L'Oreal sees China virus temporarily weighing on sales in Asia

Maybelline maker L’Oreal said on Thursday China’s coronavirus health crisis would have a short-term hit on its sales in the country and across Asian airports, after a period of booming business in the region.

Thriving appetite from Chinese consumers for luxury creams such as L’Oreal’s Lancome range has fueled sales growth at the group, which exceeded expectations in the fourth quarter.

Business across Asia even picked up pace in the last three months of the year in spite of street protests in Hong Kong that have forced some retailers to close and caused luxury goods firms’s revenues there to plummet.

L’Oreal’s Chief Executive Jean-Paul Agon cited a “remarkable end to the year in China, but also good growth in South Korea, India, Indonesia and Malaysia” to explain the performance.

He cautioned, however, that the health scare “will have a temporary impact on the beauty market in the region and therefore on our business in China and travel retail in Asia, even if it is too early to assess it.”

The outbreak has killed over 500 people in China so far, and is leading to travel restrictions that could affect beauty sales in airport duty free lounges, where many firms do business.

Earlier on Thursday Clinique-owner Estee Lauder trimmed profit forecasts for its 2020 fiscal year due to the coronavirus scare.

It also posted better-than-expected quarterly results however, also carried by strong Chinese demand.

L’Oreal said revenue reached 7.9 billion euros ($8.67 billion) in the October to December period, up 11.4% on a reported basis and rising 9.6% like-for-like, which strips out acquisitions and currency swings.

That was up from like-for-like growth of 7.8% in the previous quarter, and several analysts had expected L’Oreal’s fourth-quarter performance to be similar.

For the whole of 2019, L’Oreal’s net profit rose 9.3% to 3.98 billion euros, and its operating margin increased to 18.6%, from 18.3% a year earlier.
The company is due to hold a news conference on Friday.