2007 Annual Report L

CONTENTS

…>ˆÀ“>˜½ÃʓiÃÃ>}iÊ

…ˆivÊ ÝiVṎÛiÊ"vvˆViÀ½ÃʓiÃÃ>}iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃÊ

ÝiVṎÛiÊ œ““ˆÌÌiiÊ COMMITMENT

œÀ«œÀ>ÌiÊ}œÛiÀ˜>˜ViÊ -œVˆ>Ê>˜`Êi˜ÛˆÀœ˜“i˜Ì>ÊÀi뜘ÈLˆˆÌÞÊ -…>Ài…œ`iÀʈ˜vœÀ“>̈œ˜Ê

02 04 07 Êän 10

12 14 ʣn

L’ORÉAL FINANCIAL HIGHLIGHTS

19

MARKET TRENDS

27

BRANDS

32

INTERNATIONAL

7iÃÌiÀ˜Ê ÕÀœ«iÊ

>ÃÌiÀ˜Ê ÕÀœ«iÊ œÀ̅Ê
“iÀˆV>Ê >̈˜Ê
“iÀˆV>Ê
È>Ê
vÀˆV>]Ê"Àˆi˜Ì]Ê*>VˆvˆVÊ RESOURCES

,iÃi>ÀV…Ê>˜`Ê iÛiœ«“i˜ÌÊ "«iÀ>̈œ˜ÃÊ Փ>˜Ê,iÜÕÀViÃÊ
`“ˆ˜ˆÃÌÀ>̈œ˜Ê>˜`ʈ˜>˜ViÊ BUSINESSES

36

ÊÎn 40 42 44 Ê{È Ê{n 50

52 ÊxÈ Êxn ÊÈÓ 64

*ÀœviÃȜ˜>Ê*Àœ`ÕVÌÃ

œ˜ÃՓiÀÊ*Àœ`ÕVÌÃÊ ÕÝÕÀÞÊ*Àœ`ÕVÌÃÊ
V̈ÛiÊ œÃ“ïVÃÊ /…iÊ œ`ÞÊ-…œ«Ê iÀ“>̜œ}ÞÊ

ÊÈÈ 72 Ênä Ênn 94 97

œ˜Ì>VÌÃÊ

ʙn

WORLD’S NUMBER 1 COSMETICS GROUP

25 INTERNATIONAL BRANDS 130 COUNTRIES 63,000 EMPLOYEES ÕÊÕ>˜ÊˆÃÊ Ì…iÊ>“L>ÃÃ>`œÀʜvÊYUE-SAI]Ê Ì…iÊLÀ>˜`Ê̅>ÌÊÃÌ>˜`ÃÊvœÀÊ

…ˆ˜iÃiʓœ`iÀ˜ÊLi>ÕÌÞ]Ê >VµÕˆÀi`ÊLÞʽ"Àj>Êˆ˜ÊÓää{°

17 BILLION EUROS OF SALES IN 2007 /…ˆÃʈÃÊ>ÊvÀiiÊÌÀ>˜Ã>̈œ˜Êˆ˜ÌœÊ ˜}ˆÃ…ÊœvÊ̅iʽ"Àj>ÊÓääÇÊ
˜˜Õ>Ê,i«œÀÌʈÃÃÕi`ʈ˜Ê ̅iÊÀi˜V…ʏ>˜}Õ>}iÊ>˜`ʈÃÊ«ÀœÛˆ`i`Ê܏iÞÊvœÀÊ̅iÊVœ˜Ûi˜ˆi˜ViʜvÊ ˜}ˆÃ…Êëi>Žˆ˜}ÊÀi>`iÀÃ°Ê ˜ÊV>ÃiʜvÊ`ˆÃVÀi«>˜VÞÊ̅iÊÀi˜V…ÊÛiÀȜ˜Ê«ÀiÛ>ˆÃ°Ê

A WORLD OF BEAUTY

The L’Oréal adventure has been founded from the outset on a fundamental conviction: cosmetics are an expression of a universal dream of well-being and inner harmony. They help everyone to fully express their personality, to be selfassured and open in their relations with others, and to fulfil their potential. They can give vulnerable people the desire and the strength to rebuild their lives or resume their place in society. Beauty is useful and indeed essential. The globalisation of cosmetics consumption is only just beginning. For L’Oréal, this is an opportunity. And a responsibility. As the world leader in beauty, L’Oréal has a duty to satisfy all the desires and all the needs of consumers across the world, by driving the scientific innovation which forges the excellence of its products, and by cultivating the diversity of its brand portfolio and its distribution channels to make beauty accessible to everyone. L’Oréal’s goal is to be one of the exemplary global companies of the 21st century. The group focuses its efforts on fostering the personal and professional fulfilment of its employees, on safeguarding the integrity and quality of the environment, on developing activities for the benefit of the community, and on strengthening its corporate citizenship in the 130 countries in which it operates. Making a contribution to a more beautiful world is L’Oréal’s promise.

02

CONTINUITY IN STRATEGY AND VALUES, GROWTH ACCELERATES

"˜iÊÞi>ÀÊ>}œ]ÊÊ̜`ÊޜÕÊ̅>ÌÊ̅iÊÌÀ>˜ÃˆÌˆœ˜Ê>ÌÊ̅iʅi>`ʜvÊ̅iÊ }ÀœÕ«Ê…>`ÊÌ>Ži˜Ê«>ViÊӜœÌ…Þ]Ê܈̅œÕÌʽ"Àj>Ê“ˆÃȘ}Ê>Ê Ãˆ˜}iʅi>ÀÌLi>Ì°ÊÓääÇʓ>ÀŽÃÊ>˜Ê>VViiÀ>̈œ˜Êˆ˜Ê̅iÊÜ>ŽiʜvÊ Ì…ˆÃÊÌÀ>˜ÃˆÌˆœ˜°ÊÀœÜ̅ʅ>ÃÊ>VViiÀ>Ìi`Ê>˜`Ê̅iÊ}ÀœÕ«Ê…>ÃÊ >V…ˆiÛi`]ÊvœÀÊ̅iÊÌÜi˜Ìއ̅ˆÀ`ÊVœ˜ÃiVṎÛiÊÞi>À]Ê`œÕLi‡`ˆ}ˆÌÊ }ÀœÜ̅ʈ˜ÊˆÌÃÊÀiÃՏÌÃ]ÊiÛi˜Ê̅œÕ}…Ê̅iʓœ˜iÌ>ÀÞÊVœ˜ÌiÝÌʅ>ÃÊ Lii˜Ê`ˆvvˆVՏ̰ ACCELERATING GROWTH
ʘiÜÊi˜iÀ}Þ]ʈ˜Ã̈i`ÊLÞÊi>˜‡*>ՏÊ
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˜˜Õ>Ê i˜iÀ>Êiï˜}Ê>ÊvÕÀ̅iÀÊÃÕLÃÌ>˜Ìˆ>Êˆ˜VÀi>Ãiʈ˜Ê̅iÊ`ˆÛˆ`i˜`Ê œvʳ£È°™¯°Ê/…iÊ«>ޜÕÌÊÀ>̈œÊ…>ÃÊ}ÀœÜ˜Êœ˜ViÊ>}>ˆ˜]Ê>˜`ʘœÜÊ ÃÌ>˜`ÃÊ>ÌʓœÀiÊ̅>˜Ê{£¯°Ê/…ˆÃÊ`ˆÛˆ`i˜`Ê«œˆVÞʈÃÊL>VŽi`ÊÕ«ÊLÞÊ ÃÕVViÃÈÛiÊÅ>ÀiÊLÕÞL>VŽÊ«Àœ}À>““iÃ]Ê܅ˆV…Ê…>ÛiÊ>Ê«œÃˆÌˆÛiÊ ˆ“«>VÌʜ˜Ê˜iÌÊi>À˜ˆ˜}ÃÊ«iÀÊÅ>Ài° ˜Ê̅iÊë>ViʜvÊvˆÛiÊÞi>ÀÃÊ̅iÊ`ˆÛˆ`i˜`ʅ>ÃʓœÀiÊ̅>˜Ê`œÕLi`]Ê ÀiviV̈˜}ʽ"Àj>½ÃÊ`iÌiÀ“ˆ˜>̈œ˜Ê̜ÊÃÕ««œÀÌʈÌÃÊÅ>Ài…œ`iÀÃ]Ê “>˜ÞʜvÊ܅œ“Ê…>ÛiÊÀi“>ˆ˜i`ʏœÞ>Ê̜Ê̅iÊ}ÀœÕ«ÊœÛiÀÊ>Ê}Ài>ÌÊ ˜Õ“LiÀʜvÊÞi>ÀðÊ/…ÀœÕ}…Ê̅iÊVœ˜vˆ`i˜ViÊ̅iÞÊŜÜʈ˜ÊÕÃ]Ê̅iÞÊ “>ŽiÊ>ʓ>œÀÊVœ˜ÌÀˆLṎœ˜Ê̜Ê̅iÊÃÕVViÃÃʜvÊ>ÊLÕȘiÃÃʓœ`iÊ ܅ˆV…Ê…>ÃÊVœ˜ÃˆÃÌi˜ÌÞÊ«ÀœÛi˜ÊˆÌÃÊivviV̈Ûi˜iÃðÊÌÃÊÃÕVViÃÃʅ>ÃÊ ˆ˜`ii`ʏi`Ê̜Ê̅iÊ}ÀœÕ«ÊÀiViˆÛˆ˜}Ê̅iÊ
Ü>À`ÊvœÀÊ̅iÊ iÃÌÊ Vœ˜œ“ˆVÊ*iÀvœÀ“>˜ViʜÛiÀÊ̅iʏ>ÃÌÊ{äÊÞi>ÀÃÊvÀœ“Ê̅iʓ>}>∘iÊ L’Expansion°Ê7iÊ>ÃœÊÃiiÊ̅ˆÃÊÀiVœ}˜ˆÌˆœ˜ÊvœÀʜÕÀÊ«ÀiÃi˜ÌÊ>˜`Ê «>ÃÌÊ>V…ˆiÛi“i˜ÌÃÊ>ÃÊ>Ê«œÜiÀvՏÊi˜VœÕÀ>}i“i˜ÌÊ̜ÊVœ˜Ìˆ˜ÕiÊ >««Þˆ˜}ʜÕÀÊÃÌÀ>Ìi}Þ°

VIGILANT AND DYNAMIC GOVERNANCE The separation of the roles of Chairman and Chief Executive "vvˆViÀ]Ê܈̅Ê>ÊVi>ÀÊ`ivˆ˜ˆÌˆœ˜ÊœvÊ̅iÊÀi뜘ÈLˆˆÌˆiÃʜvÊi>V…]Ê i>`ÃÊLœÌ…Ê̜Ê}Ài>ÌÊVœ˜Ìˆ˜ÕˆÌÞʈ˜ÊÃÌÀ>Ìi}ˆVÊۈȜ˜Ê>˜`Ê>Ê«œÜiÀvՏʈ“«iÌÕÃÊvœÀʜÕÀÊLÕȘiÃÃiÃ°Ê /…iÊÃÌÀ>Ìi}ÞʈÃÊÀi}Տ>ÀÞÊÀiۈiÜi`ÊLÞÊ̅iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃ°Ê /…iÊ`ˆÛiÀÈÌÞÊ>˜`ÊVœ“«i“i˜Ì>ÀˆÌÞʜvÊ̅iÊ`ˆÀiV̜ÀýÊiÝ«iÀˆi˜ViÊ “i>˜Ê̅>ÌÊ̅iÊ`iL>ÌiÃÊ>ÀiÊiÝÌÀi“iÞÊÀˆV…Ê>˜`Êi˜>LiÊ̅iÊ œ>À`Ê ÌœÊvՏÞÊ«>ÞʈÌÃÊÀœiʜvÊÃÌÀ>Ìi}ˆVÊ}Ո`>˜Vi°
Ê̅iÊ>VµÕˆÃˆÌˆœ˜Ã]ʜvÊ܅ˆV…Ê̅iÀiʅ>ÛiÊLii˜Ê“>˜Þ]ÊÜiÀiÊ Ì…œÀœÕ}…ÞÊ`ˆÃVÕÃÃi`Ê>ÌÊ œ>À`ʏiÛi]Ê>ÃÊÜ>ÃÊ̅iÊÀiVi˜ÌÊLˆ`ÊÌœÊ >VµÕˆÀiÊ9ÛiÃÊ->ˆ˜ÌÊ>ÕÀi˜ÌÊ i>ÕÌj]Ê܅ˆV…ÊÀi«ÀiÃi˜ÌÃÊ>ʘiÜÊ>˜`Ê >ÌÌÀ>V̈ÛiÊ`iÛiœ«“i˜Ìʜ««œÀÌ՘ˆÌÞ°Ê/…iÞÊvœœÜÊ>ÊVi>ÀÊÃÌÀ>Ìi}ˆVʏˆ˜i]ÊÃÌÀi˜}̅i˜ÊœÕÀÊ«œÀÌvœˆœÊœvÊLÀ>˜`Ãʈ˜ÊœÕÀÊLÕȘiÃÃ]Ê >˜`Ê>˜ÌˆVˆ«>ÌiÊ̜“œÀÀœÜ½ÃÊÌÀi˜`Ã°Ê ÞÊÃiˆ˜}ʈ˜ÊÓääÇÊ«>ÀÌʜvʈÌÃÊÃÌ>Žiʈ˜Ê->˜œvˆ‡
Ûi˜ÌˆÃ]ʽ"Àj>ÊˆÃÊ œ«Ìˆ“ˆÃˆ˜}ʈÌÃÊÀiÜÕÀViÃÊvœÀÊ̅iÊvˆ˜>˜Vˆ˜}ʜvÊÃÌÀ>Ìi}ˆVÊ«ÀœiVÌð ÕÀ̅iÀ“œÀi]Ê̅iÊ œ>À`ʈÃÊVœ˜ÃÌ>˜ÌÞÊÀiۈi܈˜}ʈÌÃÊmodus operandi°Ê
VVœÀ`ˆ˜}Þ]ʈÌÊ`iVˆ`i`Ê̜Ê>`>«ÌʈÌÃʜÀ}>˜ˆÃ>̈œ˜\Ê Ì…iʺ>˜>}i“i˜ÌÊ>˜`Ê,i“Õ˜iÀ>̈œ˜»Ê œ““ˆÌÌiiʅ>ÃÊLii˜Ê 돈Ìʈ˜ÌœÊÌܜÊÃi«>À>ÌiÊ œ““ˆÌÌiiÃ]ʜ˜iÊ̜ÊÃiiVÌÊvÕÌÕÀiÊ œ>À`Ê i“LiÀÃÊ>˜`ÊVœÀ«œÀ>ÌiʜvvˆViÀÃÊvœÀÊ>««œˆ˜Ì“i˜ÌÊLÞÊ̅iÊ œ>À`]Ê>˜`Ê̅iʜ̅iÀÊ̜ʫÀœ«œÃiʏiÛiÃʜvÊÀi“Õ˜iÀ>̈œ˜ÊvœÀÊ Ãi˜ˆœÀʓ>˜>}iÀðÊ/…iÊVÀi>̈œ˜ÊœvÊ̅iÃiÊÌܜÊVœ““ˆÌÌiiÃÊ ÃÌÀi˜}̅i˜ÃÊ>˜Ê>Ài>`ÞÊۈ}ˆ>˜ÌÊ>˜`ÊL>>˜Vi`ʜÀ}>˜ˆÃ>̈œ˜Ê `iÈ}˜i`Ê̜Êi˜ÃÕÀiÊ̅iʅ>À“œ˜ˆœÕÃÊ`iÛiœ«“i˜ÌʜvÊ̅iÊ}ÀœÕ«Ê vœÀÊ̅iÊÞi>ÀÃÊ̜ÊVœ“i°

CHAIRMAN’S MESSAGE

“The group ensures the continuity not only of its business model, but also of the values it holds.”

CONTINUITY OF VALUES /…iÊ}ÀœÕ«Êi˜ÃÕÀiÃÊ̅iÊVœ˜Ìˆ˜ÕˆÌÞʘœÌʜ˜ÞʜvʈÌÃÊLÕȘiÃÃÊ “œ`i]ÊLÕÌÊ>ÃœÊœvÊ̅iÊÛ>ÕiÃʈÌʅœ`ðÊ7iÊÜ>˜ÌÊ̜ʏœœŽÊv>ÀÊ Liޜ˜`ÊiVœ˜œ“ˆVÊ«iÀvœÀ“>˜ViÊ>˜`ʓ>ŽiÊÃÕÀiÊ̅>ÌÊ̅iÊ}ÀœÕ«Ê ˆÃʈ˜VÀi>Ș}ÞÊÀœœÌi`ʈ˜Ê̅iʅi>ÀÌʜvÊVœÕ˜ÌÀˆiÃÊ>˜`ʜvÊÜVˆiÌÞ°Ê ,iëiVÌÊvœÀÊ̅iÊi˜ÛˆÀœ˜“i˜Ì]ʅˆ}…Êi̅ˆV>ÊÃÌ>˜`>À`Ã]Ê`ˆÛiÀÈÌÞÊ ˆ˜ÊœÕÀÊÌi>“ÃÊ>˜`ÊiÛiÀÞ`>ÞÊVœ““ˆÌ“i˜ÌÊ̜Ê̅iÊVœ““Õ˜ˆÌˆiÃÊ ˆ˜Ê܅ˆV…ÊÜiʜ«iÀ>ÌiÊ>ÀiÊ̅iÊVœÀ˜iÀÃ̜˜iÃʜvʽ"Àj>½ÃÊÀi뜘ÈLiÊ`iÛiœ«“i˜Ì°Ê ÞÊVÀi>̈˜}ʈÌÃÊ œÀ«œÀ>Ìiʜ՘`>̈œ˜Ê̅ˆÃÊÞi>À]ʽ"Àj>ÊˆÃÊÃiÌ̈˜}ʜÕÌÊ̜ÊiÝÌi˜`Ê>˜`Ê«iÀ«iÌÕ>ÌiÊ>V̈ۈ̈iÃʈ˜Êvˆi`ÃÊ܅iÀiÊÜiÊ V>˜Ê“>ŽiÊ>Ê}i˜Õˆ˜iÊVœ˜ÌÀˆLṎœ˜\Êi`ÕV>̈œ˜]ÊÃVˆi˜ViÊ>˜`Ê Ãœˆ`>ÀˆÌÞ°Ê/…iʽ"Àj>ÊœÕ˜`>̈œ˜Ê܈Ê}Õ>À>˜ÌiiÊ̅iÊ`iÛiœ«“i˜ÌʜvÊ̅iÊ}ÀœÕ«½Ãʓ>œÀÊ«…ˆ>˜Ì…Àœ«ˆVʈ˜ˆÌˆ>̈ÛiÃ]ÊÃÕV…Ê>ÃÊ̅iÊ ºœÀÊ7œ“i˜Êˆ˜Ê-Vˆi˜Vi»Ê>Ü>À`Ã]Ê>˜`Ê̅iʺ>ˆÀ`ÀiÃÃiÀÃÊ>}>ˆ˜ÃÌÊ
 -»Ê>Ü>Ài˜iÃÃÊÀ>ˆÃˆ˜}Ê«Àœ}À>““i]ÊLœÌ…ÊVœ˜`ÕVÌi`ʈ˜Ê«>À̘iÀň«Ê܈̅Ê1˜iÃVœ°ÊÌÊ܈Ê`iÛiœ«Ê˜iÜʈ˜ˆÌˆ>̈ÛiÃ]Ê«>À̈VՏ>ÀÞÊ ÌœÊ…i«ÊÛՏ˜iÀ>LiÊ«iœ«i°Ê*…ˆ>˜Ì…Àœ«ˆVʈ˜ˆÌˆ>̈ÛiÃÊ܅ˆV…Ê«ÀœÛˆ`iÊÃÕ««œÀÌ]ÊVœ˜ÛiÞÊ>ʓiÃÃ>}iÊ>˜`Ê«>ÞÊ>ʎiÞÊÀœiʈ˜ÊLՈ`ˆ˜}Ê Ì…iÊvÕÌÕÀi° /…iÊÀi«ÕÌ>̈œ˜ÊœvʜÕÀÊ}ÀœÕ«]Ê̅iÊÀiëiVÌʈÌʈ˜Ã«ˆÀiÃ]Ê>˜`Ê̅iÊ >ÌÌÀ>V̈œ˜ÊˆÌÊiÝiÀÌÃÊ̅ÀœÕ}…œÕÌÊ̅iÊܜÀ`Ê>ÀiÊ>Ê}Ài>ÌÊÜÕÀViʜvÊ «Àˆ`i]Ê>˜`ʓœÌˆÛ>̈œ˜]ÊvœÀʽ"Àj>½ÃÊÌi>“ð ÀˆÛi˜ÊLÞÊ̅ˆÃʈ“«iÌÕÃÊ>˜`ʜÕÀÊÌÀˆi`Ê>˜`ÊÌiÃÌi`ÊLÕȘiÃÃÊ “œ`i]ÊÜiÊ>ÀiʏœœŽˆ˜}ÊvœÀÜ>À`Ê̜ÊÓäänÊ܈̅ÊVœ˜vˆ`i˜Vi°Ê

Sir Lindsay Owen-Jones

…>ˆÀ“>˜Êœvʽ"Àj>

03

04

THE STRENGTH OF OUR BUSINESS MODEL TO SEIZE ALL THE OPPORTUNITIES OF A NEW COSMETICS WORLD

˜ÊÓääÇ]ʽ"Àj>½ÃÊLÕȘiÃÃʓœ`ipL>Ãi`ʜ˜Êˆ˜˜œÛ>̈œ˜]ʵÕ>ˆÌÞÊ >˜`Ê}œL>ˆÃ>̈œ˜pœ˜ViÊ>}>ˆ˜Ê`i“œ˜ÃÌÀ>Ìi`ʈÌÃʜÕÌÃÌ>˜`ˆ˜}Ê >LˆˆÌÞÊ̜ÊVÀi>ÌiÊÛ>Õi°Ê/…iÊ>VViiÀ>̈œ˜ÊœvÊ}ÀœÜ̅Ê>˜`Ê̅iÊÃÌÀœ˜}Ê ˆ“«ÀœÛi“i˜Ìʈ˜Ê«ÀœvˆÌ>LˆˆÌÞʜ˜ViʓœÀiÊ«ÀœÛi`ʈÌÃÊivvˆVˆi˜VÞÊ>˜`Ê ˆÌÃÊÀi“>ÀŽ>Liʓœ`iÀ˜ˆÌÞ°

ACCELERATED GROWTH ˜ÊÓääÇ]ʜÕÀÊ}ÀœÕ«Êœ˜ViÊ>}>ˆ˜Ê`i“œ˜ÃÌÀ>Ìi`ʈÌÃÊ>LˆˆÌÞÊ̜Ê}ÀœÜÊ Ãˆ}˜ˆvˆV>˜ÌÞÊv>ÃÌiÀÊ̅>˜Ê̅iʓ>ÀŽḭʈŽi‡vœÀʏˆŽiÊ}ÀœÜ̅]Ê>Ìʳn¯]Ê >VViiÀ>Ìi`ÊÃÌÀœ˜}ÞÊVœ“«>Ài`Ê܈̅Ê̅iÊ«ÀiۈœÕÃÊÌܜÊÞi>ÀÃ]Ê>˜`Ê Ü>ÃÊÀˆ}…ÌÊ>ÌÊ̅iÊ̜«ÊœvʜÕÀÊÌ>À}iÌÊÀ>˜}iʜvʳȯÊ̜ʳn¯°

PROFOUND TRANSFORMATION OF THE COSMETICS MARKET /…iÊ}ÀœÜ̅ʜvÊ̅iÊܜÀ`ÊVœÃ“ïVÃʓ>ÀŽiÌÊÜ>ÃÊVœ˜vˆÀ“i`ʈ˜Ê ÓääÇÊ >ÌÊ ³x¯]Ê œ˜ViÊ “œÀiÊ >LœÛiÊ Ì…iÊ >ÛiÀ>}iÊ œvÊ Ì…iÊ >ÃÌÊ £xÊÞi>Àð

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/…ˆÃÊÞi>ÀʜÕÀʓ>ÀŽiÌÊÀi>V…i`Ê>ʅˆÃ̜ÀˆVʓˆiÃ̜˜i\Ê̅iʘiÜiÀÊ VœÕ˜ÌÀˆiÃÊ­ˆ˜Ê>Ài>ÃÊÃÕV…Ê>ÃÊ
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“iÀˆV>Ê>˜`Ê >ÃÌiÀ˜Ê

ÕÀœ«i®]Ê܅ˆV…ÊÜiÊÌiÀ“Ê̅iÊ,iÃÌʜvÊ̅iÊ7œÀ`Ê✘i]ÊLiV>“iÊ vœÀÊ̅iÊvˆÀÃÌÊ̈“iÊ̅iʏ>À}iÃÌʓ>ÀŽiÌ]ʜ˜Ê>Ê«>ÀÊ܈̅Ê7iÃÌiÀ˜Ê

ÕÀœ«i]Ê܅ˆV…Ê̅iÞÊŜՏ`Êi>ȏÞʜÛiÀÌ>Žiʈ˜ÊÓään°

“The profound transformation of the cosmetics market is a historic opportunity for L’Oréal.” 7iÊ>ÀiÊ̅ÕÃÊÃiiˆ˜}Ê>ÊÀ>«ˆ`Ê>˜`Ê«ÀœvœÕ˜`ÊÌÀ>˜ÃvœÀ“>̈œ˜ÊœvÊ Ì…iÊܜÀ`ÊVœÃ“ïVÃʓ>ÀŽiÌ]Ê܈̅Ê>ʘiÜÊL>>˜ViÊLiÌÜii˜Ê̅iÊ Û>ÀˆœÕÃÊVœ˜Ìˆ˜i˜ÌÃ]Ê>˜`ÊLiÌÜii˜Ê`iÛiœ«i`Ê>˜`Êi“iÀ}ˆ˜}Ê VœÕ˜ÌÀˆið /œ“œÀÀœÜ½Ãʓ>ÀŽiÌʈÃÊÌ>Žˆ˜}ÊÅ>«iÊLivœÀiʜÕÀÊÛiÀÞÊiÞiÃ\ʈÌÊ܈Ê Liʏ>À}iÀ]ʓœÀiÊ`ޘ>“ˆVÊ>˜`ʓœÀiÊ}œL>° /…ˆÃÊÌÀ>˜ÃvœÀ“>̈œ˜ÊˆÃÊ>ʅˆÃ̜ÀˆVʜ««œÀÌ՘ˆÌÞÊvœÀʽ"Àj>° /…>˜ŽÃÊ̜ʜÕÀÊ`ˆÛiÀÈvˆi`ÊV>Ì>œ}ÕiʜvÊLÀ>˜`Ã]Ê«iÀviV̏ÞÊ >`>«Ìi`Ê̜Ê>Ê̅iÊVÕÃ̜“iÀÃʜvÊ̅iÊܜÀ`]Ê>˜`Ê̜Ê̅iʏœV>̈œ˜Ê œvʜÕÀÊÀiÃi>ÀV…ÊVi˜ÌÀiÃʜ˜Ê̅iÊ`ˆvviÀi˜ÌÊVœ˜Ìˆ˜i˜ÌÃÊ̜ʓiiÌÊ̅iÊ iÝ«iVÌ>̈œ˜ÃʜvÊVœ˜ÃՓiÀÃÊ>ÊœÛiÀÊ̅iÊ«>˜iÌ]ÊÜiÊ>ÀiÊ«iÀviV̏ÞÊ «œˆÃi`Ê̜ÊÌ>ŽiÊ>`Û>˜Ì>}iʜvÊ̅iʵՈÌiÊiÝVi«Ìˆœ˜>Ê}ÀœÜÌ…Ê «ÀœÃ«iVÌÃʜvviÀi`ÊLÞÊ>ÊÌÀՏÞÊ}œL>ˆÃi`ʓ>ÀŽiÌ°

/…iÊ̅ÀiiÊ✘iÃÊÃ>ÜÊ̅iˆÀÊ}ÀœÜ̅Ê>VViiÀ>ÌiÊVœ“«>Ài`ÊÜˆÌ…Ê Ì…iÊ«ÀiۈœÕÃÊÞi>À°Ê˜Ê7iÃÌiÀ˜Ê ÕÀœ«i]ʜÛiÀÊ̅iʏ>ÃÌÊÌܜÊÞi>ÀÃÊ Üiʅ>ÛiÊÀiÌÕÀ˜i`Ê̜Ê܏ˆ`Ê}ÀœÜ̅]ÊÃÕ««œÀÌi`ÊLÞÊiÝ«>˜`ˆ˜}Ê “>ÀŽiÌÃÊ>˜`ʓ>ÀŽiÌÊÅ>ÀiÊ}>ˆ˜ÃÊLÞʜÕÀÊ ˆÛˆÃˆœ˜Ã°Ê˜Ê œÀ̅Ê
“iÀˆV>]ÊÜiÊ>V…ˆiÛi`Ê>ÊÃÌÀœ˜}Ê}ÀœÜ̅ÊÀ>Ìi]ÊÌ܈ViÊ>ÃÊv>ÃÌÊ>ÃÊ Ì…iʓ>ÀŽḭʈ˜>Þ]Ê}ÀœÜ̅ʈ˜Ê̅iÊ,iÃÌʜvÊ7œÀ`Ê>VViiÀ>Ìi`Ê v>ÃÌiÀÊ̅>˜ÊiÛiÀÊLivœÀi]ÊVœ˜ÌÀˆLṎ˜}ʓœÀiÊ̅>˜ÊÈä¯ÊœvÊ̅iÊ }ÀœÕ«½ÃÊ}œL>Ê}ÀœÜ̅°Ê
Êˆ˜Ê>]Ê̅iÊ}ÀœÕ«½ÃÊÅ>ÀiʜvÊ̅iÊܜÀ`ʓ>ÀŽiÌÊ>`Û>˜Vi`Ê ÃÕLÃÌ>˜Ìˆ>ÞÊ̜ʣx°Î¯Ê܈̅ÊÈ}˜ˆvˆV>˜ÌÊ}>ˆ˜Ãʜ˜Ê>ÊVœ˜Ìˆ‡ ˜i˜Ìð FULL SPEED AHEAD ˜ÊÓääÇ]ʜÕÀÊ}ÀœÜ̅Êi˜}ˆ˜iÊÜ>ÃÊvˆÀˆ˜}ʜ˜Ê>ÊVޏˆ˜`iÀÃ]Ê>˜`Ê }i˜iÀ>̈˜}ʓ>݈“Õ“Ê«œÜiÀ° ˜ÊÌiÀ“Ãʜvʈ˜˜œÛ>̈œ˜]ʜÕÀÊÀiÃi>ÀV…ÊÌi>“Ãʓ>`iÊÃiÛiÀ>Ê“>œÀÊ ÌiV…˜œœ}ˆV>Ê>`Û>˜ViÃÊ>˜`ÊÃiÌÊÕ«ÊÌܜʘiÜʏ>LœÀ>̜ÀˆiðÊ/…iÊ vˆÀÃÌʈÃÊvœÀʜÀ}>˜ˆVÊ>˜`ʘ>ÌÕÀ>ÊVœÃ“ïVÃÊvœÀʜÕÀÊLÀ>˜`ÃÊTHE BODY SHOP >˜`ÊSANOFLORE]Ê>˜`Ê̅iÊÃiVœ˜`ʈÃÊvœÀʈ˜ÃÌÀՓi˜Ì>ÊVœÃ“i̇ ˆVÃ]Ê̜ʺÃiˆâiÊÕ«Vœ“ˆ˜}ÊÌÀi˜`ûʈ˜Ê̅ˆÃÊ«Àœ“ˆÃˆ˜}Ê>Ài>° /…ˆÃÊÜ>ÃÊ>ÃœÊ>ÊÀˆV…ÊÞi>ÀÊvœÀÊ̅iÊVÀi>̈œ˜ÊœvÊLœVŽLÕÃÌiÀÃÊÜˆÌ…Ê ÛiÀÞʅˆ}…Ê«œÌi˜Ìˆ>Ê>˜`Ê}œL>ÊÀi>V…°Ê/…iˆÀÊÀœ‡œÕÌÊ܈ÊVœ˜‡ ̈˜ÕiÊ̜ÊvÕiÊ}ÀœÜ̅ʈ˜ÊÓäänÊ>˜`ÊLiޜ˜`° "ÕÀÊ«œˆVÞʜvÊVœ˜ÃÌ>˜ÌÞÊi˜…>˜Vˆ˜}ÊÛ>ÕipLÞʏ>՘V…ˆ˜}ʅˆ}…iÀÊ >``i`ÊÛ>ÕiÊ«Àœ`ÕVÌÃÊ>˜`Ê}ˆÛˆ˜}Ê«ÀˆœÀˆÌÞÊ̜ÊÃÕ««œÀÌÊvœÀÊ̅iÊ …ˆ}…iÃÌÊÛ>ÕiÊÃi}“i˜ÌÃp…>ÃÊ«Àœ`ÕVi`ÊiÝVii˜ÌÊÀiÃՏÌð /…iÊ«œÜiÀʜvʜÕÀÊLÀ>˜`ÃÊVœ˜Ìˆ˜Õi`Ê̜ÊiÝ«>˜`°Ê"˜Ê̅iÊ}ÀœÜÌ…Ê «œ`ˆÕ“]ÊKIEHL’S, LA ROCHE-POSAY >˜`ÊGIORGIO ARMANI >V…ˆiÛi`Ê œÕÌÃÌ>˜`ˆ˜}Ê>`Û>˜ViðÊ/…iÊ«iÀvœÀ“>˜ViʜvÊL’ORÉAL PARIS]Ê̅iÊ }ÀœÕ«½ÃʘՓLiÀʜ˜iÊLÀ>˜`]ÊÜ>ÃÊ>ÃœÊÀi“>ÀŽ>Li°

