L’Oréal keeps up the pace: Continued strong growth

Further improvement in operating margin

• Sales: 20.57 billion euros, +13.3% like-for-like¹, +12.0% reported
• Continued outperformance of the global beauty market
• Broad-based momentum across all Divisions, with record growth in Consumer Products and another outstanding quarter for Dermatological Beauty
• Growth in all Regions with particularly impressive momentum in Europe, strong performance in the United States and sharp recovery in mainland China in the second quarter
• Progress well-balanced between offline and online
• Strong growth driven by both volume and value
• Operating margin at 20.7%, up 30 basis points
• EPS² growth: +11.2% to €6.73
• Standard & Poor’s Global again awarded L’Oréal 85 points out of 100 in its ESG rating, reflecting the Group’s performance in terms of sustainability

Commenting on the figures, Nicolas Hieronimus, CEO of L'Oréal, said:
“In a beauty market that is more dynamic than ever, L’Oréal delivered a remarkable performance and further strengthened its global leadership in the first half. Growth was broad-based across all Divisions, Regions, categories, and channels, once again vindicating our balanced, multi-polar model. Growth continued to be driven by the dual cylinders of volume and value – testament to the success of our innovations and the desirability of our brands. In keeping with our virtuous circle, we improved our profitability, all while significantly increasing investment in our brands. At the same time, in line with our dual ambition of economic and corporate performance, we continued to invest in the transition towards a more sustainable operating model that will ensure long-term value creation. In an economic context that is still uncertain, we remain ambitious for the future, optimistic about the outlook for the beauty market, and confident in our ability to keep outperforming the market and achieve in 2023 another year of growth in sales and profits.”

Moreover, the Board of Directors has decided, under the authorisation voted by the Annual General Meeting of 21 April 2023, to set up a share buyback programme during the second half of 2023 amounting to a maximum of 500 million euros and with a maximum number of shares to be acquired of 2 million. The shares thus repurchased are intended to be cancelled³.

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2023 HALF-YEAR SALES

Like-for-like, i.e. based on a comparable scope of consolidation and constant exchange rates, sales of the L’Oréal group grew by +13.3%.

The net impact of changes in the scope of consolidation was +1.1%.

Growth at constant exchange rates came out at +14.4%.

Currency fluctuations had a negative impact of -2.4%. If the exchange rates at 30 June 2023, i.e. €1 = $1.092, are extrapolated until 31 December, the impact of currency fluctuations on sales would be around -4.9% for the whole of 2023.

Based on reported figures, the Group’s sales at 30 June 2023 amounted to 20.57 billion euros, an increase of +12.0%.

Sales by Division and Region

Summary by Division

PROFESSIONAL PRODUCTS

In the first half of the year, the Professional Products Division reported continued growth of +7.6% like-for-like and +6.9% reported.
The Division outperformed the market with remarkable growth in mainland China and India, as well as the United Kingdom. It continued to grow in all distribution channels: in salons, in its SalonCentric network (in North America), in e-commerce and in the selective channel.
Growth in the dynamic haircare market was driven by Kérastase, with an excellent start for the Symbiose anti-dandruff range, and by L’Oréal Professionnel, with the success of Metal Detox. The Division performed well in hair colour, thanks to its iconic lines Shades EQ by Redken and Inoa by L’Oréal Professionnel.
As the industry leader, the Division continued to pursue the rollout of its “Hairstylists for the Future” programme, supporting all partner hairstylists in their green transition. 
 

CONSUMER PRODUCTS

The Consumer Products Division achieved its best half-year on record, growing +15.0% like-for-like and +13.1% reported.
Driven by both volume and value, the Division increased its sales by around one billion euros to achieve this record performance. The Division significantly outperformed the dynamic mass market; of particular note were the exceptional performances in Europe and in the high-potential emerging markets of Mexico, Brazil, and India.
Each of the large brands grew in double-digits. All four categories advanced strongly, powered by flawless execution, best-in-class retailer partnerships, and disruptive innovations. Makeup was the most dynamic, boosted by the newly launched Falsies Surreal Mascara by Maybelline New York, Telescopic Lift Mascara by L’Oréal Paris and Fat Oil Gloss by NYX Professional Makeup. Haircare benefitted from the Division’s premiumisation strategy, especially with the highly successful launch of Elvive Bond Repair. In hair colour, Good by Garnier was off to a very promising start. Skincare recorded double digit growth thanks to L’Oréal Paris’ new Revitalift Clinical Vitamin C SPF50+ fluid and Garnier’s new AHA BHA anti-acne line. 
 

