French cosmetics giant L'Oréal has managed to create a small turnover growth of 1.8 % in 2014, while its net profit grew spectacularly - helped by the sale of the Galderma laboratories to Nestlé.
Net profit at record height
L'Oréal, the world's largest cosmetics firm, has managed a 22.5 billion euro turnover in 2014, a growth of 1.8 % - or even + 3.7 % on a like-for-like basis, excluding negative exchange rate fluctuations.
Its net profit reached 4.91 billion euro, up 66 % compared to last year and a new record for the company. Most of the increase comes from the 2.1 billion euro added value it has received by selling its share in Galderma, its joint venture with Nestlé. Operational profit reached 3.98 billion euro, up 3.5 % compared to 2013 and exactly as much as CEO Jean-Paul Agon said when he lowered expectations in September.
"Dermatocosmetics" and luxury division drive growth
Its 'Active Cosmetics' (+ 8.7 % like-for-like) division, with skin brands like Vichy and La Roche Posay, has managed the largest growth, closely follwed by the L'Oréal Luxe (+ 7.1 %) division, which contains all of the company's perfumes.
L'Oréal Professional, which is its division with hair salon products, has grown 2.6 % in a market that is currenty struggling - causing its competitor Procter & Gamble to sell off its hair care brand, Wella.
Still, not all is well in Paris: L'Oréal's well-known brands for the general public (like Maybelline, Garnier and L'Oréal Paris) have managed a 1.6 % like-for-like turnover increase, but the overall market grew twice as fast (+ 3.5 %). Still, "Consumer Products" are still worth about half of the company's turnover.
CEO Jean-Paul Agon feels the weaker result is because "a slowing US market", which is in turn because of "increased competition" from other brands and a "limited number of in-house novelties". The Body Shop, which recently took full control of its Australian franchise business, managed a 3.7 % like-for-like turnover increase, up to 873.8 million euro.
3.5 % from online sales
L'Oréal hopes eCommerce will help grow its turnover even faster, as its online turnover has already reached 800 million euro, some 3.5 % of its total turnover. In China, its online turnover has already reached 10 % of its local turnover.
16 % of its communication budget is currently spent online. One such example is the successful launch of its MakeUp Genius app at the Cannes Film Festival. It has already been downloaded 6.3 million times, while it has already divulged in September that it would open 200 new websites in the next few years.