IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance

 
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
IN POLE POSITION
FOR THE DECADE AHEAD

Jean-Paul AGON
CHAIRMAN & CHIEF EXECUTIVE OFFICER

21 February 2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
KEY INDICATORS 2019
                                                                             SALES                            #1 BEAUTY PLAYER
                                                                           €29.9 Bn                           WORLDWIDE1

                                            OPERATING MARGIN                                                   NET PROFIT2
                                                        18.6%                                                  €4.4 Bn

                                  OPERATING CASH FLOW3                                                        EARNINGS PER SHARE4
                                                  €5 Bn                                                       €7.74

                                                                       MARKET CAPITALIZATION5
                                                                          c. €15O BILLION

                   1Source:
                          WWD, Beauty’s Top 100, May 2019. 2Net profit, excluding non-recurring items after non-controlling interests. 3Operating cash flow = Gross cash flow + changes in
21 February 2020        working capital - investments. 4Diluted earnings per share, based on net profit, excluding non-recurring items, after non-controlling interests. 5Based on 02.18.2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
BEST GROWTH
                     in 12 years

                         +8%
                         LIKE-FOR-LIKE

21 February 2020       2019 like-for-like sales growth.
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
A very dynamic
                   BEAUTY MARKET

21 February 2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
WORLDWIDE BEAUTY MARKET

                   +5.0 % / +5.5 %

21 February 2020             Source: L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates.
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
ECONOMIC, DEMOGRAPHIC & SOCIOLOGICAL
                                       fundamental evolutions

                                                                MEN’S CONSUMPTION
                   MIDDLE & UPPER CLASSES
                                            AGEING POPULATION
21 February 2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
1             DIGITAL REVOLUTION
                         in Beauty

        BEAUTY IS
    VISUAL & SOCIAL

21 February 2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
2

                   LEAPFROG
                   of traditional
                    distribution

21 February 2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
3

                   Appetite for beauty of
                      YOUNG
                    GENERATIONS

21 February 2020
IN POLE POSITION FOR THE DECADE AHEAD - Jean-Paul AGON CHAIRMAN & CHIEF EXECUTIVE OFFICER - L'Oréal Finance
4

                   STRONG PREMIUMIZATION
                         of the market

21 February 2020
Beauty market
                                      6 POWERFUL ENGINES
                   by region1                                             by sector1                                                        by category1

                   ASIA PACIFIC                      LUXURY                            DERMOCOSMETICS                                         SKINCARE

                   ≃+   9%               ≃+              10%                                    ≃+            7%                            ≃+  8%
                                             E-COMMERCE                                      TRAVEL RETAIL

                                         ≃+              27%                                ≃+           22%
21 February 2020                  1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates.
OUR STRATEGY
                   to concentrate on the
                   fastest growing segments
                   and to outperform them
                   HAS BEEN VERY SUCCESSFUL

21 February 2020
G R O W T H                 E N G I N E         1

                                                                                                                    LUXURY

                                                                                                                                                     +14%               2

                                                                                                                      ≃  +10%               1

                                                                                                                          Market                          L’Oréal
                                                                                                                                                            Luxe

21 February 2020   1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates. 22019 like-for-like sales growth.
G R O W T H                  E N G I N E                 1        L U X U R Y

            A UNIQUE PORTFOLIO                                               STRONG                                                DIGITAL AT THE CENTER OF
             OF ICONIC BRANDS                                             INNOVATIONS                                               THE MARKETING MODEL

                   4 BILLIONAIRE BRANDS                                             SKINCARE                                                              E-COMMERCE

                         +17%1                                                         +22%2                                                                  21%   3   OF SALES

                                   12019 combined like-for-like sales growth. 22019 like-for-like sales growth. 3Sales achieved on our brands’ own websites
21 February 2020                    + estimated sales achieved by our brands corresponding to sales through our retailers’ websites (non-audited data).
G R O W T H         E N G I N E              2

  DERMOCOSMETICS
                                                                        STRONGEST
                                                                          GROWTH
                               +15%                 2
                                                                        IN 20 YEARS

            ≃      +7%   1
                                                                    ALL REGIONS
                                                                   ALL CHANNELS
                                                                    ALL BRANDS
              Market             Active
                                Cosmetics

21 February 2020                    1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates. 22019 like-for-like sales growth.
G R O W T H                    E N G I N E                 2        D E R M O C O S M E T I C S

                         NEW BILLIONAIRE
                                                                                                                                                                        E-COMMERCE