LUXE

L’Oréal Luxe has accelerated quarter after quarter, posting first-half growth of +7.6% like-for-like and +6.1% reported.
L’Oréal Luxe reported strong growth in the first six months, driven by double-digit increases in Europe, North America and emerging markets. In mainland China, L’Oréal Luxe saw a remarkable recovery during the second quarter with double-digit growth in sales and achieved another record market share.
The Division outperformed the luxury fragrance market, with double-digit growth across all Regions, spurred by standout performances from couture brands including Yves Saint Laurent, Prada and Valentino. In skincare, L’Oréal Luxe continued to make progress thanks to the spectacular success of Helena Rubinstein and the recovery of Lancôme in North America, along with the success of Takami in Japan and more recently in mainland China. Makeup also grew, buoyed by the success of Yves Saint Laurent and encouraging performances from specialist brands Urban Decay and Shu Uemura.
The Aēsop brand will be integrated in the second half once the necessary regulatory approvals have been obtained. 

DERMATOLOGICAL BEAUTY⁶

The Dermatological Beauty Division reported outstanding growth of +29.0% like-for-like and +29.5% reported.
In the first half, the Division delivered another remarkable performance, growing well ahead of the highly dynamic dermocosmetics market with a strong contribution from volume and value. This was driven by its portfolio of highly complementary brands – coupled with the continued pursuit of medical and prescription leadership. The Division posted outstanding progress in all regions with particularly impressive performances in emerging markets and Europe; in mainland China, where the market continued to gradually recover, it outperformed significantly.
All global brands advanced in double digits: La Roche-Posay, the Division’s number one growth contributor maintained its strong momentum, driven by Effaclar, Cicaplast and UVmune 400. CeraVe remained extremely dynamic in North America and accelerated strongly in the rest of the world. Vichy was spurred by the success of Dercos and solid momentum in suncare. SkinCeuticals continued to progress and the newly acquired SkinBetter Science was off to a very promising start.

Summary by Region

EUROPE

Europe posted outstanding growth of +18.2% like-for-like and +16.6% reported.
L’Oréal outperformed a dynamic beauty market, with remarkable performances in key countries such as the Germany-Austria-Switzerland cluster, France, and the United Kingdom, as well as in dynamic countries like Poland, Turkey and the Nordics. In e-commerce, growth accelerated significantly in the second quarter.
Growth was fuelled by a sound contribution from value and an increase in volume, demonstrating the attractiveness of L’Oréal’s brand portfolio among European consumers.
In the Consumer Products Division, momentum was outstanding for all major brands and in all categories, led by makeup and skincare. The Dermatological Beauty Division continued to post very strong growth and significantly outperformed the market, driven by La Roche-Posay and CeraVe, both of which continued to achieve spectacular performances. L’Oréal Luxe strengthened its leadership in fragrances, the largest segment in the European selective beauty market, driven by the ongoing success of Paradoxe by Prada and Libre by Yves Saint Laurent. The Professional Products Division continued to make gains in the strategic premium haircare segment. 
 

NORTH AMERICA

In the first six months, growth in North America amounted to +13.0% like-for-like and +14.7% reported. 
Growth was broad-based across all the Divisions and driven by a strong contribution from both price and mix.
In the US, the Consumer Products Division advanced in double digits, outperforming the market in haircare and skincare; momentum remained strong in makeup, led by innovations across all key brands.
L’Oréal Luxe continued to outperform the market in fragrances, driven by couture brands including Valentino and Prada; in makeup, Yves Saint Laurent and Armani grew in double digits, driven by recent launches. Growth in e-commerce remained dynamic with strong momentum on Amazon, where the introduction of new brands, including Lancôme, is redefining luxury beauty on the platform.
The Professional Products Division outpaced the market, notably in haircare, driven by the ongoing success of Redken and Kérastase.
L’Oréal Dermatological Beauty maintained its tremendous growth, significantly outperforming the market, thanks to the continued success of CeraVe and the outstanding momentum of La Roche-Posay, the Division’s fastest growing brand. 
 

North Asia grew +3.9% like-for-like and +0.6% reported.
The beauty market in mainland China continued its progressive recovery in the second quarter, driven by a strong rebound in both offline and online channels. Against that backdrop, L’Oréal significantly outperformed the market and achieved strong growth across all channels and Divisions during this period. This was fuelled by the introduction of new brands like Valentino, Prada and Takami; a well-filled innovation pipeline; as well as the gradual expansion into new cities. During the 6.18 shopping festival, eight of the Group’s brands across all four Divisions were in the Top-20; L'Oréal Paris and Lancôme ranked first and second, respectively, cumulative across all platforms and categories.
By category, the Region’s growth in the first half was driven by haircare, notably Kérastase and L’Oréal Professionnel; skincare, including Helena Rubinstein, SkinCeuticals and Takami; and fragrance with Maison Margiela and the Prada and Valentino launches. After a challenging start to the year, makeup recovered significantly in the second quarter, driven by both mass and selective brands.
Growth remained strong in Hong Kong SAR, which benefited from the pick-up in travel from mainland China. In Japan, L’Oréal outperformed the market thanks to significant momentum in Consumer Products, notably with Maybelline New York, and L’Oréal Luxe, with standout performances for Takami and Shu Uemura.
The Travel Retail business in the Region was affected by the base effect of last year’s anticipated invoicing⁷. In addition, sell-out was adversely impacted by Travel Retail operators’ wide-ranging refocus on a model with the individual traveller at its core. 
 

