Organizational Strategy - Sustainable Development - L'Oréal

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2 L’OréaL - GrI DaTa SHEETS 2011 DIVISION OF THE CAPITAL AS AT 31 DECEMBER 2011 Madame Bettencourt and her family Nestlé The public (1) As required by law, acquired shares have no voting rights. 2.7 38.2% 1.4% 29.6% 30.8% acquired shares (1) For more than a hundred years, L’Oréal has been pushing back the frontiers of science to create beauty and offer men and women throughout the world the best in cosmetics in terms of quality, effectiveness and safety. Give everyone access to beauty by offering products responding to needs, culture and expectations in their infinite diversity. This is what L’Oréal is really about. 1/ A HISTORICAL PRESENCE IN DEVELOPED MARKETS L’Oréal is present in 130 countries on five continents. Founded in France in 1909, the group developed rapidly in western Europe. In 2010, it achieved 39.6% of its cosmetic sales in this area, confirming the importance of this zone in overall turnover. L’Oréal has had a foothold in North america since the first half of the twentieth century. Initially, the group entrusted the distribution of its products to distribution companies, based around an exclusive agent, Cosmair, in 1953. Following the purchase of Cosmair in 1994, it is as a subsidiary that the group has developed on the North american continent. The acquisition of brands such as MaybeLLine (1996) and Matrix (2000) has permanently anchored the group in North america. In 2010, sales increased by 4.1% to reach 23.6% of global cosmetics sales. Present in Japan for more than 30 years, the L’Oréal group has developed its penetration by selecting important brands for this very specific market: Kérastase in hairdressing salons, LanCôMe in the luxe products and MaybeLLine in the mass market. Despite the importance of the developed markets, their relative share of turnover for the group has fallen year on year in favour of the New Markets. 2/ RAPID DEVELOPMENT IN THE NEW MARKETS In the 1970s, the Latin american zone was developed with a multi-divisional organization that the group would reproduce in the major regions of the world. The 1990s saw the opening of New Markets with the fall of the Berlin Wall, allowing its brands access to east European markets. L’Oréal was the first foreign group to obtain authorisation from the Indian government in 1994 for the creation of a 100% owned subsidiary. In 1997, the group created a large multi-divisional zone in asia under Jean-Paul agon, which opened new subsidiaries, in particular in China, where L’Oréal holds 100% of the capital in its business. africa and the Middle East where the group had a small presence is the new frontier for development in the New Markets: the number of subsidiaries has grown from 5 to 9 over the last three years. The middle of the last decade marked a turning point: strong acceleration in the development of the New Markets has resulted in the shifting of the centre of gravity of the economic world. In total, the proportion of turnover achieved by the group in the New Markets was 15.5% in 1995, 21.7% in 2006 and 36.8% in 2010. This growth is set to continue. 3/ A DESIRE FOR SUSTAINABLE AND SHARED GROWTH Careful to look after its future and put in place bases for continuing growth, L’Oréal is seeking to develop its presence in the New Markets by applying the fundamental rules of good corporate citizenship: • The products offered to consumers must meet the highest quality standards. • The social policy followed by subsidiaries in the New Markets is the same as for all group entities. • all its production sites follow the same rules for reducing discharges and its environmental footprint. Social audits are carried out at all suppliers to its factories. • Every subsidiary participates, so far as it is able, in the main sponsorship programmes of the L’Oréal Foundation, such as “For Women in Science”, “Hairdressers against aIDS”. This overall approach is consistent with its ambition to be world leader in cosmetics products: making the world more beautiful. 4/ VAST POTENTIAL FOR DEVELOPMENT apart from the major so-called BrIMC countries (Brazil, russia, India, Mexico and China), L’Oréal has also identified “growth markets”: Poland, Ukraine, argentina, Colombia, Indonesia, Thailand, Vietnam, the Philippines, Turkey, Egypt, Saudi arabia, Pakistan, Kazakhstan, South africa, Nigeria. In each of these countries, the consumption of cosmetic products per inhabitant is 10 to 20 times less than in mature markets. Every year, several million inhabitants access levels of income that allow them to become part of the “middle classes” and enable them to become consumers of modern cosmetic products. It marketing teams listen to these new consumers and it laboratories on every continent study their specific features. The group’s innovation policy is based on accessibility and the adaptation of products to the beauty practices and rituals of all men and women in their infinite diversity. These are the bases of the universalisation of beauty which is it strategy for succeeding in these New Markets. 4/7
2 L’OréaL - GrI DaTa SHEETS 2011 5 / L’ORÉAL IS PRESENT IN 130 THE COUNTRIES THAT MAKE UP SEVEN MAJOR BUSINESS ZONES • North america 5.5% growth in 2011 (1) • Western Europe 0.6% growth in 2011 (1) • asia Pacific 13.0% growth in 2011 (1) • Eastern Europe 2.8% decline in 2011 (1) • Latin america 13.2% growth in 2011 (1) • africa, Middle East 10.5% growth in 2011 (1) • New Markets - L’Oréal in africa In December 2011, L’Oréal opened its new subsidiary in Kenya. Situated in Nairobi, this new location will be the base for developing group business in East africa in Uganda, Tanzania, rwanda, Burundi and Ethiopia. With the opening of subsidiaries in Kenya and Nigeria, the group confirms its belief in the potential for growth in africa. (1) Turnover evolution on a comparable base 6/ THE FIVE BEST-PERFORMING COUNTRIES China The market is very dynamic and the penetration of its brands is increasing, both in mainstream distribution with MaybeLLine new yOrK and Garnier and also LanCôMe in selective distribution which has a presence in a growing number of cities. Mexico With growth of 11.6% (1) , L’Oréal Mexico had a very good year in 2011, marked by the breakthrough of MaybeLLine new yOrK, alongside the mainstays of L’OréaL Paris and Garnier. activity is very strong in the active Cosmetics Division, in particular with viChy in facial care and La rOChe-POsay in sun care. United States L’Oréal grew more quickly than the market with an increase of 5.6% (1) . L’Oréal Luxe, Consumer Products and active Cosmetics Divisions showed strong growth. It was a very good year for MaybeLLine new yOrK, gains in market share for Garnier and the successful launch of essie in the mass market. France With 2.6% growth (1) , L’Oréal improved its market shares in all divisions. This year, the honour goes to Kérastase, L’OréaL Paris, KiehL’s, and dieseL which had great success with its new perfume, Loverdose. sKinCeutiCaLs and rOGer&GaLLet confirmed their role as growth-driving brands. Turkey L’Oréal Turkey saw strong growth of 27.8% (1) , from the Consumer Products Division and in particular remarkable penetration by MaybeLLine new yOrK. 2011 was also a good year for perfumes with three major launches: armani Code Sport, Loverdose and Fuel For Life Denim. (1) Turnover evolution on a comparable base 2.8 • Number of employees: 68,886. • Consolidated turnover: 20.343 billion euros. • Net profit (other than non-recurring items, excluding minority interests): 2.583 billion euros. • Consolidated profit and loss account: from operating profit to net profit excluding non-recurring items. 5/7
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Organizational Strategy - Sustainable Development - L'Oréal

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