Absolu Rouge lipstick. The new Magnifique eau de toilette has also made a promising start.
Kiehl's has achieved double-digit growth across the world, thanks in particular to its very strong performance in Asia.
Yves Saint Laurent sales are growing in North America and Asia. La Nuit de l'Homme, the brand's first fragrance launch since its integration into the division, has made an excellent start and has been the top-selling fragrance in France since its launch. The brand is also proving successful in make-up with Rouge Volupté.
The success of Diesel is continuing with Only the Brave, the trendsetting new fragrance, which has made a very good start.
In Western Europe, the distributor inventory adjustment effect has been particularly strong. The division's sell-out is holding up well in the two key markets of France and the United Kingdom. Lancôme made a good start to the year thanks to the launch of the Génifique skincare line in March. In North America, where the context was still unfavourable with the decline in department store footfall and the sharp drop in Travel Retail sales, the division's sales performance is close to the market trend. Lancôme and Yves Saint Laurent are winning market share.
The Rest of the World zone has been particularly affected by the difficulties in Russia, Dubai, and in Travel Retail in Asia. Nevertheless, the division's sell-out is growing faster than the market. The division is performing particularly well in South Korea, and in China where the Lancôme brand has further strengthened its number 1 position.
The sales of the Active Cosmetics Division were down by -2.1% like-for-like. This reflects the trend in the dermocosmetics market, which was negative for the first time in Western Europe, and the cautious stance taken by pharmacies. In this context, the division recorded market share gains, particularly in Western Europe and in the new markets.
ing and Vichy has reaffirmed its leadership in pharmacy sales, thanks to substantial advertis promotional investments in the major product initiatives, Liftactiv CxP and Liftactiv Retinol HA.
rket share, thanks to good performances across all La Roche-Posay is growing strongly and winning ma categories and the launch of the XY range for men.
reakthrough made in the haircare segment. The brand has made a Innéov has confirmed its position as number 1 in oral cosmetics in Europe, and is again winning market share, thanks to the strong b spectacular start in Brazil.
kinCeuticals is growing very strongly, boosted by its global roll-out. S
There are contrasting trends in the geographic zones:
Sales in Western Europe were down as a result of the market contraction. Market share is improving, particularly in facial skincare.
Expansion is continuing in North America, despite a significant reduction in footfall, particularly in spas and medi-spas since the end of 2008.
The financial difficulties of some distributors had a negative impact in Eastern Europe in the 1st quarter. The Rest of the World remains dynamic, although markets are now growing less rapidly.
ons thanks in particular to strong performances by che-Posay and Kiehl's. Western Europe is at -9.3% like-for-like, largely because of the lower sales of the Luxury Products Division. The group produced very good performances in Germany and the United Kingdom. But the market situation in Spain, and inventory reductions in France had a considerable impact on the 1st quarter. In sell-out, the group has held on to its positi Maybelline, La Ro
e year made by Lancôme and the s in the Professional Products Division. The like-for-like sales trend in North America in the 1st quarter was -5% in a market which was down significantly, as in the previous quarter. The slowdown had a particularly strong impact on hair salons and department stores. During the quarter, the group's situation gradually improved thanks to the continuing breakthrough of Garnier, the very good start to th strengthening of position
At end-March, the like-for-sales of The Body Shop increased by +2.5%. Retail sales (1) grew by +3.1%. On a comparable store base (2), sales were down by -1.2%.
The brand proved resilient in Western Europe, and produced excellent performances in the Rest of the World, particularly in Asia.
The Body Shop successfully launched its Moroccan Rose fragrance line, and the Wild Cherry bodycare range.
At March 31st 2009 the total number of stores was 2,536.
(1) Retail sales: total sales to consumers through all channels. (2) Retail sales with a comparable store base: total sales to consumers by stores which operated continuously from January 1st to March 31st 2008 and over the same period in 2009.
Galderma achieved a like-for-like sales increase of +18.6%.
In North America, sales growth reached +24.9% thanks to the continuing success of Oracea®, an innovative product for the treatment of rosacea, and the launch of two new products: Epiduo™, a unique drug combination for the treatment of acne, and Vectical®, the first calcitriol-based drug available in the United-States for psoriasis.
Sales in Europe increased by +10.5% thanks to the growing success of Epiduo®, and Clobex® shampoo an innovative formulation of the first corticosteroid-based shampoo approved to treat mild psoriasis of the scalp.
In Asia, sales grew by +38.9%, particularly thanks to Differin® Gel 0.1%, introduced in Japan at the end of 2008 for acne treatment, which has made a major contribution to the growth rate.
In the corrective and aesthetic dermatology market segment, Azzalure®, a botulinum toxin type A product for the treatment of frown lines, received national marketing authorizations in the United-Kingdom, Denmark, France and Portugal.
This news release may contain some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or projected in these statements."
Contacts at L'ORÉAL (Switchboard: +33.1.47.56.70.00)
Individual shareholders Financial analysts and and market authorities Institutional investors Journalists
Mr Jean-Régis CAROF Mrs Caroline MILLOT Mr Mike RUMSBY
Tel: +33.1.47.56.83.02 Tel: +33.1.47.56.86.82 Tel: +33.1.47.56.76.71 [email protected]m [email protected] mrums[email protected]m
For more information, please contact your bank, broker or financial institution (I.S.I.N. code: FR0000120321), and consult your usual newspapers, and the Internet site for shareholders and investors, http://www.loreal-finance.com, or its mobile version on your cell phone, http://mobile.lorealfinance.com; alternatively, call +33.1.40.14.80.50.
"This news release does not constitute an offer to sell, or a solicitation of an offer to buy L'Oréal shares. If you wish to obtain more comprehensive information about L'Oréal, please refer to the public documents registered in France with the Autorité des Marchés Financiers, also available in English on our Internet site www.loreal-finance.com.
L'Oréal group sales 2008/2009 (€ millions)
| X | |
|---|---|
| $\bigcirc$ | |
| $\overline{\mathsf{C}}$ | |
| 2008 | 2009 | |
|---|---|---|
| First quarter: | ||
| Cosmetics | 4 118 | 4 112 |
| The Body Shop | 168 | 162 |
| Dermatology | 73 | 96 |
| First quarter total | 4 359 | 4 370 |
| Second quarter: | ||
| Cosmetics | 4 016 | |
| The Body Shop | 166 | |
| Dermatology | 105 | |
| Second quarter total | 4 287 | |
| First half: | ||
| Cosmetics | 8 134 | |
| The Body Shop | 334 | |
| Dermatology | 178 | |
| First half total | 8 646 | |
| Third quarter: | ||
| Cosmetics | 3 978 | |
| The Body Shop | 176 | |
| Dermatology | 112 | |
| Third quarter total | 4 266 | |
| Nine months: | ||
| Cosmetics | 12 112 | |
| The Body Shop | 510 | |
| Dermatology | 290 | |
| Nine months total | 12 912 | |
| Fourth quarter: | ||
| Cosmetics | 4 247 | |
| The Body Shop | 246 | |
| Dermatology | 137 | |
| Fourth quarter total | 4 630 | |
| Full year: | ||
| Cosmetics | 16 359 | |
| The Body Shop | 756 | |
| Dermatology | 427 | |
| Full year total | 17 542 | |
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