                                                                                                                                                                         +55%    2

                       NEW GROWTH RELAYS

>40%               1

                        TRUSTED                        RECOMMENDED                                                   RETAIL                                        E-COMMERCE
                        BRANDS                           BY 160,000                                                EXCELLENCE                                        & DIGITAL
                                                          DOCTORS
                                    12019   like-for-like sales growth. 22019 like-for-like sales growth. Sales achieved on our brands’ own websites + estimated
21 February 2020                               sales achieved by our brands corresponding to sales through our retailers’ websites (non-audited data).
G R O W T H                 E N G I N E    3

                                                                                                                SKINCARE

                                                                                                                                                                   +20%   2

                                                                            #1 CATEGORY
                                                                            35% OF SALES
                                                                                                                                                 ≃  +8%        1

                                                                   #1 GROWTH DRIVER

                                                                                                                                                  Market

21 February 2020   1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates. 22019 like-for-like sales growth.
G R O W T H   E N G I N E   3   S K I N C A R E

                   THE POWER OF INNOVATION

21 February 2020
G R O W T H         E N G I N E              4

                   ASIA PACIFIC

                                +25%                 2

                                                          DOUBLE-DIGIT
             ≃     +9%   1                                 GROWTH IN
                                                         MANY COUNTRIES

               Market

21 February 2020                    1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates. 22019 like-for-like sales growth.
G R O W T H                 E N G I N E   3    A S I A   P A C I F I C

                                                                                         #1 ZONE
                                                                              LEADER WITH
                                                                           STRONG POTENTIAL

                                                                                              10%
                                                                                              MARKET
                                                                                              SHARE

21 February 2020   Source: L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes.
G R O W T H             E N G I N E              5

                   E-COMMERCE

                                     +52%                     2

            ≃      +27%     1                                     ALL DIVISIONS
                                                                  ALL REGIONS
                                                                  ALL FORMATS

                   Market

                                             1Source: L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates. 22019 like-for-like sales growth.
21 February 2020                 Sales achieved on our brands’ own websites + estimated sales achieved by our brands corresponding to sales through our retailers’ websites (non-audited data).
G R O W T H   E N G I N E   6

                                                      TRAVEL RETAIL
                                                             +25%
                                                          EXTENDING
                                                        OUR LEADERSHIP
                                                      PORTFOLIO OF BRANDS
                                                       COVERING ALL NEEDS

21 February 2020   2019 like-for-like sales growth.
L’ORÉAL significantly
               OUTPERFORMED
                                                              the market

       +5.0% / +5.5%                           1
                                                                           +8%                        2

              Beauty market

21 February 2020      1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates. 22019 like-for-like sales growth.
IMPROVEMENT IN                                                                   REDUCTION
                    GROSS MARGIN                                                                     IN SG&As1
                           (% SALES)                                                                     (% SALES)

                   72.8%               73.0%                                                     20.9%          20.3%

                    2018                2019                                                      2018               2019

21 February 2020                               1Selling,   general and administrative expenses
OPERATING                    ADVERTISING &
                      MARGIN                   PROMOTION EXPENSES
                           (% SALES)                     (% SALES)

                                       18.6%                     30.8%
                   18.3%                         30.2%

                    2018                2019      2018               2019

21 February 2020
DIVIDEND
                                PER SHARE

                                                                                             €4.25
                   €3.85
                                                                                            +10.4%
                                   2018                            2019

21 February 2020           To be proposed at the Annual General Meeting on 21 April 2020.
L’ORÉAL
                   perfectly positioned
                   FOR THE NEXT
                   DECADE

21 February 2020
A LEADER WITH STRONG POTENTIAL
                              MARKET SHARE1 AND RANKING2 BY GEOGRAPHIC ZONE

                                                               WESTERN EUROPE
                                                                                                        EASTERN EUROPE
                   NORTH AMERICA                                         20%                                      13%
                      13%                                                      N°1
                                                                                                                        N°1
                        N°1                                                                                                              ASIA PACIFIC
                                                                        AFRICA, MIDDLE EAST

                                                                                       10%                                                 10%
                              LATIN AMERICA
                                                                                                                                             N°1

                                           8%                                             N°2

                                              N°3

                               1Source:   L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes. At constant exchange rates.
21 February 2020
8 WINNING ASSETS
             1     C UT T I N G E D G E R & I