CHIEF EXECUTIVE OFFICER’S MESSAGE

˜ÊÌiÀ“ÃʜvÊ}œL>ˆÃ>̈œ˜]Ê̅iÊÃÌÀœ˜}Ê>VViiÀ>̈œ˜ÊœvʜÕÀÊ}ÀœÜÌ…Ê ˆ˜Ê̅iÊ,iÃÌʜvÊ̅iÊ7œÀ`Ê✘iÊÀiviVÌÃÊ̅iÊÃÕLÃÌ>˜Ìˆ>Ê«Àœ}ÀiÃÃÊ Üiʅ>Ûiʓ>`iʈ˜ÊÀœˆ˜}ʜÕÌʜÕÀÊLÀ>˜`ÃÊ>˜`ʜÕÀÊ«Àœ`ÕVÌÃÊ>Ê œÛiÀÊ̅iÊ«>˜iÌ]Ê>˜`Ê>ÃœÊŜÜÃÊ̅iˆÀʈ““i˜ÃiÊ«œÌi˜Ìˆ>° ˆ˜>Þ]ʈÌÊÜ>ÃÊ>ÃœÊ>ÊÛiÀÞÊ>V̈ÛiÊÞi>ÀÊvœÀÊiÝÌiÀ˜>Ê}ÀœÜ̅°Ê
vÌiÀÊ Ã“œœÌ…Þʈ˜Ìi}À>̈˜}ÊTHE BODY SHOP]ÊÜiÊÃÌ>ÀÌi`ÊÕ«Ê>ʓ>}˜ˆvˆ‡ Vi˜ÌÊvÀ>}À>˜ViÊLÕȘiÃÃ]ÊDIESEL]Ê>˜`ÊLi}>˜Ê̜Ê}œL>ˆÃiÊSANOFLORE]ʜÕÀʜÀ}>˜ˆVÊVœÃ“ïVÃÊLÀ>˜`° ˜ÊÓääÇ]ÊÜiʓ>`iÊ̅Àiiʓ>œÀÊ>VµÕˆÃˆÌˆœ˜Ãʈ˜Ê*ÀœviÃȜ˜>Ê *Àœ`ÕVÌÃʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ]Ê܅ˆV…Ê܈Ê…i«ÊÕÃÊ>VViiÀ>ÌiÊ œÕÀÊVœ˜µÕiÃÌʜvÊ̅ˆÃÊÃÌÀ>Ìi}ˆVʓ>ÀŽiÌ°Ê

“In 2007, our growth engine was firing on all cylinders, and generating maximum power.” OPERATING PROFIT: STRONG IMPROVEMENT IN A DIFFICULT CONTEXT ˜ÊÓääÇ]ʽ"Àj>Ê˜œÌʜ˜ÞÊVœ˜vˆÀ“i`ʈÌÃÊ>LˆˆÌÞÊ̜Ê>V…ˆiÛiÊÈ}‡ ˜ˆvˆV>˜ÌÊ}ÀœÜ̅]ÊLÕÌÊ>ÃœÊœ˜ViÊ>}>ˆ˜Ê̅ˆÃÊÞi>ÀÊŜÜi`ʈÌÃÊ>Lˆ‡ ˆÌÞÊ̜ʈ“«ÀœÛiʈÌÃʜ«iÀ>̈˜}Ê«ÀœvˆÌ°Ê/…ˆÃÊÜ>ÃÊ>V…ˆiÛi`Ê`iëˆÌiÊ >ʅˆ}…Þʘi}>̈ÛiÊVÕÀÀi˜VÞÊivviVÌÊ>˜`ÊÀˆÃˆ˜}ÊÀ>Üʓ>ÌiÀˆ>ÃÊ>˜`Ê i˜iÀ}ÞÊVœÃÌÃ°Ê ÀœÃÃÊ«ÀœvˆÌÊVœ˜Ìˆ˜Õi`Ê̜Ê>`Û>˜ViÊÃÌÀœ˜}Þ]Ê̅>˜ŽÃÊ̜ʜÕÀÊ «œˆVÞʜvÊi˜…>˜Vˆ˜}ÊÛ>Õi]ʜ«Ìˆ“ˆÃˆ˜}Ê«ÕÀV…>Ș}Ê>˜`ʈ“«ÀœÛ‡ ˆ˜}ʈ˜`ÕÃÌÀˆ>Ê«Àœ`ÕV̈ۈÌÞʈ˜Ê"«iÀ>̈œ˜Ã]Ê܈̅Ê̅iʓiÀ}ˆ˜}ʜvÊ “>˜Õv>VÌÕÀˆ˜}Ê>˜`ʏœ}ˆÃ̈Vð "ÕÀÊ,iÃi>ÀV…Ê>˜`Ê iÛiœ«“i˜ÌÊiÝ«i˜ÃiÃ]Ê>˜`ʜÕÀÊ>`ÛiÀ̈Ș}Ê >˜`Ê«Àœ“œÌˆœ˜ÊiÝ«i˜ÃiÃ]ʅ>ÛiÊÀi“>ˆ˜i`ÊÃÌ>LiÊ>ÃÊ>Ê«iÀVi˜Ì‡ >}iʜvÊÃ>iÃ]Ê܅ˆiʜÕÀÊÃ>iÃ]Ê}i˜iÀ>Ê>˜`Ê>`“ˆ˜ˆÃÌÀ>̈ÛiÊ iÝ«i˜ÃiÃʅ>ÛiÊVœ˜Ìˆ˜Õi`Ê̜Êv>°Ê /…iʈ˜VÀi>Ãiʈ˜Ê«ÀœvˆÌ>LˆˆÌÞʅ>ÃÊLii˜ÊÃÌÀœ˜}Ê>˜`ʅœ“œ}i˜i‡ œÕÃÊ>VÀœÃÃÊ>Ê ˆÛˆÃˆœ˜Ã]Ê܅ˆV…ʘœÜʅ>ÛiÊÛiÀÞÊȓˆ>ÀÊ«ÀœvˆÌ>Lˆ‡ ˆÌÞʏiÛiÃ°

05

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“iÀˆV>˜ÊiÛiÊˆ˜Ê>L܏ÕÌiÊÛ>Õi°Ê /…ˆÃʈÃÊ>ÊÌÕÀ˜ˆ˜}Ê«œˆ˜Ìʈ˜Ê̅iʅˆÃ̜ÀÞʜvʽ"Àj>°Ê"ÛiÀÊ̅iÊVœ“‡ ˆ˜}ÊÞi>ÀÃ]Ê̅ˆÃÊ✘iÊ܈Ê“>ŽiÊ>ʓ>œÀÊVœ˜ÌÀˆLṎœ˜Ê̜Ê̅iÊ ˆ˜VÀi>Ãiʈ˜Ê̅iÊ}ÀœÕ«½ÃÊ«ÀœvˆÌ>LˆˆÌÞ°
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BOARD OF DIRECTORS COMPOSITION AT DECEMBER 31st, 2007. The statutory length of tenure of a L’Oréal director is four years, and is renewable. Each director holds a minimum of 1,000 L’Oréal shares. (The full list of directors’ offices and directorships, in accordance with legal requirements, is included in the Notes to the Management Report of the Board of Directors.)

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TRIBUTE TO MR ANDRÉ BETTENCOURT /…iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃÊ«>ˆ`ÊÌÀˆLÕÌiÊ̜ÊÀÊ iÌÌi˜VœÕÀÌ]Ê܅œÊ«>ÃÃi`Ê>Ü>Þʜ˜Ê œÛi“LiÀÊ£™Ì…]ÊÓääÇ°Ê œ>À`ʓi“LiÀʜvʽ"Àj>Ê>˜`Ê6ˆVi‡ …>ˆÀ“>˜ÊœvÊ̅iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃÊvÀœ“Ê£™näÊ̜ʣ™™{]Ê>˜`Ê …>ˆÀ“>˜Ê>˜`Ê …ˆivÊ ÝiVṎÛiÊ"vvˆViÀʜvÊië>À>Ê vÀœ“Ê£™nÎÊ̜ÊÓää{]ÊÀÊ iÌÌi˜VœÕÀÌÊ>Ü>ÞÃÊ`i“œ˜ÃÌÀ>Ìi`Ê>ÊÃÌÀœ˜}Ê>˜`ÊȘViÀiÊ >ÌÌ>V…“i˜ÌÊ̜Ê̅iÊVœ“«>˜ÞÊ>˜`ʈÌÃÊÌi>“ðÊiÊÜ>ÃÊ>««Àœ>V…>Li]ÊÜ>À“‡…i>ÀÌi`Ê>˜`Ê V>Àˆ˜}]ÊÀiviV̈˜}Ê̅iʅՓ>˜ˆÃ̈VÊÌÀ>`ˆÌˆœ˜Ãʜvʽ"Àj>Ê܅ˆV…Ê…iÊi˜VœÕÀ>}i`°

08

EXECUTIVE COMMITTEE 1

Jean-Paul Agon Chief Executive Officer

2

Christian Mulliez Executive Vice-President Administration and Finance

3

Jean-Philippe Blanpain Managing Director Operations

4

Marc Menesguen President Luxury Products Division

5

Patrick Rabain President Consumer Products Division

6

Jean-Jacques Lebel President Professional Products Division

8

4 2

3

5 6

7

09

EXECUTIVE COMMITTEE

7

8

9

Béatrice Dautresme Executive Vice-President Corporate Communications and External Affairs

10

Laurent Attal Managing Director North America Zone

11

Geoff Skingsley Executive Vice-President Human Resources

Brigitte Liberman Managing Director Active Cosmetics Division

12

Joseph Bitton Managing Director Latin America Zone

Jochen Zaumseil Managing Director Asia Zone

13

Jean-François Grollier Executive Vice-President Research and Development

9

12 10

1

11

13

10

COMMITMENT

BUILDING A RESPONSIBLE COMPANY Corporate governance p.12

Social and environmental responsibility p.14

Shareholder information «°£n

11

L’Oréal employees, with children from the Alfred E. Smith Recreation Centre in New York, during the Volunteer Day organised by L’Oréal USA.

L’Oréal has always sought to go beyond mere economic success. Strong ethical principles guide its growth. A broader conception of social responsibility drives its commitment. To be one of the companies that have the greatest respect for the planet and are the most caring towards communities’ needs is L’Oréal’s constant goal, as it strives to build exemplary growth.

12

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A VIGILANT AND BALANCED BOARD OF DIRECTORS Vigilance and balance inspire L’Oréal’s governance. The Board of Directors constantly ensures that its organisation is adapted to changes in the group. The separation of roles between Chairman and Chief Executive Officer, decided in 2006, is proving satisfactory. At the end of 2007, the Board decided to split the “Management and Remuneration” Committee into two separate committees, one to select new Board members and corporate officers for appointment by the Board, and the other to determine the remuneration of general management. This organisation ensures the harmonious development of the group.

A HARMONIOUS ALLOCATION OF ROLES Following the separation of the roles of Chairman and Chief

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ˆ˜Ê«Ài«>Àˆ˜}ÊvœÀÊ̅iÊ œ>À`½ÃÊܜÀŽ]Ê>˜`ʓ>ŽiÊ«Àœ«œÃ>Ã]ÊLÕÌÊ `œÊ˜œÌʅ>ÛiÊ>˜ÞÊ`iVˆÃˆœ˜‡“>Žˆ˜}Ê«œÜiÀðÊ/…iÞÊÀi«œÀÌʜ˜Ê>Ê Ài}Տ>ÀÊL>ÈÃÊ̜Ê̅iÊ œ>À`]Ê܅ˆV…Ê“>ŽiÃÊ̅iÊ`iVˆÃˆœ˜Ã]Ê>˜`]Ê Ì…ÀœÕ}…ʈÌÃÊ …>ˆÀ“>˜]ÊÀi«œÀÌÃÊ̜Ê̅iÊÅ>Ài…œ`iÀð

ACTIVELY INVOLVED COMMITTEES /…iÊ œ>À`½ÃÊ œ““ˆÌÌiiÃÊ>VÌÊÃÌÀˆV̏Þʈ˜Ê>VVœÀ`>˜ViÊ܈̅Ê̅iÊ Ài“ˆÌÊ}ˆÛi˜Ê̜Ê̅i“ÊLÞÊ̅iÊ œ>À`°Ê/…iÞÊ>ÀiÊ>V̈ÛiÞʈ˜ÛœÛi`Ê

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BREAKDOWN OF SHAREHOLDING STRUCTURE AT DECEMBER 31ST, 2007

BREAKDOWN OF VOTING RIGHTS AT DECEMBER 31ST, 2007(1)

RESPONSIBLE AND EXPERIENCED DIRECTORS /…iʽ"Àj>Ê œ>À`ʅ>ÃÊ£{ʓi“LiÀÃ°Ê À>܈˜}ʜ˜Ê̅iˆÀÊVœ““ˆÌ“i˜Ì]Ê`ˆÛiÀÈÌÞÊ>˜`ʅˆ}…ÞÊVœ“«i“i˜Ì>ÀÞÊ«ÀœviÃȜ˜>Ê iÝ«iÀˆi˜Vi]Ê̅iÊ`ˆÀiV̜ÀÃÊÌ>ŽiÊ>˜Ê>V̈ÛiÊ«>ÀÌʈ˜Ê`iL>ÌiÃ]ʅ>ÛiÊ Vœ“«iÌiÊvÀii`œ“ÊœvʍÕ`}i“i˜ÌÊ>˜`Ê}Ài>ÌÊ>Û>ˆ>LˆˆÌÞ°Ê
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30.0% Mrs Bettencourt and her family

28.9% Nestlé

37.4% Public

3.7% Treasury stock

31.2% Mrs Bettencourt and her family

38.8% Public

30.0% Nestlé (1) In accordance with the law, treasury stock carries no voting rights.

COMMITMENT // CORPORATE GOVERNANCE

The “Management and Remuneration” Committee /…ˆÃÊ œ““ˆÌÌiiÊ>ÃÈÃÌÃÊ̅iÊ …>ˆÀ“>˜Ê>˜`Ê̅iÊ œ>À`]ʈ˜ÊVœ“«iÌiʈ˜`i«i˜`i˜Vi]ʈ˜Ê̅iˆÀÊÀiۈiÜʜvÊÃÕVViÃȜ˜Ê«>˜ÃÊvœÀÊ̅iÊ }ÀœÕ«½ÃÊ}i˜iÀ>Ê“>˜>}i“i˜ÌÊ«œÃˆÌˆœ˜Ã°ÊÌÊVœ˜Ãˆ`iÀÃÊ̅iÊVœ“«œÃˆÌˆœ˜ÊœvÊ̅iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃÊ>˜`Ê>˜ÞÊ«œÃÈLiÊV…>˜}iðÊÌÊ “>ŽiÃÊ«Àœ«œÃ>ÃÊ̜Ê̅iÊ œ>À`ÊVœ˜ViÀ˜ˆ˜}Ê̅iÊÀi“Õ˜iÀ>̈œ˜ÊœvÊ VœÀ«œÀ>ÌiʜvvˆViÀÃ]Ê>˜`Ê>œV>̈œ˜ÃʜvÊÃ̜VŽÊœ«Ìˆœ˜ÃʜÀÊ«œÌi˜Ìˆ>Ê vÀiiÊ}À>˜ÌÃʜvÊÅ>ÀiðÊ/…iÊ«Àˆ˜Vˆ«iÃÊ>««ˆi`Ê>˜`Ê̅iÊ œ>À`½ÃÊ `iVˆÃˆœ˜ÃÊ>ÀiÊÃiÌʜÕÌʈ˜Ê`iÌ>ˆ]Ê>˜`Ê܈̅ÊVœ“«iÌiÊÌÀ>˜Ã«>Ài˜VÞ]Ê ˆ˜Ê̅iÊ,iviÀi˜ViÊ œVՓi˜Ì­£®° ˜ÊÓääÇ]Ê̅iʺ>˜>}i“i˜ÌÊ>˜`Ê,i“Õ˜iÀ>̈œ˜»Ê œ““ˆÌÌiiʓiÌÊ vœÕÀÊ̈“iðÊ"˜ÊˆÌÃÊ«Àœ«œÃ>]Ê̅iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃÊ`iVˆ`i`]Ê>ÌÊ Ì…iÊi˜`ʜvÊÓääÇ]Ê̜Ê돈ÌÊ̅iÊ œ““ˆÌÌiiʈ˜ÊÌܜʭÃiiʜ««œÃˆÌi®° The Audit Committee /…iÊÀœiʜvÊ̅ˆÃÊ œ““ˆÌÌiiʈÃÊ̜Êi˜ÃÕÀiÊ̅>ÌÊ̅iÊi˜iÀ>Ê>˜>‡ }i“i˜ÌʈÃÊ«ÀœÛˆ`i`Ê܈̅Ê̅iʓi>˜ÃÊi˜>Lˆ˜}ʈÌÊ̜ʈ`i˜ÌˆvÞÊ>˜`Ê “>˜>}iÊ̅iÊiVœ˜œ“ˆV]Êvˆ˜>˜Vˆ>Ê>˜`ʏi}>ÊÀˆÃŽÃÊv>Vi`ÊLÞÊ̅iÊ }ÀœÕ«ÊLœÌ…ʈ˜Ãˆ`iÊ>˜`ʜÕÌÈ`iÊÀ>˜Viʈ˜ÊˆÌÃÊÀœṎ˜iÊ>˜`ÊiÝVi«Ìˆœ˜>Êœ«iÀ>̈œ˜Ã°Ê˜ÊÓääÇ]Ê̅iÊ œ““ˆÌÌiiʓiÌÊ̅ÀiiÊ̈“iÃʈ˜Ê ̅iÊ«ÀiÃi˜ViʜvÊ>ÊˆÌÃʓi“LiÀÃÊ>˜`Ê̅iÊ-Ì>ÌÕ̜ÀÞÊ
Õ`ˆÌœÀð ˜ÊÓääÇ]Ê܈̅ÊÀi}>À`Ê̜Ê̅iʈ˜vœÀ“>̈œ˜Êœ˜Ê̅iÊ}ÀœÕ«½ÃÊÀiÃՏÌÃ]Ê Ì…iÊ
Õ`ˆÌÊ œ““ˆÌÌiiÊÀiۈiÜi`ʈ˜Ê`iÌ>ˆÊ̅iÊ>ëiVÌÃÊÀi>̈˜}ÊÌœÊ «ÀœÛˆÃˆœ˜Ã]ʏˆÌˆ}>̈œ˜Ê>˜`Ê«i˜Ãˆœ˜ÊVœ““ˆÌ“i˜ÌðÊ7ˆÌ…ÊÀi}>À`Ê ÌœÊ˜ÌiÀ˜>Ê œ˜ÌÀœ]Ê̅iÊÈÌÕ>̈œ˜ÊVœ˜ViÀ˜ˆ˜}Ê̅iʏi}>ÊÀˆÃŽÃÊÌœÊ Ü…ˆV…Ê̅iÊVœ“«>˜ÞʈÃÊiÝ«œÃi`ÊÜ>ÃÊ«ÀiÃi˜Ìi`Ê̜Ê̅iÊ œ““ˆÌÌii]Ê̜}i̅iÀÊ܈̅Ê̅iʜLÃiÀÛ>̈œ˜Ãʓ>`iÊLÞÊ̅iʘÌiÀ˜>Ê
Õ`ˆÌÊ i«>À̓i˜Ì°Ê/…iÊ œ““ˆÌÌiiÊÜ>ÃÊ>ÃœÊˆ˜vœÀ“i`Ê̅>Ìʽ"Àj>½ÃÊ v՘`>“i˜Ì>Ê˜ÌiÀ˜>Ê œ˜ÌÀœÊÀՏiÃʅ>`ÊLii˜ÊÕ«`>Ìi`Ê>˜`ʜvÊ Ì…iÊV…>˜}iÃʈ˜Ê̅iÊ …>ˆÀ“>˜½ÃÊ,i«œÀÌ]ʈ˜Êˆ˜iÊ܈̅Ê̅iÊÀiVœ““i˜`>̈œ˜Ãʓ>`iÊLÞʏœV>Ê>Õ̅œÀˆÌˆiÃÊ>˜`ʜÀ}>˜ˆÃ>̈œ˜ÃÊ Ài뜘ÈLiÊvœÀÊ`iÌiÀ“ˆ˜ˆ˜}ÊVœÀ«œÀ>ÌiÊ}œÛiÀ˜>˜ViÊ«À>V̈Við

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-Ê “Strategy and Implementation” Committee Èʓi“LiÀÃ\ UÊ-ˆÀʈ˜`Ã>ÞÊ"Üi˜‡œ˜iÃÊ ­ …>ˆÀ“>˜® Uʈˆ>˜iÊ iÌÌi˜VœÕÀÌ UÊi>˜‡*ˆiÀÀiÊiÞiÀà UÊ*iÌiÀÊ À>LiVŽ‡i̓>̅i UÊÀ>˜VˆÃVœÊ >ÃÌ>šiÀÊ >ÃVœ UÊ iÀ˜>À`Ê>ÃÀˆi xʓiï˜}Ãʈ˜ÊÓääÇ° “Management and Remuneration” Committee ­Õ˜ÌˆÊ œÛi“LiÀÊÎäth]ÊÓääÇ®

Îʓi“LiÀÃ\ Uʈˆ>˜iÊ iÌÌi˜VœÕÀÌÊ ­ …>ˆÀܜ“>˜® UÊ*iÌiÀÊ À>LiVŽ‡i̓>̅i UÊ iÀ˜>À`Ê>ÃÀˆi {ʓiï˜}Ãʈ˜ÊÓääÇ°

Appointments Committee ­Ãˆ˜ViÊ œÛi“LiÀÊÎäth]ÊÓääÇ®

Îʓi“LiÀÃ\ UÊ iÀ˜>À`Ê>ÃÀˆiÊ ­ …>ˆÀ“>˜® UÊi>˜‡*ˆiÀÀiÊiÞiÀà UÊ*iÌiÀÊ À>LiVŽ‡i̓>̅i Remuneration Committee ­Ãˆ˜ViÊ œÛi“LiÀÊÎäth]ÊÓääÇ®

Îʓi“LiÀÃ\ UÊ iÀ˜>À`Ê>ÃÀˆiÊ ­ …>ˆÀ“>˜® UÊi>˜‡*ˆiÀÀiÊiÞiÀà UÊ*iÌiÀÊ À>LiVŽ‡i̓>̅i Audit Committee Îʓi“LiÀÃ\ UÊ8>ۈiÀÊœ˜Ì>˜iÌÊ ­ …>ˆÀ“>˜® UÊi>˜‡*ˆiÀÀiÊiÞiÀà UÊÀ>˜VˆÃVœÊ >ÃÌ>šiÀÊ >ÃVœ Îʓiï˜}Ãʈ˜ÊÓääÇ°

(1) Management Report of the Board of Directors, chapter on “Remuneration of corporate officers”, pages 85 to 89 of volume 2 of this Reference Document.


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SYSTEMATIC SELF-EVALUATION

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˜˜Õ>Êi˜iÀ>Êiï˜}°Ê˜ÊÓääÇ]Ê̅iÊ œ>À`ʜvÊ ˆÀiV̜ÀÃÊvˆÀÃ̏ÞÊ iÝ«ÀiÃÃi`ÊÃ>̈Ãv>V̈œ˜Ê܈̅ʈÌÃʜÀ}>˜ˆÃ>̈œ˜]Ê܈̅Ê̅iÊÃi«>À>̈œ˜ÊœvÊ̅iÊÀœiÃʜvÊ …>ˆÀ“>˜Ê>˜`Ê …ˆivÊ ÝiVṎÛiÊ"vvˆViÀ]Ê>˜`Ê Ì…iÊVœ˜Ìi˜ÌʜvʈÌÃʓiï˜}Ã]Ê>ÃʈÌÊVœ˜Ãˆ`iÀÃÊ̅>ÌÊ̅iÃiʅ>ÛiÊ Vœ˜Ìˆ˜Õi`Ê̜ʈ“«ÀœÛiʈ˜ÊµÕ>ˆÌÞ°ÊÌÊÌ>ŽiÃÊ>ʓœÀiÊ܈`i‡À>˜}ˆ˜}Ê œœŽÊ>ÌÊÃÌÀ>Ìi}Þ]Ê>˜`Ê̅iÊ`ˆÀiV̜ÀÃÊÌ>ŽiÊ̅iÊۈiÜÊ̅>ÌÊ̅iÞʅ>ÛiÊ >ÊLiÌÌiÀʎ˜œÜi`}iʜvÊLÕȘiÃÃiÃ]ʓ>ÀŽiÌÃÊ>˜`ÊVœ“«ï̈œ˜°Ê ˜Ê>VVœÀ`>˜ViÊ܈̅ʈÌÃÊ܈ÅiÃ]Ê̅iÊ œ>À`ÊÜ>ÃÊ«ÀœÛˆ`i`ʈ˜ÊÓääÇÊ ÜˆÌ…ÊÀi}Տ>ÀÊ>˜`ÊÀiˆ>Liʈ˜vœÀ“>̈œ˜Ê>LœÕÌÊ̅iÊ}ÀœÕ«½ÃÊLÕȘiÃÃÊ>V̈ۈ̈iðÊ/…iÊ`ˆÀiV̜ÀÃʅœÜiÛiÀÊÃ̈ÊÜ>˜ÌÊ̜ʈ“«ÀœÛiÊ̅iÊ µÕ>ˆÌÞÊ>˜`ÊLÀœ>`i˜Ê̅iÊÃVœ«iʜvÊ̅iˆÀÊ`iL>ÌiÃÊiÛi˜ÊvÕÀ̅iÀ]Ê LÞÊÀiViˆÛˆ˜}Ê«ÀˆœÀʈ˜vœÀ“>̈œ˜Ê܅ˆV…ʈÃÊÌ>À}iÌi`Ê>˜`ÊÀiiÛ>˜Ìʈ˜Ê ۈiÜʜvÊ̅iÊ`iVˆÃˆœ˜ÃÊ̅>ÌÊ̅iÊ œ>À`ʈÃÊLiˆ˜}Ê>Îi`Ê̜ÊÌ>Ži°

ENSURING STRICT CONFIDENTIALITY /…iÊ`ˆÀiV̜ÀÃ]Ê܅œÊ…>ÛiÊ«iÀ“>˜i˜Ìʈ˜Ãˆ`iÀÊÃÌ>ÌÕÃ]Ê>««ÞÊÃÌÀˆVÌÊ ÀՏiÃÊ̜Ê̅i“ÃiÛiÃÊ܈̅ÊÀi}>À`Ê̜Ê̅iÊVœ˜vˆ`i˜Ìˆ>Êˆ˜vœÀ“>̈œ˜Ê ˆ˜Ê̅iˆÀÊ«œÃÃiÃȜ˜°Ê˜Ê̅ˆÃÊÀiëiVÌ]Ê̅iÞʓiiÌÊ̅iÊÀiµÕˆÀi“i˜ÌÃÊ œvÊ̅iʏ>ÜÊ>˜`ÊVœ“«ÞÊ܈̅Ê̅iÊ«ÀiÛi˜ÌˆÛiʓi>ÃÕÀiÃÊÌ>Ži˜Ê LÞʽ"Àj>Êˆ˜ÊÀi>̈œ˜Ê̜ʈÌÃÊi“«œÞiiÃ]Ê«>À̈VՏ>ÀÞÊ܈̅ˆ˜Ê̅iÊ ÃVœ«iʜvÊ̅iʘÈ`iÀÊ/À>`ˆ˜}Ê,ՏiÃÊ>˜`Ê̅iʘÌiÀ˜>Ê œ˜ÌÀœÊ«ÀœVi`ÕÀiðÊ/…iʈ“«Àœ«iÀÊÕÃiÊ>˜`ÊÌÀ>˜Ã“ˆÃȜ˜Êœvʈ˜Ãˆ`iÀʈ˜vœÀ“>̈œ˜Ê“ÕÃÌÊLiÊ«ÀiÛi˜Ìi`]Ê>˜`ʈ˜ÛiÃ̓i˜ÌÃʈ˜Ê̅iÊVœ“«>˜Þ½ÃÊ Ã…>ÀiÃʓÕÃÌÊLiÊV>ÀÀˆi`ʜÕÌÊ܈̅ˆ˜Ê>ÊÃiVÕÀiÊvÀ>“iܜÀŽ°Ê

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ENSURING SUSTAINABLE AND RESPONSIBLE GROWTH L’Oréal’s goal is to ensure sustainable and responsible growth. We are convinced that sustainable success is based on strong ethical principles, which provide a framework of values, shared by all employees, and guide our growth. It is also based on a genuine sense of responsibility towards the wider community.

THE SIX KEY PRINCIPLES OF OUR SUSTAINABLE DEVELOPMENT APPROACH > We are committed to ensuring growth which creates value for the largest possible number of those who contribute to our success. > We want to promote sustainable innovation by incorporating the principles of sustainable development into the heart of our Research and Development activities. > We want to offer our employees a safe, healthy and stimulating working environment, in which personal talent and merit are recognised, diversity is valued, private life is respected and the balance between professional life and personal life is taken into account. > We build strong and lasting partnerships with our customers and our suppliers, based on mutual trust and interest.

