French cosmetics company L'Oréal has seen its turnover grow 14 % in its first quarter, up to nearly 6.5 billion euro. There are still reasons for concern however, as the underlying sales has slowed down, especially with its main consumer brands.
Growth slows down
The world's largest cosmetics company lifted its turnover 14.1 % compared to 2014's first quarter to 6.44 billion euro turnover, mainly thanks to the weaker euro. If exchange rates are ignored, its growth was 'only' 5.2 % and on a like-for-like basis, that even drops to + 4 %. Even with that last figure, L'Oreal still performed better than what analysts had expected, at + 3.6 %, but almost 1 % lower than its 4.9 % turnover increase in 2014's last quarter.
The slower growth is particularly visible in its consumer products, containing brands like L'Oréal Paris, Garnier and Maybelline. Disappointing American and Chinese sales have hampered the branch's organic growth, which stopped at 1.7 %. Cosmetics chain The Body Shop has resisted that trend, growing its turnover 4 % on a like-for-like basis to 192.4 million euro.
L'Oréal's luxury branch, containing brands like Lancôme, Saint Laurent, Armani and Kiehl's, performs much better with a 7.5 % organic growth, which is better than the + 6 % for rivalling LVMH's brands Dior, Guerlain and Givenchy. The biggest growth numbers were, once again, for the "active cosmetics" branch (containing La Roche Posay and Vichy). The group's professional performance was also positive, with a 3.5 % increase.
Regionally, the company's Western European sales saw a mere 1.3 % growth, while American sales grew 2.4 % and the emerging markets added another 7.5 % in general. The Africa&Middle East region and Latin American region both went into double-digit growth, with 11.3 and 10 % respectively.
Despite the slower growth, CEO Jean-Paul Agon has upheld his 3.5 - 4 % growth forecast for 2015.