             2     P O WE R F UL B R A N D S

             3     DIGITAL EXCELLENCE

             4     E-COMMERCE LEADERSHIP

             5     PERFECT BALANCE

             6     UN I Q UE C UL T UR E & O R G A N I Z A T I O N

             7     L O N G - T E R M B US I N E S S M O D E L

             8     EXEMPLARY RESPONSIBILITY

21 February 2020
CUTTING EDGE R&I

     1
                                      THE WORLD'S LARGEST
                                        RESEARCH FORCE
                                       dedicated to beauty

                                      4,100
                                       R&I EXPERTS
                                                     €1Bn
                                                     R&D EXPENSES

21 February 2020
CUTTING EDGE R&I

     1                       L e a d i n g t h e w a y o n technologies t h a t a r e
                                      REVOLUTIONIZING BEAUTY

                   GREEN SCIENCES                  EXPOSOME                   MICROBIOME
21 February 2020
POWERFUL BRANDS

     2                       UNIQUE PORTFOLIO OF BRANDS
     PROFESSIONAL                    CONSUMER   L’ORÉAL    ACTIVE
       PRODUCTS                      PRODUCTS     LUXE    COSMETICS

21 February 2020
POWERFUL BRANDS

     2                               9 BILLIONAIRE BRANDS

                                                 +9%

21 February 2020                           2019 combined like-for-like sales growth.
POWERFUL BRANDS

     2
                        2 BRANDS          2 NEW BRANDS      PRADA LICENSE
                    CHANGING DIVISIONS   FOR L’ORÉAL LUXE      IN 2021

21 February 2020
DIGITAL EXCELLENCE

     3                     MASTERING THE NEW MARKETING MODEL

                      PRECISION                         PERFORMANCE
                      MARKETING                     OPTIMIZED IN REAL TIME

                       ≃   50%
                       OF MEDIA SPEND
                                                    PROPRIETARY DIGITAL COCKPIT,
                                                      STRONGLY ENHANCING ROI

                         ON DIGITAL

                       ≃   80%
                        ON PRECISION
                         ADVERTISING

21 February 2020
DIGITAL EXCELLENCE

     3
                                        POWER TO ENGAGE

              1.3 Bn                                   25%
                   CONSUMER               BEAUTY GLOBAL TRAFFIC
                   DATA POINTS1                ON YOUTUBE

              1.2 Bn                          7.4 Bn
                   VISITORS ON                    VIDEO VIEWS ON
                   OUR WEBSITES                       YOUTUBE

21 February 2020                          1Mass   personalization of marketing and consumer interactions.
DIGITAL EXCELLENCE

     3                                  SERVICES & EXPERIENCE

                                              20 SERVICES
                                               20 BRANDS
                                             70 COUNTRIES

21 February 2020
DIGITAL EXCELLENCE

     3

                                            More than
                                        30,000 managers
                                         UPSKILLED

                                        Many capabilities
                                        INTERNALIZED

21 February 2020
DIGITAL EXCELLENCE

     3

                   LEADER OF THE NEW

                     BEAUTY TECH
                              WORLD

21 February 2020
E-COMMERCE LEADERSHIP

     4                                                                                       Mastering
                                         THE NEW E -COMMERCE MODEL
                                                                                                % OF GROUP SALES1

                                                                                                                                                             15.6%

                                                                                                                                 11.0%
                                                                                                       8.0%
                                                                          6.4%
                                             5.1%
                    3.4%

                     2014                        2015                         2016                        2017                         2018                        2019

21 February 2020            1Sales   achieved on our brands’ own websites + estimated sales achieved by our brands corresponding to sales through our retailers’ websites (non-audited data).
E-COMMERCE LEADERSHIP

     4                                             ONLY THE BEGINNING OF
                                                 THE E-COMMERCE JOURNEY
                                                         WEIGHT OF E-COMMERCE IN THE BEAUTY MARKET (IN %)

  ARGENTINA            BRAZIL           SOUTH     MALAYSIA           SPAIN                RUSSIA               JAPAN             GERMANY       FRANCE        UK         KOREA
                                        AFRICA
              MEXICO            CHILE       SINGAPORE        ITALY              INDIA             THAILAND                TURKEY          POLAND    CANADA        USA           CHINA

21 February 2020                                               Source: L’Oréal 2019 estimates. Excluding razors, soaps and toothpastes.
PERFECT BALANCE

     5

                         PERFECT
                        BALANCE

21 February 2020
PERFECT BALANCE

     5                                       ABSOLUTE COVERAGE
                                                         7 DISTRIBUTION CHANNELS
                                                                    PHARMACIES
                                             DEPARTMENT STORES      DRUGSTORES
     HAIR SALONS            MASS RETAIL         PERFUMERIES          MEDISPAS     BRANDED RETAIL   TRAVEL RETAIL   E-COMMERCE

