L'Oreal Maintains Growth Despite China Region Down Slightly
- Chaileedo Press
- Oct 21, 2022
- 4 min read
Updated: Nov 1, 2022
Beauty giant L'Oreal sold 27.94 billion euros ($27.3 billion) in the first three quarters, up 12 percent year-on-year. North Asia, where China is located, grew by only 7.4% due to China's strict pandemic control measures. Even so, North Asia remains the second largest market for L'Oréal.
On October 20, L'Oréal released its financial data for the third quarter of 2022. The financial data showed that for the three quarters ended September 30, 2022, L'Oréal Group achieved sales of 27.94 billion euros (about $27.3 billion), up 12% year-on-year. The Group achieved sales of 9.575 billion euros (about $9.36 billion) in the third quarter, up 9% year-on-year.
Growth across all four divisions
By division, L'Oréal's four divisions, Professional Products, Consumer Products, L’Oreal Luxe, and Active Cosmetics, all achieved significant growth in the first three quarters of 2022.
Active Cosmetics led the growth with 22.6%, with sales of 3.85 billion euros ($3.77 billion). The division strengthened its channel strength by deepening its partnership approach with healthcare professionals and grew much faster than the dermocosmetics market. La Roche-Posay remained the main driver of the division's performance, while CeraVe was the fastest-growing brand and brands such as VICHY and SkinCeuticals also achieved accelerated growth.
It is worth mentioning that the division completed the acquisition of Skinbetter Science, an American skincare brand, in the third quarter. According to L'Oreal's previous presentation, Skinbetter Science has now become one of the fastest growing medical skincare brands in the United States, known for developing innovative products with active ingredients for anti-aging, moisturizing, cleansing, exfoliating and sun protection.
The second fastest-growing division was L’Oreal Luxe with sales of 10.48 billion euros ($10.25 billion) in the first three quarters, up 12.2% year-on-year. The division achieved strong growth in emerging markets such as Europe and Latin America, while the fragrance business in North America was a strong driver. However, L'Oréal also mentioned that the pandemic prevention and control measures in the China region and Hainan also had a significant negative impact.
In terms of brands, the perfume market was led by sales of Libre by YSL Beauty, La Vie est Belle by Lancôme, and Paradoxe and Armani Code by Prada. In skincare, brands such as Lancôme and HR maintained huge growth momentum in the ultra-high-end market. For color cosmetics, YSL Beauty, Lancôme and Shu Uemura brands led the gains.
It is worth mentioning that a new luxury fragrance brand division was established within L’Oreal Luxe this week. The new division president, Sandrine Groslier, said the goal of the new division is to enable its fragrance brands to achieve more stable and sustainable growth in the global fragrance industry's rising environment and to develop the L'Oréal Group's mono-axis fragrance brands.
The Mass Cosmetics Division ranked last with a growth rate of 8.7%, with sales of 10.34 billion euros ($10.11 billion). The main performance drivers came from Maybelline's Superstay Vinyl Ink lipstick and NYX's concealer serum, as well as L'Oréal Paris and Garnier in the hair care segment.
The Professional Hair Care division grew 10.9% year-on-year, with sales of 3.25 billion euros ($3.18 billion) in the first three quarters. The division performed well in India, Mainland China, Brazil and Germany. The main performance was driven by the continued growth of brands such as Kashi and L'Oréal Paris Salon.
North Asia market grew by only 0.3% in the third quarter
By geography, overall L'Oréal grew across all divisions and all regions, significantly outperforming the global beauty market. L'Oréal achieved a relatively solid performance in the third quarter and continued to grow at a more stable rate compared to 2019, said Nicolas Hieronimus, CEO of L'Oréal.
Among the five performance segments, the fastest growing segment in the first three quarters was SAPMENA-SSA (South Asia Pacific, Middle East, North Africa, Sub-Saharan Africa), which grew at a rate of 25.4% despite overall sales of 2.19 billion euros ($2.14 billion), with third-quarter sales reaching 30%, well ahead of the Group's overall growth rate.
However, North Asia, where China is located, grew at a significantly lower rate than other regions, with growth of only 7.4% in the first three quarters and sales of 8.03 billion euros (about $7.85 billion), and only 0.3% in the third quarter, with sales of 2.41 billion euros (about $2.39 billion). Even so, North Asia is still the second largest market for L'Oréal.
According to the financial report, the slowdown in North Asia was due to strict pandemic control measures in China, and the beauty market in the region remained negative in the third quarter. Against this backdrop, however, L'Oréal Luxe still gained new market share and other business units continued to consolidate their positions in e-commerce, with L'Oréal Paris skincare ranking first in the TikTok China.
L'Oréal said in its earnings report that the global beauty market remains dynamic and consumer demand for beauty products remains unchanged. The combination of a strong business model, agility and the commitment of a global team has enabled L'Oréal to once again significantly outperform the market and consolidate its position as the world's number one beauty company. Despite the current uncertainty, we remain confident in the outlook for the global beauty market, which reaffirms its resilience. We still have confidence in innovation. We outperform the market and deliver another year of sales and profit growth in 2022."
In fact, L'Oréal also continued to strengthen its investment and build its business in Asia in the second half of the year. In September, L'Oréal China's venture capital firm Shanghai Meicifang Investment Co. completed its first investment, making a minority investment in local high-end Chinese perfume and fragrance brand DOCUMENTS. This groundbreaking move further confirms the importance of the Chinese market in L'Oréal's global layout and highlights the important strategic deployment of Chinese beauty brands in Meicifang's future investments.
In October, L'Oréal Group broke ground for the world's first self-built intelligent operation center and put into operation the 100,000-grade cleanroom of L'Oréal Suzhou Shangmei factory. The start of production means that L'Oréal China has become the first market where the Group has invested in an intelligent operation center and a cleanroom.
According to L'Oréal, this series of investment initiatives once again demonstrates the Group's commitment to continuous investment in China and its long-term confidence in the Chinese market.
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