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> We are aware of the impact of our activities on the natural environment, including biodiversity, and are constantly striving to reduce it. > Finally, we are determined to be a genuinely good corporate citizen, making a positive contribution in the countries and communities in which we operate and in particular by fostering science, support for the vulnerable, and education.

2007 HIGHLIGHTS

> Appointment of a Director of Ethics, reporting directly to the Chief Executive Officer of the group. New edition of the Code of Business Ethics. > Creation of the L’Oréal Corporate Foundation. > Extension of the Unesco-L’Oréal “For Women in Science” national fellowship programme to 35 countries. > Active participation of L’Oréal in working groups on climate change, membership of the Global Business Leadership Platform on Climate Change of the United Nations Global Compact.

> Leadership of the CSR Europe Diversity Laboratory. > Signing of the Responsible Communication Charter drawn up by the French advertisers’ association (UDA). > Internal communication on sustainable development: awareness raising days, module included in induction seminars, wide circulation of abridged report. > Strategic partnership with the Women’s Forum meeting in Deauville and co-initiation of the Sci Tech Girl project to raise young women’s awareness of scientific and technical professions.

COMMITMENT // SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

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On October 18th, 2007, L’Oréal launched its new Code of Business Ethics worldwide, with each employee receiving a copy.

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“We believe that our commitment to live up to these powerful values, and to demonstrate our high ethical standards in all that we do will ensure more than ever that L’Oréal is seen as an organisation which inspires trust and respect.” -ˆÀʈ˜`Ã>ÞÊ"Üi˜‡œ˜iÃÊ>˜`Êi>˜‡*>ՏÊ
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CODE OF BUSINESS ETHICS A new edition The new Code of Business Ethics enables L’Oréal employees to anticipate and respond to the constantly changing expectations of stakeholders. Issues such as competition law, fight against corruption, responsible marketing, diversity and privacy are considered from a decidedly practical and educational viewpoint. To ensure it can be used by everyone, the Code of Business Ethics has been translated into 43 languages.

15

16

“Discovering and promoting talent. Supporting the efforts of those who stand up to their fate. Reaching out a helping hand to those made vulnerable by life. These are our Foundation’s ambitions.” Béatrice Dautresme

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BIRTH OF THE L’ORÉAL FOUNDATION

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/…iÊVÀi>̈œ˜ÊœvÊ̅iʜ՘`>̈œ˜Ê“i>˜ÃÊ̅>ÌÊi݈Ã̈˜}ÊVœÀiÊ«Àœ}À>““iÃÊÃÕV…Ê>ÃʺœÀÊ7œ“i˜Êˆ˜Ê-Vˆi˜Vi»Ê>˜`ʺ>ˆÀ`ÀiÃÃiÀÃÊ >}>ˆ˜ÃÌÊ
 -»ÊV>˜ÊLiÊiÝÌi˜`i`Ê>˜`ʓ>`iÊ«iÀ“>˜i˜ÌÊ­ÃiiÊ LœÝiî° ÕÌʈÌÊ>ÃœÊœ«i˜ÃÊÕ«Ê̅iÊ«œÃÈLˆˆÌÞʜvʈ˜ˆÌˆ>̈˜}ʘiÜÊ«ÀœiVÌÃ]Ê «>À̈VՏ>ÀÞʈ˜ÊÃVˆi˜ÌˆvˆVÊi`ÕV>̈œ˜Ê>˜`ÊÃÕ««œÀÌÊvœÀÊ̅iÊÛՏ˜iÀ>LiÊ«iœ«i° ˜ÊÀ>˜Vi]ÊvœÀÊiÝ>“«i]Ê̅iʜ՘`>̈œ˜ÊˆÃÊ«>À̘iÀˆ˜}Ê̅iÊÃ>“ÕÜVˆ>ÊvœÀʈÌÃÊ«ˆœÌÊ«ÀœiVÌÊLa Maison des Femmes]Ê>ÊÅiÌiÀÊ Ü…iÀiÊ«>À̈VՏ>ÀÞÊÛՏ˜iÀ>LiÊܜ“i˜ÊV>˜ÊÀiLՈ`Ê̅iˆÀʏˆÛiÃ°Ê ˜Ê̅iÊvˆi`ʜvÊÃVˆi˜ÌˆvˆVÊi`ÕV>̈œ˜]ʈÌʈÃÊ>ÃœÊ«>À̘iÀˆ˜}Ê̅iÊ ˆÌjÊ `iÃÊÃVˆi˜ViÃÊiÌÊ`iʏ½ˆ˜`ÕÃÌÀˆiʈ˜Ê*>ÀˆÃʜ˜Ê>Ê«Àœ}À>““iÊ՘`iÀÊ Ü…ˆV…Ê՘ˆÛiÀÈÌއiÛiÊÃÌÕ`i˜ÌÃÊ«ÀœÛˆ`iÊi`ÕV>̈œ˜>ÊÃÕ««œÀÌÊ ÌœÊޜ՘}Ê«iœ«iÊvÀœ“Ê՘`iÀ«ÀˆÛˆi}i`Ê>Ài>ðÊ

“FOR WOMEN IN SCIENCE” National fellowships set up in 16 new countries The “For Women in Science” programme, created in partnership with Unesco, highlights the scientific excellence of women, and encourages new talents. Each year, the L’Oréal-Unesco awards are made to five eminent women researchers, with each scientist receiving $100,000. Up to now, 47 major scientists have received this distinction, and become role models for the younger generation. Fellowships to encourage scientific careers form another part of the “For Women in Science” programme. /…iÊvˆv̅ʺœÀÊ7œ“i˜Êˆ˜Ê-Vˆi˜Vi»Ê ˜>̈œ˜>ÊviœÜň«Ê«Àœ}À>““iʈ˜Ê˜`ˆ>°

Each year the international Unesco-L’Oréal fellowships enable 15 post-doctorate students to continue their research in the best laboratories in the world. To date, 105 young scientists were awarded fellowships. The national fellowship programmes, set up in 2001 by L’Oréal subsidiaries to enable women students to continue their scientific studies, have now been extended to 35 countries and 340 doctorate students have benefited from the scheme. In 2007, sixteen new countries joined the programme, including France, Germany and Russia.

COMMITMENT // SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

“HAIRDRESSERS AGAINST AIDS” Programme launched in 12 new countries Set in motion in South Africa, the preventative education initiative “Hairdressers against AIDS” was launched in 2007 in 12 new countries, including India, Germany, Argentina, Canada, Mexico and Russia. It makes use of the network of L’Oréal partner hairdressers to raise public awareness of the risks of the disease, and inform customers of ways of protecting themselves. A specific AIDS training module is taught by more than 3,000 instructors worldwide, through hairdresser training academies, hair salons, and professional conferences. "˜Ê iVi“LiÀÊ£ÃÌ]ÊÓääÇ]Ê7œÀ`Ê
 -Ê >Þ]Ê “œÀiÊ̅>˜Ê{ääÊ iˆˆ˜}ʅ>ˆÀ`ÀiÃÃiÀÃÊ̜œŽÊ«>ÀÌʈ˜Ê The Great AIDS Walk ˆ˜Ê …ˆ˜>°

To mark World AIDS Day on December 1st, 2007, 2,500 hairdressers took part in events in France, 550 salons in Germany relayed the programme’s prevention messages, and more than 400 Beijing hairdressers took part in The Great AIDS Walk in China.

SAFETY, HEALTH AND ENVIRONMENT INDICATORS

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2.55 L’Oréal has taken several “green energy” initiatives, for example at its plant at Burgos in Spain, where photovoltaic panels have been installed.

2005

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2007

> Number of accidents resulting in sick leave per million hours worked for L’Oréal personnel (group factories and distribution centres)

22.4

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22.5

2003

20.0

19.5

18.1

17.1

2004

2005

2006

2007

>CO2 emissions in grams per finished products equivalent (group factories and distribution centres)

2% Destruction

3% Landfill

23% Energy recovery from incineration

35% Recycling

> Waste reuse and recycling in 2007 (group factories and distribution centres)

37% Reuse

17

18

-
, " ,Ê ",
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CLOSER TO THE SHAREHOLDER WITH MORE ACCESSIBLE INFORMATION L’Oréal has introduced a wide range of initiatives to supplement the financial and strategic information provided to shareholders and investors: shareholder meetings in regional capitals, participation in the 2007 Actionaria shareholder fair in Paris, factory and laboratory visits, wider circulation of the Letter to Shareholders and the Shareholder Digest, meetings of the rolling shareholder panel to prepare for the Annual General Meeting and discuss the Annual Report, and meetings with analysts and institutional investors from all over the world.

More than 1,500 shareholders visited the L’Oréal stand at Actionaria.

MEETING SHAREHOLDERS œÀÊ̅iÊvœÕÀ̅ÊÞi>ÀÊÀ՘˜ˆ˜}]ʽ"Àj>ÊÜiVœ“i`ʓœÀiÊ̅>˜Ê £]xääÊÅ>Ài…œ`iÀÃʜ˜ÊˆÌÃÊÃÌ>˜`Ê>ÌÊ̅iÊ
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ON-LINE FINANCIAL INFORMATION /œÊÃÕ««i“i˜ÌÊ̅iʈ˜vœÀ“>̈œ˜Ê>Û>ˆ>Liʜ˜‡ˆ˜i]ʽ"Àj>Ê…>ÃÊ Vœ“«iÌiÞÊÀiÛ>“«i`Ê̅iÊ`iÈ}˜Ê>˜`ÊÕÃiÀʈ˜ÌiÀv>ViʜvʈÌÃÊ ÜiLÈÌiÊÜÜÜ°œÀi>‡vˆ˜>˜Vi°Vœ“Ê̜ʓ>ŽiÊLÀœÜȘ}Êi>ÈiÀÊ>˜`Ê «ÀœÛˆ`iÊÀˆV…iÀÊVœ˜Ìi˜Ì]ʈ˜VÕ`ˆ˜}Ê>ʘiÜʺÀiµÕi˜ÌÞÊ
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˜˜Õ>Êi˜iÀ>Êiï˜}Ê sent directly to the shareholder. (1) Cliff: French Association of Investor Relations. (2) FFCI: French Investment Club Federation. ­Î®Ê-ÕLiVÌÊ̜Ê̅iÊ>««ÀœÛ>ÊœvÊ̅iÊ
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«ÀˆÊÓÓnd, 2008.

19

L’ORÉAL FINANCIAL HIGHLIGHTS

DOUBLE PERFORMANCE FOR SUSTAINED GROWTH L’Oréal has always pursued a double objective: to increase both its sales and its results.

+16.9% +8.1% Sales(1)

+11.3%

Operating profit

+13.0%

Net earnings per share(2)

(1) Based on published figures. (2) Diluted net earnings per share based on net profit excluding non-recurrent items after minority interests. (3) Dividend to be proposed to the Annual General Meeting of Shareholders on April 22nd, 2008.

Dividend(3)

20

GROUP PERFORMANCE OVER FOUR YEARS

CONSOLIDATED SALES

OPERATING PROFIT

(E millions)

(E millions)

17,063 13,641

14,533

15,790

+8.1%

2,266

2,089

2004

2005

2006

2007

2,541

2,827

+11.3%

2004

2005

2006

2007

PRE-TAX PROFIT EXCLUDING NON-RECURRENT ITEMS(1)

NET PROFIT EXCLUDING NON-RECURRENT ITEMS AFTER MINORITY INTERESTS(1)

(E millions)

(E millions)

2,370

2,187

2,638

2,896

+9.8%

1,639

1,486

1,833

2,039

+11.2%

2004(2)

2005

2006

2007

2004(2)

2005

2006

2007

BREAKDOWN BY BRANCH IN 2007(3) CONSOLIDATED SALES Emillions

Cosmetics The Body Shop (4)

Dermatology

OPERATING PROFIT

Growth Like-for-like Published figures

Emillions

Weight

Growth based on published sales

% of sales

15,908

+8.0%

+6.0%

2,701

95.5%

+11.5%

17.0%

787

+5.7%

+80.9%

64

2.3%

+9.3%

8.1%

368

+12.7%

+6.9%

62

2.2%

+4.3%

16.9%

(1) Non-recurrent items include capital gains and losses on long-term asset disposals, depreciation of long-term assets and restructuring costs. (2) For comparison purpose, 2004 pro forma profit and loss accounts are restated in order to reflect the deconsolidation of Sanofi-Synthélabo at January 1st, 2004: - by replacing the share in net income of Sanofi-Synthélabo, %293.5 million, by the received dividends, %145.9 million, - and by neutralizing the net of tax dilution capital gain relating to these shares, %2,854.5 million before any deduction and %471.1 million of taxes. (3) The group business is composed of the cosmetics and the dermatology branches and of The Body Shop. (4) Group share, i.e. 50%.

L’ORÉAL FINANCIAL HIGHLIGHTS

2007 CONSOLIDATED SALES OF THE COSMETICS BRANCH 7.8% Active Cosmetics

15.0% Professional Products

BY DIVISION E millions

Professional Products

2,392

Like-for-like Growth based growth on published figures

+7.5%

Consumer Products

8,280

+7.9%

+4.8%

3,928

+8.4%

+4.1%

Active Cosmetics

1,248

+10.8%

+10.7%

15,908

+8.0%

+6.0%

BY BUSINESS SEGMENT E millions

Skincare

4,162

Like-for-like Growth based growth on published figures

+10.8%

+8.1%

Haircare

3,790

+5.7%

+4.3%

Make-up

3,240

+8.0%

+3.7%

Hair colourants

2,493

+5.2%

+ 2.5%

Perfumes

1,715

+12.5%

+ 9.1%

509

+3.7%

+26.5%

15,908

+8.0%

+6.0%

Other Total cosmetics sales

52.0% Consumer Products

+12.5%

Luxury Products

Total cosmetics sales(1)

24.7% Luxury Products

Divisions weight

10.8% Perfumes

3.2% Other

26.2% Skincare

15.7% Hair colourants

23.8% Haircare 20.4% Make-up Business segments weight

BY GEOGRAPHIC ZONE E millions

Like-for-like Growth based growth on published figures

Western Europe

7,250

+4.1%

North America

4,004

+4.8%

+1.3%

Rest of the World, of which: 4,654

+17.9%

+14.5%

29.2% Rest of the World 45.6% Western Europe

+3.7%

Asia

1,580

+14.3%

+7.0%

Latin America

1,124

+14.6%

+10.1%

Eastern Europe

1,142

+29.4%

+34.4%

Other countries

808

+15.4%

+12.5%

Total cosmetics sales

15,908

+8.0%

+6.0%

25.2% North America Geographic zones weight

(1) The difference between the total cosmetics sales and the combined total of the four divisions, (`60 million), consists mainly of mail order sales.

21

22

2007 OPERATING PROFIT OF THE COSMETICS BRANCH

BY DIVISION Professional Products Consumer Products Luxury Products Active Cosmetics Cosmetics divisions total(1) Non-allocated(2) Cosmetics branch total

2006 % of sales

% millions

% of sales

443

20.8%

502

21.0%

1,421

18.0%

1,582

19.1%

776

20.6%

844

21.5%

221

19.6%

256

20.5%

2,860

19.1%

3,180

20.0%

– 437

–2.9%

– 479

–3.0%

2,423

16.1%

2,701

17.0%

% millions

% of sales

% millions

% of sales

1,527

21.8%

1,633

22.5%

744

18.8%

773

19.3%

BY GEOGRAPHIC ZONE Western Europe North America Rest of the World Total for geographic zones Non-allocated(2) Cosmetics branch total

2007

% millions

2006

2007

589

14.5%

774

16.6%

2,860

19.1%

3,180

20.0%

– 437

–2.9%

– 479

–3.0%

2,423

16.1%

2,701

17.0%

2007 FINANCIAL RATIOS 2006

2007

=

16.1%

16.6%

=

12.5%

13.9%

Net gearing(3)

=

22.8%

17.4%

Cash flow/I flow/Investments

=

3.2 x

3.5 x

(% of sales)

Operating profit/S profit/Sales (% of shareholders’ equity)

Net profit excluding non-recurrent items after minority interests/O interests/Opening shareholders’ equity (% of shareholders’ equity)

(1) Includes the operating profit of the “cosmetics miscellaneous” activity which consists mainly of mail order sales. (2) “Non-allocated” items consist of the expenses of functional divisions and of fundamental research, and of stock option costs, which are not allocated to the cosmetics divisions. This item also includes activities not forming part of the group’s core businesses, such as insurance, reinsurance and banking. Current and non-current debt – Cash and cash equivalents (3) Net gearing = Shareholders’ equity after minority interests

L’ORÉAL FINANCIAL HIGHLIGHTS

2007 BALANCE SHEET AND CASH FLOWS

BALANCE SHEET (E millions)

ASSETS

LIABILITIES

24,783

24,783 23,200

23,200

Non-current assets

Current assets Cash and cash equivalents

19,155

16,979

4,847

5,134

781

1,087

2007

2006

14,624

13,622

Shareholders’ equity

1,505

1,395

Non-current liabilities

4,110

3,460

Debts (current and non-current)

4,544

4,723

Current liabilities

2007

2006

SOURCES AND APPLICATIONS OF FUNDS (E millions)

SOURCES Net income

APPLICATIONS

2,658 776 Investment in tangible and intangible assets

Depreciation and provisions Capital gains or losses on disposals of assets, changes in deferred taxes and other

598

Operating cash flow

76

Change in working capital requirement

–536

Cash flow 2,720

(1) +12.9% growth compared with December 31st, 2006.

1,868

+12.9%(1)

23

24

L’ORÉAL OVER 10 YEARS

1997

1998

1998(1)

1999(1)(2)

2000(2)

2001

10,537

11,498

9,588

10,751

12,671

13,740

Pre-tax profit of consolidated companies

1,183

1,339

979

1,125

1,322

1,502

As a percentage of consolidated sales

11.2

11.6

10.2

10.5

10.4

10.9

Income tax

422

488

375

429

488

536

Net operational profit

722

807

722

833

1,033

1,236

FRENCH ACCOUNTING STANDARDS (E millions)

Results of operations Consolidated sales

As a percentage of consolidated sales

6.9

7.0

7.5

7.7

8.2

9.0

Net operational profit after minority interests

641

719

719

827

1,028

1,229

Total dividend

165

191

191

230

297

365

Fixed assets

5,346

5,590

5,299

5,918

7,605

8,140

Current assets

4,512

4,937

4,229

5,139

6,256

6,724

Balance sheet

Of which cash and marketable securities

825

903

762

1,080

1,588

1,954

Shareholders’ equity(3)

5,015

5,428

5,123

5,470

6,179

7,210

Borrowing and debts

1,767

1,748

1,718

1,914

3,424

2,939

Net operational profit after minority interests per share(7)

0.95

1.06

1.06

1.22

1.52

1.82

Net dividend8)(9)

0.24

0.28

0.28

0.34

0.44

0.54

Tax credit

0.12

0.14

0.14

0.17

0.22

0.27

35.90

61.59

61.59

79.65

91.30

80.90

676,062,160

676,062,160

676,062,160

676,062,160

676,062,160

676,062,160

Per share data (E) qʘœÌiÃÊ{Ê̜ÊÈ

st(8)

Share price at December 31

Weighted average number of shares outstanding

FRENCH ACCOUNTING STANDARDS (1) For purposes of comparability, the figures include: - in 1998, the pro forma impact of the change in the consolidation method for Synthélabo, following its merger with Sanofi in May 1999, - the impact in 1998 and 1999 of the application of CRC Regulation no.99-02 from January 1st, 2000 onwards. This involves the inclusion of all deferred tax liabilities, evaluated using the balance sheet approach and the extended concept, the activation of financial leasing contracts considered to be material, and the reclassification of profit sharing under “Personal costs”. (2) The figures for 1999 and 2000 also include the impact on the balance sheet of adopting the preferential method for the recording of employee retirement obligation and related benefits from January 1st, 2001 onwards. However, the new method had no material impact on the profit and loss account of the years concerned. (3) Plus minority interests. (4) Including investment certificates issued in 1986 and bonus share issues. Public Exchange Offers were made for investment certificates and voting right certificates on the date of the Annual General Meeting on May 25th, 1993 (see Commission des Opérations de Bourse information note of June 3rd, 1993). The certificates were reconstituted as shares following the Special General Meeting on March 29th, 1999 and the Extraordinary General Meeting on June 1st, 1999. (5) Figures restated to reflect the one-for-ten bonus share allocation decided by the Board of Directors as of May 23rd, 1996. (6) T Ten-for-one share split (Annual General Meeting of May 30th, 2000). (7) Net earnings per share are based on the weighted average number of shares outstanding in accordance with the accounting standards in force. In order to provide data that are genuinely recurrent, L’ L Oréal calculates and publishes net earnings per share based on Net operational profit after minority interests, before allowing for the provision for depreciation of treasury stock, capital gains and losses on fixed assets, restructuring costs, and the amortisation of goodwill. At December 31st, 2004, 8.5 million subscription options have been allocated to group executives, and could lead to the issue of the same number of shares. (8) The L’ L Oréal share has been listed in euros on the Paris Bourse since January 4th, 1999, where it was listed in 1963. (9) The dividend is fixed in euros since the Annual General Meeting of May 30th, 2000.

L’ORÉAL FINANCIAL HIGHLIGHTS

2002

2003

2004

IFRS

2004

2004(1)

2005

2006

2007

pro forma

(E millions)

Results of operations 14,288

14,029

14,534

1,698

1,870

2,063

11.9

13.3

14.2

580

629

696

1,464

1,661

1,659

10.2

11.8

11.4

1,456

1,653

1,656

433

494

554

8,130

8,136

11,534

6,843

6,876

6,645

Consolidated sales

13,641

13,641

14,533

15,790

17,063

Operating profit

2,089

2,089

2,266

2,541

2,827

As a percentage of consolidated sales

15.3

15.3

15.6

16.1

16.6

Pre-tax profit excluding non-recurrent items

2,334

2,187

2,370

2,638

2,896

–

1,486

1,639

1,833

2,039

554

554

659

739

843

15,734

15,734

18,686

19,155

16,979

4,075

4,075

4,537

4,847

5,134

Net profit excluding non-recurrent items after minority interests Total dividend Balance sheet

2,216

2,303

1,981

7,434

8,136

10,564

2,646

1,941

2,175

Non-current assets Current assets Cash and cash equivalents Shareholders’ equity(2) Net current and non-current debt Cash flow

576

576

663

781

1,087

11,825

11,825

14,657

14,624

13,622

1,568

1,568

2,217

3,329

2,373

1,923

1,923

2,130

2,410

2,720

–

2.29

2.60

2.98

3.36

0.82

0.82

1.00

1.18

1.38(5)

55.85

55.85

62.80

75.90

97.98

Per share data (E) 2.15

2.45

2.46

0.64

0.73

0.82

0.32

0.37

–

72.55

65.00

55.85

675,990,516

676,021,722

673,547,541

Diluted net profit excluding non-recurrent items after minority interests Net dividend(3)(4) st(3)

Share price at December 31

Diluted weighted average number of share outstanding

649,598,404 649,598,404 630,892,470 615,723,220 606,012,471

IFRS (1) For comparison purpose, pro forma profit and loss accounts are restated in order to reflect the deconsolidation of Sanofi-Synthélabo at January 1st, 2004: - by replacing the share in net income of Sanofi-Synthélabo, `293.5 million, by the received dividends, `149.5 million, - and by neutralizing the net of tax dilution capital gain relating to these shares, `2,854.5 million before any deduction and `471.1 million of taxes. (2) Plus minority interests. (3) The L’ L Oréal share has been listed in euros on the Paris Bourse since January 4th, 1999, where it was listed in 1963. The share capital is fixed at `123,595,122 at December 31st, 2007: the par value of one share is now `0.2. (4) The dividend is fixed in euros since the Annual General Meeting of May 30th, 2000. (5) Dividend proposed to the Annual General Meeting of April 22nd, 2008.

25

26

THE L’ORÉAL SHARE (at December 31 , 2007) st

Net earnings(1) per share

Dividend(2) per share

Share price

Market capitalisation(3)

E3.36

E1.38

E97.98

E60.55 billion

DIVIDEND PER SHARE (in euro)

BREAKDOWN OF SHARE OWNERSHIP (as at December 31st, 2007)

1.38(2)

1.18 1.00 0.64

0.73

³£n°x¯

2002

0.82

+16.9%

³£{°£¯

2003

³£Ó°Î¯

2004

³ÓÓ°ä¯

2005

21.7% International institutional investors

30.0% Mrs Bettencourt and her family

10.0% French institutional investors

³£n°ä¯

2007

2006

28.9% Nestlé

0.6% Employees

5.1% Individual shareholders 3.7% Treasury stock

Dividend distribution rate in 2002: 36.0% Dividend distribution rate in 2007: 41.1%(4)

INVESTMENT IN L’ORÉAL SHARES OVER 10 YEARS

OVER 20 YEARS

Initial capital multiplied by 3.19 in 10 years Total shareholder return: 11.26%

Initial capital multiplied by 35.3 in 20 years Total shareholder return: 19.00%

Purchase of 41 shares at E359.02(5) on December 31st, 1997: 14,719.82 euros

Purchase of 38 shares at E389.51(5) on December 31st, 1987: 14,801.38 euros

Valuation at December 31st, 2007 including reinvestment of dividends (479 shares at E97.98): 46,932.42 euros

Valuation at December 31st, 2007 including reinvestment of dividends (5,333 shares at E97.98): 522,527.34 euros

L’ORÉAL SHARE PRICE IN 2007 (in euro) 100.00
97.10

L’Oréal CAC 40 (reindexed on L’Oréal)

95.00


94.41


93.58


98.26
97.98


91.17

Change in L’Oréal share price in 2007


89.23

90.00


88.12


87.00
84.38

85.00


83.17
81.30

+29.09%


85.17


82.45

80.00

5,614 points


75.90

75.00

+1.31%

5,542 points

01 /0 1 01 /1 5 01 /2 9 02 /1 2 02 /2 6 03 /1 2 03 /2 6 04 /0 9 04 /2 3 05 /0 7 05 /2 1 06 /0 4 06 /1 8 07 /0 2 07 /1 6 07 /3 0 08 /1 3 08 /2 7 09 /1 0 09 /2 4 10 /0 8 10 /2 2 11 /0 5 11 /1 9 12 /0 3 12 /1 7 12 /3 1

70.00

(1) Diluted net earnings per share based on net profit excluding non-recurrent items after minority interests. (2) Dividend proposed to the Annual General Meeting of April 22nd, 2008. (3) On the numbers of shares at December 31st, 2007, i.e. 617,975,610 shares. (4) Based on the dividend proposed to the Annual General Meeting of April 22nd, 2008.

Change in CAC40 index in 2007

27

TRENDS

COSMETICS MARKET A NEW WORLD BECKONS

28

STRONG AND SUSTAINABLE GROWTH IN

WORLDWIDE COSMETICS MARKET(1) Average annual growth rate, excluding currency fluctuations:

+4.6% E58.2bn +5.3% +3.0% +5.0% +4.4%

+5.4%

+5.5%

+5.3%

+4.9%

+4.3%

+4.6%

+4.0%

+3.4%

+3.8%

E108.8bn +4.9% +5.0%

A MARKET WORTH ALMOST 110 BILLION EUROS… In 2007, the worldwide cosmetics market totalled `£än°nÊLˆˆœ˜(1), representing some `£ÇÊ«iÀÊ«iÀܘ° … GROWING STRONGLY AND STEADILY It is growing strongly and extremely steadily in a very long term perspective, with an average annual growth À>Ìiʜvʳ{°È¯ÊiÝVÕ`ˆ˜}ÊVÕÀÀi˜VÞÊvÕVÌÕ>̈œ˜ÃʜÛiÀÊ̅iʏ>ÃÌÊ£xÊÞi>Àð

1993

2000

2007

> Worldwide cosmetics market 1993-2007 (E billions) (1) Excluding soap, toothpaste and razors. Provisional estimates for 2007. Source: L’Oréal estimates, manufacturer selling prices.

DYNAMICS OF THE FIVE MAIN BUSINESS SEGMENTS

SKINCARE, NUMBER 1 CATEGORY IN THE MARKET

/…iÊVœÃ“ïVÃʓ>ÀŽiÌʈÃÊ`ˆÛˆ`i`ʈ˜ÌœÊvˆÛiʓ>ˆ˜ÊLÕȘiÃÃÊ segments: skincare, haircare, make-up, fragrances and toiiÌÀˆiðÊ
Ãʓ>˜ÞÊVœ˜ÃՓiÀÃʘii`ÃÊ>˜`Ê>ëˆÀ>̈œ˜ÃÊ>ÊœÛiÀÊ Ì…iÊܜÀ`ʅ>ÛiʘœÌÊÞiÌÊLii˜Ê“iÌ]Ê>Ê«Àœ`ÕVÌÊV>Ìi}œÀˆiÃÊ>ÀiÊ }ÀœÜˆ˜}]Ê>˜`ʜvviÀÊÃÕLÃÌ>˜Ìˆ>Ê`iÛiœ«“i˜ÌÊ«œÌi˜Ìˆ>°

/…iʘՓLiÀʜ˜iÊV>Ìi}œÀÞÊLÞÊÈâi]ÊΈ˜V>ÀiʘœÜÊ Ài«ÀiÃi˜ÌÃÊ>LœÕÌʜ˜i‡Ì…ˆÀ`ʜvÊ̅iʓ>ÀŽiÌ°

32% Skincare

12% Toiletries

27% Haircare

17% Make-up 12% Fragrances

> Weight of market by product category(2) (2) Excluding soap, toothpaste and razors. Source: L’Oréal estimates.

... AND THE MOST DYNA "ÛiÀÊ̅iʏ>ÃÌÊvˆÛiÊÞi>ÀÃ]Êà «Àœ`ÕVÌÃÊ­v>Vˆ>ÊΈ˜V>Ài]ÊLœ sun protection) have achiev highest growth rate of t “>ˆ˜ÊVœÃ“ïVÃÊV>Ìi}œÀˆiÃ

MARKET TRENDS

29

THE WORLDWIDE COSMETICS MARKET

A MARKET FOR INNOVATION DRIVEN BY MAJOR TECHNOLOGICAL BREAKTHROUGHS i>ÕÌÞʈÃÊ>ÊÌiV…˜œœ}އL>Ãi`ÊLÕȘiÃÃÊ>˜`ʈÌÃÊ market is focused on innovation, as consumers are …ˆ}…ÞÊÃi˜ÃˆÌˆÛiÊ̜ʫÀœ}ÀiÃÃÊ>˜`Ê«iÀvœÀ“>˜Vi° >œÀÊÌiV…˜œœ}ˆV>ÊLÀi>ŽÌ…ÀœÕ}…ÃÊ«>ÞÊ>ʎiÞÊ Àœiʈ˜Ê̅iʓ>ÀŽi̽ÃÊ}ÀœÜ̅]Ê«>À̈VՏ>ÀÞʈ˜Ê̅iÊ ÃŽˆ˜V>ÀiÊLÕȘiÃð Decades of research thus led to the discovery œvÊ̅iʘi}>̈ÛiÊivviVÌÃʜvÊ16
ʜ˜ÊΈ˜Ê>}iˆ˜}]Ê and to the major discovery of the role played LÞÊ>˜Ìˆ‡œÝÞ`>˜ÌðÊ

MEN

7 MILLION NEW EUROPEAN CONSUMERS IN 4 YEARS Men are gradually starting to consume facial skincare products, even though they still only represent a small share of ̅iʓ>ÀŽiÌ° In 2005, 27 million men in Europe used a v>Vˆ>ÊΈ˜V>ÀiÊ«Àœ`ÕVÌ]Ê>ÊÎä¯Êˆ˜VÀi>Ãiʈ˜ {ÊÞi>Àð

SENIORS OPPORTUNITY NUMBER 1 IN DEVELOPED COUNTRIES With the ageing of the population in the most developed countries, seniors represent a major opportunity for developing the skincare LÕȘiÃðÊ-i˜ˆœÀÃÊ>ÀiÊ>Ü>ÞÃʏœœŽˆ˜}Ê for increasingly active and technologically advanced skincare products, and naturally turn to the highiÃÌÊ«Ài“ˆÕ“Ê«Àœ`ÕVÌðÊ/…ˆÃÊÕ«Ü>À`Ê ÌÀi˜`ʈ˜Ê“>ÀŽiÌÊÛ>ÕiʈÃÊ>ÊÃÕLÃÌ>˜Ìˆ>Ê source of growth and an opportu˜ˆÌÞÊvœÀʽ"Àj>Ê܈̅ʈÌÃÊVÕÌ̈˜}Êi`}iÊ ÀiÃi>ÀV…°

26.9 23.7 20.8

2001

2003

2005

> Millions of men using a facial skincare product in Europe Source: L’Oréal surveys in five European countries (France, Germany, United Kingdom, Italy, Spain).

