L'Oreal Group's sales in the first half of the year were nearly 18.4 billion euros, and prices may increase

On July 29, L’Oréal Group released its financial report for the first half of 2022, showing that the group achieved sales of 18.36 billion euros in the first half of the year, a year-on-year increase of 13.5%, and operating profit of 3.746 billion euros, a year-on-year increase of 25.3%.

Specifically, the four major divisions of L’Oréal Group, professional hair products, mass cosmetics, high-end cosmetics and active cosmetics, achieved sales of 2.164 billion euros, 6.794 billion euros, 6.872 billion euros and 2.537 billion euros, up 21.7%, 13.9%, 25.6% and 28%.

All four divisions achieved double-digit growth, but Volkswagen Cosmetics was the group's lowest-growing division, while Active Cosmetics was the fastest-growing division of the L'Oréal Group, with a turnover of 2.536 billion euros, an increase of 30.3%.

With the activation of Lancôme, Helena and Saint Laurent Beauty, and the successful launch of Urban Decay and Mason Margiela, the premium cosmetics segment has achieved an impressive increase in market share. At the same time, the Active Health Cosmetics division continued to grow, thanks to the success of La Roche-Posay and Serico. Kashi has also become a growth driver for the Professional Hair Products division. Strong innovations at Maybelline New York and L'Oréal Paris also contributed significantly to the growth of the Mass Cosmetics division in the second quarter.
In terms of regions, in the first half of this year, L'Oréal's sales in the Latin American market ranked first in the world with a year-on-year increase of 39.1%, and North Asia, including the Chinese market, ranked fourth with a year-on-year increase of 20.3%. However, sales in the North Asian market reached 5.62 billion euros in the first half of the year, exceeding the European market's 5.567 billion euros.

In the semi-annual report, Nicolas Hieronimus, CEO of L'Oreal Group, specifically mentioned that thanks to the development of e-commerce channels, the Chinese mainland market performed well. It achieved double-digit growth in June and consolidated and expanded market share across all its divisions in the second quarter - including L'Oréal's luxury cosmetics division, which broke records and reached a new all-time high.

Ye Hongmu, CEO of L'Oreal Group, said when evaluating the operating data: L'Oreal Group achieved extraordinary performance growth in the first half of this year. In the post-pandemic environment, consumers have shown a stronger desire to socialize and favor high-quality innovative beauty products, which has greatly promoted the growth of the beauty market. L'Oreal has achieved twice the average growth rate of the beauty market, consolidating its position as the world's largest beauty group.

However, Ye Hongmu also said that the company may continue to raise prices in the second half of the year to offset rising production costs, and will raise prices in a very targeted manner. Ye Hongmu said that L'Oreal will not raise prices by the same amount for all products, but make fine adjustments. At present, the company's product sales have not decreased, but consumption upgrades have occurred in each category.

He noted that while negotiating price increases with retailers was "no easy task", there would not be a "very tough fight".

In the first half of this year, L’Oréal Group slightly reduced the proportion of advertising and promotion spending to 31.5% of sales, no longer as strong as it was during the epidemic last year. Ye Hongmu said that L'Oreal may maintain a similar proportion of investment in the second half of the year. He also said that although the outlook for the second half of the year is uncertain, the company is generally confident or even very optimistic about the business outlook.