L'Oréal to close down one of its Brazilian factories

By the end of 2018, L'Oréal will close down one of its factories in Rio de Janeiro and transfer its output to São Paulo, as a result of the economic problems affecting Brazil.

"The decision takes into account the need for operational adjustments (...) and the problems currently affecting Brazil's economy," explained the French cosmetics giant in a press release to the AFP agency on Thursday.

The factory in question is located in the working-class district of Pavuna, to the north of Rio, and has been active since 1969. Its output will be transferred to the Vila Jaguara facility in São Paulo, Brazil's economic capital.

L'Oréal stated that "employees who will not continue in their activity will receive a bonus over and above statutory compensation," without providing figures on any job cuts.

Brazilian media speculated that the security problems affecting Rio de Janeiro one year after the Olympic Games may have influenced the decision to close down the factory, a belief which was refuted on Thursday by L'Oréal's press office.

In 2017, L'Oréal opened new headquarters and an R&D centre in Rio's harbour area.
The group also owns a factory in Nova Iguaçu, on Rio's outskirts, which produces cosmetics for Brazilian brand Niely, acquired in 2014.

"Brazil remains one of the world's leading markets for the corporation," noted L'Oréal in the press release.

In the first six months of the year, the French giant reported a net income of €2 billion, up 37.7% compared to the same period in 2016.

Brazil is striving to revitalise its economy after two consecutive years of recession, a crisis which is felt very strongly in the state of Rio de Janeiro, where civil servants are often paid with a delay of several months.