SUSTAINABLE GROWTH

Average annual spending (E)

20-29 years: E26.1

2.4

30-39 years: E32.6

3.0

40-49 years: E59.3

4.1

50-59 years: E70.8

4.4

Number of products purchased

> Skincare creams: average annual spending and number of products purchased by age bracket per year Source : TNS Worldpanel France.

The cosmetics market in the developed VœÕ˜ÌÀˆiÃÊŜՏ`Ê>V…ˆiÛiÊÃÕÃÌ>ˆ˜>LiÊ }ÀœÜ̅°ÊˆÀÃ̏ÞÊLiV>ÕÃiʜvÊ̅iÊ>ÀÀˆÛ>ÊœvÊ ˜iÜÊVœ˜ÃՓiÀÃ]Ê>˜`ÊÃiVœ˜`ÞÊLiV>ÕÃiÊ penetration rates in some markets, even ˆ˜Ê7iÃÌiÀ˜Ê ÕÀœ«iÊ>˜`Ê œÀ̅Ê
“iÀˆV>]Ê Ã̈ÊœvviÀÊÛiÀÞÊÈ}˜ˆvˆV>˜ÌÊ}ÀœÜ̅ʫÀœÃ«iVÌð

30

DECISIVE

NEW MARKETS BECOME THE NUMBER ONE CONSUMPTION ZONE IN THE WORLD THEY REPRESENT ONE THIRD OF THE MARKET… ˜ÊÓääÇ]Ê̅iÊVœÕ˜ÌÀˆiÃʈ˜Ê̅iÊ,iÃÌʜvÊ̅iÊ7œÀ`Ê✘i]ÊiÝVÕ`ˆ˜}Ê >«>˜]ÊLiV>“iÊ̅iʘՓLiÀʜ˜iʓ>ÀŽiÌ]ʜ˜Ê>Ê«>ÀÊ܈̅Ê7iÃÌiÀ˜Ê

ÕÀœ«i]Ê܅ˆV…Ê̅iÞÊŜՏ`ʜÛiÀÌ>Žiʈ˜ÊÓään°

33%

33%

Western Europe

CONSUMPTION 14 TIMES LOWER THAN IN THE MOST DEVELOPED MARKETS

,iÃÌʜvÊ̅iÊ7œÀ`Ê excluding Japan

13% Japan

21% North America

> Weight of cosmetics market by geographic zone(2)

Consumption of cosmetics products in the new markets is still on average 14 times lower than in the most developed markets (Japan, Western

ÕÀœ«iÊ>˜`Ê œÀ̅Ê
“iÀˆV>®°

… BUT THEY ARE THE GROWTH DRIVER ˜ÊÓääÇ]Ê̅iÊVœÕ˜ÌÀˆiÃʜvÊ̅iÊ,iÃÌʜvÊ̅iÊ7œÀ`Ê✘iÊVœ˜ÌÀˆLÕÌi`ÊܓiÊÌܜ‡Ì…ˆÀ`ÃÊ­Èί®ÊœvÊ̅iÊ}ÀœÜ̅ʜvÊ̅iÊܜÀ`Ê VœÃ“ïVÃʓ>ÀŽiÌ°Ê/…ˆÃÊVœ˜ÌÀˆLṎœ˜Ê…>ÃÊ}ÀœÜ˜ÊÃÕLÃÌ>˜Ìˆ>ÞÊ œÛiÀÊ̅iʏ>ÃÌÊ£äÊÞi>ÀðÊ/…iÊVœ˜ÃÌ>˜Ìʈ˜VÀi>Ãiʈ˜Ê̅iÊÜiˆ}…ÌʜvÊ these countries will continue to generate a leverage effect, >VViiÀ>̈˜}ÊܜÀ`܈`iʓ>ÀŽiÌÊ}ÀœÜ̅°

107.6 90.1 71.0 70%

63%

Contribution cosmetics market grow

33%

Weight in worldwide market

60% 50% 40%

6.4

30% 23.90%

20% 21.90%

Japan

Western Europe

North America

Rest of the World

> Cosmetics consumption per capita(1) (E) (1) Excluding soap, toothpaste and razors. 2007 provisional estimates. Source: L’Oréal estimates of manufacturer selling prices.

10% 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

> Weight and contribution of Rest of the World zone in cosmetics market growth(2) (2) Excluding soap, toothpaste and razors. 2007 provisional estimates. Source: L’Oréal estimates.

MARKET TRENDS

31

CONTRIBUTION OF NEW MARKETS

INCREASING INCOME ACCELERATES ACCESS TO COSMETICS In these new markets, the driving force for consumption is the strong ˆ˜VÀi>Ãiʈ˜Êˆ˜Vœ“i°Ê/…ˆÃʘiÜÊÌÀi˜`ÊÀi«ÀiÃi˜ÌÃÊ>˜ÊœÕÌÃÌ>˜`ˆ˜}ʜ««œÀÌ՘ˆÌÞÊvœÀÊ>ÊVœ˜ÃՓiÀÊ«Àœ`ÕVÌʈ˜`ÕÃÌÀˆiÃ]Ê>˜`ÊVœÃ“ïVÃʈ˜Ê«>À̈VՏ>À° 60 MILLION NEW CONSUMERS A YEAR

>V…ÊÞi>À]ÊܓiÊÈäʓˆˆœ˜Ê˜iÜÊVœ˜ÃՓiÀÃÊ>ÌÌ>ˆ˜Ê>˜Êˆ˜Vœ“iʏiÛiÊ ܅ˆV…Ê“i>˜ÃÊ̅iÞÊV>˜Ê>vvœÀ`Ê̜ÊLÕÞʓœÀiÊÜ«…ˆÃ̈V>Ìi`ÊVœÃ“ïVÃÊ «Àœ`ÕVÌð

1,670

High-income

1,290

Middle-income(1

×2.5

680 ×2.6

490 2000

/…ˆÃÊÀi`ˆÃÌÀˆLṎœ˜ÊœvÊÜi>Ì…ÊLi˜ivˆÌÃÊLœÌ…Ê̅iʓˆ``i‡ˆ˜Vœ“iÊ>˜`Ê …ˆ}…‡ˆ˜Vœ“iÊV>Ìi}œÀˆiÃ]Ê܅œÃiʘՓLiÀÃÊ>ÀiÊÃiÌÊ̜ʈ˜VÀi>ÃiÊLÞÊ>Êv>V̜ÀʜvÊÓ°x]Ê>VVœÀ`ˆ˜}Ê̜Ê7œÀ`Ê >˜ŽÊÃÌ>̈Ã̈VðÊ/…ˆÃÊ}ÀœÜ̅ʈ˜Êˆ˜Vœ“iÊ …œ`ÃʜÕÌÊ}ÀœÜ̅ʫÀœÃ«iVÌÃʘœÌʜ˜ÞÊvœÀʓ>ÃǓ>ÀŽiÌÊLÕÌÊ>ÃœÊvœÀÊ̅iÊ “œÃÌÊiÝVÕÈÛiÊLÀ>˜`ð

2030

> Growth in world population by income bracket (millions of people) Source: Calculated on data from the World Bank’s Global Economic Prospects 2007 report. (1) Middle-income: per capita income between 4,000 and 17,000 U.S. dollars P.P.P.

POTENTIAL OF NEW MARKETS In 20 years, the world of cosmetics has under}œ˜iÊ>Ê«ÀœvœÕ˜`ÊÕ«…i>Û>°Ê-iÛiÀ>Êi“iÀ}ˆ˜}Ê countries are now amongst the largest markets ˆ˜Ê̅iÊܜÀ`\Ê̅iÊ , ÊVœÕ˜ÌÀˆiÃÊ­ À>∏]Ê,ÕÃÈ>]ʘ`ˆ>]Êi݈VœÊ>˜`Ê …ˆ˜>®°Ê ÕÌʽ"Àj>Ê…>ÃÊ >ÃœÊˆ`i˜Ìˆvˆi`Ê£ÓÊVœÕ˜ÌÀˆiÃÊ܅ˆV…ÊVœ“Lˆ˜iÊÃÕLstantial market potential and high growth rates, >˜`Ê̅iÞʈ˜ÊÌÕÀ˜Ê܈Ê>VÌÊ>ÃÊ}ÀœÜ̅ÊÀi>ÞðÊ/…iÊ , ÊVœÕ˜ÌÀˆiÃÊ>˜`Ê̅iʺ iÝÌʣӻʭÃiiÊÌ>LiÊ œ««œÃˆÌi®Ê̜}i̅iÀÊVœ˜ÌÀˆLÕÌi`ʓœÀiÊ̅>˜Ê…>vʜvÊ the growth of the worldwide cosmetics market ­xӰί®Êˆ˜ÊÓääÇ°

> 52.3%: Contribution of BRIMC countries and the “Next 12” countries to worldwide cosmetics market growth(2) BRIMC Brazil Russia India Mexico China

“NEXT 12”: 12 HIGH GROWTH POTENTIAL COUNTRIES Argentina Colombia Czech Republic Dubai Indonesia Philippines

Poland South Africa Thailand Turkey Ukraine Vietnam

(2) Excluding soap, toothpaste and razors. 2007 provisional estimates.

MEETING ALL BEAUTY ASPIRATIONS ÀœÜ̅ʈ˜ÊVœ˜ÃՓ«Ìˆœ˜ÊˆÃÊ՘`iÀ«ˆ˜˜i`ÊLÞÊÃÌÀœ˜}ʏœV>ÊLi>ÕÌÞÊÌÀ>`ˆÌˆœ˜Ã°Ê½"Àj>Ê,iÃi>ÀV…ÊiÝ«œÀiÃÊ̅i“ʈ˜Ê>Ê̅iˆÀÊ`ˆÛiÀÈÌÞÊ ÌœÊëœÌÊiÝ«iVÌ>̈œ˜ÃÊ>˜`ʓiiÌÊ>ÊŽˆ˜`ÃʜvÊLi>ÕÌÞÊ>ëˆÀ>̈œ˜Ã°Ê i>ÕÌÞÊVÕÃ̜“ÃÊvˆÀ“ÞÊÀœœÌi`ʈ˜Ê`ˆvviÀi˜ÌÊVˆÛˆˆÃ>̈œ˜ÃÊi݈ÃÌÊ >ÊœÛiÀÊ̅iÊܜÀ`°Ê/…iÞÊvœÀ“Ê̅iʏˆÛˆ˜}ÊÌÀ>`ˆÌˆœ˜Êˆ˜Ê܅ˆV…ʽ"Àj>ÊV>˜Êˆ˜˜œÛ>ÌiÊ>˜`ʜvviÀÊ«Àœ`ÕVÌÃÊ>`>«Ìi`Ê̜ʏœV>ÊVœÃ“ïVÊ VՏÌÕÀiðÊœÀÊÃiÛiÀ>Ê`iV>`iÃ]ÊÀiÃi>ÀV…ÊiÛ>Õ>̈œ˜ÊVi˜ÌÀiÃÊL>Ãi`ʈ˜Ê̅iÊvœÕÀÊVœÀ˜iÀÃʜvÊ̅iÊi>À̅ʅ>ÛiÊLii˜ÊVœiV̈˜}Ê`>Ì>Ê >LœÕÌÊVՏÌÕÀ>ÊVœ˜ÌiÝÌÃ]Ê>˜`ÊiÛiÀÞ`>ÞʅÞ}ˆi˜iÊ>˜`ÊLi>ÕÌÞÊÀˆÌÕ>Ã]Ê«ÀœÛˆ`ˆ˜}Ê>˜Êˆ˜Ãˆ}…Ìʈ˜ÌœÊ̅iÊ`ˆvviÀi˜ÌʏœV>ÊÀi>ˆÌˆiÃʜvÊ VœÃ“ïVÃÊVՏÌÕÀi°Ê ̅˜œ}À>«…ÞÊ>˜`Êi̅œœ}ÞÊ̅ÕÃÊi˜>LiÊ̅iÊVœ˜ÃÌÀÕV̈œ˜ÊœvÊ>ÊÛiÀˆÌ>LiÊÃVˆi˜ViʜvÊ}iœVœÃ“ïVÃ°Ê /…ˆÃʎ˜œÜi`}iÊ>˜`Ê՘`iÀÃÌ>˜`ˆ˜}ʜvÊ`ˆÛiÀÈÌÞʓi>˜Ê̅>ÌÊÀiÃi>ÀV…ʈÃÊܜÀŽˆ˜}ÊvœÀÊ̅iÊLi˜ivˆÌʜvÊ>ÊvœÀ“ÃʜvÊLi>ÕÌÞ]Ê Ü…ˆiÊ«ÀœÛˆ`ˆ˜}Ê>ÊVœ˜ÃÌ>˜ÌÊvœÜʜvʈ˜˜œÛ>̈œ˜Ã°

32


Ê*
/-Ê/"Ê
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COMPLEMENTARY BRANDS All different and perfectly complementary in terms of cultural origin, positioning and price, the brands are rolled out by distribution channel with each division developing a specific vision of beauty: the artistic creativity of hairdressers, luxury in selective distribution, health and skincare in pharmacies, and affordability in mass-market outlets. The brands are opening and developing all paths to beauty. MULTICULTURAL BRANDS L’Oréal was the first global company to fully encompass geographic and cultural diversity in its conception of beauty. Italian luxury with GIORGIO ARMANI, French elegance with L’ORÉAL PARIS and LANCÔME, American style with RALPH LAUREN, American make-up with MAYBELLINE NEW YORK, natural inspiration with the British brand THE BODY SHOP and artistic Japanese make-up with SHU UEMURA... The group’s brand portfolio meets the multi-faceted beauty aspirations of the whole world. WITH STRONG POTENTIAL Today, the 25 international brands, which represent 93% of sales, enable the group to actively prepare for the future. Some, such as L’ORÉAL PARIS, LANCÔME, VICHY and L’ORÉAL PROFESSIONNEL, are already leaders in their respective channels. Others are rapidly emerging, and could become tomorrow’s leaders. Others again are beginning their conquest of world markets. All of them have tremendous growth potential.

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PROFESSIONAL PRODUCTS

CONSUMER PRODUCTS

/…iÊ*ÀœviÃȜ˜>Ê*Àœ`ÕVÌÃÊ ˆÛˆÃˆœ˜Ê`iÈ}˜ÃÊ …>ˆÀÊ«Àœ`ÕVÌÃÊvœÀÊ>ÊŽˆ˜`Ãʜvʅ>ˆÀÊÃ>œ˜Ã°ÊœÀiÊ̅>˜Ê Îʓˆˆœ˜Ê…>ˆÀÃÌޏˆÃÌÃÊÕÃiÊ̅i“Ê>˜`ÊÃiÊ̅i“ʈ˜Ê̅iˆÀÊÃ>œ˜ÃÊ œvviÀˆ˜}Ê̅iˆÀÊ«ÀœviÃȜ˜>Ê>`ۈVi°

/…iÊ œ˜ÃՓiÀÊ*Àœ`ÕVÌÃÊ ˆÛˆÃˆœ˜Ê`ˆÃÌÀˆLÕÌiÃʈÌÃÊ«Àœ`ÕVÌÃÊ ˆ˜Ê>Ê“>ÃǓ>ÀŽiÌÊV…>˜˜iÃÊ­Ç]ÈääʅޫiÀ“>ÀŽiÌÃ]Ê {ä]äääÊÃÕ«iÀ“>ÀŽiÌÃ]ÊÇ{]äääÊ`ÀÕ}Ã̜Àiî°ÊÌʜvviÀÃÊ Vœ˜ÃՓiÀÃÊ«Àœ`ÕVÌÃÊ̅>ÌÊVœ“Lˆ˜iÊ>`Û>˜Vi`ÊÌiV…˜œœ}ÞÊ ÜˆÌ…Ê…ˆ}…Ê>``i`ÊÛ>ÕiÊ>ÌÊ>vvœÀ`>LiÊ«ÀˆVið

THE BODY SHOP *ÀiÃi˜Ìʈ˜Êx™ÊVœÕ˜ÌÀˆiÃÊ܈̅ÊÓ]{ÓÈÊÃ̜ÀiÃ]ÊTHE BODY SHOP LÀ>˜`ʈÃÊÀi˜œÜ˜i`ÊvœÀʈÌÃÊ«ˆœ˜iiÀˆ˜}ÊÀœiʈ˜Ê̅iÊÕÃiʜvÊ ˜>ÌÕÀ>Êˆ˜}Ài`ˆi˜ÌÃÊ>˜`ʈÌÃÊÃÌÀœ˜}Êi̅ˆV>ÊVœ““ˆÌ“i˜Ì°

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LUXURY PRODUCTS /…iÊÕÝÕÀÞÊ*Àœ`ÕVÌÃÊ ˆÛˆÃˆœ˜Ê“>ÀŽiÌÃÊ«ÀiÃ̈}iÊLÀ>˜`Ã]Ê܈̅Ê>Ê܈`iÊ`ˆÛiÀÈÌÞʜvÊVՏÌÕÀ>ÊœÀˆ}ˆ˜Ã]ʈ˜ÊÃiiV̈ÛiʜÕ̏iÌÃÊܜÀ`܈`iÊ ­`i«>À̓i˜ÌÊÃ̜ÀiÃ]Ê«iÀvՓiÀˆiÃ]ÊÌÀ>ÛiÊÀiÌ>ˆ]ÊLÀ>˜`Ê>˜`Ê`ˆÃÌÀˆLÕ̜Àʜ˜‡ˆ˜iÊÃ>iÃÊÈÌiÃ]Ê>˜`ÊvÀiiÊÃÌ>˜`ˆ˜}ÊÃ̜Àiî°

ACTIVE COSMETICS /…iÊܜÀ`ʏi>`iÀʈ˜Ê̅iÊ`iÀ“œVœÃ“ïVÊΈ˜V>Àiʓ>ÀŽiÌ]Ê Ì…iÊ
V̈ÛiÊ œÃ“ïVÃÊ ˆÛˆÃˆœ˜Ê“>ÀŽiÌÃʈÌÃÊvˆÛiÊLÀ>˜`Ãʈ˜Ê “œÀiÊ̅>˜ÊÇx]äääÊ«…>À“>VˆiÃ]ʈ˜Êë>ÃÊ>˜`ʓi`ˆÃ«>Ã]Ê>˜`Ê Ì…ÀœÕ}…Ê`œV̜ÀðÊÌʜvviÀÃÊ«Àœ`ÕVÌÃʈ`i>ÞÊÃՈÌi`ÊÌœÊ «…>À“>VˆÃÌýÊ>`ۈViÊ>˜`Ê`iÀ“>̜œ}ˆÃÌýÊÀiVœ““i˜`>̈œ˜Ã°

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INTERNATIONAL

EXPANDING IN ALL THE WORLD’S MARKETS Western Europe «°În

Eastern Europe p.40

North America p.42

Latin America p.44

Asia «°{È

Africa, Orient, Pacific «°{n

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L’ORÉAL PARIS event in Shanghai.

Outstanding growth prospects are opening up in all markets. In Western Europe and North America, L’Oréal is strengthening its position in markets where the group’s brands have considerable growth potential. In the rest of the world, as consumer spending potential increases for millions of people each year, the group is ideally positioned to seize this historic opportunity.

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WESTERN EUROPE In an expanding market, Western Europe posted +4.1% like-for-like sales growth. Sales trends were very favourable in the United Kingdom (+7.6%), Spain (+8.7%) and Scandinavia, particularly in Sweden (+9.7%). In France and Germany sales improved in the second half. The Professional Products Division performed particularly well in Germany and the United Kingdom. Consolidating its leadership, the Consumer Products Division won substantial market share in facial skincare, particularly in Germany, foundations and lipsticks. There was a sharp acceleration in the Luxury Products Division’s sales, with excellent performances in the United Kingdom, France and Italy. The Active Cosmetics Division recorded solid growth.

> Innéov, number one for oral cosmetics in Western Europe

In 2003, L’Oréal and Nestlé created INNÉOV, an oral cosmetics brand sold in pharmacies. Four years later, INNÉOV is number one in the European market and leads a new consumer trend.

SPAIN > Matrix on show in 5,000 salons One year after the brand’s launch in Spain, more than 5,000 hair salons have used MATRIX products: SoColor Beauty hair colourant and Biolage haircare ranges are proving highly successful. The American brands MATRIX and REDKEN are asserting their role as growth relays for the Professional Products Division in West European countries.

GERMANY > Maybelline New York captivates Berlin Larger areas in sales outlets mean more advice and shopping pleasure for consumers. The success of high definition Stretch&Define mascara and exclusive partnerships with the fashion world, such as Berlin Fashion Week, are stimulating the growth of the MAYBELLINE NEW YORK brand, and reinforcing its leadership of the German make-up market.

INTERNATIONAL // WESTERN EUROPE

7,250

million euros of consolidated sales in 2007

45.6%

of total group consolidated cosmetics sales

+4.1% like-for-like growth

UNITED KINGDOM > Fuel For Life by Diesel, an energising launch

FRANCE > All-time record for L’Oréal Paris Just six weeks after its launch in August 2007, the Derma Genèse facial skincare range was number one in the market. By winning new consumers, captivated by a new vision of facial skincare, L’ORÉAL PARIS is achieving all-time record market share levels, strengthening its number one position in this segment.

The highly original launch of Fuel For Life by DIESEL took everyone by surprise: an offbeat teasing campaign on the Internet, true to the spirit of fashion and to its designer Renzo Rosso, backed up by an exceptional commercial initiative to give the fragrances unrivalled visibility in retail outlets. Launched at the end of August 2007, Fuel For Life reached the premier league of best selling men’s and women’s fragrances by September.

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EASTERN EUROPE The group achieved record growth of +29.4%, reflecting trends across all East European countries, particularly Russia (+37.7%) and Poland (+16.9%). L’Oréal Ukraine became the third largest subsidiary in the zone, just two years after its creation. Professional Products sales are accelerating everywhere, and are now number one in Russia, Poland and the Czech Republic. Consumer Products recorded strong and evenly matched growth, driven by facial skincare and make-up. The Luxury Products Division is growing twice as fast as the market, strengthening its leadership in the zone. In addition to the success of VICHY, long established as the leader in pharmacies, LA ROCHE-POSAY is proving to be an important growth relay for the Active Cosmetics Division.

UKRAINE > Instant Garnier effect

POLAND > Vichy revolutionises pharmacies

VICHY, the number one pharmacy brand, consolidates its number two position in facial skincare across all retail channels. In 2007, ten Healthy skin check-up centres offer skin diagnostic services across the country. By setting up high quality health sections within pharmacies, the Active Cosmetics Division is playing a leading role in modernising the channel, while improving the visibility of its brands.

POLAND > Natural success for The Body Shop In its seven stores opened in 2007 in Warsaw and three other cities in Poland, THE BODY SHOP is making its mark, particularly with its make-up and fragrance ranges. The boom in the Polish market fully justifies the brand’s goal of opening around fifty stores in Poland over the next five years.

Created at the start of 2006, the Ukrainian subsidiary delivers spectacular growth in 2007, spearheaded by the breakthrough of GARNIER skincare. The Pure range, specially formulated to cleanse young skin, and the anti-wrinkle formulas of UltraLift both prove an instant hit.

INTERNATIONAL // EASTERN EUROPE

1,142

million euros of consolidated sales in 2007

7.2%

of total group consolidated cosmetics sales

+29.4% like-for-like growth

RUSSIA > Lancôme inspires dreams

2007 was a year of conquest for LANCÔME in Russia: +70% growth and a luxury image reinforced by the renovation of two of Russia’s most prestigious department stores, GUM and TSUM. The brand inspires the dreams of Russian women, as reflected in the success of the most recent launches: Virtuôse mascara and Rénergie Morpholift R.A.R.E. anti-ageing skincare.

RUSSIA > Affinitone by Maybelline New York: Made-to-measure beauty A nourishing formula to withstand the rigours of winter, and a palette of natural tones adapted to the complexions of East European women spell success for Affinitone foundation, which was launched in Russia at the end of 2007, and helps the MAYBELLINE NEW YORK brand to grow by more than 30%.

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NORTH AMERICA Sales grew by +4.8% in North America, as market growth slowed slightly. Market share gains were significant. The Professional Products Division strengthened its market leader position, particularly in hair colourants. The Consumer Products Division grew faster than the market in the make-up segment, due particularly to L’ORÉAL PARIS and in the skincare segment thanks to a number of strategic launches. Luxury Products Division sales grew slightly faster than the market thanks to the success of its fragrances. The Active Cosmetics Division is strengthening its presence in drugstore in the north-eastern states and in California, while SKINCEUTICALS recorded a solid growth rate.

UNITED STATES > Facial skincare breakthrough Having gained second place in just three years in the United States haircare market with Fructis, GARNIER takes a new step forward with the launch of its Nutritioniste skincare range. This product combines nutrition and dermatology in a pack in the traditional green colour of the GARNIER brand. In 2007, L’ORÉAL PARIS also launches the Skin Genesis facial skincare range. Aimed at women in their thirties to early forties, Skin Genesis represents an opportunity for the brand to win new consumers. The success of the launch allows L’ORÉAL PARIS to take a commanding position in the anti-ageing skincare segment. The launches of Nutritioniste by GARNIER and Skin Genesis by L’ORÉAL PARIS are helping the group to strengthen its number one position in the consumer skincare market.

CANADA > The fascination of Shu Uemura The opening in May 2007 of the first counter in Vancouver marks the launch of SHU UEMURA in Canada. Canadian women find the brand’s purifying oils, false eyelash collection and palette of colours extremely attractive. At the end of December, the brand is already number three in make-up sales at the Holt Renfrew department store in Vancouver.

CANADA > Vichy, number one in facial skincare in Canadian pharmacies

VICHY’s blockbuster Aqualia Thermal is launched in 2007 in Canada, with special events in seven major cities. Just a few months after its launch, Aqualia Thermal reaches the top 5 in facial skincare sales in pharmacies(1), bolstering VICHY’s position as number one in this category in Canada(2). (1) Source: AC Nielsen, National $, Drugstores, Moisturisers, 3 periods: from September 29th to November 24th, 2007. (2) Source: AC Nielsen Canada, Total Face Care Market in Dollars, National Drug, aggregate data at December 22nd, 2007.

INTERNATIONAL // NORTH AMERICA

4,004

million euros of consolidated sales in 2007

25.2%

of total group consolidated cosmetics sales

+4.8% like-for-like growth

UNITED STATES > Three men’s fragrances in the top five 2007 launches The Luxury Products Division shows robust retail sales and gains ground in 2007, in part due to strong launches in designer fragrances. In 2007, the Division continued to consolidate its leadership position in the American men’s category with three out of the top five new launches for the year—Attitude by GIORGIO ARMANI, Polo Explorer by RALPH LAUREN and Fuel for Life by DIESEL. In women’s fragrances, GIORGIO ARMANI continues to grow its presence with the fall introduction of Emporio Armani Diamonds, which was the third largest new launch of the year.

UNITED STATES > Strategic acquisitions in Professional Products

With the acquisition of the luxury haircare brand PUREOLOGY, and the launch of SHU UEMURA ART OF HAIR, the Professional Products Division is stepping up its presence in the fast-growing sector of the most prestigious American hair salons. The acquisition of geographically complementary distributors Beauty Alliance and Maly’s West means the Division can control distribution more effectively and build a closer relationship with American hairdressers by offering them the best service and training. These two strategic acquisitions form part of a highly efficient salon distribution business model, which combines the American distribution approach with L’Oréal’s expertise in partnerships with hairdressers.

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LATIN AMERICA In Latin America, like-for-like sales grew by +14.6%. Alongside Brazil and Mexico, already major markets for L’Oréal, the group achieved spectacular growth in Colombia (+27.2%), Argentina (+36.6%), Venezuela (+46.8%) and Panama (+74.2%), where a subsidiary was created in 2007. The group’s brands are capitalising on the spectacular development in this part of the world to gain market share. Meanwhile, the zone has rationalised its business model by grouping its industrial and logistical operations for the southern triangle in Brazil, and for the northern part in Mexico. The new organisational structure enables L’Oréal to make large economies of scale while significantly cutting its costs.

BRAZIL > Active Cosmetics in the driving seat

LA ROCHE-POSAY is strengthening its position as the leading partner of pharmacists and dermatologists in Brazil, the brand’s second most important country in the world. The partnership brings spectacular successes in sun products for the Anthelios range, and in anti-wrinkle skincare, with sales rising by more than 50% since the launch of Redermic. With VICHY and LA ROCHE-POSAY, the Active Cosmetics Division is now number one in the Brazilian dermocosmetics market.

ARGENTINA > Winning duo in hair salons

In 2007, REDKEN and MATRIX are successfully launched in the Argentinean market, with two highly complementary strategies. The premium brand REDKEN is available in more than 200 high-end salons in the major cities. MATRIX, a more affordable brand, was sold in more than 1,000 affordable salons by the end of 2007. Together they are bolstering the Professional Products Division’s number one position.

MEXICO > The Kiehl’s adventure begins An affordable luxury positioning, a very friendly atmosphere and excellent quality of service have ensured the success of the three KIEHL’S boutiques opened in Mexico over the last year. The latest, created at the Saks Fifth Avenue store in Mexico City, even succeeds in capturing the number one position in the department store’s cosmetics brand rankings. Four new KIEHL’S boutiques are to be opened in 2008.

INTERNATIONAL // LATIN AMERICA

1,124

million euros of consolidated sales in 2007

7.0%

of total group consolidated cosmetics sales

+14.6% like-for-like growth

BRAZIL > Elsève Volume Control by L’Oréal Paris, specially designed for Latin American hair Elsève Volume Control by L’ORÉAL PARIS is formulated to meet the specific needs of Brazilian women who wish to tame the volume of their hair. Successfully launched in Brazil in April 2007, it rapidly became the leading franchise of Elsève, thanks to its “Crema para peinar” conditioner. Also launched in Chile and Mexico in 2007, Elsève Volume Control will continue its Latin American roll-out in 2008.

ARGENTINA > L’Oréal, number one partner of the World Congress of Dermatology More than 12,000 dermatologists from all over the world took part in the World Congress of Dermatology, held in Buenos Aires in October 2007, of which L’Oréal was the number one partner. Many of the dermatologists visited the “L’Oréal Village” to find out more about the group’s brands.