                       5 BEAUTY CATEGORIES

                                                                      ALL PRICE         ALL            ALL
                                                                      SEGMENTS          REGIONS        PSYCHOGRAPHICS

    HAIRCARE        HAIR COLOR   SKINCARE   FRAGRANCES    MAKE-UP

21 February 2020
PERFECT BALANCE

     5                                 PERFECT BALANCE
                                              in terms of sector

                           ACTIVE COSMETICS   8.9%            11.5%     PROFESSIONAL PRODUCTS

                   L’ORÉAL LUXE   36.9%                                  42.7%   CONSUMER PRODUCTS

                                       BREAKDOWN OF 2019 SALES BY DIVISION

21 February 2020
PERFECT BALANCE

     5                                   PERFECT BALANCE
                                             in terms of region

                      ASIA PACIFIC   32.3%                              27.7%     WESTERN EUROPE

                        OTHER MARKETS   14.7%                         25.3% NORTH AMERICA

                                     BREAKDOWN OF 2019 SALES BY GEOGRAPHIC ZONE

21 February 2020
PERFECT BALANCE

     5                                              PERFECT BALANCE
                                                        in terms of category
                                                                                      4.4% OTHERS*
                             FRAGRANCES                9.3%

                                                                                                                                      35.0% SKINCARE

                            HAIR   25.0%

                                                                                                                 26.3% MAKE-UP
                                        BREAKDOWN OF 2019 SALES BY BUSINESS SEGMENT

21 February 2020                     * Others include hygiene products and the sales of third party brands by the US professional products distributors
UNIQUE CULTURE & ORGANIZATION

     6

  A LEADER WITH THE SPIRIT                                    LONG-TERM
     OF A CHALLENGER                                UNIQUE      VISION
                                                   APPROACH
 A LARGE COMPANY WITH                                          SHORT-TERM
 THE SPIRIT OF A START-UP                                     PRAGMATISM

21 February 2020
UNIQUE CULTURE & ORGANIZATION

     6

                   EMPOWERED                                  STRATEGICALLY
                                                              CONCENTRATED
                   LOCAL TEAMS
                                                  UNIQUE
                                               ORGANIZATION
  AGILITY & EXCELLENCE                                        OPERATIONALLY
      ON THE FIELD                                            DECENTRALIZED

21 February 2020
LONG-TERM BUSINESS MODEL

     7

     LONG-TERM BUSINESS MODEL
             to deliver consistent, sustainable
                     & reliable growth

21 February 2020
LONG-TERM BUSINESS MODEL

     7
                                          TOPLINE GROWTH
                                  The best route to value creation

                                   F O C U S O N T O P L I N E G R O WT H

                                                    +
                                     OPERATIONAL DISCIPLINE

21 February 2020
LONG-TERM BUSINESS MODEL

     7                                                           CONSISTENT GROWTH
                                                                IN OPERATING MARGIN
          20%

                                                                                                                                                                                                       18.6%

                                                                                                                                                                                               18.3%
                                                                                                                                                                                      18.0%
                                                                                                                                                                             17.6%
                                                                                                                                                                    17.4%
                                                                                                                                                           17.3%
                                                                                                                                                  17.0%
          18%

                                                                                            16.6%

                                                                                                                                         16.5%
                                                                                                                                16.2%
                                                                                   16.1%

                                                                                                                       15.7%
                                                                          15.6%

                                                                                                     15.5%
                                                                 15.3%
          16%
                                                        14.9%

                                                                                                              14.8%
                                               14.0%

          14%
                                      12.9%
                             12.1%

          12%
                    10.0%

          10%

            8%
                   2000     2001     2002     2003     2004     2004     2005     2006     2007     2008     2009     2010     2011     2012     2013     2014     2015     2016     2017     2018     2019
                                                                IFRS

21 February 2020
LONG-TERM BUSINESS MODEL

     7
                                SUSTAINED PROFIT INCREASE
                                              NET PROFIT SINCE 1989 IN MILLION EUROS

                                                                                       4,357
                                                      x20
                                                       IN 30 YEARS

                   223

                   1989                                                                 2019

21 February 2020
LONG-TERM BUSINESS MODEL

     7
                                                A DYNAMIC DIVIDEND POLICY
                                                                                    DIVIDEND PER SHARE SINCE 1998 IN EUROS

