International focus pays off for L'Oreal in 2007

By Guy Montague-Jones

- Last updated on GMT

Related tags Cent Europe L'oréal

Emerging markets overtook North America in terms of profitability
for L'Oreal as the company's international outlook helped it secure
high operating profit once again.

The world's largest cosmetics company posted an increase in operating profit of 11.3 per cent to €2.8bn for the year ending 31 December. Profitability ​ L'Oreal's focus on emerging markets has enabled the firm to grow strongly while rivals have struggled in the saturated markets of Western Europe and North America. Indeed operating profit from its activities in the 'rest of the world' rose 31.4 per cent to €774m in 2007 while North America profits increased only narrowly to the lower figure of €773m. Operating margin remained steady rising to 16.6 per cent from 16.1 per cent last year despite higher oil and energy prices. Improved cost management and favourable media purchasing conditions were cited as reasons behind the increase. International sales ​ Meanwhile sales for the full year were up 8.1 per cent to €17.1bn but the figures were slightly affected towards the end of the year by the strong Euro with fourth quarter sales rising 6.6 per cent. Sales growth was highest outside of North America and Western Europe with international sales jumping 17 per cent for the fourth quarter. Eastern European sales were particularly significant increasing 28.6 per cent over the period and Chinese market growth led the way in Asia as sales on the continent rose 15.5 per cent. Future plans ​ Looking forward to 2008 L'Oreal expects to achieve sales growth between 6 and 8 per cent despite the mounting economic gloom. L'Oreal CEO Jean-Paul Agon said: "As for 2008, we are optimistic despite the uncertainties of the economic environment. "In fact, our business has always proven extremely resilient during periods of crisis, we intend to continue strengthening our positions and growing faster than the market, and the large proportion of our sales now made in new and fast-growing markets is providing a powerful relay for our global growth."

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