L’Oréal Second-Quarter Results Beat Analyst Expectations

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PARIS — L’Oréal’s results in the second quarter of 2022 made analysts’ heads spin — in a good way.

“L’Oréal has delivered another quarter of gravity-defying growth, well ahead of consensus,” wrote Jeffries analyst Molly Wylenzek in a research note.

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She added the world’s largest beauty company deftly navigated through important disruption to its business in China, which generates 20 percent of overall group sales.

By June, company sales in mainland China had returned to double-digit increases.

In the three months ended June 30, L’Oréal’s sales reached 9.31 billion euros, up 22.7 percent in reported terms and 13.4 percent organically.

“L’Oréal did it again: a decent beat on high expectations,” wrote Bruno Monteyne, an analyst at AB Bernstein.

L’Oréal’s second-quarter like-for-like sales gains broadly beat analysts’ consensus of 9.7 percent. Impressive beats were noted by Monteyne in the L’Oréal Luxe and Active Cosmetics divisions.

L’Oréal Luxe, with brands such as Kiehl’s, Yves Saint Laurent and Biotherm, posted sales of 3.41 billion euros, an increase of 26.1 percent in reported terms and 15.3 percent on an organic basis. L’Oréal said in a statement released Thursday after the close of the Paris bourse that the division outperformed in all three of its categories — skin care, fragrance and makeup — and its business was balanced across geographic zones in the first half.

The Active Cosmetics division, which comprises brands such as CeraVe, La Roche-Posay and Vichy Laboratories, registered second-quarter sales of 1.28 billion euros, a rise of 33.9 percent in reported numbers and 23.8 percent on a constant basis. L’Oréal said the division in the first six months of 2022 grew much faster than the total dermo cosmetics market and posted double-digit advances in all geographies.

The Professional Products division’s second-quarter sales of 1.12 billion euros were up 20.7 percent on a reported basis and 11.3 percent in like-for-like terms. The division, boasting brands including L’Oréal Professional, Kérastase and Redken, notched first-half gains in every market, with “outstanding performance” in India, mainland China, North America and Germany, according to L’Oréal.

Meanwhile, sales at the Consumer Products division, with the L’Oréal Paris, Garnier and NYX Professional Makeup brands, reached 3.49 billion euros, 16.8 percent growth on a reported basis and 9.1 percent in like-for-like terms. L’Oréal said the division outpaced a robust global makeup market.

In the first half of 2022, L’Oréal’s sales rose 20.9 percent in reported terms and 13.5 percent on a like-for-like basis to 18.36 billion euros.

“After two years of the pandemic, consumers confirm their desire to socialize and indulge themselves with innovative and superior beauty products, which in turn is fueling the growth of the beauty market,” said Nicolas Hieronimus, L’Oréal chief executive officer, in the statement. “L’Oréal grew twice as fast as the market and has strengthened its position as the world’s number-one beauty company.”

In the half, the group’s net profit reached 3.22 billion euros, a 36.4 percent gain, as its operating margin came in at 19.7 percent, against 19.1 percent the prior quarter.

Hieronimus said L’Oréal’s performance is increasingly balanced on many levels: between volume and value growth, and between brick-and-mortar and e-commerce, which continues registering double-digit increases.

Further, there was an equilibrium noted between geographic regions, which posted double-digit rises. Hieronimus highlighted the strong performance in emerging markets of the South Asia-Pacific, Middle East, North Africa and Sub-Saharan Africa [or SAPMENA-SSA] zone and Latin America. He said the performance in mainland China was “outstanding” in a highly challenging context, thanks to the group’s e-commerce expertise.

Each of L’Oréal’s three selective divisions posted double-digit growth, while the Consumer Products division’s business accelerated significantly in the second quarter.

Hieronimus pointed out each major product category also achieved double-digit gains.

He said the group’s ability to valorize its portfolio through innovation and cost control allowed L’Oréal to counterbalance the negative impact of higher raw material costs, allay supply chain pressures and continue to invest efficiently in its brands, while the company improved its profitability and created sustainable value.

“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,” said Hieronimus.

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