KEPLER CHEUVREUX - loreal-finance.com · kepler cheuvreux september th18 2014 . ... all distribution channels ... by distribution channel* estimated worldwide

Jean-Paul AGON Chairman and CEO

KEPLER CHEUVREUX

September 18th 2014

September 18th 2014 2 //

AGENDA

Our fundamentals A solid but contrasted first half 2014 An unusual year for the cosmetics market Confidence for the future


OUR FUNDAMENTALS

I


WHO WE ARE

23 BILLION € SALES IN 2013 12,2% MARKET SHARE

A PURE PLAYER IN BEAUTY FOR 105 YEARS

THE WORLD LEADER IN ITS INDUSTRY

3590 RESEARCHERS 748 MILLION € BUDGET IN 2013

ALL DISTRIBUTION CHANNELS ALL CULTURAL ORIGINS ALL PRICE RANGES

A PORTFOLIO OF 30 COMPLEMENTARY BRANDS PERMANENTLY ENRICHED BY ACQUISITIONS

A UNIQUE STRATEGY: UNIVERSALIZATION

A LEADING R&I FORCE


BALANCED GEOGRAPHIC POSITIONS

BALANCED OPERATING PROFIT

* Before central group expenses, fundamental research expenses, stock-option & free grant of shares expenses and miscellaneous items – as a % of total cosmetics sales

** Cosmetics divisions total

BY DIVISION* (as a % of sales)

BY REGION* (as a % of sales)

22.2% 18.7% 19.2%

20.1%**

WESTERN EUROPE

NORTH AMERICA

NEW MARKETS

20.5% 19.9% 20.0% 21.2%

PROFESSIONAL PRODUCTS

CONSUMER PRODUCTS

L’ORÉAL LUXE

ACTIVE COSMETICS

20.1%**

A VERY BALANCED BUSINESS MODEL

35.1%

25.1%

39.8%

NORTH AMERICA

WESTERN EUROPE

NEW MARKETS

BREAKDOWN OF 2013

COSMETICS SALES

BY REGION


1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

113

3117

* Net operating profit, excl. non-recurring items attributable to owners of the company, with Synthélabo consolidated fully up to 1998; net profit excl. non recurring items attributable to owners of the company, with Sanofi-Synthélabo equity consolidated from 1999 to 2004; net profit excl. non-recurring items attributable to owners of the company including Sanofi dividend from 2004; IFRS since 2005

NET PROFIT SINCE 1985*

(IN MILLION EUROS) A POWERFUL & LONG TERM BUSINESS MODEL


A SOLID BUT CONTRASTED FIRST HALF 2014

II


*Like-for-like sales growth The announcement on February 11th 2014 of the disposal of 50% of Galderma leads to account for this business in accordance with IFRS 5 accounting rule on discontinued operations. In accordance with IFRS 11 accounting rule, Inneov has been consolidated under the equity method as of January 1st 2014. All figures for earlier periods have been restated accordingly.

CONSUMER PRODUCTS

L’ORÉAL LUXE

ACTIVE COSMETICS

+3.0% +2.0% +7.4% +8.1%

COSMETICS TOTAL +4.0%

CONTRASTED GROWTH BY DIVISION

CONSOLIDATED SALES AT THE END OF JUNE 2014*


North America

+0.9%

Western Europe

+2.8%

Eastern Europe**

+6.1% Japan

+1.5%

Asia Pacific excl.Japan

+7.1%

Africa Middle East**

+14.5% Latin America

+7.8%

CONTRASTED GROWTH BY ZONE

COSMETICS SALES AT THE END OF JUNE 2014*


*Like-for-like growth. In accordance with IFRS 11 accounting rule, Inneov has been consolidated under the equity method as of January 1st 2014. All figures for earlier periods have been restated accordingly. ** As of July 1st 2013, Turkey and Israel, which were previously included in the Africa, Middle East zone, were transferred to the Eastern Europe zone. All figures for earlier periods have been restated accordingly.

