L’Oréal’s annual results point to LATAM struggle

By Simon Pitman contact

- Last updated on GMT

L’Oréal’s annual results point to LATAM struggle
The world’s biggest beauty and personal care player has published strong full-year 2018 results, but whereas the figures show that new markets were generally strong, it Latin America was the exception.

Overall the results were strong, with full year sales coming in at €26.9 billion, an increase of 7.1% on a like-for-like basis, while net profit after interest was up 8.8% to €3.89 billion.

Although the figures were driven by the strength of the Euro against foreign currencies, pushing the results up by 8.0% at constant exchange rates.

But in Latin America, overall sales slipped slightly, with challenging conditions in the first half of the year in Brazil, as well as hyperinflation in Argentina being amongst the factors.

LATAM sales slide

For the full year, sales in the LATAM region slipped to €1.78 billion, a fall of 0.4% on a like-for-like basis and an even more dramatic decrease of 8.6% on a reported basis.

Reflecting improved economic conditions in Brazil, the four quarter results showed some improvement, with sales of €463 million representing a drop of 2.8% on a like-for-like basis and 5.1% on a reported basis.

Overall New Markets, which includes Latin America, showed a like-for-like increase in 2018 sales of 16.5% to reach €3.15 billion, a figure that was largely boosted by comparable sales in the Asia Pacific region, which rose 26.2% on a like-for-like basis to €2.06 billion.

Gains drowned out by economic woes

On a positive note, executives revealed that the company’s L'Oréal luxe and active cosmetics divisions posted strong sales growth in the region as well as winning market share.

In Brazil, the company’s biggest market in the region, the professional products division showed strong growth in 2018, but the consumer products division was particularly challenged in the first half of the year, coinciding with the national truck drivers’ strike.

Meanwhile the company’s performance was particularly hard hit by the economic challenges in Argentina, with an adjustment for hyperinflation on July 1st​ 2018 impacting like-for-like sales across the region by -2.0%.

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