Weaker euro results in strong quarter for L'Oréal

Cosmetics company L’Oréal did better than expected in the fourth quarter. The weaker euro, combined with stronger American and Japanese sales, gave the company excellent results.

The Body Shop disappoints

L’Oréal’s turnover in 2015’s fourth quarter reached 6.5 billion euro, which is a 9 % increase, but a 4.2 % like-for-like increase compared to the year before. Analysts however had only predicted a 3.6 % growth.

Mainly L’Oréal Luxe products, which represents about a third of the cosmetics department, sold well with a 13.5 % turnover increase to 2.04 billion euro, while it achieved a 6.8 % like-for-like turnover increase. 

Luckily for L’Oréal, its American sales grew 18.2 % to 1.7 billion euro, mostly thanks to the weaker euro, as like-for-like turnover growth was a ‘mere’ 5 %. European turnover grew 4.5 % in the fourth quarter, up to 2 billion euro.

All but one of L’Oréal’s divisions performed well in the fourth quarter. The Body Shop was the exception, with a 5.8 % like-for-like turnover drop following weaker Hong Kong results and a disappointing holiday season in the United States.

For its full fiscal year, L’Oréal’s turnover grew 12.1 % to 25.26 billion euro, but it would have been a 4.9 % turnover increase if exchange rate fluctuations are ignored. Compared to the year before, operational profit jumped 13.5 % to 4.39 billion euro.

The company was very happy with its online sales, now at 5 % of total turnover with its 1.3 billion euro contribution.