Sarah Masonier / Reuters
The French cosmetics giant says it is particularly “disappointed” with the consumption of the products in Asia.
Shares of cosmetics giant L’Oréal fell more than 6% on the Paris stock exchange on Friday, after reporting fourth-quarter results below analysts’ forecasts. L’Oreal published progress results for 2023 on Thursday evening, with an increase of 8.4% in its net profit, to 6.2 billion euros, and a 7.6% increase in its sales, to 41.2 billion euros. However, investors noted weak growth in overall sales in the fourth quarter, with sales in North Asia declining (-6.2%). Around 9:50 a.m., L’Oréal shares fell 6.40% to 424.25 euros.
Fourth-quarter revenue fell short of estimates, according to analysts at RBC Capital Markets, who noted that sales “North Asia and Europe significantly underperform expectations”. The North Asia region, which includes China, “Having been affected by ongoing challenges” Especially in tourism, “As well as through the collapse of mainland China.”Jefferies analysts clarify.
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Disappointment in China
Consumption in China “frustrated” With a slower-than-expected recovery, L’Oréal’s general director, Nicolas Hieronymus, acknowledged that he “Not at all worried about the future”. “There are still 275 million people who will enter the middle class and consumers are becoming more sophisticated”According to him, “There is a real appetite for quality products”He said on Thursday evening.
Analysts are more cautious: “We are not certain that other regions can sustainably compensate for the challenges in Asia, given the underlying market weakness and L’Oreal’s strong penetration in China.”RBC Markets analysts estimate. “We believe that expectations (…) are very high as growth in the beauty market normalizes” In Asia, add Jefferies analysts.