+7.3%

TOTAL NEW MARKETS

FURTHER INCREASE IN PROFITABILITY H1 2014


-50bp +30bp +30bp

+50bp

19.6% 21.1% 20.3%

28.2%


CONSUMER PRODUCTS

L’ORÉAL LUXE

ACTIVE COSMETICS

+30bp OPERATING PROFIT

(as a % of sales)

H1 2013 H1 2014

18.2% 17.9%

OPERATING PROFIT BY DIVISION*

(as a % of sales)

* Before central group expenses, fundamental research expenses, stock-option & free grant of shares expenses and miscellaneous items – as a % of total cosmetics sales. In accordance with IFRS 11 accounting rule, Inneov has been consolidated under the equity

method as of January 1st 2014. All figures for earlier periods have been restated accordingly.

The announcement on February 11th 2014 of the disposal of 50% of Galderma leads to account for this business in accordance with IFRS 5 accounting rule on discontinued operations.


18.2% 17.9 %

+30bp OPERATING PROFIT

3.17

2.94

+7.5%*

Adjusted EPS*

(in euros) (as a % of sales)

1025 968

+5.9% NET OPERATING CASH FLOW

(in million euros)

H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014

A VALUE CREATING BUSINESS MODEL THAT GENERATES CASH FLOW

H1 2014

* Comparison of diluted earnings per share, based on net profit excluding non recurring items attributable to owners of the

company – as reported in H1-2013 – with H1-2014 diluted earnings per share excluding non recurring items, attributable to

owners of the company, adjusted for the strategic transaction between L’Oréal and Nestlé as from January 1st, 2014.


AN UNUSUAL YEAR FOR THE COSMETICS MARKET

III


NORTH AMERICA

+1.5/+2.5 %

WESTERN EUROPE

+0/+1 %

NEW MARKETS EXCL. JAPAN

+5.5/+6.5 %

JAPAN

+0/+1 %

ESTIMATED WORLDWIDE COSMETICS MARKET GROWTH

+3/+3.5 %

A VERY CONTRASTED 2014 MARKET

*Excluding razors, soaps and toothpastes. Source: L’Oréal estimates. Excluding exchange rate impact

2014 WORLDWIDE COSMETICS MARKET - ESTIMATED GROWTH BY REGION *


+4/+5%

+2.5/+3.5% MASS MARKET

+5/+6% DERMO- COSMETICS

+0.5/+1% HAIR SALONS

LUXURY

*Excluding razors, soaps and toothpastes. Source: L’Oréal estimates. Excluding exchange rate impact

A VERY CONTRASTED 2014 MARKET

2014 WORLDWIDE COSMETICS MARKET- ESTIMATED GROWTH BY DISTRIBUTION CHANNEL*

ESTIMATED WORLDWIDE COSMETICS MARKET GROWTH

+3/+3.5 %


1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F

5.0%

3.0%

2014 FORECAST:

+3/+3.5%

* L’Oréal BMS estimates - excluding soaps, toothpastes and razors. Net manufacturing price (sell-in) - provisional estimate. Growth at constant exchange rate

LATEST 2014 MARKET FORECAST

WORLDWIDE COSMETICS MARKET GROWTH OVER THE PAST 20 YEARS*


OUTPERFORM THE GROWTH OF THE COSMETICS MARKET

GROW LIKE-FOR-LIKE SALES

IMPROVE PROFITABILITY AS A % OF SALES

INCREASE IN EPS/ ACCRETION IMPACT

AMBITION FOR 2014


CONFIDENCE FOR THE FUTURE

IV

No1

NORTH AMERICA

14.3%

No1

WESTERN EUROPE

19.3%

No1

EASTERN EUROPE

11.8%

No8

JAPAN

2.2% No2

ASIA PACIFIC

10.5% excl. Japan

No2

AFRICA MIDDLE EAST

10.2% (in the countries where

L’Oréal is present) No4

LATIN AMERICA

8.5%

STRENGTHENING WORLDWIDE LEADERSHIP

L’OREAL MARKET SHARE BY GEOGRAPHIC ZONE 2013*

12.2%

16.9%

8.6%

L’ORÉAL “WORLD”:

“MATURE MARKETS”:

“NEW MARKETS”:

*Excluding soaps, razors and toothpastes. L’Oréal Estimates BMS September 18th 2014 18 //


MARKET SHARE GAINS

COSMETICS MARKET* GROWTH AND L’ORÉAL LIKE-FOR-LIKE COSMETICS SALES GROWTH

*excluding soaps, razors and toothpastes. 2013 provisional estimates

Source: L’Oréal estimates. Excluding exchange rate impact

+5.6%

+4.2%

2010

+5.0%

+4.6%

+5.5%

+4.6%

+5.2%

+3.8%

2011 2012 2013

MARKET


ACQUISITIONS TO FOSTER OUR FUTURE ORGANIC GROWTH

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

22 000

19

67

19

68

19

69

19

70

19

71

19

72

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Consolidated sales (€m)