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ASIA L’Oréal’s growth accelerated quarter by quarter to reach +14.3% in like-for-like sales. In Asia excluding Japan, it reached +17.8%, with a growth rate of +1.8% in Japan. In the highly competitive North Asian markets (Japan and South Korea), the group achieved positive scores thanks to the success of Professional Products in both countries and the breakthrough of KIEHL’S, SHU UEMURA and BIOTHERM in the luxury channel in South Korea. In China (+30%), growth was very rapid in all divisions. The Luxury Products Division strengthened its number one position there, thanks in particular to the strong performances of YUE-SAI in skincare. Finally, conquests are continuing in the countries of South-East Asia, particularly in Indonesia (+21.2%), Thailand (+22%) and Vietnam, where L’Oréal is creating a subsidiary to cover the four divisions.

HONG KONG > Armani magic The immediate success of the premium skincare range Crema Nera, and its rise to number one position in the selective fluid/cream foundation market, enable the GIORGIO ARMANI brand to achieve +38% growth in 2007. The opening of two new sales outlets takes the total number to six.

CHINA > L’Oréal Paris, number one in its retail universe Driven by the success of its ranges in the skincare segment, the largest market in China, L’ORÉAL PARIS achieved growth of more than 47% in 2007, making it the number one beauty brand in its retail universe. Among its major successes, the Men Expert range, launched one year ago, is proving a winner with Chinese men.

SOUTH KOREA > Customers appreciate Kiehl’s quality of service

South Koreans are very keen on the KIEHL’S brand. They appreciate the simple, natural products, quality of service and proximity to the consumer, which create a spirit of community. Present in five stores, KIEHL’S achieves spectacular growth in 2007, particularly in skincare with its flagship ranges Dermatologist Solutions and Ultra Facial.

INTERNATIONAL // ASIA

1,580

million euros of consolidated sales in 2007

9.9%

of total group consolidated cosmetics sales

+14.3% like-for-like growth

MALAYSIA > Garnier’s new horizons Building on its success in Thailand, where GARNIER is now number two in the skincare segment, the brand moved into Hong Kong and several countries in South-East Asia, including Indonesia and Malaysia. GARNIER is making a significant breakthrough there, driven by the success of Light facial skincare, ideally suited to local expectations.

JAPAN > Luxury is synonymous with Kérastase

KÉRASTASE establishes itself in Japan as the top luxury brand in the exclusive haircare sector. Its rinse-free haircare products, which highlight the skills of the hairdresser, are proving highly successful with very demanding customers. These successes have made Japan the second largest market for the brand after France, and are contributing, with the success of L’ORÉAL PROFESSIONNEL, to the Division’s very significant market share increases in Japan.

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AFRICA, ORIENT, PACIFIC Like-for-like sales in the Africa-Orient-Pacific zone grew by +15.4%. The zone’s growth was driven by India (+34.4%) and boosted by resounding successes in South Africa (+19.9%) and Dubai (+26.4%). Meanwhile, growth is increasing again in Australia (+11.3%). All the brands are making progress in North Africa and the Middle East, thanks to GARNIER’s skincare initiatives and the success of the luxury brands, especially in Dubai.

AUSTRALIA > Elvive by L’Oréal Paris makes a remarkable debut

Well established in the make-up, skincare and hair colourant segments, L’ORÉAL PARIS in 2007 launched its Elvive haircare range in Australia, a market with 20 million consumers. This launch propelled L’ORÉAL PARIS into second place in the Australian market.

INDIA > Garnier, modernity for everyone With the success of its Light Matte skincare range, GARNIER is asserting its identity as a modern and high performance brand, which remains affordable. With its dual lightening and matte effect, ideal for the humid Indian climate, Light Matte helped GARNIER to shoot up the Indian skincare rankings from fifth to second in one year.

INTERNATIONAL // AFRICA, ORIENT, PACIFIC

808

million euros of consolidated sales in 2007

5.1%

of total group consolidated cosmetics sales

+15.4% like-for-like growth

DUBAI > Viktor & Rolf, luxury rolls-out its brands Launched in highly selective retail channels, the VIKTOR & ROLF brand has very rapidly succeeded in making Flowerbomb one of the top five women’s fragrances in Dubai. The introduction of VIKTOR & ROLF, which perfectly embodies the modern luxury concept, is continuing in the luxury brand portfolio roll-out in this region.

NEW ZEALAND > Creativity galvanises growth More than 1,300 young hairdressers from New Zealand took part in the new “Talent Spotting” competition organised by L’ORÉAL PROFESSIONNEL, and intended to develop their professional and artistic skills. This initiative helped the brand to grow much faster than the market. This success, and those achieved by the other brands including MATRIX, is consolidating the Professional Products Division’s position as the unchallenged leader in this market.

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RESOURCES

AT THE HEART OF THE GROUP, INVENTING THE FUTURE Research and Development p.52

Operations «°xÈ

Human Resources «°xn

Administration and Finance «°ÈÓ

51

Modelling and screening tools facilitate the creation of tomorrow’s hair colourants.

The Research Division invents beauty to accelerate the brands’ success and prepare for the future. The Operations Division redesigns organisational structures to improve the performance, quality and efficiency of customer service. Women and men are at the heart of the group’s success, and the acceleration of its growth. For them, L’Oréal builds an environment of creativity, diversity and passion.

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INVENTING BEAUTY INSPIRED BY DIVERSITY The world of beauty is changing. As people live longer and the melting pot effect continues, new kinds of beauty expectations are emerging. At the same time, the paths of beauty are diversifying. Men and women are turning increasingly to institutes, pharmacies, hair salons, perfumeries, supermarkets, dermatologists and even surgeons. L’Oréal Research is taking all these factors on board so as to anticipate beauty trends, seize growth relays and invent the products of tomorrow, without making any concessions on quality, safety and performance. Jean-François Grollier Executive Vice-President Research and Development

2007 HIGHLIGHTS

> Creation of two new worldwide development units: Natural and organic cosmetics; Instrumental cosmetics. > Validation by ECVAM (European Centre for the Validation of Alternative Methods) of the human epidermis model Episkin as a method of predicting the irritant potential of chemical substances, enabling the complete replacement of animal testing for skin irritation.

> Publication of the first volume of the Skin Aging Atlas (Volume 1: Caucasian types). The result of 12 years of studies over the world, this research enables the evaluation of anti-ageing product performance and the development of ageing modelling tools. > L’Oréal’s innovative force was recognised when it won the Decision Makers’ Prize (“Prix des Décideurs”) at the first Innovation Management Trophy Awards.

RESOURCES // RESEARCH AND DEVELOPMENT

*Àœ`ÕVÌÃÊ>˜`ÊÃÕLÃÌ>˜ViÃʈ˜Ê>ÊvœÀ“ÃÊ­ˆµÕˆ`]Ê«œÜ`iÀ]Ê }i]ÊVÀi>“]Ê«>ÃÌi®Ê>ÀiÊÌiÃÌi`Ê`ˆÀiV̏Þʜ˜Ê̅iÊÃÕÀv>ViʜvÊ Ì…iÊi«ˆ`iÀ“ˆÃ]ÊȓՏ>̈˜}Ê̅iÊ̜«ˆV>Ê>««ˆV>̈œ˜Ê ܅ˆV…ÊVœÀÀi뜘`ÃÊ̜ʘœÀ“>ÊVœ˜`ˆÌˆœ˜ÃʜvÊÕÃi°Ê ½"Àj>ÊÀœṎ˜iÞÊÕÃiÃÊ̅iÊ «ˆÃŽˆ˜Ê“œ`iÊ̜ÊVœ˜vˆÀ“Ê ̅iÊ«Àœ`ÕVÌÃÊV>ÕÃiʘœÊˆÀÀˆÌ>̈œ˜°

RECONSTRUCTED SKIN Moving towards widespread use For 25 years, L’Oréal has been able to reconstruct skin from human cells, in the laboratory, but also on a large scale, in a production unit in Lyon (France). The Episkin epidermis model, which is an invaluable research tool in biology, has just been validated by the European Commission body ECVAM (European Centre for the Validation of Alternative Methods) as a tool for evaluating the irritant potential of substances and products on the skin. This is a decisive step forward for alternative methods, and has been welcomed by consumers, regulatory bodies, and the chemical industries.

THE FUTURE OF BEAUTY ˜ÊÓääÇ]Ê̅iÊ7œÀ`Ê œ˜}ÀiÃÃʜvÊ iÀ“>̜œ}Þʈ˜Ê Õi˜œÃÊ
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ÌÊ̅iʅi>ÀÌʜvÊ̅ˆÃÊ ÃVˆi˜ÌˆvˆVÊiÛi˜Ì]ʽ"Àj>Ê«ÀiÃi˜Ìi`ʈÌÃÊۈȜ˜ÊœvÊ̅iÊvÕÌÕÀiʜvÊ Li>ÕÌÞ]Ê̅ÀœÕ}…Ê̅iʓ>œÀÊ>`Û>˜ViÃʜvʈÌÃÊÀiÃi>ÀV…Ê>˜`ʈÌÃÊ LÀ>˜`ð The beauty of the future will reflect the world’s diversity. 7ˆÌ…Ê̅iʓˆ}À>̈œ˜ÊœvÊ«œ«Õ>̈œ˜Ã]Ê̅iÊ«>˜iÌʈÃÊiÝ«iÀˆi˜Vˆ˜}Ê >ʓiÌˆ˜}Ê«œÌÊivviVÌÊ܅ˆV…ÊVÀi>ÌiÃʘiÜʎˆ˜`ÃʜvÊLi>ÕÌްʽ"Àj>Ê ˆÃÊvœœÜˆ˜}Ê̅ˆÃÊ՘`iÀÞˆ˜}ÊÌÀi˜`°Ê
ÃÊܓiÊÌi>“ÃʜLÃiÀÛiÊ Li>ÕÌÞÊÀˆÌÕ>ÃÊ>VÀœÃÃÊ̅iÊܜÀ`]ʜ̅iÀÃÊ>ÀiÊVœ˜`ÕV̈˜}ÊV>“-

Using an instrumental method patented by L’Oréal, researchers measured the skin colour of some 3,500 women in the four corners of the earth. They have thus created a chart of 63 different tones.

L’Oréal does not intend to stop there; other models of the skin and the cornea are currently being validated to replace other safety evaluation tests.

COSMETICS AND DERMATOLOGICAL RESEARCH CENTRES WORLDWIDE

> 10 in France

> 3 in the United States

> 3 in Asia

Chevilly-Larue, Clichy (2 centres), Tours, Aulnay, Lyon, Sophia Antipolis, Monaco, Nice, Gigors-et-Lozeron

Clark, Chicago, Princeton

Kawasaki, Tokyo (Japan) Pudong (China)

53

54

For more than 10 years, the hair biology teams have been working on stem cells: they have identified two ring-shaped reservoirs along the hair follicle (shown in reddish brown).

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569

560 533

2006

576

529

496

2005

At the heart of living matter.ʘʈÌÃʏ>LœÀ>̜ÀˆiÃÊ>˜`ʈ˜Ê«>À̘iÀň«Ê܈̅ʈ˜ÌiÀ˜>̈œ˜>Ê>V>`i“ˆVÊÌi>“Ã]ʽ"Àj>ÊÃÌÕ`ˆiÃÊ̅iÊ }i˜œ“ˆVÃʜvÊΈ˜Ê>}iˆ˜}]ÊÃÌi“ÊViÊLˆœœ}Þ]ÊÀi«>À>̈Ûiʓi`ˆVˆ˜iÊ>˜`Ê̈ÃÃÕiÊ̅iÀ>«Þ°Ê/…ˆÃʺΈ˜œ“ˆVûÊ>ÀÃi˜>Ê…œ`ÃʜÕÌÊ Ì…iÊ«Àœ“ˆÃiʜvÊ>ÊVœÃ“ïVÃÊÀiۜṎœ˜°Ê-Ìi“ÊViÊÀiÃi>ÀV…Ê܈Ê Տ̈“>ÌiÞʏi>`Ê̜ÊVœÃ“ïVÃÊ܅ˆV…ÊV>˜Êvˆ˜`Ê܏Ṏœ˜ÃÊ̜ÊVœ“L>ÌÊ >}iˆ˜}]Ê«ÀiÛi˜Ìʅ>ˆÀʏœÃÃ]Ê>˜`ÊiÛi˜ÊÀiÃ̜Àiʅ>ˆÀÊ}ÀœÜ̅°Ê/…iÊ ÕÌˆ“>ÌiÊ>ˆ“ÊœvÊ̅iÊÀiÃi>ÀV…ʈÃÊ̜ʈ`i˜ÌˆvÞÊLˆœœ}ˆV>ÊÌ>À}iÌÃÊ >˜`ʓ>ÀŽiÀÃÊ܅ˆV…Ê܈Êi˜>LiÊ>Ê`ˆ>}˜œÃˆÃÊ>˜`Ê«iÀܘ>ˆÃi`Ê ÃœṎœ˜Ã°Ê-Ìi“ÊViÊÀiÃi>ÀV…Ê܈Êˆ˜Ê̅iÊvÕÌÕÀiʏi>`Ê̜ÊVœÃ“ïVÃÊ V>«>LiʜvÊÀi}i˜iÀ>̈˜}Ê̈ÃÃÕi°Ê/œ`>ÞÊ̅ˆÃʈÃÊ>Ài>`ÞÊ«œÃÈLi]Ê LÕÌÊin vitro°Ê˜Ê>Ê*iÌÀˆÊ`ˆÃ…]ÊÀiÃi>ÀV…iÀÃʅ>ÛiÊÃÕVVii`i`]ÊÕȘ}Ê >`ՏÌÊÃÌi“ÊViÃʜvʅ>ˆÀ]ʈ˜ÊÀiVœ˜ÃÌÀÕV̈˜}Êi«ˆ`iÀ“ˆÃ]ʓÕÃVi]Ê Lœ˜iÊ>˜`ʘiÀÛiÃ°Ê ÕÀÀi˜ÌÞʽ"Àj>½ÃÊ,iÃi>ÀV…ÊÌi>“ÃÊ>ÀiÊÌ>Žˆ˜}Ê >`Û>˜Ì>}iʜvÊ̅iÃiÊ>`Û>˜ViÃÊ̜ʜ«Ìˆ“ˆÃiÊ̅iÊViÊL>˜ŽÃÊvÀœ“Ê ܅ˆV…Ê̅iÞÊÀiVœ˜ÃÌÀÕVÌÊΈ˜Ê̜Ê`iÛiœ«Ê>ÌiÀ˜>̈Ûiʓi̅œ`ÃÊÌœÊ >˜ˆ“>ÊÌiÃ̈˜}°Ê˜ÊÓääÇ]Ê̅iÊ}ÀœÕ«Ê“>`iÊ>Ê}Ài>ÌÊÃÌi«ÊvœÀÜ>À`Ê ˆ˜Ê̅ˆÃÊvˆi`Ê­ÃiiÊLœÝ]Ê«>}iÊxή°

2007

> Research and development budget (E millions, including 50% of Galderma research investments)

2005

2006

1

2

3

4

5

6

7

8

2007

> Number of patents (cosmetics and dermatological research)

The universal classification of hair shape contains eight categories.

RESOURCES // RESEARCH AND DEVELOPMENT

«ÀiÃiÀÛ>̈ÛiÃ]Ê}i˜Ìi]ÊiVœœ}ˆV>ÊœÀÊViÀ̈vˆi`ʜÀ}>˜ˆV®Ê>˜`ÊiÝÌi˜`Ê Ì…iˆÀÊÕÃiÊ̜Ê>ÊÛ>ÀˆiÌÞʜvÊvˆi`ÃÊ­ÌiÝÌÕÀiÊ>}i˜ÌÃ]ÊVœœÕÀ>˜ÌÃÊ>˜`Ê «>VŽ>}ˆ˜}®]Ê>˜`Ê̜ÊÃiÌÊիʈ˜`iÝiÃʜvʘ>ÌÕÀ>˜iÃð /…iÊV…œˆViʜvʺ}Àii˜»ÊÃÕ««ÞÊV…>ˆ˜ÃÊ܈ÊLiʓœ˜ˆÌœÀi`Ê܈̅Ê̅iÊ }Ài>ÌiÃÌÊۈ}ˆ>˜ViÊ̜ʫÀiÃiÀÛiÊLˆœ`ˆÛiÀÈÌÞÊ>˜`Ê}Õ>À>˜ÌiiÊv>ˆÀÊ ÌÀ>`i]ÊLÞÊi˜ÃÕÀˆ˜}Ê>Êv>ˆÀÊÀiÌÕÀ˜ÊvœÀÊ}ÀœÜiÀÃÊ>˜`Ê«ˆVŽiÀðʽ"Àj>Ê …>ÃÊ>Ài>`ÞÊLi}՘Ê̜Ê>««ÞÊ̅ˆÃÊ>««Àœ>V…Ê܈̅ʈÌÃÊÃÕ««ˆiÀÃʜvÊ >À}>˜Êœˆ]ÊÅi>ÊLÕÌÌiÀÊ>˜`Ê«>“Êœˆ°

Centifolia rose extract is obtained from petals using environment-friendly distillation processes.

HIGH TECH AND NATURALNESS: THE SYNERGY
œ˜}È`iÊ>ëˆÀ>̈œ˜ÃÊvœÀʅˆ}…ÊÌiV…˜œœ}ÞÊ>˜`Ê܇V>i`ʈ˜Û>ÈÛiÊ ÌiV…˜ˆµÕiÃ]Ê>ëˆÀ>̈œ˜ÃÊ>ÀiÊ>ÃœÊ}ÀœÜˆ˜}ÊvœÀÊ«Àœ`ÕVÌÃÊ܅ˆV…Ê>ÀiÊ “œÀiʘ>ÌÕÀ>]Êi˜ÛˆÀœ˜“i˜Ì‡vÀˆi˜`ÞÊ>˜`Êv>ˆÀÞÊÌÀ>`i`°Ê/ܜʜvÊ̅iÊ }ÀœÕ«½ÃÊLÀ>˜`Ã]ÊSANOFLOREÊ>˜`ÊTHE BODY SHOP]ʅ>ÛiÊŜܘÊ̅iÊ Ü>ÞÊvœÀÜ>À`°Ê/œÊÌ>«Êˆ˜ÌœÊ̅ˆÃÊÀ>«ˆ`ÞÊiÝ«>˜`ˆ˜}ÊÌÀi˜`]ʽ"Àj>Ê …>ÃÊVÀi>Ìi`Ê>Ê >ÌÕÀ>Ê>˜`ʜÀ}>˜ˆVÊVœÃ“ïVÃÊ՘ˆÌʈ˜ÊˆÌÃÊ,iÃi>ÀV…Ê ˆÛˆÃˆœ˜°ÊÌÃʓˆÃȜ˜\Ê̜ʓ>ŽiÊÕÃiʜvʘ>ÌÕÀ>ÊiÝÌÀ>VÌÃÊ­«>˜ÌÃ]Ê L>VÌiÀˆ>]Ê«>˜ŽÌœ˜]ÊviÀ“i˜ÌÃÊ>˜`Ê«ÀœLˆœÌˆVîʈ˜Ê̅iÊ`iÈ}˜ÊœvÊ «Àœ`ÕVÌÃ]Ê̜ʜvviÀÊ>Ê}Ài>ÌÊ`ˆÛiÀÈÌÞʜvÊvœÀ“Տ>Ãʭ܈̅ʜÀÊ܈̅œÕÌÊ

3,095

cosmetics and dermatological research employees (including 50% of Galderma research employees)

576 patents registered in 2007

FOR SUSTAINABLE INNOVATION
ÊœÛiÀÊ̅iÊܜÀ`]Ê̅iÊÀi}Տ>̜ÀÞÊVœ˜ÌiÝÌʈÃÊňv̈˜}]Ê܈̅Ê>Ê }ÀœÜˆ˜}Êi“«…>ÈÃʜ˜ÊVœÀ«œÀ>ÌiÊVœ““ˆÌ“i˜ÌÊ̜ÊÃÕÃÌ>ˆ˜>LiÊ >˜`ÊÀi뜘ÈLiʈ˜˜œÛ>̈œ˜°Ê/…ˆÃʈÃÊ>˜œÌ…iÀÊV…>i˜}iÊ܅ˆV…Ê ½"Àj>Ê…>Ãʏ>À}iÞÊ>˜ÌˆVˆ«>Ìi`°Ê˜Ê ÕÀœ«i]Ê̅iÊÃiÛi˜Ì…Ê>“i˜`“i˜ÌÊ̜Ê̅iÊ œÃ“ïVÃÊ ˆÀiV̈ÛiÊ«Àœ…ˆLˆÌÃÊ̅iÊÕÃiʜvʈ˜}Ài`ˆi˜ÌÃÊÌiÃÌi`ʜ˜Ê>˜ˆ“>ÃÊvÀœ“ÊÓää™ÊœÀÊÓä£Î]Ê`i«i˜`ˆ˜}ʜ˜Ê̅iÊ V>Ãi]Ê>˜`Ê̅iʘiÜÊ,
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Õ̅œÀˆÃ>̈œ˜Ê>˜`Ê,iÃÌÀˆV̈œ˜ÊœvÊ …i“ˆV>Ã®Ê“>ŽiÃʈÌÊ Vœ“«ÕÃœÀÞÊvÀœ“ÊÓäänʜ˜Ü>À`ÃÊ̜ÊÀi}ˆÃÌiÀÊ>ÊV…i“ˆV>ÃÊÕÃi`Ê ˆ˜Êˆ˜`ÕÃÌÀˆ>Ê«Àœ`ÕVÌÃÊ܏`ʈ˜Ê ÕÀœ«i° ˜Ê
È>]Ê >˜>`>Ê>˜`Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ]Êȓˆ>ÀÊ«Àœ}À>““iÃÊ >ÀiÊLiˆ˜}ÊÃiÌÊÕ«Ê܈̅Ê`ˆvviÀi˜ÌÊ̈“iÊvÀ>“iÃÊ>˜`ÊÀiµÕˆÀi“i˜ÌÃ°Ê ½"Àj>Ê,iÃi>ÀV…Ê…>Ãʏ>À}iÞÊ>˜ÌˆVˆ«>Ìi`Ê̅iÃiÊÀi}Տ>̈œ˜Ã]ÊÃœÊ Ì…>ÌÊVœ“«ˆ>˜ViÊ`œiÃʘœÌʅ>“«iÀÊ̅iÊvœÜʜvʈ˜˜œÛ>̈œ˜Ã]ÊLÕÌʜ˜Ê ̅iÊVœ˜ÌÀ>ÀÞÊVœ˜ÛiÀÌÃÊ̅i“ʈ˜ÌœÊ`iÛiœ«“i˜Ìʜ««œÀÌ՘ˆÌˆið ˜Êv>VÌ]Ê̅iÊLi>ÕÌÞʓ>ÀŽiÌʈÃÊÃÕ««Þ‡`ÀˆÛi˜Ê>˜`ʽ"Àj>½ÃÊ ,iÃi>ÀV…Ê ˆÛˆÃˆœ˜ÊˆÃÊVœ˜Ìˆ˜Õ>ÞÊiµÕˆ««ˆ˜}ʈÌÃivÊ܈̅Ê̅iʓi>˜ÃÊ vœÀʈ˜Ûi˜Ìˆ˜}Ê̅ˆÃʓ>ÀŽiÌ]Ê܈̅Ê>ÊˆÌÃʈ˜ÌiÀ˜>Ê>˜`ÊiÝÌiÀ˜>Ê«>À̘iÀÃ]Ê܅ˆÃÌʜLÃiÀۈ˜}Ê̅iÊ`ˆÛiÀÈÌÞʜvÊVœ˜ÃՓiÀÃÊ>˜`Ê̅iˆÀÊ iÝ«iVÌ>̈œ˜Ã°

560

million euros of research expenses in 2007 (including 50% of Galderma research expenses)

INNOVATION

HAIR SHAPE A universal classification L’Oréal researchers, in conjunction with population geneticists, have just published the results of a study of 1,500 people in 18 countries, which set out to define hair types on the basis of shape criteria. Simple, based on physical measurements which are easily applicable to hair, this objective classification reflects diversity. It is compatible with the history of migrations and the melting pot process. The method requires the measurement of three parameters: diameter of curvature, curl index and number of waves. It leads to a classification with eight categories, from the straightest hair to the curliest. From now on, the performances of a straightener, a relaxer or a permanent wave will be defined on the basis of these eight classes, thus opening up new perspectives for the development of hair styling and texture products.

55

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STREAMLINING OPERATIONS TO DRIVE PERFORMANCE The newly created Operations Division has now brought the production and commercial logistics teams together under a single authority. We have redeployed the whole supply chain into four geographic poles (Europe, Asia, Latin America, North America), each with considerable autonomy, to increase responsiveness and accelerate mutualizing projects. We are continuing our efforts to simplify production facilities and ensure recurrent reductions in purchasing costs. This takes us forward in the ongoing process of streamlining our production and logistics structures, to improve returns on investment and maintain the cost cutting spiral in a context of less favourable raw material prices. Jean-Philippe Blanpain Managing Director Operations

DIESEL fragrance packaging, Gauchy factory (France).

2007 HIGHLIGHTS Ê

> The Production and Technology Division has been superseded by the Operations Division, which has a wider brief covering the whole supply chain. > L’Oréal has joined the Carbon Disclosure Project Supply Chain Leadership Council to gain a clearer vision of the environmental footprint of its supply chain.

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RESOURCES // OPERATIONS

SIMPLIFYING PRODUCTION FACILITIES ˜ÊÓääÇ]ʽ"Àj>ÊVœ˜Ìˆ˜Õi`Ê̜Ê>««ÞÊ̅iÊȓ«ˆvˆV>̈œ˜Ê«œˆVÞÊ ˆ˜ÌÀœ`ÕVi`ÊÃiÛiÀ>ÊÞi>ÀÃÊ>}œ°Ê/…ˆÃʏi`Ê̅iÊ}ÀœÕ«Ê̜ÊVœÃiÊ>˜Ê industrial site in Chile so as to concentrate production for >̈˜Ê
“iÀˆV>ʈ˜Ê̅iÊ À>∏ˆ>˜Ê>˜`Êi݈V>˜Êv>V̜ÀˆiðÊÕÀ̅iÀÊ productivity gains have been added to the process, driven by ̅iʈ˜ÌÀœ`ÕV̈œ˜Êœvʈ˜˜œÛ>̈ÛiÊ«ÀœViÃÃiÃÊvœÀÊΈ˜V>ÀiÊ«Àœ`ÕVÌÃÊ>˜`ʓ>Ži‡Õ«Êi“ՏÈœ˜ÃÊ­“>ÃV>À>Ê>˜`ÊvœÕ˜`>̈œ˜®°Êˆ˜>Þ]Ê ÃiÛiÀ>Êv>V̜ÀÞÊiÝÌi˜Ãˆœ˜Ê«ÀœiVÌÃʅ>ÛiÊLii˜ÊV>ÀÀˆi`ʜÕÌ]ÊvœÀÊ iÝ>“«iʈ˜Ê*œ>˜`]ʘ`ˆ>Ê>˜`Ê >˜>`>]Ê̜ÊÃÕ««œÀÌÊ}ÀœÜ̅ʈ˜Ê ̅iÃiÊiÝ«>˜`ˆ˜}Ê✘ið

A NEW INTEGRATED AND CENTRALISED SUPPLY CHAIN ½"Àj>½ÃÊÃÕ««ÞÊV…>ˆ˜Ê˜œÜʈ˜VÕ`iÃÊ̅ÀiiÊ>V̈ۈ̈iÃÊ՘`iÀÊ̅iÊ same authority: production, purchasing/procurement, and VÕÃ̜“iÀʏœ}ˆÃ̈VðÊ/…ˆÃʘiÜʜÀ}>˜ˆÃ>̈œ˜>ÊÃÌÀÕVÌÕÀiʜvviÀÃÊ>Ê }œL>Ê>˜`ÊVœ˜Ìˆ˜ÕœÕÃÊۈȜ˜ÊvÀœ“Ê̅iÊ«ÕÀV…>ÃiʜvÊÀ>Üʓ>ÌiÀˆ>ÃÊ̜Ê̅iÊ`iˆÛiÀÞʜvÊvˆ˜ˆÃ…i`Ê«Àœ`ÕVÌÃÊ̜Ê̅iÊ`ˆÃÌÀˆLÕ̜À°ÊÌÊ enables greater efficiency and better customer service quality, ܅ˆiʓ>݈“ˆÃˆ˜}Ê̅iÊ«Àœ`ÕV̈ۈÌÞʜvʜ«iÀ>̈œ˜Ã]Ê>˜`Ê>`>«Ìing the supply chain to suit the specifics of each geographic ✘i°Ê1˜ÌˆÊ˜œÜÊVÕÃ̜“iÀʏœ}ˆÃ̈VÃÊÜ>ÃÊ`iVi˜ÌÀ>ˆÃi`ʈ˜Êi>V…Ê VœÕ˜ÌÀÞ°Ê/…iÊVÀi>̈œ˜ÊœvÊ>ÊȘ}iÊVi˜ÌÀ>ˆÃi`ÊÀi뜘ÈLˆˆÌÞʈÃÊ >ÊÃÌÀ>Ìi}ˆVÊÃÌi«Ê̜Ü>À`ÃʓœÀiÊivvˆVˆi˜ÌÊÕÃiʜvÊ̅iÊ«…ÞÈV>Ê `ˆÃÌÀˆLṎœ˜Ê˜iÌܜÀŽ°

THE ENVIRONMENT AND SAFETY "˜ViÊ>}>ˆ˜Ê̅iÀiÊÜiÀiÊÛiÀÞÊVi>Àʈ“«ÀœÛi“i˜ÌÃʈ˜Ê>Êi˜ÛˆÀœ˜“i˜Ì>Êˆ˜`ˆV>̜ÀÃ\ÊÜ>ÌiÀÊVœ˜ÃՓ«Ìˆœ˜Ê­qǯ®]Êi˜iÀ}ÞÊVœ˜ÃՓ«Ìˆœ˜Ê­q{¯®Ê>˜`Ê "2Êi“ˆÃȜ˜ÃÊ­qȯ®°Ê/…iÊ}ÀœÕ«½ÃÊi˜Ûˆronmental commitment is leading to practical steps such as ̅iʈ˜ÃÌ>>̈œ˜ÊœvÊ܏>ÀÊ«>˜iÃÊ>ÌÊ ÕÀ}œÃʈ˜Ê-«>ˆ˜Ê>˜`Ê*՘iÊ ˆ˜Ê˜`ˆ>°Ê
««Þˆ˜}Ê̅iÊÃ>“iÊ«Àˆ˜Vˆ«i]Ê>Ê̅iÊ}ÀœÕ«½ÃÊ«Àœ«iÀÌÞÊVœ˜ÃÌÀÕV̈œ˜Ê«ÀœiVÌÃÊ>ÀiÊL>Ãi`ʜ˜Ê>ÊÃÕÃÌ>ˆ˜>LiÊ`iÈ}˜Ê >˜`ÊLՈ`ˆ˜}Ê«œˆVÞÊ܈̅Ê +Ê­ˆ}…Ê ˜ÛˆÀœ˜“i˜Ì>Ê+Õ>ˆÌޮʜÀÊ 

ÊViÀ̈vˆV>̈œ˜° ˜Ê̅iÊÃ>viÌÞÊvˆi`]Ê̅iÊ}ÀœÕ«Ê…>ÃÊÃÕVVii`i`ʈ˜Ê“>ˆ˜Ì>ˆ˜ˆ˜}Ê̅iÊ }œœ`Ê«iÀvœÀ“>˜ViʏiÛiÊˆÌÊ>V…ˆiÛi`ʈ˜ÊÓääÈ°Ê

RECURRENT PURCHASING COST REDUCTIONS ˜ÊÓääÇ]Ê>ʘiÜʜÀ}>˜ˆÃ>̈œ˜>ÊÃÌÀÕVÌÕÀiÊÜ>Ãʈ˜ÌÀœ`ÕVi`]ÊÕȘ}Ê ÃiÛi˜ÊÜÕÀVˆ˜}ÊVi˜ÌÀiÃÊVœ“«>Ài`Ê܈̅Ê̅iÊ«ÀiۈœÕÃÊÎÇ°Ê œ“Lˆ˜i`Ê܈̅Ê̅iÊLi˜ivˆÌÃʜvʜ˜}œˆ˜}Ê>˜`Ê̅œÀœÕ}…ÊÛ>ÕiÊ>˜>ÞÈÃÊ ivvœÀÌÃ]ʈÌʅ>ÃÊi˜>Li`ÊÀiVÕÀÀi˜ÌÊ}>ˆ˜Ãʜ˜Ê«ÕÀV…>ÃiÃʜvÊ«>VŽ>}ˆ˜}]Ê`iëˆÌiÊ̅iʅˆ}…iÀÊ«ÀˆViÃÊvœÀÊi˜iÀ}ÞÊ>˜`ÊÀ>Üʓ>ÌiÀˆ>Ã]Ê ÃÕV…Ê>ÃÊ>Õ“ˆ˜ˆÕ“Ê>˜`Ê«>Ã̈V° /…ˆÃÊۈÀÌ՜ÕÃʓœ`iÊœvʏi>`LÕވ˜}Ê«>VŽ>}ˆ˜}ʈÌi“ÃÊ܈ÊLiÊ iÝÌi˜`i`Ê̜ÊÀ>Üʓ>ÌiÀˆ>Ã]ʜÕÌÜÕÀVˆ˜}]ÊV>«ˆÌ>Ê}œœ`Ã]Ê«Àœ“œÌˆœ˜>Ê>À̈ViÃÊ>˜`Ê}i˜iÀ>ÊiÝ«i˜ÃiÊ«ÕÀV…>Ș}°Êˆ˜>Þ]Ê ½"Àj>Ê…>ÃÊÃiÌÊÕ«Ê>ÊÃÕ««ˆiÀÊ>ÃÃiÃÓi˜ÌÊÃÞÃÌi“ÊL>Ãi`ʜ˜Ê five criteria: quality, innovation, competitivity, logistics and ÜVˆ>ÊÀi뜘ÈLˆˆÌÞ°

COMMITMENT

L’Oréal China distribution centre, Suzhou (China).

