L’Oreal earnings Q3 2018; CEO sees no slowdown in China

Like luxury goods makers, cosmetics companies like L’Oreal or Japan’s Shiseido have been hit by fears over a slowdown in China, which sparked a stock market sell-off. Shares in the French beauty group have fallen almost 8 percent since a peak in August.

But, following the firm’s earnings statement, shares shot up by nearly 6 percent on Wednesday during morning trade. The company said on Tuesday that appetite for its mass-market brands like L’Oreal Paris and especially luxury labels like Lancome remained robust in Asia, with the pace of revenue growth in the region even accelerating from a quarter earlier.

A particularly strong performance in the luxury division, which also houses Yves Saint Laurent make-up and brands like Clarisonic, helped L’Oreal to beat expectations in the July to September period.

Agon said that, as well as China, India and Korea were among other Asian markets boosting the firm’s performance.

“But China is very strong,” he added. “Sales in China are flying, especially in luxury, and we have seen this now for a long time, and it’s going on.”

Agon said this meant L’Oreal was “not only taking advantage of this strong market but also gaining market share which is very good for the future.”

The company said there were some improvements in western Europe during the third quarter in this division, which also comprises brands like Garnier shampoo, but said that the Brazilian market in particular was still tough.

On western Europe, Agon said: “For us, we had two good years (in the region) — last year and the year before — this year is a bit tougher, but we are still confident. We keep investing in western Europe, and we count on the gain in market share to keep growing.”

— Reuters contributed to this report.

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