L'Oreal Q3 sales contrasted by Europe-US divide
Western European sales despite an overall rise in turnover growth,
as the French group releases its third quarter results.
Group sales amounted to €10.75 billion, although no breakdown was given for the third quarter. According to the company this represented a rise of 7.1 per cent in turnover growth compared to the corresponding quarter in 2004, giving a growth rate of 4.7 per cent for the nine month period.
Unlike many major cosmetic and toiletry players, L'Oreal's performance in the all-important North American market has met with considerable success recently. Here sales grew by 6.6 per cent during the third quarter, despite prevailing retail conditions continuing to be flat.
However, sales growth in Western European was considerably slower, where, despite stronger retail conditions, the company only managed to register a O.4 per cent like-for-like sales increase.
The stock market reacted immediately, with shares trading nearly 3 per cent lower at the start of trading yesterday.
L'Oreal CEO Sir Lindsay Owen-Jones said that he was encouraged by Western European results "gradually moving forward again, adding that, "The strengthening of the main currencies against the euro has led to a clearly positive exchange rate impact in the third quarter, for the first time in several years."
With the business plan working well for the year, Owen-Jones said that sales and earnings targets were on course for the full year.
On a divisional basis sales of active cosmetics rose by 13 per cent over the nine month period, albeit from a small base. This was driven by launches that included anti-wrinkle products in the Vichy and Activ Pro lines.
Sales of consumer products, the largest division, rose by 4.5 per cent - driven by the Ultra-Lift skin care lin and Nutrisse hair colourant; whereas sales of professional products rose by 5.3 per cent during the nine month period - boosted by the Keratese Reflection and Volumactive ranges.
The developing markets are also continuing to show strong increases in revenuee, with like-for-like sales in the Eastern European growing by 28.4 per cent, boosted by a staggering rise of 41 per cent in the Russian Federation. The success of product initiatives from L'Oreal Paris and the success of the DermoExpertise skin care range were outlined as being particularly strong in this market.
In Latin America like-for-like sales increases of 11.3 per cent were driven by the success of Elseve anti-dandruff shampoos and hair care lines, together with Decontract Rides skin care line.
