Blemish-Free L’Oréal Eyes 19th Year of Double-Digit Net Growth

L’Oréal said it is on track to post double-digit profit gains for 2003, as it reported that first-quarter sales on a like-for-like basis rose...

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"The growth in North America and Western Europe — particularly in Europe, with a progression of 8.5 percent — was remarkable given the economic situation in the regions and the group’s high penetration," she said.

Also at the analyst meeting, L’Oréal confirmed its figures for 2002. As reported, L’Oréal posted net profits last year of $1.58 billion on consolidated sales of $15.4 billion.

"In spite of the mediocre economic climate, the like-for-like sales-growth figure was one of the best in the last decade," said Owen-Jones. "The improvement in margins was not just among the best in the last decade: It was the best, and by a very long way."

Last year, L’Oréal’s operating margins increased to 12.9 percent from 12.1 percent in 2001.

Owen-Jones also emphasized that L’Oréal has continued to outpace the market by 50 to 100 percent over the past decade, when the beauty business grew by 4.8 percent on average.

"The strategy that has formed the basis for [L’Oréal’s] ‘outperformance’ consists of organic growth as a priority; investment in research and in quality control; concentration on a limited number of businesses and brands, and international development," he explained.

"After many years of effort, L’Oréal is today ideally placed to take advantage of the enormous potential for future growth in emerging markets," said Owen-Jones.

"L’Oréal has invested in emerging markets in the last couple of years by building infrastructure in terms of production and distribution," continued Seibel. "It will benefit from profit growth from these investments going forward."

Even last year, the numbers were strong for emerging markets. In the period, the "rest of the world," or the regional category excluding Western Europe and North America, was L’Oréal’s fastest-growing market. It represented 19.8 percent of consolidated sales for cosmetics, or $2.96 billion, which was up 8.1 percent over 2001. On a like-for-like basis, the region’s sales rose 21.8 percent.

Sales in China last year were up 61 percent. In Brazil, they soared 50 percent.

Owen-Jones added that L’Oréal’s strategy has been to introduce brands on a market-by-market basis and to slowly infiltrate countries’ distribution channels.
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