L'Oreal posts 2008 results; braces for challenging 2009

PARIS Beauty company L’Oreal Paris experienced a slight increase in total sales for 2008 and acknowledged that the environment will remain challenging and it is “tackling 2009 with realism, confidence and resolve.”

“Realism because the economic environment will certainly be difficult and we are prepared for this. Confidence because the cosmetics market has always shown resilience at times of crisis, and because L’Oreal’s fundamentals are strong and our financial situation is robust,” stated Jean-Paul Agon, L’Oreal CEO. “But also resolve, because thanks to our product innovation momentum, the unique quality of our brand portfolio, our possibilities for geographic expansion and our determination to strengthen our business drivers and control our costs, we are confident in L’Oreal’s ability to successfully weather this adverse economic climate and to even emerge stronger than before.”

No specific outlook was provided for 2009.

Total group sales for 2008 rose 2.8% and totaled 17.5 billion euros. Sales on a like-for-like basis rose 3.1%.

Net profit, excluding one-time items, rose from 2.04 billion euros to 2.06 billion euros. However, net profit, hampered by a charge of 115 million euros, dropped nearly 27 percent to 1.95 billion euros in 2008.

In North America, sales based on reported figures declined 6.6 percent and totaled 3.7 billion euros for 2008. On a like-for-like basis, sales slipped 4.8%.

The company noted that, in North America, there was a clear deterioration in the market during the fourth quarter, particularly in department stores, where sales were disappointing over the year-ago holiday period. Also, in salons the number of visits continued to decline. Overall, the group was slightly below the market trend, but still strengthened its positions in the consumer products, professional products and active cosmetics.

In its consumer products division within the United States, the company experienced an increase in market share despite inventory reductions by some large distributors. During the year, there were significant advances in facial skin care with Revitalift and the increasingly successful Garnier Nutritionist, launched in 2007, the company stated.