IFRS norms from 2004


COMPLEMENT OUR BRAND PORTFOLIO AND BOOST OUR GEOGRAPHIC PRESENCE

4 ACQUISITIONS IN 2014

ENTERING THE PROFESSIONAL SKINCARE MARKET

SKINCARE MASKS IN CHINA

A COMPLEMENTARY MASS HAIR COLOR BRAND IN BRAZIL

A PROFESSIONAL MAKE-UP ARTISTRY MASS MARKET BRAND

DECLÉOR & CARITA MAGIC

HOLDINGS NYX

PPD CPD CHINA CPD USA NIELY

CPD BRAZIL

AGREEMENT TO ACQUIRE


CREATIVITY, CONTENT, CONSUMER CONNECTIVITY

DIGITAL MEDIA >13% of our net media expenses

E-COMMERCE Sales +25%*

*H1 – 2014 Like-for-like sales growth of our own e-commerce websites

APPOINTMENT OF A CHIEF DIGITAL OFFICER AT EXECUTIVE COMMITTEE LEVEL

ACCELERATION OF OUR DIGITAL TRANSFORMATION


VERY IMPORTANT STEP IN THE EVOLUTION OF OUR CAPITAL STRUCTURE

Nestlé

Others

Bettencourt Meyers family

Treasury shares

SHAREHOLDING STRUCTURE AS OF 8 JULY 2014**

33.17%

1.26% 42.38%

23.20% GOVERNANCE

CONCERTED ACTION BETWEEN THE BETTENCOURT MEYERS FAMILY

AND NESTLÉ CONFIRMED

* as a % of share capital based on a total number of shares of 605,901,887 as of 12.31.2013 ** as a % of share capital based on a total number of shares of 559,808,399 as of 07.08.2014

after cancellation of the repurchased shares

Shareholders’ pact adapted to reflect the new shareholding structure

• The number of Nestlé representatives on the

L’Oréal Board was reduced from 3 to 2

• Standstill adjusted for the Bettencourt Meyers family’s and Nestlé’s stakes

(30.64%*) (29.44%*)

(1.01%*) (38.91%*)


SUSTAINED MARKET GROWTH

MARKET SHARE GAINS

ENHANCED WORLDWIDE LEADERSHIP

PROFIT INCREASE

DYNAMIC DIVIDEND POLICY

SOLID PROSPECTS


-------------------------Avertissement / Disclaimer ------------------------- « Ce document ne constitue pas une offre de vente ou la sollicitation d’une offre d’achat de titres L’Oréal. Si vous souhaitez obtenir des informations plus complètes concernant L’Oréal,

nous vous invitons à vous reporter aux documents publics déposés en France auprès de l’Autorité des Marchés Financiers (également disponibles en version anglaise sur notre site Internet

www.loreal-finance.com).Ce document peut contenir certaines déclarations de nature prévisionnelle. Bien que la Société estime que ces déclarations reposent sur des hypothèses

raisonnables à la date de publication du présent communiqué, elles sont par nature soumises à des risques et incertitudes pouvant donner lieu à un écart entre les chiffres réels et ceux

indiqués ou induits dans ces déclarations.»

"This document does not constitute an offer to sell, or a solicitation of an offer to buy, L’Oréal shares. If you wish to obtain more comprehensive information about L’Oréal, please refer to the

public documents registered in France with the Autorité des Marchés Financiers (which are also available in English on our Internet site: www.loreal-finance.com).This document may contain

some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at the date of publication of this release, they are by their

nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or projected in these statements."

Françoise Lauvin

Head of Investor Relations

Tel. : + 33 1 47 56 86 82

Fax : + 33 1 47 56 74 93

email : [email protected]

Sophie Gasperment

Group General Manager, Financial Communication

Strategic Prospective

Tel. : + 33 1 47 56 86 22

Fax : + 33 1 47 56 74 93

email : [email protected]

Documents

KEPLER CHEUVREUX - loreal-finance.com · kepler cheuvreux september th18 2014 . ... all distribution channels ... by distribution channel* estimated worldwide