520 billion RMB! 12 major beauty groups released their semi-annual reports

Abstract: Abstract: In the first half of this year, sales revenue of cosmetics-related businesses of 12 companies reached totaled $76.6 billion, an increase slightly year-on-year, with growth momentum coming from high-end brands that have kicked off a competition war in the Chinese market.

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Recently, international beauty groups have been releasing their latest financial reports. CHAILEEDO Compiled these financial data among 12 international beauty companies such as L'Oreal, P&G, Unilever, Johnson & Johnson, Shiseido, and so on from January to June this year. According to statistics, the sales revenue of cosmetics-related businesses of these 12 international beauty groups in the first half year totaled approximately 76.596 billion, a slight increase of 0.6 percentage points compared to the same period last year.

Among these 12 companies, 7 reached year-over-year sales growth, with LVMH, L'Oreal, and Beiersdorf all posting double-digit growth. The other 5 companies’ sales revenue declined, with Natura & Co, LG Household & Health Care, and Amore Pacific all posting sales decline of more than 10% in the first half.

CHAILEEDO observed that high-end makeup and fragrances performed outstandingly in the first half year. For example, L'Oreal's premium cosmetics division achieved sales revenue of about $6.964 billion, up 16.4% year-on-year, which has benefited from high-end brands such as Lancome, Helena, and YSL beauty. In the fragrance area, LVMH's fragrance and skincare segment saw 20% growth, and that was the fastest growth rate among the 12 companies. According to the financial report, a number of fragrances under LVMH such as Dior JAdore and Givenchy Linterdit have maintained great growth.

Overall, although 7 companies achieved growth, the rate was less than that in the past. For instant, L'Oreal's sales increased by 20.7% in the first half of 2021, compared to 13.5% this year. Similarly, both Shiseido and Amore Pacific turned their year-on-year figures from growth to decline.

A very vital reason is the impact brought about by the Chinese market. In their financial reports, almost all of the 12 companies mentioned the significant influences of the pandemic on their Asian market or their group's overall business performance in areas such as Shanghai. Furthermore, CHAILEEDO found that many companies presented an increase in revenue without growth in profit, for example, Kao's operating profit fall 37.64% year on year. A number of companies predict that this uncertainty will continue for a period of time. And almost all of them have taken measures to increase prices and reduce costs in order to lower cost pressure and achieve their full-year growth targets.

Among them, the Kao Group has decided to continue its strategic price increase program, including planning for promotional costs, direct price increases, value-added improvements, and cost compression. The group expects price increases in overseas regions to bring about $29 million in the second half of this year and about $52 million in Japan. The financial report of Unilever also showed that the price increases measure that group implemented in the home care segment and other business segments in the first half of the year, and the increased range in the second quarter amounted to 11.2%.

In addition, the competition war in the Chinese market led by international giants has started. For instance, L'Oreal is about to introduce Parda beauty into China, and Aveda, a high-end Washing & Care brand under Estee Lauder, has opened its first store in China. Meanwhile, the beauty giants are also accelerating their localization strategies, channels, marketing and technology are getting closer to the Chinese market. This is evident from the fact that the beauty giants are increasing their investment in live streaming and are stationed in duty-free stores in Hainan.

China is a vital potential market, and international beauty groups are still full of confidence and ambition. At the same time, based on the forecast of the future global market, the organizational structure, brand portfolio, supply chain, and other aspects are constantly adjusting and optimizing in order to fight the next battle.