PARIS – L’Oréal’s results for the second quarter of 2022 have made analysts’ heads spin, in a good way.
“L’Oreal delivered another quarter of gravity-defying growth, well ahead of consensus,” Jeffries analyst Molly Wylenzek wrote in a research note.
She added that the world’s largest beauty company has skilfully navigated major disruptions to its China business, which generates 20% of the group’s overall sales.
In June, business sales in mainland China had returned to double-digit increases.
In the three months ended June 30, L’Oréal’s sales reached 9.31 billion euros, up 22.7% in reported terms and 13.4% in organic terms.
“L’Oreal has done it again: a decent beat on high expectations,” wrote Bruno Monteyne, an analyst at AB Bernstein.
L’Oreal’s second-quarter like-for-like earnings were well ahead of analyst consensus of 9.7%. Impressive beats were noted by Monteyne in the L’Oréal Luxe and Active Cosmetics divisions.
L’Oréal Luxe, with brands such as Kiehl’s, Yves Saint Laurent and Biotherm, achieved sales of 3.41 billion euros, up 26.1% as reported and 15.3% in organic. L’Oréal said in a statement released Thursday after the Paris Stock Exchange closed that the division outperformed in its three categories – skincare, fragrances and makeup – and that its business was balanced across geographies in the first half of the year. .
The Active Cosmetics division, which includes brands such as CeraVe, La Roche-Posay and Vichy Laboratories, recorded sales of 1.28 billion euros in the second quarter, up 33.9% in figures published and 23.8% at constant data. L’Oreal said the division in the first six months of 2022 grew much faster than the total dermo cosmetics market and recorded double-digit advances in all geographies.
Second-quarter Professional Products sales of €1.12 billion were up 20.7% as reported and 11.3% like-for-like. The division, which includes brands such as L’Oréal Professionnel, Kérastase and Redken, posted first-half gains in all markets, with “outstanding performances” in India, mainland China, North America and Germany , according to L’Oreal.
At the same time, sales of the Consumer Products division, with the L’Oréal Paris, Garnier and NYX Professional Makeup brands, reached 3.49 billion euros, representing growth of 16.8% on a reported basis and 9. 1% like-for-like. L’Oreal said the division outpaced a robust global makeup market.
In the first half of 2022, L’Oréal’s sales increased by 20.9% as reported and by 13.5% like-for-like to reach 18.36 billion euros.
“After two years of the pandemic, consumers are confirming their desire to socialize and indulge themselves with innovative and superior beauty products, which in turn is fueling the growth of the beauty market,” said Nicolas Hieronimus, CEO of L’Oréal, in the declaration. “L’Oréal has grown twice as fast as the market and is consolidating its position as world number one in beauty.
In the first half, the group’s net profit reached 3.22 billion euros, up 36.4%, its operating margin standing at 19.7%, against 19.1% in the previous quarter.
Hieronimus said that L’Oréal’s performance is increasingly balanced on several levels: between volume and value growth, and between brick and mortar and e-commerce, which continues to register increases at two digits.
In addition, there is a balance between the geographical areas, which recorded double-digit increases. Hieronimus highlighted the strong performance of emerging markets in South Asia Pacific, the Middle East, North Africa and Sub-Saharan Africa [or SAPMENA-SSA] area and Latin America. He said the performance in mainland China was “remarkable” in a very difficult environment, thanks to the group’s e-commerce expertise.
Each of L’Oréal’s three selective divisions posted double-digit growth, while activity in the Consumer Products division accelerated significantly in the second quarter.
Hieronimus pointed out that every major product category also made double-digit gains.
He said the group’s ability to add value to its portfolio through innovation and cost control has enabled L’Oréal to offset the negative impact of rising raw material costs, ease pressures on supply chain and continue to invest effectively in its brands, while the business has improved its profitability and created sustainable value.
“We remain bullish on the outlook for the global beauty market and confident in our ability to outperform in 2022 and deliver another year of sales and profit growth,” Hieronimus said.