                                                                                                                                                                                         4.25 1
                                                                                                                                                                                                    +10.4%
                                                 DIVIDEND INCREASE FOR

                   +10%
                                                 SHAREHOLDERS WHO HAVE
                                                 CONTINUOUSLY HELD SHARES                                                                                                           3,80
                                                 IN REGISTERED FORM FOR AT                                                                                                  3.55
                   LOYALTY BONUS                 LEAST 2 CALENDAR YEARS                                                                                             3.30
                                                                                                                                                            3.10
                                                                                                                                                    2.70
                                                                                                                                            2.50
                                                                                                                                    2.30
                                                                                                                            2.00
                                                                                                                    1.80
                                                                                                    1.44    1.50
                                                                                            1.38
                                                                                   1.18
                                                                                                                                                       PAYOUT RATIO: 54.9%
                                                                                                                                                                                                         2
                                                                           1.00
                                                           0.73    0.82
                                         0.54      0.64
                           0.34   0.44
                    0.28

                    1998   1999   2000   2001      2002     2003    2004    2005    2006    2007    2008    2009    2010    2011     2012    2013    2014    2015    2016    2017    2018    2019

21 February 2020                         1To   be proposed at the Annual General Meeting on 21 April 2020. 2Based on the dividend proposed at the Annual General Meeting on 21 April 2020.
LONG-TERM BUSINESS MODEL

     7
                                                DOUBLE-DIGIT TSR

                                                17.1%

                                                                              15.1%                        15.6%

                                                      3
                                                     YEARS
                                                                                    5
                                                                                   YEARS
                                                                                                                10
                                                                                                                 YEARS

21 February 2020                      Takes into account the value of the share and the dividend income received. At 31 December 2019.
LONG-TERM BUSINESS MODEL

     7                                 A POWERFUL VALUE -CREATING
                                            BUSINESS MODEL
                                                                               TEN YEAR EVOLUTION OF THE SHARE PRICE
                                                                                                                                                                                       €265.7
                                                                                                                                                                                       x3.4

            €78.0
                      31/12/2009   31/12/2010   31/12/2011        31/12/2012      31/12/2013     31/12/2014      31/12/2015     31/12/2016      31/12/2017   31/12/2018   31/12/2019

21 February 2020                                             Source: Nasdaq Thomson Reuters Eikon, stock prices from 31 December 2009 to 14 February 2020
EXEMPLARY RESPONSIBILITY

     8                                        Extending our lead in
                                              SUSTAINABILITY

21 February 2020
EXEMPLARY RESPONSIBILITY

     8                                   DEEP TRANSFORMATION
                                                                       We decouple
                      We offer products                                                                                                        We provide access
                      that combine                                     our environmental                                                       to work to people
                      performance with                                 impact from                                                             from underprivileged
                      sustainability                                   our growth                                                              communities

                     85% OF NEW                                        -78%2 CO2                                                               90,635 PEOPLE
                     PRODUCTS1                                         +37%3 PRODUCTION
                     have an improved
                     environmental
                     or social profile

21 February 2020                          1New   or renovated products 2Emissions from plants and distribution centres since 2005 32005-2019
EXEMPLARY RESPONSIBILITY

     8                                         L’ORÉAL,
                                       A SUSTAINABLE COMPANY

                         ONLY COMPANY WITH 3 “A” FOR THE 4th YEAR IN A ROW
21 February 2020
EXEMPLARY RESPONSIBILITY

     8
               L’ORÉAL,
             AN INCLUSIVE
              COMPANY

                    World leader
                   gender equality

21 February 2020
EXEMPLARY RESPONSIBILITY

     8                                          L’ORÉAL,
                                          AN ETHICAL COMPANY

                                               #1 worldwide
                                               Ethical Quote
                                              Reputation Index

21 February 2020                                Ranking date December 2019
EXEMPLARY RESPONSIBILITY

     8                                   New, extremely ambitious
                                        2030 COMMITMENTS

21 February 2020
STARTING THIS NEW YEAR
                   AND NEW DECADE
                   Stronger than ever

21 February 2020
Deep solidarity with Chinese people

21 February 2020
After a period of disturbance
     consumption resumes
     STRONGER THAN BEFORE

21 February 2020
Assuming that the epidemic
                      follows a similar pattern,
                    Confidence in our capacity
                     to outperform the market
                                and
                   Achieve another year of growth
                      in both sales and profits

21 February 2020
THANK YOU
                     MERCI

21 February 2020
------------------------- Disclaimer -------------------------

"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."
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