SUPPLIERS AND DIVERSITY CONVENTION In November 2007, L’Oréal held a convention with more than 100 of the group’s suppliers. A dozen associations were thus able to make presentations about the challenges of diversity and illustrate good practices. This is in line with the strategy of encouraging supplier involvement in L’Oréal’s sustainable development policy: some 600 social audits were carried out in 2007 on suppliers’ premises.

FOUR AUTONOMOUS GEOGRAPHIC POLES INDUSTRIAL FACTORIES IN THE WORLD Consumer Products: 23 factories Luxury Products: 6 factories Professional Products: 3 factories Active Cosmetics: 2 factories Dermatology: 2 factories Raw materials: 4 factories

> Europe

> North America

> Latin America

21 factories (including 13 in France)

8 factories

3 factories

> Asia - Africa Middle-East - Pacific 8 factories

57

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SECURING THE TALENTS OF TOMORROW

Our mission at Human Resources is to contribute to L’Oréal’s sustainable growth by providing on-going support to the men and women of the company. Identifying and recruiting the talents of tomorrow, developing their skills, promoting their careers and securing their loyalty all lie at the heart of our forward-looking Human Resources strategy. To achieve this, we are constantly seeking to attract the best candidates and communicate to them the enthusiasm and passion for our business and brands. At the same time, we stimulate creativity by sharing our know-how and promoting the personal development of each individual, thus strengthening our expertise in beauty products and our capacity for generating leaders. Our working environment, remuneration policies, opportunities for advancement and sensitivity to employees’ needs all contribute to a sense of belonging, and create the optimum conditions for focusing everybody’s energy on our business. We also provide support to our Divisions by staying abreast of this perpetually changing environment, continually devising fresh solutions to meet the challenges and opportunities in rapidly changing world markets. Geoff Skingsley Executive Vice-President Human Resources

2007 HIGHLIGHTS

> 28,200 employees from 14 countries participated in an internal opinion survey. > Hewitt, the Human Resources consultancy, named L’Oréal as one of the best performing companies for spotting and developing leaders in its Top companies for Leaders survey. > In 2007, L’Oréal once again came top as the favourite company of European students in the internationally renowned Trendence survey.

> Creation of “L’Oréal Innovation Lab” a new business game for recruiting Research candidates. > Over 1,800 managers participated in Diversity seminars in Europe in 2007.

BUSINESS GAMES

RESOURCES // HUMAN RESOURCES

For its 15th edition, the “L’Oréal Brandstorm” marketing game attracted more than 4,400 students from 35 countries who worked on creating a new range of hairstyling products.

For the 7th edition of the “L’Oréal e-Strat Challenge” business game, more than 44,000 students in 128 countries took on the role of General Manager of a virtual cosmetics company.

RECRUITMENT

SUSTAINING GROWTH /œÊvՏvˆÊˆÌÃÊ`iÛiœ«“i˜ÌÊ>“LˆÌˆœ˜Ã]ʽ"Àj>ÊÀiµÕˆÀiÃÊiÝ«iÀˆenced and trained individuals in all its different business sec̜ÀÃÊ>˜`Ê>V̈ۈ̈iðÊ/…iÊV…>i˜}iÊvœÀʜÕÀÊՓ>˜Ê,iÜÕÀViÃÊ Ìi>“ÃÊܜÀ`‡Üˆ`iʏˆiÃʈ˜ÊÌÀ>ˆ˜ˆ˜}]Ê`iÛiœ«ˆ˜}Ê>˜`ÊÃiVÕÀˆ˜}Ê̅iÊ œÞ>ÌÞʜvÊÌ>i˜Ìi`ʈ˜`ˆÛˆ`Õ>ÃÊ܅œÊ>ÀiÊV>«>LiʜvÊ}i˜iÀ>̈˜}Ê vÕÌÕÀiÊ}ÀœÜ̅°Ê,iVÀՈ̓i˜ÌÊ>˜`ÊÌÀ>ˆ˜ˆ˜}ʈÃʈ˜Ìi˜Ãˆvވ˜}ÊÜˆÌ…Ê Ì…iÊÀ>«ˆ`Ê}ÀœÜ̅ʈ˜Ê˜iÜʓ>ÀŽiÌÃ°Ê "˜iʜvÊ̅iÊv՘`>“i˜Ì>Êii“i˜ÌÃʜvʽ"Àj>½ÃʅՓ>˜Ê«œˆVÞʈÃÊ to constantly prepare managers for their future responsibilïiÃÊLÞʜvviÀˆ˜}Ê̅i“ÊiÝ«œÃÕÀiÊ̜Ê>ÊVœ“«i“i˜Ì>ÀÞÊÀ>˜}iʜvÊ iÝ«iÀˆi˜ViðʘÌiÀ˜>Ê“œLˆˆÌÞʈÃÊ̅iÀivœÀiÊÃÌÀœ˜}ÞÊi˜VœÕÀ>}i`\Ê>ÊÌÞ«ˆV>ÊV>ÀiiÀÊ«>̅Ê܈Ê>ÌiÀ˜>ÌiÊLiÌÜii˜ÊiÝ«iÀˆi˜ViÊ ˆ˜Ê̅iÊvˆi`Ê>˜`ʍœLÃÊ܈̅ˆ˜Êv՘V̈œ˜>Ê`i«>À̓i˜ÌÃÊ>˜`Êޜ՘}Ê “>˜>}iÀÃÊ>ÀiÊÃ܈v̏ÞÊ«Àœ“œÌi`Ê̜ʫœÃˆÌˆœ˜ÃʜvÊÀi뜘ÈLˆˆÌÞ° ÕÀ̅iÀ“œÀi]Ê̅iÊ}ÀœÕ«Êi˜VœÕÀ>}iÃʓœLˆˆÌÞÊ̅ÀœÕ}…œÕÌʈÌÃÊ`ˆvviÀi˜ÌÊ}iœ}À>«…ˆVÊ✘iðÊ/…iÊ«Àˆ˜Vˆ«iʓˆÃȜ˜ÊœvʓœÀiÊ̅>˜ÊxnäÊ œvʜÕÀÊiÝ«>ÌÀˆ>Ìiʓ>˜>}iÀÃÊVœ˜ÃˆÃÌÃʈ˜Ê՘`iÀÌ>Žˆ˜}Ê>˜`ʏ>՘V…ˆ˜}Ê ˜iÜÊ>V̈ۈ̈iÃÊ­ˆ˜Ê̅iÊVœ““iÀVˆ>]ʈ˜`ÕÃÌÀˆ>]Ê>˜`ÊÀiÃi>ÀV…ÊÃiV̜ÀÃ]Ê vœÀÊiÝ>“«i®Ê>˜`Êi˜ÃÕÀˆ˜}Ê̅>ÌʜÕÀʏœV>ÊÌi>“ÃÊLi˜ivˆÌÊvÀœ“Ê̅iÊ ÌÀ>˜ÃviÀʜvʎ˜œÜ‡…œÜÊ>˜`ÊiÝ«iÀˆi˜Vip>Ê«œˆVÞÊ܅ˆV…ʈÃÊVœ˜`ÕVˆÛiÊ̜ÊLՈ`ˆ˜}Ê`ˆÛiÀÈvˆi`Ê>˜`ÊÃÌÀœ˜}ʓ>˜>}i“i˜ÌÊÌi>“ðÊ

“L’Oréal Ingenius Contest” awards engineering students who have demonstrated their inventive talent by putting an ambitious industrial challenge into practice.

The latest game, “L’Oréal Innovation Lab” is aimed at attracting and recruiting candidates of a scientific background for our Research and Development Division.

SHARING PASSION AND AMBITION ˜ÊœÀ`iÀÊ̜ʓiiÌÊ̅iÊ}ÀœÕ«½ÃÊ`iÛiœ«“i˜ÌÊÌ>À}iÌÃ]ÊՓ>˜Ê ,iÜÕÀViÃʓÕÃÌÊLiÊV>«>LiʜvÊëœÌ̈˜}]Ê>ÌÌÀ>V̈˜}Ê>˜`ÊVœ˜Ûˆ˜Vˆ˜}Ê̅iÊLiÃÌÊÌ>i˜ÌÃÊ̜ʍœˆ˜ÊœÕÀÊÌi>“ÃÆÊ`ˆÛiÀÈÌÞ]Ê>˜`Ê>Ê ̅>ÌʈÌʜvviÀÃʈ˜Ê̅iÊÜ>ÞʜvÊ«Àœ}ÀiÃÃ]Ê«iÀvœÀ“>˜ViÊ>˜`ÊVՏÌÕÀ>Ê richness, is a core requisite of our recruitment policy and for LՈ`ˆ˜}ʜÕÀÊÌi>“ÃÊܜÀ`‡Üˆ`i° ½"Àj>½ÃʜÀˆ}ˆ˜>ÊÀiVÀՈ̓i˜ÌÊ«œˆVÞʈÃÊVi˜ÌÀi`ʜ˜ÊºÃ…>Àˆ˜}Ê̅iÊ «>ÃȜ˜»ÊœvÊ̅iʽ"Àj>Ê>`Ûi˜ÌÕÀi°Ê/…ˆÃÊ«œˆVÞʈ˜VÕ`iÃ\Ê>V̈ÛiÊ ˆ˜ÛœÛi“i˜ÌÊ>˜`Ê«>À̘iÀň«ÃÊ܈̅ʓœÀiÊ̅>˜ÊÓääÊ՘ˆÛiÀÈ̈iÃʈ˜Ê̅iÊܜÀ`ÆÊ>Ê܈`iÊÀ>˜}iʜvʈ˜ÌiÀ˜>̈œ˜>Þ‡Ài˜œÜ˜i`Ê LÕȘiÃÃÊ}>“iÃÊÕȘ}ÊÀi>ÊˆviÊÈÌÕ>̈œ˜ÃÊ܅ˆV…ʈÕÃÌÀ>ÌiÊ̅iÊ iÝÌi˜ÌÊ>˜`ÊVœ“«i݈ÌÞʜvʜÕÀÊLÕȘiÃÃiÃÆÊ«>À̈Vˆ«>̈œ˜Êˆ˜ÊÀi>Ê or virtual recruitment events designed to give target audii˜ViÃÊ>˜Êˆ˜Ãˆ}…Ìʈ˜ÌœÊ̅iʈÃÃÕiÃÊ>ÌÊÃÌ>Žiʈ˜Ê̅iÊ}ÀœÕ«]ʈÌÃÊVՏÌÕÀi]ÊÌi>“ÃÊ>˜`ÊܜÀŽˆ˜}Êi˜ÛˆÀœ˜“i˜ÌÆÊ>˜Êˆ˜ÌiÀ˜Ã…ˆ«Ê«œˆVÞ]Ê Àœi`ʜÕÌÊܜÀ`‡Üˆ`i]Ê܅iÀiÊÃÌÕ`i˜ÌÃʅ>ÛiÊ̅iʜ««œÀÌ՘ˆÌÞÊ œvÊܜÀŽˆ˜}Ê>ÌÊ̅iÊÛiÀÞʅi>ÀÌʜvʜÕÀÊÌi>“ÃÆÊ̅iʈ˜Ìi}À>̈œ˜Ê œvÊޜ՘}ÊÀiVÀՈÌÃʈ˜ÌœÊœÕÀʺÌ>i˜ÌÊ«œœ»Ê>˜`Ê>Ê`iÛiœ«“i˜ÌÊ «Àœ}À>““iÊLÀˆ˜}ˆ˜}Ê̅i“ÊÃÞÃÌi“>̈V>Þʈ˜ÌœÊVœ˜Ì>VÌÊ܈̅ʜÕÀÊ Vœ˜ÃՓiÀÃ]ÊVˆi˜ÌÃÊ>˜`Ê«Àœ`ÕVÌð

RECRUITMENT WEEKENDS IN NEW YORK American students spend a weekend in New York “living the L’Oréal experience”. The students from American universities are picked from among several hundreds of candidates and get the chance of talking to L’Oréal managers about their careers, the industry and the different lines of business. Over the weekend, the students experience both real-life business situations (getting to know the group’s brands and products, its creativity) and take part in recreational workshops which are a fun and engaging way of experiencing the full impact of L’Oréal’s passion and energy.

59

60

CAPITALISING ON ENERGY ½"Àj>½ÃÊÃÕVViÃÃʈÃÊL>Ãi`ʜ˜Ê̅iʵÕ>ˆÌÞÊ>˜`ÊVœ““ˆÌ“i˜ÌʜvʈÌÃÊ i“«œÞiiÃÊ>˜`Ê̅iˆÀÊÜi‡Liˆ˜}ʈÃÊVœ˜ÃÌ>˜ÌÞÊLiˆ˜}ʓœ˜ˆÌœÀi`°Ê ˜ÌiÀ˜>Êœ«ˆ˜ˆœ˜ÊÃÕÀÛiÞÃʅ>ÛiÊLii˜Ê>Êvi>ÌÕÀiÊvœÀÊÃiÛiÀ>ÊÞi>ÀÃÊ ˆ˜Ê“>˜ÞÊVœÕ˜ÌÀˆiÃÊ>˜`ÊȘViÊ̅iÊi˜`ʜvÊÓääÈ]ÊÓn]ÓääÊi“«œÞiiÃʅ>ÛiÊLii˜Êˆ˜ÌiÀۈiÜi`ʈ˜Ê£{ÊVœÕ˜ÌÀˆiÃÊۈ>ÊPulse, a single È·µÕiÃ̈œ˜ÊÃÕÀÛiÞ° -ÌÀœ˜}Êi“«œÞiiÊVœ““ˆÌ“i˜ÌÊi“iÀ}i`Ê>ÃÊ>ÊVœ““œ˜ÊÀiÃՏÌʈ˜Ê >ÊœÕÀÊÃÕLÈ`ˆ>ÀˆiÃ]Ê>˜`ʈÌʈÃÊ>ÊۈÌ>Ê>ÃÃiÌÊvœÀÊ>V…ˆiۈ˜}ʜÕÀÊ}ÀœÜÌ…Ê Ì>À}iÌðÊ
Êi“«œÞiiÃÊÜiÀiʈ˜vœÀ“i`ʜvÊ̅iÊÀiÃՏÌÃʜvÊ̅iʈ˜ÌiÀ˜>ÊÃÕÀÛiÞÊ>˜`ÊܜÀŽˆ˜}Ê}ÀœÕ«Ãʅ>ÛiÊLii˜ÊVÀi>Ìi`Ê̜Ê`i>ÊÜˆÌ…Ê Ì…œÃiÊ>Ài>ÃÊ܅ˆV…Ê>ÀiÊviÌÊ̜ÊLiʈ˜Ê˜ii`ʜvʈ“«ÀœÛi“i˜Ì°

and a number of programmes have also been specifically `iÈ}˜i`Ê̜ÊÃ̈“Տ>ÌiÊ̅iÊVÀi>̈ۈÌÞʜvÊÌi>“Ãʈ˜Ê>ÊœÕÀʓ>œÀÊ “>ÀŽiÌÃ°Ê Ài>̈ÛiÊÌiV…˜ˆµÕiÃÊ>ÀiÊÌ>Õ}…Ìʈ˜`ˆÛˆ`Õ>ÞʜÀʈ˜Ê teams and managers have the opportunity of meeting creative iÝ«iÀÌÃʜÀÊvÕÀ̅iÀˆ˜}Ê̅iˆÀʏi>À˜ˆ˜}ÊL>Ãi`ʜ˜Ê̅iÊiÝ«iÀˆi˜ViÊ œvʜ̅iÀÊVՏÌÕÀið

REWARDING COMMITMENT AND PERFORMANCE ½"Àj>Ê>ˆ“ÃÊ̜ʜvviÀʈ˜`ˆÛˆ`Õ>Ê>˜`ÊVœiV̈ÛiÊÀi“Õ˜iÀ>̈œ˜Ê «>VŽ>}iÃÊ̜Ê>ÌÌÀ>VÌÊÌ>i˜Ìi`ʈ˜`ˆÛˆ`Õ>ÃÊ>˜`ÊÃiVÕÀiÊVœ“«>˜ÞÊ œÞ>ÌÞ°Ê >V…ʈ˜`ˆÛˆ`Õ>½ÃÊVœ˜ÌÀˆLṎœ˜ÊˆÃÊiÛ>Õ>Ìi`ʜ˜Ê…ˆÃʜÀʅiÀÊ œÜ˜Ê«iÀvœÀ“>˜ViÊ>˜`ÊÀiVœ}˜ˆÃi`Ê̅ÀœÕ}…Ê>ÊVœ“«ï̈ÛiÊÃ>>ÀÞ°Ê ÛiÀÞÊÞi>Àʽ"Àj>Ê«>À̈Vˆ«>ÌiÃʈ˜Ê̅iʈ˜ÌiÀ˜>̈œ˜>ÊÀi“Õ˜iÀ>̈œ˜ÊLi˜V…“>ÀŽÃʜvÊëiVˆ>ˆÃÌÊVœ˜ÃՏÌ>˜VˆiÃ°Ê œiV̈ÛiÊ remuneration is also a means of developing employee loyalty >˜`ÊVœ˜ÌÀˆLṎ˜}Ê̜Ê}œL>ÊÌ>À}iÌÃÆÊ«ÀœvˆÌÊÅ>Àˆ˜}Ê>˜`ʈ˜Vi˜ÌˆÛiÊ ÃV…i“iÃÊÜiÀiÊÃiÌÊիʈ˜ÊÀ>˜Viʈ˜Ê£™nnÊ>˜`ʈ˜ÊÓääÇÊÀi«ÀiÃi˜Ìi`Ê̅iÊ}œL>ÊÃՓʜvÊ£Óäʓˆˆœ˜ÊiÕÀœÃ°Ê˜ÊÓää£]ʽ"Àj>Ê >՘V…i`Ê>Ê7œÀ`܈`iÊ*ÀœvˆÌÊ-…>Àˆ˜}Ê«Àœ}À>““iÊ­77*-®Êˆ˜Ê >ÊœÌ…iÀÊ}ÀœÕ«ÊÃÕLÈ`ˆ>ÀˆiðÊ/…iÊ77*-ʈÃÊL>Ãi`ʜ˜ÊœV>ÊÃ>iÃÊ >˜`Ê«ÀœvˆÌÊ}ÀœÜ̅ÊÌ>À}iÌÃÊ>˜`ÊV>˜ÊÀi«ÀiÃi˜ÌÊÕ«Ê̜ÊǯʜvÊ>˜Ê i“«œÞii½ÃÊÃ>>ÀÞ°

“Metiers Essentials” in India

Ý«iÀ̈ÃiÊ«ÀœÛˆ`iÃÊ>ʓ>œÀÊVœ“«ï̈ÛiÊi`}iÊ܅ˆV…ÊvœÃÌiÀÃÊ ˆ˜˜œÛ>̈œ˜°Ê/…iʺïiÀÃÊ ÃÃi˜Ìˆ>Ã»Ê«Àœ}À>““iÊÜ>ÃÊ`iÛiœ«i`Ê>˜`ʏ>՘V…i`ʈ˜Ê˜`ˆ>Ê>˜`ʈÃÊÃV…i`Տi`Ê̜ÊLiÊ`i«œÞi`]Ê ˆ˜Ê«ÀˆœÀˆÌÞ]Ê̅ÀœÕ}…œÕÌÊ>Ê̅iʺ , »ÊVœÕ˜ÌÀˆiðÊÌÊi˜ÃÕÀiÃÊ Ì…>Ìʘi܏ÞÊÀiVÀՈÌi`Êޜ՘}ʓ>ÀŽï˜}ʓ>˜>}iÀÃʅ>Ûiʈ““i`ˆ>ÌiÊ>VViÃÃÊ̜ʈ˜‡`i«Ì…Ê«Àœ`ÕVÌʎ˜œÜi`}iʜ˜ÊvœÀ“Տ>i]Ê ˆ˜}Ài`ˆi˜ÌÃ]ÊÌiÝÌÕÀiÃÊ>˜`Ê̅iÊ`ˆvviÀi˜ÌÊ>««ˆV>̈œ˜ÃÊvœÀÊ>ÊΈ˜Ê >˜`ʅ>ˆÀÊÌÞ«ið

The “Must Have” programmes /…iÃiÊÌÀ>ˆ˜ˆ˜}ÊVœÕÀÃiÃʅ>ÛiÊLii˜Ê`iÈ}˜i`Ê̜Êi˜ÃÕÀiÊ̅>ÌÊiÛiÀÞÊ “>˜>}iÀÊ>VµÕˆÀiÃÊ̅iÊL>ÈVʘiViÃÃ>ÀÞÊiÝ«iÀ̈ÃiÊ«ÀˆœÀÊ̜Ê>ʘiÜÊ >ÃÈ}˜“i˜Ì°Ê
ʺÕÃÌÊ>Ûi»Ê«Àœ}À>““i]ÊVœ“Lˆ˜ˆ˜}Ê}i˜iÀ>Ê Ž˜œÜi`}iʜvʽ"Àj>Ê>˜`ʈÌÃÊëiVˆvˆVÊ«À>V̈ViÃ]ʅ>ÃÊLii˜Ê`À>Ü˜Ê Õ«ÊLÞÊi>V…Ê«ÀœviÃȜ˜>ÊÃiV̜ÀÊvœÀÊ>ÊVœÕ˜ÌÀˆiÃÊ>˜`ÊÀi}ˆœ˜Ã°Ê

“360° Launch Excellence” in Brazil ºÎÈäcÊ>՘V…Ê ÝVii˜Vi»Ê…>ÃÊLii˜Ê`iÈ}˜i`Ê̜Ê`iÛiœ«Ê>Ê Ìi>“½ÃÊVÀi>̈ÛiÊ>LˆˆÌˆiðÊ
ÊVœ>V…ÊëiVˆ>ˆÃi`ʈ˜ÊVÀi>̈ÛiÊÌiV…˜ˆµÕiÃÊܜÀŽÃÊ>œ˜}È`iÊÌi>“Ãʈ˜Ê`iۈȘ}Ê̅iÊ«>À̈VՏ>ÀÞʈ˜˜œÛ>̈Ûiʏ>՘V…ÊœvÊ>˜Êœ«iÀ>̈œ˜>Ê«ÀœiVÌ°Ê/…ˆÃʺ>V̈œ˜Êi>À˜ˆ˜}»Ê«Àœ}À>““iÊÜ>Ãʏ>՘V…i`ʈ˜Ê À>∏Ê>˜`ʈ˜ÊÃiÛiÀ>ÊœÌ…iÀʓ>ÀŽiÌðÊ

½"Àj>Ê…>ÃÊ>Ü>ÞÃÊi˜VœÕÀ>}i`Ê«iÀ“>˜i˜ÌÊ`ˆ>œ}ÕiÊLiÌÜii˜Ê ˆÌÃÊi“«œÞiiÃ]Ê̅iˆÀÊÀi«ÀiÃi˜Ì>̈ÛiÃÊ>˜`Ê>˜>}i“i˜Ì°ÊœÀÊ iÝ>“«i]ʓœÀiÊ̅>˜ÊÓ{]äääÊi“«œÞiiÃÊ>ÀiÊÀi«ÀiÃi˜Ìi`ʈ˜Ê ½"Àj>½ÃÊ ÕÀœ«i>˜Ê œÕ˜VˆÊvœÀÊ-œVˆ>Ê ˆ>œ}Õi°Ê˜ÊÀ>˜Vi]Ê̅iÊ «>À̘iÀň«ÊLiÌÜii˜Êi“«œÞiiÃÊ>˜`Ê>˜>}i“i˜ÌʈÃÊ}Õ>À>˜Ìii`ÊLÞÊ£ä£ÊÀi«ÀiÃi˜Ì>̈ÛiÊVœÕ˜VˆÃÊ>˜`ʓœÀiÊ̅>˜Ê>Ê̅œÕÃ>˜`Ê i“«œÞiiÊÀi«ÀiÃi˜Ì>̈Ûið

STIMULATING CREATIVITY ½"Àj>½ÃÊÌÀ>ˆ˜ˆ˜}Ê«Àœ}À>““iÃÊ>ÀiÊÃÌÀÕVÌÕÀi`Ê>ÀœÕ˜`ÊvœÕÀÊ i>À˜ˆ˜}ÊVi˜ÌÀiÃʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ]Ê …ˆ˜>]ÊÀ>˜ViÊ>˜`Ê À>∏°Ê /…iÃiÊ«Àœ}À>““iÃʭ܅ˆV…ʈ˜Ê̈“iÊ܈ÊLiʜ«i˜Ê̜Ê>Êi“«œÞiiîÊ>ÀiÊ`i`ˆV>Ìi`Ê̜ÊÅ>Àˆ˜}Ê>˜`ÊLՈ`ˆ˜}ʜ˜ÊœÕÀÊiÝ«iÀ̈Ãi]Ê

63,358(1) 60,851(1)

4.6% Other regions

19.3% France

15.1% Asia

52,403

15,082

2005 Global workforce

16,197

2006

16,975

2007

Global number of executives(2)

> Change in workforce

(1) Including The Body Shop since 2006 and American distributors since 2007. (2) Global number of executives in the cosmetics branch.

7.7% Latin America

23.8% North America

24.9% Western Europe excluding France

4.4% Eastern Europe > Breakdown of employees by geographic zone(1) at December 31st, 2007

RESOURCES // HUMAN RESOURCES

ACTIONS FOR DIVERSITY PROMOTING TALENTS AND DIVERSITY TRAINING FOR MANAGERS

> Scholarships and mentoring ½"Àj>ÊÃÌÀiÃÃiÃʈÌÃÊVœ““ˆÌ“i˜ÌÊ̜Ê`iÃiÀۈ˜}Êޜ՘}ÊÃÌÕ`i˜ÌÃÊ vÀœ“ÊÜVˆ>ÞÊ`i«ÀˆÛi`ʜÀʓˆ˜œÀˆÌÞÊL>VŽ}ÀœÕ˜`ÃÊLÞʅi«ˆ˜}Ê Ì…i“Ê̜ʫÕÀÃÕiÊ̅iˆÀÊÃÌÕ`ˆiÃÊ̅ÀœÕ}…ʈÌÃÊ«>À̘iÀň«ÃÊÜˆÌ…Ê ÃV…œœÃʜÀÊ՘ˆÛiÀÈ̈iÃʜ˜ÊiÛiÀÞÊVœ˜Ìˆ˜i˜Ì\Ê̅iÊÞVjiÊi˜ÀˆÊ6Ê >˜`Ê̅iʘÃ̈ÌÕÌÊ`½jÌÕ`iÃÊ«œˆÌˆµÕiÃʈ˜ÊÀ>˜Vi]Ê>À>Ê1˜ˆÛiÀÈÌÞÊ ­1ˆÌ®Êˆ˜Ê>>ÞÈ>]Ê,ˆœÊ`iÊ>˜iˆÀœÊ-Ì>ÌiÊ1˜ˆÛiÀÈÌÞʈ˜Ê À>∏]Ê 7ˆÌÃÊ1˜ˆÛiÀÈÌÞÊ>˜`Ê̅iÊ1˜ˆÛiÀÈÌÞʜvÊ >«iÊ/œÜ˜Êˆ˜Ê-œÕ̅Ê
vÀˆV>]Ê̅iÊ1˜ˆÛiÀÈÌÞʜvÊ/iÊ
ۈÛʈ˜ÊÃÀ>i]ÊiÌV° Dr Ismail, Associate Dean Business School, UitM “I never thought that L’Oréal would be our partner… L’Oréal is like family now.” > “Diversity and Performance” Chair, ESSEC (France) /…iʺ ˆÛiÀÈÌÞÊ>˜`Ê*iÀvœÀ“>˜Vi»Ê …>ˆÀÊÜ>ÃÊVÀi>Ìi`Ê>ÌÊ̅iÊ Ài˜V…ÊLÕȘiÃÃÊÃV…œœÊ -- ]ÊLiÌÜii˜Ê½"Àj>]Ê
ˆÀÊÀ>˜Vi‡ Ê>˜`Ê iœˆÌÌiʈ˜Ê̅iÊvˆÀÃÌÊ«>À̘iÀň«ÊœvʈÌÃʎˆ˜`ʈ˜Ê>Ê̜«Ê “>˜>}i“i˜ÌÊÃV…œœ°Ê/…ˆÃÊÀiÃi>ÀV…Ê>˜`ʏi>À˜ˆ˜}Ê«Àœ}À>““iʈÃÊ vœVÕÃi`ʜ˜Ê`iÛiœ«ˆ˜}Ê>ÊVi˜ÌÀiʜvÊiÝ«iÀ̈Ãiʜ˜Ê`ˆÛiÀÈÌÞ]Ê>˜`Ê ÌÀ>ˆ˜ˆ˜}ÊvÕÌÕÀiʓ>˜>}iÀÃʈ˜Ê̅ˆÃÊVÀÕVˆ>ÊˆÃÃÕiÊvœÀÊÜVˆiÌÞ° Pierre Tapie, Executive Director, ESSEC Business School “The “Diversity and Performance” Chair is the culmination of a shared belief: that diversity drives performance. L’Oréal was intimately involved in defining the content.” > Diversity Seminars for Managers -ˆ˜ViÊ̅iÊi˜`ʜvÊÓääÈ]Ê>ÊëiVˆ>Ê ˆÛiÀÈÌÞÊÌÀ>ˆ˜ˆ˜}Ê«Àœ}À>““iÊ ˆÃÊLiˆ˜}ÊÀœi`ʜÕÌÊvœÀÊ̅iÊn]äääʓ>˜>}iÀÃʈ˜Ê̅iÊ}ÀœÕ«°Ê/…ˆÃÊ programme is designed to help them identify and overcome >˜ÞʜvÊ̅iˆÀʜܘʈ˜`ˆÛˆ`Õ>ÊL>ÀÀˆiÀÃÊ̜Ê`ˆÛiÀÈÌÞ°Ê ÞÊ̅iÊi˜`ʜvÊ ÓääÇ]ʘi>ÀÞÊ£]nääʓ>˜>}iÀÃʅ>`Ê>Ài>`ÞÊÀiViˆÛi`ÊÌÀ>ˆ˜ˆ˜}° Mike Elmont, co-founder of Focus Consultancy “In the past two years we have designed and piloted a Diversity and Equity training programme for L’Oréal and are currently rolling it out Europe-wide for 8,000 L’Oréal managers. You cannot invest that amount of time and allocate the relevant resources without a serious commitment to diversity.”

