The world's biggest cosmetics company, L'Oreal, is benefiting from a boost in sales from consumers in the Middle East and Africa region.
L'Oreal happy with Middle East profit make up
The Middle East was certainly "worth it" for L'Oreal, the world's biggest cosmetics company, as women sought to keep their hair shiny and skin glowing in desert climes.
Shoppers in the region spent €297.6 million (Dh1.57 billion) this year on products such as L'Oreal's 4D mascara and luxury lipstick under its Lancome brand, pushing up sales in the Middle East and Africa by 6.4 per cent compared with the first half of last year, the French company reported yesterday.
"Our growth prospects in an uncertain context make us very confident," Jean-Paul Agon, the chief executive of L'Oreal, told investors. "The worldwide cosmetics market is going to continue its growth."
For L'Oreal - the maker of the eponymous drugstore make-up line as well as Khiel's lip balm and Yves Saint Laurent eye shadow - business in the Levant, Turkey and new subsidiaries in Pakistan and Egypt are doing especially well, the company reported.
L'Oreal, known for its advertisements featuring models and celebrities who proudly proclaim "we're worth it", have also sought to cater to customers in the UAE, where a growing tourism sector and a harsh climate are helping to drive sales.
"While on holiday, tourists will spend on beauty treatments and products," said Dr Belaid Rettab, the senior director of the Economic Research and Sustainable Business Development sector at the Dubai Chamber of Commerce and Industry."There is also the local market driven by the harsh climate, which contributes to the demand for hair and skin products used as protection against damage and dryness."
Retail sales of beauty products in the Emirates have grown an average of 13 per cent every year for the past five years, according to the market researcher Euromonitor International.
Population and income growth, combined with its geographic location as a travel hub, will help to further boost sales of cosmetics and perfumes to Dh1.2bn (US$327m) by 2014, according to the Dubai Chamber.
L'Oreal's growth in the Middle East as well as Asia and Latin America helped to offset lacklustre earnings of €1.7bn, missing analyst estimates by €80m. Shares of L'Oreal on the Euronext Paris dropped nearly 2 per cent to €75.49 after the announcement.
Part of that stemmed from slower growth in the US - where earlier this year it announced it would close a plant - as well as in its core market of the euro zone, which accounts for 30 per cent of sales. Sales in western Europe ticked up by a mere 1.4 per cent this year.
The EU needs to push forward economic policies to "promote growth and consumption", said Mr Agon, adding that he did not expect sales growth there to come to a stop.
"We are not planning to have zero growth in the developed markets in years to come," Mr Agon said.
Last week, L'Oreal announced it would be shuffling some of its senior executives in a continuing effort to acquire 1 billion new customers and thereby double the company's base of consumers. Geoff Skingsley, the vice president of human resources who joined L'Oreal 25 years ago, will be taking over as managing director of Middle East and Africa from October 1.
Mr Skingsley's predecessor oversaw the Latin America region as well, although the new role will focus solely on this part of the world.