L’Oréal H1 2022 net profit surges 25%: We have performed ‘remarkably well’, says CEO

Last week, L’Oréal reported worldwide sales of €18.36m for H1 2022, up 20.9% on the previous year, along with second quarter (Q2) sales of €9.3m, up 22.7%. Like-for-like growth for the half year sat at 13.5% and 13.4% for Q2. Total net profit excluding non-recurring items after non-controlling interests soared 25.2% to hit €3.25m for H1 2022.

In division terms, L’Oréal’s Luxe business generated the lion’s share of global sales at €6.87m, up 25.6% on the previous year. Active cosmetics, however, displayed most growth for H1, up 28% at €2.53m. For Q2, consumer products totted up most sales at €3.49m, growing 26.1%, but it was active cosmetics that grew most significantly in the quarter, up 33.9% at €1.28m. L’Oréal Luxe sales surged 26.1% in Q2 to €3.4m and professional products was up 20.7% at €1.1m.

‘Dynamic’ beauty market growth worldwide​

Nicolas Hieronimus, CEO of L’Oréal, said the company had performed “remarkably well”​ in the first half of 2022, growing twice as fast as the wider global beauty market.

“After two years of the pandemic, consumers confirm their desire to socialise and indulge themselves with innovative and superior beauty products, which in turn is fuelling growth in the beauty market,”​ Hieronimus said.

Speaking to analysts on the company’s earnings call, he added: “This has been a strong semester for L’Oréal but also for the beauty market, which overall demonstrates once again its resilience.”​

Company estimates suggested that total global beauty market growth sat at 6% in H1 2022, with European beauty up 14%; now “fully recovered”​ from the impact of the pandemic. Across the global market, fragrances continued to perform especially well worldwide, followed by makeup, hair care and then skin care, he said.

Importantly, L’Oréal was growing at a “consistent pace”​ compared to 2019 within all of this, at around 20%.

“I feel it’s very important to highlight that L’Oréal is flying at cruising speed over a very uneven landscape with heavily varying comparatives. So, 2019 remains a good benchmark to monitor our pace,”​ he said.

Balanced L’Oréal growth – volume, value, offline, online and worldwide​

Importantly, Hieronimus said H1 2022 had not only seen strong growth but also balanced growth at L’Oréal, between volume and value terms; between offline and online; and across all geographic zones.

The European beauty business, for example, had bounced back to being particularly “dynamic”​ in H1 2022, now exceeding pre-pandemic 2019 levels. North America business had also returned to pre-COVID levels, he said, though there had been a slowdown in July.

Globally, L’Oréal’s sales had grown most significantly in Latin America this year, up 43.9% for Q2 2022 and up 39.1% for H1 2022. Europe had the lowest growth levels, but still reported sales up at 13.4% for Q2 and up 14.6% for H1. Sales across South Asia Pacific, Middle East and North Africa [SAPMENA] were up 38.9% for Q2 and 28.3% for H1 and North America sales were up 25.3% for Q2 and 23.5% for H1. In money terms, North Asia held the lion’s share of sales in Q2 and H1 at €2.81m and €5.6m, respectively, up 22.7% and 20.3%.

Hieronimus said L’Oréal saw an “outstanding performance”​ in mainland China thanks to e-commerce, despite a “very challenging market context” ​with a ‘zero COVID’ policy in the country and COVID resurgence across North Asia.

Absorbing and mitigating material and supply chain challenges​

Worldwide, the CEO said the company’s capacity to valorise its portfolio via innovation and control of costs had enabled it to “absorb the impact of higher raw material prices, mitigate supply chain pressures, and continue to invest efficiently”​ in its brands.

Looking ahead to H2 2022, he said L’Oréal would continue with price increases across its portfolio to respond to the inflationary context, but these would be conducted in a “tailor-made way”.​

“…Mindful of the current uncertainties and instability, we are convinced that our unique, balanced model, our incredible innovation capacity, our strong brand portfolio, the passion and agility of our teams and our financial strength are the assets that will enable us to pursue our profitable and sustainable growth strategy,”​ he said.

“We remain optimistic about the outlook for the global beauty market and confident in our ability to outperform in 2022 and achieve another year of growth in sales and profits.”​