44% Men

56% Women

> Breakdown of female and male executives in 2007(2)

PROMOTING EQUAL RECRUITMENT OPPORTUNITIES

˜ÊœÀ`iÀÊ̜Ê`ˆÛiÀÈvÞÊÀiVÀՈ̓i˜ÌÊÜÕÀViÃ]Ê̅iÊ}ÀœÕ«ÊÃÕ««œÀÌÃÊ numerous forums devoted to minorities, the disabled or senˆœÀÃ]Ê>˜`ÊÃiÌÃÊÕ«Ê«>À̘iÀň«ÃÊ܈̅Ê>ÃÜVˆ>̈œ˜ÃÊ̜Êvˆ}…ÌÊ`ˆÃVÀˆ“ˆ˜>̈œ˜° SHARING BEST PRACTICES

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˜ÌÀi«Ài˜`ÀiÊ«œÕÀʏ>Ê ˆÌj°Ê/…iʏ>LœÀ>̜ÀÞʈ˜ÛœÛiÃÊ>ÀœÕ˜`Ê vˆvÌii˜Êˆ˜ÌiÀ˜>̈œ˜>ÊVœ“«>˜ˆiÃÊ>ÃÊÜiÊ>ÃÊ>««ÀœÝˆ“>ÌiÞÊÌi˜Ê >˜Ìˆ‡`ˆÃVÀˆ“ˆ˜>̈œ˜Ê>ÃÜVˆ>̈œ˜ÃÊ­
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»° Ann Vandenhende, CSR Europe Senior Director and Catherine Rubbens, CSR Europe Director “L’Oréal has taken up a strong leadership role in managing this laboratory. Through the active engagement of key European stakeholders, it also pushes forward the equality and nondiscrimination agenda in Europe”.

65% Men

35% Women

> Breakdown of female and male management committee members in 2007(2)

61

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ENSURING FINANCIAL STABILITY AND MAKING OUR ORGANISATIONAL STRUCTURES MORE EFFICIENT The Administration and Finance Division of L’Oréal continued to apply a balanced financial policy in 2007. The policy was supported by initiatives to improve the productivity of both organisational structures and systems made available to the operational teams. Throughout the group, the administration, management and finance teams played an active part in the operational performance of the businesses. Their contribution was particularly focused on tightening up internal control, monitoring cash flows and ensuring rigorous control of performance, which was reported in detail to all shareholders. Overall, the group continued in 2007 its policy of substantially and continuously increasing dividend, backed up by a share buyback programme for significant amounts, while strengthening the balance sheet. Christian Mulliez Executive Vice-President Administration and Finance

2007 HIGHLIGHTS

> Updating of the Fundamentals of Internal Control guide to help employees identify operational risks even more clearly. > Implementation of the Enterprise Resource Planning (ERP) and the new reporting tool continued. > Creation of an Indirect Purchasing department in most subsidiaries. > Pooling of subsidiaries’ support services continued.

> Disposal of 1.8% stake in Sanofi-Aventis capital. > Several strategic acquisitions: PUREOLOGY, an American premium professional haircare brand; the American distributors Beauty Alliance and Maly’s West; preparation for the acquisition of Canan, a Turkish haircare product company, and the signing of a scientific collaboration agreement with Light Bioscience, the leading medical research company in LED photomodulation®.

RESOURCES // ADMINISTRATION AND FINANCE

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The merging of teams in single sites continued, as in Greece where a new headquarters was opened.

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PURCHASING OPTIMISATION *Àœ}À>““iÃÊ̜ʜ«Ìˆ“ˆÃiʘœ˜‡«Àœ`ÕV̈œ˜Ê«ÕÀV…>ÃiÃÊVœ˜Ìˆ˜Õi`]Ê «>À̈VՏ>ÀÞʈ˜Ê>`ÛiÀ̈Ș}Ê>˜`Ê«Àœ“œÌˆœ˜Ê«ÕÀV…>Ș}°Ê ÞÊ̅iÊ i˜`ʜvÊÓääÇ]Ê«Àœ}À>““iÃʜvÊ̅ˆÃÊÌÞ«iʅ>`ÊLii˜Êˆ˜ÌÀœ`ÕVi`ʈ˜Ê әÊVœÕ˜ÌÀˆiÃ]Êi˜>Lˆ˜}ÊÃÕLÃÌ>˜Ìˆ>ÊVœÃÌÊÃ>ۈ˜}ðÊ/œÊi˜ÃÕÀiÊ̅>ÌÊ }>ˆ˜ÃÊVœ˜Ìˆ˜Õiʈ˜Ê̅iʏœ˜}ÊÌiÀ“]ʘ`ˆÀiVÌÊ*ÕÀV…>Ș}Ê`i«>À̓i˜ÌÃʅ>ÛiÊLii˜ÊVÀi>Ìi`ʈ˜Ê“œÃÌÊ}ÀœÕ«ÊÃÕLÈ`ˆ>Àˆiðʘ`ˆÀiVÌÊ

POOLING CONTINUES ½"Àj>Ê“>`iÊÀ>«ˆ`Ê>`Û>˜ViÃÊ>}>ˆ˜Êˆ˜ÊÃÕ««œÀÌÊÃiÀۈViÊ«œœˆ˜}]Ê «>À̈VՏ>ÀÞʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃÊ>˜`Ê ÕÀœ«i°Ê/…iÊVœ˜Ãœˆ`>̈œ˜Ê œvÊ̅iʈ˜vœÀ“>̈œ˜ÊÌiV…˜œœ}Þ]ʅՓ>˜ÊÀiÜÕÀViÃ]Ê>VVœÕ˜Ìˆ˜}Ê >˜`Ê«ÕÀV…>Ș}Ê>V̈ۈ̈iÃÊÃÌÀi˜}̅i˜ÃÊ̅iÃiÊÃÌÀÕVÌÕÀiýʜ«iÀ>̈œ˜>ÊivvˆVˆi˜VÞ°Ê
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GREATER CONTROL OF OPERATIONAL RISKS To help all employees carry out their everyday duties, the group has updated the Fundamentals of Internal Control guide. This overview of internal control, first edited in 2005, is a simple and effective management and training tool, which supplements the group’s standards and charters. It forms part of an ongoing internal control effort, and is an essential tool to effectively manage operational risks. The guide is a reference document based on practical experience. It brings together all the measures designed to provide a guidance framework for operational activities.

63

64

BUSINESSES

EXCELLING IN ALL OUR DISTRIBUTION CHANNELS Professional Products «°ÈÈ

Consumer Products p.72

Luxury Products «°nä

Active Cosmetics «°nn

The Body Shop p.94

65

GIORGIO ARMANI event for the Emporio Armani Diamonds launch at GUM department store in Moscow.

To tap into every desire for beauty, each Division maximises the potential of all its brands: today’s leaders and those of tomorrow. In this way, a closer and stronger relationship is established each day, between our brands and growing numbers of increasingly diverse consumers. In 2007, all Divisions increased their market share, matching each other in contributing to the dynamism of the group’s growth.

Galderma p.97

66

BUSINESSES

PROFESSIONAL PRODUCTS

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STIMULATING CREATIVITY IN ALL HAIR SALONS The Division’s key focus is to be the partner of the greatest number of hair salons around the world. Firstly, through differentiated brands, enabling salons of all kinds to express their personality. The acquisition of the American brand PUREOLOGY in 2007, for example, is strengthening our presence in the new and fast-growing luxury segment. The Division also offers increasingly relevant innovations which improve the quality of hair colour, styling and haircare services. Finally, educational initiatives, tailored to suit each salon’s stage of development and aspirations, support and inspire salons, reflecting the specific preferences of each region of the world. Jean-Jacques Lebel President Professional Products

Shu Uemura Art of Hair, France.

2007 HIGHLIGHTS

> Acquisition of two of its key distributors in the United States, Beauty Alliance and Maly’s West, to build a closer relationship with American hairdressers in the fields of services and education, and to accelerate the Division’s growth. > Acquisition of the PUREOLOGY brand in the United States to complete the Division’s brand portfolio in the luxury haircare segment. This brand offers haircare products for colour-treated hair.

> Launch of SHU UEMURA ART OF HAIR in an ultra-selective distribution channel. > Success of the Division’s initiatives in the segment aimed at senior women with Color Suprême hair colourants and Age Densiforce haircare from L’ORÉAL PROFESSIONNEL, together with the Age-Recharge haircare range from KÉRASTASE. > Extension of the global reach of the MATRIX brand, now present in 50 countries and 260,000 salons.

BUSINESSES // PROFESSIONAL PRODUCTS

PUREOLOGY

A new strategic brand for the Division in a fast-growing sector PUREOLOGY has an excellent reputation with the top American hair colour specialists for its highly original formulas: sulphate-free shampoos, plant ingredients and aromatic perfumes. Acquired in 2007, the brand is proving extremely successful in the United States. It is unlocking excellent growth opportunities all over the world.

2007 REVIEW

2008 OUTLOOK

Growth accelerated in all regions of the world, as the Division grew three times faster than the market. In Western Europe, all countries and all brands contributed to the growth rate of +4%. In North America (+6.2%), the Division is benefiting from the acquisition of two distributors, by forging a strategic alliance with the hairdressers who are our customers, and from the dynamism of our brands, particularly REDKEN and KÉRASTASE. The recently acquired PUREOLOGY brand is also growing strongly. Growth in the rest of the world was +16.4%, with advances of +9.3% in Japan, +40.7% in Russia and +29.4% in China.

Growth is set to continue in 2008, with a particular focus on the highly dynamic luxury hairdressing market, as the Division goes on building a comprehensive offering to meet the needs of the most exclusive salons. It will continue to develop its luxury brands with highly diverse cultural backgrounds: the French brand KÉRASTASE, the Japanese brand SHU UEMURA ART OF HAIR and the American brand PUREOLOGY. 2008 marks the Division’s entry into the new and highly dynamic market of professional skincare, with the newly created brand KERASKIN ESTHETICS. The Division is now able to offer a full spectrum of beauty care products in the world’s most prestigious salons. The Division will also strive to reinforce its positions in the booming men’s and senior women’s segments. Finally, the geographical rollout will continue across all regions of the world, particularly in the most affordable salons where MATRIX should make more breakthroughs.

CONSOLIDATED SALES BY GEOGRAPHIC ZONE

CONSOLIDATED SALES BY BUSINESS SEGMENT

2006

2007

% of 2007 sales

E millions

Growth 2007/2006 Like-for-like

Published figures

Western Europe

980.3

1,017.8

42.6%

+4.0%

+3.8%

North America

635.5

802.0

33.5%

+6.2%

Rest of the World TOTAL

2006

2007

% of 2007 sales

E millions

Growth 2007/2006 Like-for-like

Published figures

Hair colourants

842.8

887.6

37.1%

+6.5%

+5.3%

+26.2%

Styling and textures

349.5

360.3

15.1%

+1.1%

+3.1%

Shampoos and haircare

933.6

1,144.0

47.8%

+10.4%

+22.5%

2,125.9

2,391.9

100%

+7.5%

+12.5%

510.0

572.1

23.9%

+16.4%

+12.2%

2,125.9

2,391.9

100%

+7.5%

+12.5%

TOTAL

70

The Professional Products Division develops services and offers products to meet the expectations of all hairdressing professionals, in hair colourants, textures and haircare. It has the most comprehensive brand portfolio in the industry thanks to its cultural variety and its ability to cater for all kinds of hair salons, from the most affordable to the most exclusive.

L’ORÉAL PROFESSIONNEL ˜ÊÓääÇ]Ê̅iÊL’ORÉAL PROFESSIONNEL brand sharply accelerated its growth, advancing more than twice as fast as the worldwide “>ÀŽḭʘʅ>ˆÀÊVœœÕÀ>˜ÌÃ]Ê̅iÊ}œœ`Ê«iÀvœÀ“>˜ViÃʜvÊ̅iÊVœÀiÊ À>˜}iÃÊ>ˆÀiÊ>˜`Ê,ˆV…iÃÃi]ÊVœ“Lˆ˜i`Ê܈̅Ê̅iʅˆ}…ÞÊÃÕVViÃÃvՏʏ>՘V…ÊœvÊ œœÀÊ-Õ«Àk“iʈ˜Ê̅iÊÃi˜ˆœÀÊܜ“i˜½ÃÊÃi}“i˜Ì]Ê …>Ûiʏi˜ÌÊ`ޘ>“ˆVʘiÜʈ“«iÌÕÃÊ̜Ê̅ˆÃÊLÕȘiÃðʘÊÌiÝÌÕÀiÃ]Ê̅iÊ

brand is continuing to win market share in zones with strong «œÌi˜Ìˆ>]Ê̅>˜ŽÃÊ̜ʫÀœ`ÕVÌÃÊÃÕV…Ê>ÃÊ8Ìi˜ÃœÊ܅ˆV…ʈÃÊVœ˜Ìˆ˜Õˆ˜}Ê ÌœÊ«ÀœÛiʅˆ}…ÞÊÃÕVViÃÃvՏ°Ê/…iÊ
È>˜Ê>՘V…ÊœvÊ7œ˜`iÀÊ7>ÛiʈÃÊ >ÃœÊVœ˜ÌÀˆLṎ˜}Ê̜Ê̅iÊLÀ>˜`½ÃÊ}ÀœÜ̅ʈ˜Ê̅ˆÃʓ>ÀŽiÌÊÃi}“i˜Ì°Ê ˜Ê̅iʅ>ˆÀV>ÀiÊÃiV̜À]Ê-jÀˆiÊ Ý«iÀÌʈÃÊVœ˜Ìˆ˜Õˆ˜}ʈÌÃʅˆ}…ÞÊ `ޘ>“ˆVÊ}ÀœÜ̅Ê>VÀœÃÃÊ̅iÊܜÀ`°Ê/…iÊÃÕVViÃÃvՏʏ>՘V…ÊœvÊ
}iÊ i˜ÃˆvœÀViʈÃÊVœ˜Ãœˆ`>̈˜}Ê̅iÊLÀ>˜`½ÃʜvviÀˆ˜}ʈ˜Ê̅iʓ>ÀŽiÌÊ >ˆ“i`Ê>ÌÊÃi˜ˆœÀÊܜ“i˜°Ê˜ÊÃÌޏˆ˜}]Ê̅iÊLÀ>˜`½ÃÊ}ÀœÜ̅ʈÃÊVœ˜Ìˆ˜Õˆ˜}Ê̅>˜ŽÃÊ̜Ê̅iÊ}œœ`ÊÃVœÀiʜvÊ/iV˜ˆ°
ÀÌÊ>˜`Ê̅iʜ˜}œˆ˜}Ê ÃÕVViÃÃÊÃ̜ÀÞʜvÊ̅iÊ*>ÞÊ >ÊÃÌޏˆ˜}ÊÀ>˜}iÊvœÀÊޜ՘}Ê«iœ«i]Ê ÜˆÌ…ÊˆÌÃʺ>ÌiÀ˜>̈Ûi»Êˆ“>}i°Ê/iÝÌÕÀiÊ Ý«iÀÌ]Ê>ʘiÜÊ«Ài“ˆÕ“Ê…ˆ}…Ê tech styling range, has made a very promising start.

KÉRASTASE ˜ÊÓääÇ]ÊKÉRASTASE continued to improve its top-end positioning, LœÃÌiÀˆ˜}ʈÌÃÊ«œÃˆÌˆœ˜Ê>ÃÊܜÀ`ʘՓLiÀʜ˜iʈ˜ÊÕÝÕÀÞʅ>ˆÀV>ÀiÊ LÞÊ>V…ˆiۈ˜}Ê`œÕLi‡`ˆ}ˆÌÊ}ÀœÜ̅°Ê/…iÊLÀ>˜`ÊÃVœÀi`ʈÌÃʅˆ}…iÃÌÊ }ÀœÜ̅ÊÀ>ÌiÊvœÀÊvˆÛiÊÞi>ÀÃ]ÊiÝViˆ˜}ʈ˜Ê“>œÀÊVœÕ˜ÌÀˆiÃÊÃÕV…Ê>ÃÊ >«>˜Ê>˜`Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiðÊ/…iʓ>ˆ˜Ê…ˆ}…ˆ}…ÌÃÊÜiÀiÊ̅iÊ }ÀœÜˆ˜}Ê`ޘ>“ˆÃ“ÊœvÊ̅iÊ,jÈÃÌ>˜ViÊvÀ>˜V…ˆÃi]Ê܈̅Ê̅iÊ`iÛiœ«“i˜ÌʜvÊ̅iÊ
}i‡,iV…>À}iÊÀ>˜}iÊvœÀÊÃi˜ˆœÀÊܜ“i˜]Ê̅iÊÃÕVViÃÃvՏʏ>՘V…ÊœvÊ ÕÌÀˆÌˆÛiÊ"jœ‡ ÕÀÊœ˜Ê̅iÊVÕÀÞʅ>ˆÀÊÃi}“i˜Ì]Ê Ì…iÊ܈˜˜ˆ˜}ÊÜ>ÞÃʜvÊ*ˆÝiˆÃÌ]Ê>Ê«œÃ̇VœœÕÀ>˜Ìʅ>ˆÀV>Àiʏˆ˜iÊvœÀÊ professional use only, and the creation of the new haircare cati}œÀÞʜvʘˆ}…̇̈“iÊÌÀi>̓i˜ÌÊ܈̅Ê̅iÊ œV̜}i˜ˆÃÌÊÀ>˜}i°

Kérastase With Noctogenist, KÉRASTASE is growing rapidly and reinforcing its position as the luxury haircare world leader.

PARTNERSHIP

HAIR BE 12 Serious games foster a new educational approach The Division has developed a new tool for both trainees and experienced hairdressers, that uses online video game techniques to simulate the activity of a hair salon. This new educational system helps hairdressers improve the quality of the services provided to their customers, builds team spirit and increases salon sales. Hair Be 12 is also aimed at all our hairdressers who wish to train or perfect their skills using the Internet. The initiative has been unanimously welcomed by hairdressing schools and hairdressers in salons across the world.

BUSINESSES // PROFESSIONAL PRODUCTS

L’Oréal Professionnel, Age Densiforce L’ORÉAL PROFESSIONNEL is continuing its breakthrough in the seniors segment thanks to the success of its two major initiatives: the Age Densiforce anti-ageing haircare range and the global roll-out of Color Suprême hair colourant.

MATRIX ՓLiÀʣʈ˜Ê œÀ̅Ê
“iÀˆV>]ÊMATRIX produced a satisfactory performance in this region, despite a less substantial contribution from new products and substantial efforts to restrict distriLṎœ˜Ê̜Ê̅iÊ«ÀœviÃȜ˜>ÊV…>˜˜iÊœ˜Þ°Ê/…iÊLÀ>˜`½Ãʈ˜ÌiÀ˜>̈œ˜>‡ ˆÃ>̈œ˜ÊˆÃÊVœ˜Ìˆ˜Õˆ˜}]Ê>ÃʈÌÊLœÃÌiÀÃʈÌÃÊ«œÃˆÌˆœ˜Ãʈ˜Ê À>∏]Ê,ÕÃÈ>]Ê ˜`ˆ>]Ê …ˆ˜>Ê>˜`Ê*œ>˜`°Ê>ˆÀÊVœœÕÀ>˜ÌÃÊi˜œÞi`Ê`œÕLi‡`ˆ}ˆÌÊ }ÀœÜ̅ÊvœÀÊ̅iÊÌܜÊVœÀiÊÀ>˜}iÃÊ-œVœœÀÊ>˜`Ê œœÀÃޘV]Ê̅>˜ŽÃÊ ÌœÊ̅iÊÃÕVViÃÃʜvÊ̅iÊ …œVœ>ÌiÊ …iÀÀÞʈ˜ˆÌˆ>̈Ûi°Ê7œ˜`iÀLÀœÜ˜Ê Ü>Ãʏ>՘V…i`ÊÃÕVViÃÃvՏÞʈ˜Ê
È>Ê>˜`ÊÌ>Þʈ˜Ê̅iÊLÀœÜ˜ÊÃi}“i˜Ì°Ê˜Ê…>ˆÀV>Ài]Ê̅iÊÃÕVViÃÃʜvÊ̅iÊœÀÌi̅jÀ>«ˆiʏ>՘V…ʈ˜Ê À>∏ʈÃÊVœ˜Ìˆ˜Õˆ˜}]Ê>˜`Ê œœˆ˜}ʈ˜ÌÊvÀœ“Ê-V>«Ì…jÀ>«ˆiʓ>`iÊ >ÊÛiÀÞÊ«Àœ“ˆÃˆ˜}ÊÃÌ>ÀÌʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiðʘÊÃÌޏˆ˜}]Ê6>ۜœ“Ê œ`Êi>ÌÊVœ˜vˆÀ“i`ʈÌÃÊܜÀ`܈`iÊÃÕVViÃð

REDKEN /…iÊLÀ>˜`Ê>}>ˆ˜Êˆ˜VÀi>Ãi`ʈÌÃʓ>ÀŽiÌÊÅ>ÀiÊ>˜`ʈÃÊÃÌÀi˜}̅i˜ˆ˜}Ê ˆÌÃÊ«œÃˆÌˆœ˜Ãʜ˜Ê>ÊVœ˜Ìˆ˜i˜Ìðʘʅ>ˆÀÊVœœÕÀ>˜ÌÃ]ÊREDKEN is building up its presence and recruiting thousands of salons with the Ài>՘V…ÊœvÊ œœÀÊÕȜ˜Ê
`Û>˜Vi`Ê*iÀvœÀ“>˜ViÊ œœÀÊ Ài>“°Ê ˜Ê…>ˆÀV>Ài]Ê
Ê-œvÌÊvœÀÊ`ÀÞʅ>ˆÀÊÜ>ÃÊÃÕVViÃÃvՏÞÊÀi>՘V…i`]Ê iÝ«iÀÌÊÃ>œ˜Ê…>ˆÀV>ÀiÊÜ>ÃÊÃÌÀi˜}̅i˜i`ÊLÞÊ …i“ˆÃÌÀÞÊ-ÞÃÌi“]Ê >˜`Ê̅iʏ>՘V…ÊœvÊ̅iÊÃV>«ÊV>Àiʏˆ˜iÊ-V>«Ê,iˆivÊÜ>ÃÊÛiÀÞÊÜiÊ ÀiViˆÛi`°Ê˜ÊÃÌޏˆ˜}]ÊREDKENʈ˜ÌÀœ`ÕVi`Ê1ÀL>˜Ê Ý«iÀˆ“i˜Ì]Ê>ʘiÜÊ }i˜iÀ>̈œ˜ÊœvÊ«Àœ`ÕVÌÃÊ܈̅ʅˆ}…ÞʜÀˆ}ˆ˜>ÊÌiÝÌÕÀiÃÊvœÀÊ>˜Ê ՘`iÀ}ÀœÕ˜`ÊÃÌޏi°Ê,i`Ži˜ÊvœÀÊi˜Ê…>ÃÊÃÌÀi˜}̅i˜i`ʈÌÃÊ«œÃˆÌˆœ˜ÃÊ>ÊœÛiÀÊ̅iÊܜÀ`Ê܈̅Ê̅iʓi˜½Ãʅ>ˆÀÊVœœÕÀ>˜ÌÊ œœÀÊ

>“œÊ£ä½]Ê>˜`Ê܈̅ʈ˜˜œÛ>̈ÛiÊÃÌޏˆ˜}Ê«Àœ`ÕVÌð

SHU UEMURA ART OF HAIR /…iʏ>՘V…ÊœvÊSHU UEMURA ART OF HAIR, in the second half of ÓääÇ]ʈ˜Ê̅iʓœÃÌÊ«ÀiÃ̈}ˆœÕÃʅ>ˆÀÊÃ>œ˜Ã]ʈÃÊLՈ`ˆ˜}ÊÕ«Ê̅iÊ ˆÛˆÃˆœ˜½ÃÊLÀ>˜`Ê«œÀÌvœˆœÊˆ˜Ê̅iʏÕÝÕÀÞÊÃi}“i˜Ì°Ê/…iÊLÀ>˜`Ê focuses on hair beauty rituals inspired by the Japanese tea ViÀi“œ˜Þ°Ê >Ãi`ʜ˜Ê̅iÊ«…ˆœÃœ«…ÞʜvÊÀÊ-…ÕÊ1i“ÕÀ>Ê>˜`ʅˆÃÊ «ÀœviÃȜ˜>ÊiÝ«iÀˆi˜Vi]Ê̅iÊLÀ>˜`ʜvviÀÃʅ>ˆÀV>ÀiÊ>˜`ÊÃÌޏˆ˜}Ê products formulated with rare and natural ingredients redisVœÛiÀi`ÊLÞÊÃVˆi˜Vi°Ê>՘V…i`ʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃÊ>˜`ʈ˜Ê

ÕÀœ«i]Ê̅iÊLÀ>˜`ʅ>ÃÊLii˜ÊÛiÀÞÊv>ۜÕÀ>LÞÊÀiViˆÛi`]Ê>˜`ʈÌÃÊ growth prospects are promising.

Shu Uemura Art of Hair With the new SHU UEMURA ART OF HAIR brand, the Division continues to build a complete offering for high-end salons.

MIZANI /…ˆÃÊiÝ«iÀÌÊLÀ>˜`ÊvœÀÊ
vÀœ‡
“iÀˆV>˜Ê>˜`ʓˆÝi`‡À>Viʅ>ˆÀʈÃÊ Vœ˜Ìˆ˜Õˆ˜}Ê̜Ê}ÀœÜÊ­³Î£¯®]Ê܈̅Ê>ÊÃÕVViÃÃvՏʏ>՘V…ÊvœÀÊ ÕÌÌiÀÊ i˜`]Ê>ÊVœ“«Ài…i˜ÃˆÛiÊÃÌÀ>ˆ}…Ìi˜ˆ˜}ÊÃÞÃÌi“Ê܈̅Ê>ÃÜVˆ>Ìi`Ê treatments to obtain an outstanding quality of hair.

L’Oréal Professionnel, Germany.

Matrix, India.

Redken, shampoo range.

International hairdressing show, Germany.

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BUSINESSES

CONSUMER PRODUCTS

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INNOVATING FOR ALL CONSUMERS

The most important challenge for the Division is the global roll-out of our major brands, L’ORÉAL PARIS, GARNIER and MAYBELLINE NEW YORK, to make sure that we take full advantage of dynamic consumer spending in the growth relay countries and the thrust of modern retailing channels. Our second challenge is to continue our geographic conquests, by investing in the BRIMC countries (Brazil, Russia, India, Mexico and China) while supporting a good level of growth in Western Europe and North America and increasing worldwide profitability through businesses which have reached critical mass. The third challenge is moving into categories with a strong growth potential and high added value, such as skincare and make-up, where our performance is able to excell both in terms of sales and contribution to profit, without failing to develop positions in our original business of haircare. Our fourth challenge is making product innovation a permanent process: as well as rapidly renewing the catalogue, the key to our dynamic growth, it is important to build major franchises in a long-term perspective, spurred on by technological innovations, and establish them on a permanent basis in each of the main regions of the world. Patrick Rabain President Consumer Products

L’Oréal Paris, Bosnia and Herzegovina.

2007 HIGHLIGHTS

> In facial skincare, the Division broke the one billion euro barrier with a +19% increase, boosted by the successful launch of Skin Genesis by L’ORÉAL PARIS. Men Expert facial skincare meanwhile advanced by +45%. > An outstanding year in make-up, both for L’ORÉAL PARIS and MAYBELLINE NEW YORK, thanks in particular to very strong growth for the foundations Accord Parfait Mineral from L’ORÉAL PARIS and Superstay by MAYBELLINE NEW YORK.

> 12 countries accounted for 70% of the Division’s growth, in the following order: Russia, United States, China, Ukraine, Spain, United Kingdom, India, Mexico, Poland, Australia, Brazil and Italy. > Productivity efforts are continuing in organisational structures and in purchasing. Gross profit is improving, while selling, general and administrative expenses are advancing at only half the rate of sales growth, enabling a very significant increase in profit.

BUSINESSES // CONSUMER PRODUCTS

SKIN GENESIS

Natural source of youth With Skin Genesis, multi-layer cell strengthening skincare, L’ORÉAL PARIS is innovating by combining, without added preservatives, two key active ingredients: Pro-Xylane™, a molecule developed using green chemistry by L’Oréal laboratories after seven years of research, and hyaluronic acid, which is naturally present in the skin and can retain up to one thousand times its weight in water. To develop Pro-Xylane™, L’Oréal’s researchers used xylose, a sugar extracted from the ash tree, a renewable and biodegradable raw material.

2007 REVIEW

2008 OUTLOOK

The strong growth in sales (+7.9% like-for-like), built up quarter by quarter, enabled the Division to achieve a substantial increase in profit. Dynamic growth continued in Western Europe and there was a good performance in North America, two key regions where the Division is growing faster than the market. The remarkable acceleration in the rest of the world, led by the BRIMC countries, has propelled these countries beyond the mark of 30% of the Division’s sales. Finally, in the two high added value segments of skincare and make-up, the Division has stolen a march on its competitors with major launches and a strict policy of building blockbuster products.

The cosmetics market is just as dynamic as ever, driven by consumers who are keen to look attractive, the skincare needs of increasing numbers of seniors in West European markets, and the ability of the new middle classes in the rest of the world to afford beauty products. By making its product innovations more relevant and its brands more desirable, the Division is constantly creating more value in markets. Boosted by the success of the launches at the end of 2007 and by a particularly rich launch schedule in 2008, it is looking forward to 2008 with confidence and high expectations.

