“This is a historic step for L’Oréal, this is the first time since the group’s inception, the sales have been higher in emerging markets than in North America,” said Jean-Paul Agon, CEO of the world leader in cosmetics, which presented its 2012 results Monday, February 11. The “new markets” as the group calls them, represent 39.41% of sales of L’Oreal cosmetics, against 35.5% for Europe and 25% in North America.
Future growth will come from China, India, Brazil, Mexico, Indonesia… and “tomorrow from Africa.” Already, China and Hong Kong together constitute the second largest market for L’Oréal after the United States. The group did better than expected in 2012, with a turnover of €22.46 billion in 2012, up 10.4% compared to the previous year. Operating income jumped 12.3% to €3.69 billion, while net income rose by 17.6% to €2.86 billion.
For 2013, the CEO of L’Oréal is optimistic: “Globally, growth in cosmetics should be around 4.5%. We intend to outperform the market,” he said, noting that he also intends to improve these results.
After the announcements of opening plants in 2012 – the most important in Indonesia to serve the South-East Asia or the biggest hair dye plant in Mexico – the next inauguration, which will bring the total number to 44 for L’Oréal, is scheduled for April in Egypt to supply North Africa and the Middle East. In Africa, L’Oréal has recently opened branches in Kenya, Nigeria, Ghana and in the Middle East, Saudi Arabia.
On research, the rate is unlikely to decline: “It is the engine of war,” said Jean-Paul Agon. “L’Oréal is continuing to increase its research budgets,” he added, proud of the recent openings of the largest global center of capillary expertise in Saint-Ouen and the fifth regional “hub” in Mumbai, India, designed to develop formulas and products tailored to the Indian public.
The report published Monday shows that the group has little debt: cash flow reached record levels of €2.58 billion (up 26.4% compared to fiscal year 2011). This is the reason why management has decided to generously reward its shareholders by proposing to increase the dividend by 15% to €2.3. Monday, the company has also given the green light, in the Board of Directors, to a new share repurchase plan of €500 million during the first half of 2013.
The legal saga of the Bettencourt affair – L’Oreal heiress Liliane Bettencourt, 90 years old, one of the wealthiest people in the world (worth $24 billion) is in a state of dementia – continues. There are five people indicted and the investigation seems to be ending soon.
Whatever the throes of major shareholders of the group – the founding family holds 30.79% and Swiss food company Nestlé holds 29.58% – Jean-Paul Agon ensures that “this does not affect L’Oréal.”
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