L’Oréal’s shares fell by 4.32% to 337.50 euros, primarily due to disappointing fourth-quarter growth figures, especially in the Professional Products and Luxury segments. Challenges in the Chinese market and a slowdown in North America further contributed to the company’s struggles, resulting in the lowest organic growth since the pandemic. However, L’Oréal reported record annual profits for 2024, exceeding expectations, and remains optimistic about future growth, targeting a 5% increase in revenue.
L’Oréal Faces Setbacks Despite Strong Annual Results
In a recent report, L’Oréal experienced a significant drop of 4.32%, with shares trading at 337.50 euros, making it the most considerable decliner in the CAC 40 index. The decline is attributed to lackluster growth figures for the fourth quarter of 2024, as highlighted by Invest Securities. The Professional Products segment only grew by 3.8%, falling short of the expected 5.5%, while the Luxury segment reported a mere 1% growth against a forecast of 4.5%. The cosmetics titan is also grappling with challenges in the Chinese market, which saw a decline of 3.6% in North Asia during the fourth quarter and a 3.2% drop for the entire year of 2024.
Mixed Market Performance and Future Outlook
Invest Securities noted that L’Oréal’s struggles are compounded by a slowdown in North America, where growth reached only 1.4% in the fourth quarter, down from 5.5% for the year. This downturn resulted in the company’s weakest organic growth since the pandemic, with a comparable growth rate of 2.5% and 4.5% reported. Stifel pointed out that L’Oréal’s fourth-quarter growth of 3.9% was below the Visible Alpha consensus and marked a decline from previous quarters’ performances.
Despite facing challenges in the fourth quarter, L’Oréal celebrated record annual results for 2024, surpassing market expectations. The group reported a net profit of 6.41 billion euros, reflecting a 3.6% increase over the anticipated 6.379 billion. Operating profit also rose by 6.7% to 8.687 billion euros, exceeding predictions, while operating cash flow increased by 8.6% to 6.644 billion euros.
With total revenue hitting 43.48 billion euros, L’Oréal enjoyed a published growth of 5.6% and a comparable growth of 5.1%. The board has proposed a dividend of 7 euros per share, marking a 6.1% increase from the previous year.
Looking ahead, CEO Nicolas Hieronimus expressed optimism about the beauty market, stating, “We are confident in our ability to outperform the global market once again, aiming for another year of revenue and profit growth.” According to consensus forecasts provided by Stifel, L’Oréal is expected to achieve a 5% growth on a comparable basis, outpacing the projected 4% growth in the global beauty market.