French cosmetics giant L’Oréal announced on Thursday, February 12, a 4.4% decline in net profit to EUR 6.13 billion (about USD 7.3 billion), weighed down by adverse exchange rate effects and an exceptional surtax imposed on large companies to help restore France’s public finances.

The group’s annual revenue increased by 1.3% to EUR 44 billion, the company said in a press release. Its operating margin edged up to 20.2%, from 20% in 2024.

While revenues rose seven percent in the fourth quarter in Europe — still the company’s biggest market — they edged up just 0.7 percent in North America and fell five percent in North Asia, which includes China.

Overall, sales were up 1.5 percent to 11.24 billion euros (USD 13.3 billion) in the final quarter of 2025 — usually when the company benefits from strong holiday-fuelled buying. This was a marked slowdown from the 4.5-percent growth seen the previous year.

On a like-for-like comparison that excludes the impact of currency fluctuations, sales in Q4 2025 rose six percent, whereas the consensus forecast was around eight percent, analysts said.

The luxury division (Luxe) in particular, which includes high-end perfumes and make-up and is L’Oréal’s biggest by revenue, saw a 0.5-percent sales slide in the fourth quarter, to 4.2 billion euros.

"We think the miss, led by North Asia and Luxe, will be a concern amid a vague outlook," said David Hayes, an analyst at investment bank Jefferies.

L’Oréal’s CEO Nicolas Hieronimus said when he presented the results on Thursday that L’Oréal had achieved a "solid" performance "despite a context that was at the very least volatile and unfavourable".

For 2026, he said the company had to be "cautious and humble", although he expected "the beauty market to continue its acceleration" unless there was "a new surprise".

"We’re going to have to intensify our efforts in terms of innovation to energise the market and win over customers," he added.

“In 2025, L’Oréal achieved a record year for patent filings, with 725 patents granted. This ensures a stronger pipeline of exclusive innovations and a greater share of revenue protected by intellectual property,” Hieronimus explained.