SAPMENA–SSA⁸

SAPMENA-SSA achieved outstanding growth of +23.6% like-for-like and +17.4% reported.
SAPMENA continued to deliver outstanding double-digit growth in all categories and Divisions, making gains in both volume and value. By category, skincare was the main driver, fuelled by the expansion of CeraVe and strong growth in La Roche-Posay suncare; makeup was the fastest-growing category due to the rebound of Maybelline New York; fragrances recorded another strong and broad-based performance.
By Region, growth was well-balanced between Pacific, Southeast Asia, South Asia and Middle East & North Africa. In the Pacific region, growth was outstanding, especially in the drug store channel; in India, growth was driven by mass and professional hair colour and haircare. In Southeast Asia, L’Oréal recorded strong sales and outperformed in Thailand, Malaysia and Singapore, while the Consumer Products Division in Vietnam benefited from the expansion of e-commerce. The Gulf States recorded excellent growth over the religious holidays.
In Sub-Saharan Africa (SSA), all countries saw double-digit growth, with particularly strong momentum in South Africa and Kenya. 
 

LATIN AMERICA

Latin America achieved outstanding growth of +23.6% like-for-like and +28.9% reported.
The Latin American beauty market remained dynamic across all key countries, driven by Mexico and Brazil.
L’Oréal delivered excellent growth with a positive contribution from volume and value – supported by a strong innovation pipeline. All countries continued to grow in double digits, with Brazil and Mexico being the top contributors. E-commerce sales continued to display fast growth.
Makeup spearheaded double-digit growth across all categories, with the stellar success of Maybelline New York innovations. In skincare, growth was driven by the continued success of La Roche-Posay and CeraVe, as well as L’Oréal Paris and Garnier. Haircare sales grew thanks to the continued strength of the Elvive franchise.

IMPORTANT EVENTS DURING THE PERIOD 01/04/23 TO 30/06/23 AND POST-CLOSING EVENTS

STRATEGY

• On 1 July, as part of the Ambition France project, the Group established L’Oréal France as an autonomous entity, bringing together its commercial operations and shared services, as voted by the Annual General Meeting of 21 April 2023.

RESEARCH, BEAUTY TECH AND DIGITAL

• L’Oréal launched several major biotech initiatives. Its venture capital fund BOLD invested in US biotech company Debut to co-develop a platform of over 7,000 increasingly high-performing and more sustainable ingredients; the joint development program between L’Oréal and Debut aims to accelerate their go-to-market. It also announced a partnership with Bakar Labs, the pioneering biotech incubator of University of California Berkeley; the collaboration gives Bakar Labs’ start-ups free access to L’Oréal’s 3D-reconstructed skin models, an innovative tool for animal-free safety and efficacy testing.
• At Viva Technology 2023, L’Oréal unveiled its latest Beauty Tech innovations: inclusive solutions such as HAPTA, designed to enable people with hand motion disorders to apply makeup; diagnostic tools (SPOTSCAN, META PROFILER™, K-SCAN); personalised solutions (3D shu:brow); and sustainable solutions like L’Oréal Professionnel’s WATER SAVER, which has saved over 66 million litres of water to date.
  L'Oréal and Verily – an Alphabet precision health tech company – also announced the launch of My Skin & Hair Journey, the world’s largest, most diverse multi-year skin and hair health study. Involving thousands of women in the US, the study will help researchers better understand the biological, clinical and environmental factors that contribute to skin and hair health.
• At the World Congress of Dermatology (WCD) in Singapore, L’Oréal unveiled new research on pigmentation and the impact of hormonal variations on women’s skin and scalp.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE

• L'Oréal was recognised by Standard & Poor’s Global for its sustainability performance, with a solid Environmental, Social & Governance (ESG) rating of 85 points out of 100. The score underlines L'Oréal’s sustainable transformation towards a more responsible and inclusive business model through the implementation of an ambitious sustainability strategy.
• At the 25^th L’Oréal-UNESCO For Women in Science International Awards, five women scientists were recognised for their outstanding work. A medal of honour and a financial endowment were also given to three researchers who have been forced to flee their country and have shown exemplary courage, resilience and commitment to science.
• To coincide with Earth Day, in April L'Oréal announced three new projects supported by its Fund for Nature Regeneration. NetZero, ReforesTerra and Mangroves.Now were chosen for their innovative approaches to soil carbon sequestration, reforestation and mangrove restoration as well as their potential to have a far-reaching, positive impact on the environment and local communities.
• L'Oréal featured on Fast Company’s 2023 list of 100 Best Workplaces for Innovators, which recognises organisations around the world that demonstrate an inspiring commitment to encourage and develop innovation at all levels.

