2008 Annual Report - Sustainable Development - L'Oréal

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The L’Oréal adventure Inventing beauty: this is L’Oréal’s vocation. Since its creation by a researcher, one century ago, the group has never stopped believing in research, pushing back the boundaries of science and knowledge, increasing the number of innovations and patents, driven by a passion for exploration and a single-minded focus on quality. Beauty is a scientific adventure. Responding to the desire for well-being of millions of men and women: this is L’Oréal’s tireless quest. For the past 100 years, generations of employees have engaged in this fabulous adventure with diligence, imagination and drive, asserting the relevance of the group’s brand portfolio and its distribution networks in different countries in order to make beauty —every type of beauty—accessible to all, the world over. Beauty is a human adventure. Sharing its good fortune and success: this, one century after its creation, is L’Oréal’s greatest wish. The centenary celebrations—convivial, generousspirited and outward-looking—will mirror the nature of the group and its history. A new century is beginning for L’Oréal, a century of commitment to make the world ever more beautiful. World’s number 1 cosmetics group 23 international brands (1) 17.5 billion euros of sales in 2008 (1) Brands with annual sales of more than 50 million euros. 130 countries 67,500 employees 628 patents registered in 2008 01
02 Chairman’s message — With solid governance, true to its values, L’Oréal is maintaining its course A year ago, I told you we were looking forward to 2008 with confidence. As it turned out, nothing could predict the force and scale of the economic crisis which has spared no sector of the economy. And yet, in the eye of the storm, L’Oréal is staying on course and further strengthening its worldwide leadership. The group is confirming its investment in research, actively supporting the development of its brands, and continuing to expand its global reach. Resolutely focused on the long-term, it accepts the constraints of the present while concentrating its efforts, in priority, on preparing for the future. Although sales growth slowed in 2008, it remained, given the economic environment, at a good level and profits have continued to increase, despite the headwinds of currency fluctuations and the price of raw materials. The balance-sheet structure is extremely healthy. This achievement reflects both the group’s remarkable capacity for resilience and the quality of the management of Jean-Paul Agon and his teams. The loyalty of our shareholders is an asset Convinced that the confidence and loyalty of our shareholders are essential to implement this long-term strategy, we are particularly attached to the continuity of our dividend policy. The proposal at the Annual General Meeting to pay a dividend of 1.44 euro per share is thus an expression of both our confidence in the solidity of L’Oréal, and our legitimate concern to maintain the right balance. “L’Oréal is staying on course and further strengthening its worldwide leadership.” As L’Oréal prepares to celebrate its centenary, the Board of Directors has also chosen to propose to the Annual General Meeting a resolution enabling the payment of a dividend, increased by 10% for all registered shareholders of at least two years standing, as from the dividend payment in 2012 and limited to 0.5% of the nominal capital. We believe that, in a period of turbulence, encouraging stability is a modern approach which is in the interest of all the shareholders. Taking care to continually improve governance I have often expressed here the need for careful monitoring of best practices in corporate governance and our determination to make constant progress. All the Board’s committees—the Remuneration Committee, the Appointments Committee, the Audit Committee and the Strategy and Implementation Committee—have thoroughly prepared for the Board’s deliberation. The Board has taken note of the recommendations made by AFEP and MEDEF concerning the remuneration of corporate officers of listed companies. The Board considers that these recommendations are in line with the company’s corporate governance policy. The Code of AFEP and MEDEF, completed in this way, serves as reference for the company for all relevant matters. L’Oréal’s directors, individuals with a very diverse range of professional backgrounds and experience, are regular and active contributors. They are vigilant, closely monitoring all the activities and businesses; they play an active part in reviewing the group’s strategy, as in the case of the major acquisition of Yves Saint Laurent Beauté, an exceptional opportunity thanks to which L’Oréal is now number 1 in luxury products in its distribution channel. The Board has also given due consideration to the impact of the financial crisis in the cosmetics market and has in particular validated the strategy of powerfully supporting the brands, to drive growth in the group’s positions.
Page 1 and 2: 2008 Annual Report
Page 6 and 7: Deepening our values In 2008, L’O
Page 8 and 9: Operating profit proves resilient I
Page 10 and 11: Board of Directors COMPOSITION AT D
Page 12 and 13: 8 Jean-Philippe Blanpain Managing D
Page 14 and 15: of inspiration and creativity, of b
Page 16 and 17: 1982 Patented by L’Oréal Researc
Page 18 and 19: To be sustainable, L’Oréal’s g
Page 20 and 21: Product meeting: developing and sha
Page 22 and 23: The Strategy and Implementation Com
Page 24 and 25: Sustainable Development — Philant
Page 26 and 27: Water L’Oréal is striving to ach
Page 28 and 29: 2008 Consolidated sales of the cosm
Page 30 and 31: 2008 Balance sheet and cash flows b
Page 32 and 33: 2003 2004 14,029 14,534 1,870 2,063
Page 34 and 35: The L’Oréal share key figures (a
Page 36 and 37: Skincare: number 1 category in the
Page 38 and 39: In 2020… … 1 billion young seni
Page 40 and 41: The vocation of the group’s brand
Page 42: Luxury Products The Luxury Products
Page 45 and 46: 42 Businesses — Professional Prod
Page 47 and 48: 44 Businesses — Professional Prod
Page 50 and 51: Consumer PRODUCTS L’ORÉAL PARIS
Page 52 and 53: Skincare records the highest growth
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—GARNIER England. L’ORÉAL PARI
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SOFtSHEEn·CARSOn So f TSheen·ca r
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56 Businesses — Luxury Products 2
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58 Businesses — Luxury Products
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60 Businesses — Luxury Products
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62 Cosmetics ACTIVE VICHY LA ROCHE-
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Another year of double-digit growth
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—LA ROcHE-POSAy China. —SKINcEU
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Opening of the first The Body Shop
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GALDERMA Science in the service of
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Western Europe €7,382 million of
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Advice is vital in mass-market dist
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L’Or é a L Pr O f e s s i O n n
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Ga r n i e r Nutritioniste Anti-puf
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In Brazil, its second largest marke
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With its full brand portfolio, L’
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As nine out of ten South African wo
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L’Oréal’s success is based on
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esearchers, and thousands of head t
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InVEntInG A CEntuRY OF BEAutY From
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COmBInInG PACKAGInG InnOVAtIOn WItH
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BuSInESS GAmES—A unIquE EXPERIEnC
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Taking actions for diversity and eq
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tAX The mission of the Tax departme
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Published by the Administration and
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