French cosmetics giant L’Oréal said yesterday, Tuesday July 30, its sales and profits rose during the first half of the year despite a drop in China. Overall, sales at the company that owns the Maybelline New York and Garnier brands climbed 7.5 percent to 22.1 billion euros (USD 23.9 billion) while net profits rose 8.8 percent to 3.65 billion.

"Our continued strong momentum in emerging markets, Europe and North America allowed us to more than offset the depressed beauty market in mainland China," chief executive Nicolas Hieronimus said in a statement.

Raising the game in China

North Asia sales fell by 3.1 percent the first half to 5.47 billion euros.

China has for years been a key source of sales growth for luxury firms for years, and the sluggish performance of the world’s second-largest economy has taken a hit on their earnings.

Hieronimus said L’Oréal had originally hoped the Chinese market would rebound this year, but instead it contracted in the second quarter. "In our forecast for the rest of the year, we believe the Chinese market will remain slightly negative, that Chinese consumers lack confidence and are paying much more attention to their spending," he told AFP.

The group’s CEO said he remains positive and ambitious about China, however. "There are 400 million consumers there who could buy our products and we’re selling to only 100 million," he said.

To reach that goal “L’Oréal needs to raise its game," Hieronimus added, pointing out that the group’s luxury cosmetics brand Saint Laurent was experiencing double digit growth in China and that its Aesop cosmetics shops there were performing well.

However, the 4.0 percent growth in the luxury division, L’Oréal’s second largest, trailed the 8.3 percent expansion posted by the larger consumer products division.

A normalizing beauty market

With 8.7 percent growth North America edged out North Asia as L’Oréal’s top sales region.

Sales in Europe, Latin America and South Asia all grew by double digits.

The company expressed confidence for the rest of the year, saying it expects to post sales and profit growth for the year.

"I am pleased with this performance. In a beauty market which, despite its slowdown, remains dynamic at around 5.5% growth in the first half, we are progressing by 7.3%" (in comparable data), Mr. Hieronimus told an AFP journalist.

Earlier this year, L’Oréal forecasted the global beauty market to return to pre-Covid growth rates at around 4.5%.

"With an annual growth rate comprised between 4 and 4.5%, the beauty market, which was worth 280 billion euros in 2023, should reach 380 billion euros in 2030. There are plenty of opportunities," added Mr. Hieronimus.