FINANCE

• In May, L’Oréal successfully completed a bond issue⁹ totalling 2 billion euros, the net proceeds of which will be used for general corporate purposes, in particular the acquisition of Aēsop.

2023 HALF-YEAR RESULTS

The limited review procedures of the half-year consolidated accounts have been completed. The limited review report is being prepared by the Statutory Auditors.

Operating profitability at 20.7% of sales

Consolidated profit and loss account: from sales to operating profit.

Gross profit, at 15,282.6 million euros, came out at 74.3% of sales compared with 73.1% in the first half of 2022, an increase of 120 basis points.

Research & Innovation expenses, at 622.8 million euros, came out at 3.0% of sales.

Advertising and promotion expenses, at 6,682.6 million euros, came out at 32.5% of sales, an increase of 100 basis points.

Selling, general and administrative expenses, at 18.1% of sales, decreased by 20 basis points.

Overall, operating profit increased by +13.7% to 4,258.8 million euros and amounted to 20.7% of sales, an increase of 30 basis points compared with the first half of 2022. 

Operating profit by Division

The L’Oréal group is managed on an annual basis. This means that half-year operating profits cannot be extrapolated for the whole year.

The profitability of the Professional Products Division came out at 21.2%, in line with the first half of 2022.
The profitability of the Consumer Products Division increased from 20.0% to 21.0%. 
The profitability of Luxe decreased by 80 basis points, to 23.2%.
The profitability of the Dermatological Beauty Division improved by 70 basis points to 28.4%.

Net profit excluding non-recurring items

Consolidated profit and loss account: from operating profit to net profit excluding non-recurring items.

Overall financial expenses came out at 45.3 million euros. 

Sanofi dividends amounted to 420.9 million euros.

Income tax excluding non-recurring items came out at 1,013.2 million euros, i.e. a tax rate of 21.9%.

Net profit excluding non-recurring items after non-controlling interests came out at 3,616.6 million euros.

Earnings per share, at 6.73 euros, increased by +11.2% compared with the first half of 2022.

Net profit

Consolidated profit and loss account: from net profit excluding non-recurring items to net profit.

Non-recurring items amounted to 257.6 million euros net of tax.

Operating cash flow and balance sheet

Gross cash flow amounted to 4,378 million euros, an increase of 14.5%.

The change in working capital amounted to -1,556 million euros.

Investments, at 724 million euros, represented 3.5% of sales.

Operating cash flow¹⁴ amounted to 2,097 million euros, an increase of 56.9%.

At 30 June 2023, after taking into account finance lease liabilities for 1,567 million euros, net debt amounted to 4,822 million euros.

“This news release does not constitute an offer to sell, or a solicitation of an offer to buy L’Oréal shares. If you wish to obtain more comprehensive information about L’Oréal, please refer to the public documents registered in France with the Autorité des Marchés Financiers, also available in English on our website www.loreal-finance.com.
This news release may contain some forward-looking statements. While the Company believes that these statements are based on reasonable assumptions as of the date of publication of this press release, they are by nature subject to risks and uncertainties which may lead to a discrepancy between the actual figures and those indicated or suggested in these statements.”
 

This is a free translation into English of the news release issued in the French language and is provided solely for the convenience of English-speaking readers. In case of discrepancy, the French version prevails.

About L’Oréal

For over 110 years, L’Oréal, the world’s leading beauty player, has devoted itself to one thing only: fulfilling the beauty aspirations of consumers around the world. Our purpose, to create the beauty that moves the world, defines our approach to beauty as inclusive, ethical, generous and committed to social and environmental sustainability. With our broad portfolio of 36 international brands and ambitious sustainability commitments in our L’Oréal for the Future programme, we offer each and every person around the world the best in terms of quality, efficacy, safety, sincerity and responsibility, while celebrating beauty in its infinite plurality.

With 87,400 committed employees, a balanced geographical footprint and sales across all distribution networks
(e-commerce, mass market, department stores, pharmacies, hair salons, branded and travel retail), in 2022 the Group generated sales amounting to 38.26 billion euros. With 20 research centres across 11 countries around the world and a dedicated Research and Innovation team of over 4,000 scientists and 5,500 tech and digital professionals, L’Oréal is focused on inventing the future of beauty and becoming a Beauty Tech powerhouse.

More information on https://www.loreal.com/en/mediaroom

L’ORÉAL CONTACTS

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