Luxury brands spur on L’Oréal's profit

Luxury brands spur on L’Oréal's profit

Despite weak turnover growth in 2017, cosmetics company L’Oréal still generated a much-improved net profit thanks to excellent luxury sales, where its margins are bigger.

 

Growth in every region

L’Orèal’s total turnover reached 26.02 billion euro in 2017, up 0.7 % compared to the year before. Its like-for-like turnover growth was 4.8 % and ignoring exchange rate fluctuations, it would have posted a 2 % increase. Luxury was the main engine for growth: turnover grew 10.6 % to 8.5 billion euro, partially thanks to strong Asian sales. Active Cosmetics grew 11.9 % to 2.1 billion euro and the remaining cosmetics grew 1 % to 12.12 billion euro. Online contributed 2 billion euro to turnover.

 

The cosmetics company posted growth in every region: Western Europe grew 1.5 % to 2 billion euro, North America performed even better, with a 3.5 % increase. L’Oréal’s turnover spiked 7.5 % to 2.7 billion euro in the emerging markets.

 

Operational profit grew 3 % to 4.68 billion euro and net profit grew 2.8 % to 3.75 billion euro.

 

Nestlé

CEO Jean-Paul Agon said that L’Oréal would be interested if Nestlé decided to sell its 23 % stake in the country. “We have sufficient funds”, he said. If it were required, L’Oréal would even be willing to sell its 9 % stake in pharmaceutical company Sanofi, to pay for the acquisition.