CONSOLIDATED SALES BY BUSINESS SEGMENT 2006

CONSOLIDATED SALES BY GEOGRAPHIC ZONE 2006

2007

% of 2007 sales

E millions

2007

% of 2007 sales

E millions

Growth 2007/2006 Like-for-like

Published figures

Growth 2007/2006 Like-for-like

Published figures

Hair colourants

1,587.2

1,604.8

19.4%

+4.6%

+ 1.1%

Haircare and styling

2,269.4

2,314.3

28.0%

+4.5%

+2.0%

Western Europe

3,640.9

3,729.5

45.0%

+3.5%

+2.4%

Make-up

2,136.5

2,252.7

27.2%

+10.1%

+5.4%

North America

2,130.9

2,043.2

24.7%

+3.9%

– 4.1%

Skincare

1,616.5

1,823.0

22.0%

+15.0%

+12.8%

Rest of the World

2,131.6

2,507.5

30.3%

+19.2%

+17.6%

Other

293.8

285.5

3.4%

–2.6%

–2.8%

7,903.5

8,280.2

100%

+7.9%

+4.8%

TOTAL

7,903.5

8,280.2

100%

+7.9%

+4.8%

TOTAL

75

76

The Consumer Products Division distributes its products through all mass-market channels. Its diversified brand portfolio offers consumers affordable products combining high technology with strong added value.

Bare Naturale, a new generation foundation beneficial for the skin, symbolising the dynamism of L’ORÉAL PARIS in the make-up segment.

L’ORÉAL PARIS /…iÊ ˆÛˆÃˆœ˜½ÃÊ«Ài“ˆÕ“ÊLÀ>˜`Ê>V…ˆiÛi`ÊÛiÀÞÊ}œœ`Ê}ÀœÜÌ…Ê ­³n°£¯®]ÊiÝVii`ˆ˜}ʈÌÃÊÌ>À}iÌÃʈ˜Ê“>˜ÞÊVœÕ˜ÌÀˆiðʘÊ̅iÊÃiVœ˜`Ê …>v]ʈÌÃÊ>VViiÀ>̈œ˜ÊÜ>ÃÊLœœÃÌi`ÊLÞÊ̅iÊÃÕVViÃÃʜvÊ«Àœ`ÕVÌÊ >՘V…iÃÊvÀœ“ÊÃՓ“iÀʜ˜Ü>À`ðÊ
Ì…œÕ}…ʈÌÃÊÃ>iÃʅ>ÛiÊ>Ài>`ÞÊ̜««i`Ê{ÊLˆˆœ˜ÊiÕÀœÃ]Ê̅iÊ LÀ>˜`ÊÃ̈Ê…>ÃÊVœ˜Ãˆ`iÀ>LiÊ}ÀœÜ̅ʫœÌi˜Ìˆ>Ê>ÃÊ̅iʘՓLiÀÊ œvÊVœ˜ÃՓiÀÃÊ`i“>˜`ˆ˜}Ê«Ài“ˆÕ“ʵÕ>ˆÌÞʈÃʈ˜VÀi>Ș}Ê>VÀœÃÃÊ Ì…iÊܜÀ`° ˜Ê̅iʅ>ˆÀV>ÀiÊÃi}“i˜Ì]Ê ÃmÛiʈÃÊVœ˜vˆÀ“ˆ˜}ʈÌÃÊ«œÃˆÌˆœ˜Ê>ÃÊ Ì…iʘՓLiÀʜ˜iÊÅ>“«œœÊˆ˜Ê̅iÊ7iÃÌÊ ÕÀœ«i>˜Ê“>ÀŽiÌ]ÊÜˆÌ…Ê Ì…iÊÃÕVViÃÃʜvÊ œœÀۈÛiÊ>˜`Ê ÕÌÀˆ}œÃðÊ>ˆÀÊÌÀi>̓i˜ÌÊÃ>iÃÊ >ÀiÊ}ÀœÜˆ˜}ʈ˜Ê̅iÊÀiÃÌʜvÊ̅iÊܜÀ`]Ê܅iÀiÊ̅iÊLÀ>˜`ʈÃʘœÜÊ ÃÌ>À̈˜}Ê̜ÊVœ˜µÕiÀʓ>ÀŽiÌÃ°Ê ˜iÌÌʅ>ˆÀʏ>VµÕiÀÊÃ>iÃÊ}ÀiÜÊLÞÊ ³Ç¯]ÊLœÃÌiÀi`ÊLÞÊiÛiÀ‡«ÀiÃi˜ÌÊ>˜`Ê}ÀœÜˆ˜}ÊVÕÃ̜“iÀʏœÞ>ÌÞ]Ê xäÊÞi>ÀÃÊ>vÌiÀʈÌÃÊVÀi>̈œ˜°Ê ÝVii˜ViÊ>˜`Ê*ÀjvjÀi˜Viʅ>ˆÀÊVœ‡ œÕÀ>˜ÌÃÊ`iˆÛiÀi`Ê܏ˆ`Ê«iÀvœÀ“>˜ViÃ]Ê>˜`Ê̅iÊ>““œ˜ˆ>‡vÀiiÊ …>ˆÀÊVœœÕÀ>˜ÌÊ >Ã̈˜}Ê Àm“iʏœÃÃÊ«ÀœÛi`ÊiÝÌÀi“iÞÊÃÕVViÃÇ vՏʈ˜ÊˆÌÃÊÃiVœ˜`ÊÞi>ÀʜvÊi݈ÃÌi˜Vi°

UV Perfect SPF 50, the champion of UV protection products in China, reflects the determination of L’ORÉAL PARIS to create regional blockbusters.

L’Oréal Paris, Russia.

L’Oréal Paris, France.

L’Oréal Paris, France.

BUSINESSES // CONSUMER PRODUCTS

Finding a gloss that stays is no longer mission impossible. Thanks to a new patented polymer, Glam Shine 6H from L’ORÉAL PARIS keeps its shine for 6 hours.

˜Êv>Vˆ>ÊΈ˜V>Ài]Ê̅iÊLœVŽLÕÃÌiÀÃÊ,iۈÌ>ˆvÌ]Ê
}i‡*iÀviVÌÊ>˜`Ê

œ>}i˜ÊˆiÀÊÀiVœÀ`i`Ê`œÕLi‡`ˆ}ˆÌÊ}ÀœÜ̅]Ê>˜`Ê̅iÀiÊÜ>ÃÊ >ÊÃÕVViÃÃvՏʏ>՘V…ÊvœÀÊ-Žˆ˜Êi˜iÈÃ]ʓՏ̈‡>ÞiÀÊViÊÃÌÀi˜}̅‡ i˜ˆ˜}ÊΈ˜V>Ài]ÊVœ“Lˆ˜ˆ˜}Ê̅iÊLi˜ivˆÌÃʜvʅÞ>ÕÀœ˜ˆVÊ>Vˆ`Ê>˜`Ê *Àœ‡8ޏ>˜i™° ˜Ê7iÃÌiÀ˜Ê ÕÀœ«i]Ê̅iÊLÀ>˜`ʜÕÌ«>Vi`ʈÌÃÊÌÀ>`ˆÌˆœ˜>ÊÀˆÛ>­£® >ÌÊi˜`‡ÓääÇÊ܈̅ÊÃi‡Ì…ÀœÕ}…ÊÀˆÃˆ˜}ÊLÞʳ£È¯°Ê/…iÊÃÕVViÃÃÊ Ã̜ÀˆiÃÊÜiÀiʍÕÃÌÊ>ÃÊÃi˜Ã>̈œ˜>Êˆ˜Ê …ˆ˜>p̅iÊÃiVœ˜`‡À>˜Žˆ˜}Ê v>Vˆ>ÊΈ˜V>Àiʓ>ÀŽiÌÊvœÀÊ̅iÊLÀ>˜`Ê>vÌiÀÊ̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃp ˆ˜Ê,ÕÃÈ>Ê>˜`ʈ˜Êi݈Vœ]Ê܅iÀiÊΈ˜V>ÀiÊ«Àœ`ÕVÌÃʅ>ÛiÊLii˜Ê >`>«Ìi`Ê̜ʓiiÌʏœV>Ê˜ii`ð /…iÊÃÕVViÃÃʜvÊ̅iÊi˜Ê Ý«iÀÌÊv>Vˆ>ÊΈ˜V>ÀiÊÀ>˜}iʅ>ÃÊLii˜Ê }ÀœÜˆ˜}ÊiÛiÀÊȘViʈÌÃʏ>՘V…Ê>ÌÊ̅iÊi˜`ʜvÊÓääx°Ê/ܜÊLœVŽ‡ LÕÃÌiÀÃ]ÊÞ`À>‡ ˜iÀ}ïVʭ܈̅Ê>“L>ÃÃ>`œÀÃÊ>Ì̅iÜÊœÝÊ ˆ˜Ê ÕÀœ«iÊ>˜`Ê >˜ˆiÊ7Õʈ˜Ê
È>®Ê>˜`Ê6ˆÌ>‡ˆvÌʭ܈̅Ê*ˆiÀViÊ ÀœÃ˜>˜®]Ê>ÀiÊ`ÀˆÛˆ˜}Êi˜Ê Ý«iÀÌÊvœÀÜ>À`ʈ˜ÊˆÌÃÊVœ˜µÕiÃÌʜvÊ ÜœÀ`ʓ>ÀŽiÌð ˜Ê“>Ži‡Õ«]ÊL’ORÉAL PARIS …>`Ê>˜ÊœÕÌÃÌ>˜`ˆ˜}ÊÞi>ÀÊvÀœ“ÊÃiÛiÀ>Ê ۈiÜ«œˆ˜ÌðÊ/…ÀœÕ}…ʈÌÃÊÃÌÀœ˜}Ê}ÀœÜ̅ʭ³£Ó¯®Êˆ˜Ê>ÊÀi}ˆœ˜ÃʜvÊ Ì…iÊܜÀ`°Ê ÞÊ>V…ˆiۈ˜}ÊVÀˆÌˆV>Ê“>ÃÃÊ­>“œÃÌʜ˜iÊLˆˆœ˜ÊiÕÀœÃ®]Ê ÃœÊ̅>ÌÊi>V…ÊVœÕ˜ÌÀÞÊV>˜ÊiÛiÀ>}iÊ«ÀœvˆÌ>LˆˆÌÞ°Ê
˜`Êvˆ˜>ÞÊ Ì…ÀœÕ}…Ê̅iʵÕ>ˆÌÞʜvʈÌÃʏ>՘V…iÃ]Ê܅ˆV…ÊVœ“Lˆ˜iʺˆ“«ÕÃiÊ LÕ޻ʫÀœ`ÕVÌÃ]ÊÃÕV…Ê>ÃÊ œœÀÊ,ˆV…iÊ>˜`ʏ>“Ê-…ˆ˜iÊÈʏˆ«Ã̈VŽÃ]Ê ºVœ˜Ûi˜ˆi˜Vi»Ê«Àœ`ÕVÌÃÊÃÕV…Ê>ÃÊ/iiÃVœ«ˆVʓ>ÃV>À>]Ê>˜`ʏœÞ>ÌÞÊ LՈ`ˆ˜}Ê«Àœ`ÕVÌÃÊÃÕV…Ê>ÃÊ >ÀiÊ >ÌÕÀ>iÊvœÕ˜`>̈œ˜°Ê/œ`>Þ]Ê̅iÊ LÀ>˜`ʈÃÊ>ˆ“ˆ˜}ÊvœÀÊV>Ìi}œÀÞʏi>`iÀň«Êˆ˜Ê“œÃÌʜvʈÌÃʓ>ÀŽiÌð

Fructis by GARNIER became the Division’s number one haircare and styling line in 2007.

GARNIER /…iÊGARNIERÊLÀ>˜`Ê>}>ˆ˜Ê>V…ˆiÛi`Ê>ÊÛiÀÞÊ}œœ`ÊÃVœÀiʈ˜ÊÓääÇÊ ÜˆÌ…Ê}ÀœÜ̅ʜvʳn°™¯°ÊÌÃÊ}œ>ÊˆÃÊ̜ʜvviÀÊÜiÊ>`>«Ìi`]ÊivviV‡ ̈ÛiÊ>˜`ʘ>ÌÕÀ>Ê«Àœ`ÕVÌÃʜvʈ˜ÌiÀ˜>̈œ˜>ÊµÕ>ˆÌÞʈ˜Êi>V…ÊÀi}ˆœ˜Ê œvÊ̅iÊܜÀ`°Ê
ʓ>ÃǓ>ÀŽiÌÊLÀ>˜`]ÊGARNIERÊLՈ`ÃÊ>ÊVœÃiÊ Ài>̈œ˜Ã…ˆ«Ê܈̅ÊVœ˜ÃՓiÀÃÊLÞÊÕȘ}ÊÜi‡Ž˜œÜ˜ÊœV>Ê«iÀܘ‡ >ˆÌˆiÃʈ˜ÊV…iiÀvՏÊ>`ÛiÀÌÃÊ܅ˆV…ÊœvviÀÊivviV̈ÛiÊ>˜ÃÜiÀÃÊ̜ÊÀi>‡ ˆviÊ«ÀœLi“ð /…ˆÃÊÃÌÀ>Ìi}ÞʈÃÊ«Àœ`ÕVˆ˜}ÊÛiÀÞÊÃÌÀœ˜}Ê}ÀœÜ̅ʈ˜Êi“iÀ}ˆ˜}Ê VœÕ˜ÌÀˆiÃ]Ê«>À̈VՏ>ÀÞʈ˜Ê,ÕÃÈ>]Ê1ŽÀ>ˆ˜i]Ê,œ“>˜ˆ>]Ê/…>ˆ>˜`]Ê ÕL>ˆ]Ê>˜`ʘ`ˆ>]Ê܅iÀiÊ̅iÊLÀ>˜`ʈÃÊLiVœ“ˆ˜}ʜ˜iʜvÊ̅iÊ “>œÀÊ«>ÞiÀðÊ˜Ê œÀ̅Ê
“iÀˆV>]ÊGARNIERʈÃÊ>V…ˆiۈ˜}Ê`œÕLi‡ `ˆ}ˆÌÊ}ÀœÜ̅Ê>˜`ʈÃʘœÜʜ«iÀ>̈˜}ʈ˜Ê̅ÀiiʎiÞÊV>Ìi}œÀˆiÃ\Ê …>ˆÀV>Ài]ʅ>ˆÀÊVœœÕÀ>˜ÌÃÊ>˜`ÊΈ˜V>Ài° "˜Ê̅iÊ«Àœ`ÕVÌÊvÀœ˜Ì]Ê̅iÊLÀ>˜`ʈÃÊVœ˜Vi˜ÌÀ>̈˜}ʈÌÃÊivvœÀÌÃʜ˜Ê LœVŽLÕÃÌiÀðÊÀÕV̈Ã]Ê̅iÊ ˆÛˆÃˆœ˜½ÃʘՓLiÀʜ˜iʅ>ˆÀV>ÀiÊ>˜`Ê ÃÌޏˆ˜}ÊÀ>˜}i]Ê}ÀiÜÊLÞʳǯÊ܈̅Ê̅iÊÃÕVViÃÃvՏʏ>՘V…ÊœvÊ-iiŽÊ EÊ-…ˆ˜iÊvœÀÊ`ÀÞÊ>˜`Ê՘“>˜>}i>Liʅ>ˆÀ°Ê ÕÌÀˆÃÃiÊ œœÀ>̈œ˜Ê VÀm“iÊ­>˜`Ê œœÀÊ >ÌÕÀ>Ã]ʈÌÃÊÛiÀȜ˜ÊvœÀÊi“iÀ}ˆ˜}ÊVœÕ˜ÌÀˆiÃ®Ê ˆÃÊ̅iÊܜÀ`½ÃʘՓLiÀʜ˜iʅ>ˆÀÊVœœÕÀ>˜Ìʈ˜ÊۜÕ“iÊ>˜`ʈÃÊ

(1) Nielsen/IRI panel—Facial skincare (December 2007).

L’Oréal Paris, Italy.

Garnier, India.

Garnier, Romania.

77

78 A grille diffuser is used to apply the new Watershine Elixir lip gloss from MAYBELLINE NEW YORK.

Garnier Pure anti-bacteria skincare is a big success in Eastern Europe.

World number one in mascara, MAYBELLINE NEW YORK introduces a new elastomer brush technology with Define-a-lash.

}ÀœÜˆ˜}ÊÃÌÀœ˜}Þʈ˜Ê7iÃÌiÀ˜Ê ÕÀœ«i]Ê œÀ̅Ê
“iÀˆV>Ê>˜`Ê̅iÊ , ÊVœÕ˜ÌÀˆið >À˜ˆiÀÊ-Žˆ˜Ê >ÌÕÀ>ÃÊv>Vˆ>ÊΈ˜V>ÀiÊÀiVœÀ`i`Ê}ÀœÜ̅ʜvʳÓ{¯Ê ܈̅ʈÌÃʓ>œÀÊvÀ>˜V…ˆÃiÃ]Ê>`>«Ìi`Ê̜Ê̅iʘii`ÃʜvÊ`ˆvviÀi˜ÌÊ Vœ˜Ìˆ˜i˜ÌÃ\Ê1ÌÀ>ˆvÌÊ>˜Ìˆ‡>}iˆ˜}ÊΈ˜V>Àiʈ˜Ê ÕÀœ«i]Ê*ÕÀiÊ>˜Ìˆ‡ L>VÌiÀˆ>ÊΈ˜V>Àiʈ˜Ê >ÃÌiÀ˜Ê ÕÀœ«i]Ê7…ˆÌi˜ˆ˜}ʈ}…ÌÊ«Àœ`ÕVÌÃÊ ˆ˜Ê-œÕ̅‡ >ÃÌÊ
È>Ê>˜`ʘ`ˆ>]Ê>˜`Ê̅iÊ ÕÌÀˆÌˆœ˜ˆÃÌiÊÀ>˜}iʈ˜Ê̅iÊ 1˜ˆÌi`Ê-Ì>ÌiÃ°Ê GARNIERÊLœ`ÞV>ÀiÊ«Àœ`ÕVÌÃÊ>V…ˆiÛi`Ê}œœ`Ê}ÀœÜ̅]Ê«>À̈VՏ>ÀÞÊ ÜˆÌ…Ê œ`ÞÊ,i«>ˆÀ]Ê œ`ÞÊ-Փ“iÀÊ>˜`Ê œ`Þʈ}…ÌʓœˆÃÌÕÀˆÃiÀÃ°Ê iëˆÌiÊ«œœÀÊÃՓ“iÀÊÜi>̅iÀ]Ê̅iÊ
“LÀiÊ-œ>ˆÀiÊÀ>˜}iÊÃÕV‡ Vii`i`ʈ˜Ê}ÀœÜˆ˜}ÊLÞʳ{¯Êˆ˜Ê ÕÀœ«i]ÊLœÃÌiÀi`ʈ˜Ê-«>ˆ˜ÊLÞÊ Ì…iÊ>VµÕˆÃˆÌˆœ˜ÊœvÊ iˆ>ÊÃ՘ʫÀœ`ÕVÌð

MAYBELLINE NEW YORK /…iÊ
“iÀˆV>˜Ê“>Ži‡Õ«ÊLÀ>˜`ʅ>`Ê>Ê«>À̈VՏ>ÀÞÊ«ÀœÃ«iÀœÕÃÊ Þi>ÀÊ܈̅ÊܜÀ`܈`iÊ}ÀœÜ̅ʜvʳn°{¯Ê>˜`Ê>Ê}œœ`ÊiVœ˜œ“ˆVÊ «iÀvœÀ“>˜Vi° /…iʅˆ}…ˆ}…ÌÊÜ>ÃÊ̅iÊLÀ>˜`½ÃÊL>>˜Vi`Ê`iÛiœ«“i˜ÌÊ>VÀœÃÃÊ >ÊÀi}ˆœ˜ÃʜvÊ̅iÊܜÀ`\Ê7iÃÌiÀ˜Ê>˜`Ê >ÃÌiÀ˜Ê ÕÀœ«i]Ê
È>]Ê >̈˜Ê
“iÀˆV>Ê>˜`Ê œÀ̅Ê
“iÀˆV>°ÊœÀiÊ̅>˜ÊiÛiÀÊLivœÀi]Ê MAYBELLINE NEW YORK ˆÃÊ̅iÊ՘`ˆÃ«ÕÌi`ÊܜÀ`܈`iʓ>Ži‡Õ«Ê i>`iÀ°Ê/…iÊ`iÛiœ«“i˜ÌÊÌi>“ÃÊܜÀŽi`ʅ>À`Ê̜Êi˜ÃÕÀiÊ̅iÊ ivviV̈Ûi˜iÃÃʜvÊ«Àœ`ÕVÌÊ«ÀiÃi˜Ì>̈œ˜ÃÊ>˜`ÊÌ>ŽiÊÌ>À}iÌi`ʈ˜ˆ‡ ̈>̈ÛiÃÊ̜ʓiiÌÊ̅iʘii`ÃʜvÊi>V…ÊÀi}ˆœ˜Êˆ˜Ê̅iÊܜÀ`° ˜Ê̅iÊiÞiÊÃi}“i˜Ì]ÊMAYBELLINE NEW YORK >՘V…i`Ê̅iʓ>œÀÊ ˆ˜˜œÛ>̈œ˜Ê ivˆ˜i‡>‡>ÅÊ܈̅Ê>˜Êi>Ã̜“iÀÊLÀÕÅ]Ê܅ˆV…ʈÃʘœÜÊ œ˜iʜvÊ̅iʏi>`ˆ˜}ʓ>ÃV>À>Ãʈ˜Ê ÕÀœ«iÊ>˜`Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ°Ê ˜Ê
È>]Ê܅iÀiÊiÞi>Åʘii`ÃÊ>ÀiÊ`ˆvviÀi˜Ì]Ê1˜Ã̜««>LiÊ>˜`Ê 6œÕ“½Ê Ý«ÀiÃÃÊ«iÀVÕÀÊ>ÀiÊ«ÀœÛˆ˜}ÊiÝÌÀi“iÞÊÃÕVViÃÃvՏ°Ê

Maybelline, Singapore.

/…iʎiÞÊ`iÛiœ«“i˜ÌÃʈ˜Ê̅iÊv>Vˆ>ÊÃi}“i˜ÌÊÜiÀiÊ̅iÊ܈˜˜ˆ˜}Ê -Õ«iÀÃÌ>ÞÊ-ˆŽÞʏœ˜}‡>Ã̈˜}ÊvœÕ˜`>̈œ˜Êˆ˜Ê7iÃÌiÀ˜Ê ÕÀœ«i]Ê >˜`Ê̅iÊÃÕVViÃÃʈ˜Ê
È>ʜvÊՓˆvˆÌÊ/ܜÊ7>ÞÊ >ŽiÊVœ“«>VÌÊ vœÕ˜`>̈œ˜]Ê>`>«Ìi`ÊvœÀÊ̅iÊ …ˆ˜iÃiÊVœ“«i݈œ˜Ê>˜`ÊVˆ“>Ìi°Ê ˜Ê œÀ̅Ê
“iÀˆV>Ê>˜`Ê ÕÀœ«i]Ê Ài>“Ê>ÌÌiÊœÕÃÃiÊvœÕ˜`>‡ ̈œ˜ÊˆÃÊVœ˜Ìˆ˜Õˆ˜}ʈÌÃÊ}ÀœÜ̅° ˜Êˆ«Ã̈VŽ]Ê̅iÊÃÕVViÃÃvՏʏ>՘V…ÊœvÊ7>ÌiÀň˜iÊ ˆÝˆÀʏˆ«Ê}œÃÃÊ ÃÌÀi˜}̅i˜i`Ê̅iÊ7>ÌiÀň˜iÊvÀ>˜V…ˆÃi°Ê˜Ê7iÃÌiÀ˜Ê ÕÀœ«i]Ê Ì…iÊÃÕVViÃÃʜvÊ-Õ«iÀÃÌ>Þʏœ˜}‡>Ã̈˜}ʏˆ«Ã̈VŽÊÜ>ÃÊVœ˜vˆÀ“i`]Ê Ü…ˆiʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃÊ̅iÊ}ÀœÕ«Êˆ˜˜œÛ>Ìi`Ê܈̅Ê-Õ«iÀÃÌ>ÞÊ }œÃÃÊ>˜`ʈÌÃʘiÜÊ«>Ìi˜Ìi`ÊÌiV…˜œœ}Þ°

SOFTSHEEN·CARSON /…iÊÞi>ÀÊÜ>ÃʓœÀiÊv>ۜÕÀ>LiÊvœÀÊSOFTSHEEN·CARSON]Ê܈̅Ê>Ê Vi>Àʈ“«ÀœÛi“i˜Ìʈ˜Ê-œÕ̅Ê
vÀˆV>Ê>˜`Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ]Ê Ü…ˆV…Ê̜}i̅iÀÊ>VVœÕ˜ÌÊvœÀʙä¯ÊœvÊ̅iÊLÀ>˜`½ÃÊÃ>ið ˜Ê-œÕ̅Ê
vÀˆV>]Ê̅iÊLÀ>˜`Ê«Àœ`ÕVi`Ê>Êvˆ˜iʓ>ÀŽï˜}Ê>˜`ÊVœ“‡ “iÀVˆ>Ê«iÀvœÀ“>˜ViÊÜˆÌ…Ê >ÀŽÊEÊœÛiÞÊÀi>ÝiÀðÊÌʏ>՘V…i`Ê ,ˆV…Ê>˜`Ê >ÌÕÀ>Ãʅ>ˆÀÊVœœÕÀ>˜ÌÃ]Ê>`>«Ìi`Ê̜Ê`i>Ê܈̅Ê̅iÊ vÀ>}ˆˆÌÞʜvÊÀi>Ýi`ʅ>ˆÀ°Ê˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃÊ̅iÀiÊÜiÀiÊ}œœ`Ê «iÀvœÀ“>˜ViÃÊvÀœ“Ê̅iÊ"«Ìˆ“Õ“Ê >ÀiÊÀ>˜}iÊ>˜`Êi̽ÃÊ>“Ê ÃÌޏˆ˜}Ê«Àœ`ÕVÌð

SoftSheen·Carson, South Africa.

BUSINESSES // CONSUMER PRODUCTS

Extreme comfort with Agnès b. moisturising and smoothing foundation.

CLUB DES CRÉATEURS DE BEAUTÉ /…iÊëiVˆ>ˆÃÌʈ˜Ê`ˆÀiVÌÊÃ>iÃʜvÊVœÃ“ïVÃÊ«Àœ`ÕVÌÃ]ÊLE CLUB DES CRÉATEURS DE BEAUTÉ ­

®]ʍœˆ˜ÌÞʜܘi`ÊxäÉxäÊLÞʽ"Àj>Ê>˜`Ê ÎÊ-ՈÃÃiÃ]ʅ>`Ê>Ê`ˆÃ>««œˆ˜Ìˆ˜}ÊÞi>À]ÊÀiviV̈˜}ʏœÜiÀÊÃ>iÃʈ˜Ê À>˜ViÊ>˜`ÊiÀ“>˜Þ°Ê˜ÌiÀ˜iÌÊÃ>iÃʅœÜiÛiÀÊVœ˜Ìˆ˜Õi`ÊÌœÊ ˆ˜VÀi>Ãi]Ê>˜`ʘœÜÊ>VVœÕ˜ÌÊvœÀʓœÀiÊ̅>˜ÊÎä¯ÊœvÊ̜Ì>ÊÃ>iÃ]Ê ÀˆÃˆ˜}Ê̜ÊÎn¯Êˆ˜Ê iVi“LiÀ°Ê,iviV̈˜}Ê̅ˆÃÊÃÕVViÃÃ]Ê̅iÊVVL‡ «>ÀˆÃ°vÀÊÈÌiÊÜ>ÃÊ̅iÊÃiVœ˜`ʓœÃÌÊۈÈÌi`ÊVœÃ“ïVÃÊÜiLÈÌiʈ˜Ê À>˜Viʈ˜ÊÓääÇ°

A new strength-building styling cream for ethnic hair in the Optimum Care range of SOFTSHEEN·CARSON.

PARTNERSHIP

L’ORÉAL AND COOP ITALIA Working together to double footfall in the Health and Beauty area Creating a universe in a hypermarket where consumers feel just as relaxed and receptive as in Perfumery: the challenge taken up by L’Oréal’s Italian subsidiary and Coop Italia. An exemplary collaborative effort to transform the Health and Beauty area of Ipercoop at Castenaso near Bologna into an attractive space offering a pleasant shopping experience: more clearly identified zones for each category, new products that are highlighted more effectively, and above all more explanations for consumers. This pilot partnership led to a very clear improvement in customer satisfaction and the doubling of footfall in the Health and Beauty section, together with a significant increase in sales.

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BUSINESSES

LUXURY PRODUCTS


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ANTICIPATING EVERY ASPIRATION FOR LUXURY Luxury is becoming truly global. The new markets—Russia, China, India, Mexico and the Middle East—are experiencing record growth rates. Meanwhile demand remains very high in Western markets. Over the next few years, we have a triple goal: to maintain our dynamism in fragrances by developing our brand portfolio, and further improving the success rate of our initiatives; to continue the globalisation of our relay brands: KIEHL’S, DIESEL, SHU UEMURA and VIKTOR & ROLF; to be a driving force in the major scientific innovation breakthroughs in the two major segments of skincare and make-up. Marc Menesguen President Luxury Products

Diesel, France.

2007 HIGHLIGHTS

> The arrival of the DIESEL brand at the end of August hits the headlines with the launch of two Fuel for Life fragrances, for men and women.

The success of the new skincare line Phyto-Black Lift is opening up bright prospects for the brand in skincare.

> Amongst the relay brands, KIEHL’S continues its conquest of world markets, and now covers 28 countries with new free standing stores and worldwide growth of +23.6%.

> GIORGIO ARMANI moves into the skincare segment with its ultra premium Crema Nera range, and opens its first spa in Tokyo.

> SHU UEMURA accelerates its growth and its worldwide presence, particularly in China, South Korea, the United States and Canada.

> LANCÔME consolidates its worldwide leadership in anti-ageing skincare with the success of Absolue Premium ßx, Rénergie Morpholift R.A.R.E. and the Lancôme Men line.

BUSINESSES // LUXURY PRODUCTS

KIEHL’S / GIORGIO ARMANI

Designing naturally innovative products The brands of the Luxury Products Division take a very close interest in natural ingredients. The aim is not to follow fashion, but as always to discover in nature new and effective ways of taking care of beauty. In 2007 the KIEHL’S brand thus launched its facial skincare line Yerba Maté, consisting of three products: a lotion, a toner and a cleanser. Maté is a South American plant whose stimulant and anti-oxidant properties are widely recognised, and which is very rich in nutrients. The new Crema Nera facial skincare line from GIORGIO ARMANI has a unique mineral composition, Obsidian Mineral Complex, which stimulates cellular metabolism, combined with expanded obsidian (L’Oréal patent). This highly innovative approach by L’Oréal researchers has produced excellent results both in vitro and in vivo.

2007 REVIEW

2008 OUTLOOK

In an extremely buoyant worldwide selective market, the Division achieved strong growth (+8.4%) across all geographic zones. In Western Europe (+6.7%), the recovery which began in 2006 became more pronounced, with very good scores in France, Italy, the United Kingdom, Belgium and Spain. In North America, the Division’s sales grew by +5%. In the rest of the world there was strong double-digit growth (+14.7%), with substantial expansion in Asia, the Middle East, Australia, Latin America and particularly Russia. Fragrances (+14.0%) are the most dynamic category. Skincare sales are growing, particularly in the anti-ageing segment. In make-up, the acceleration came in the second half. This dynamic growth, together with strict cost control, enabled the Division to significantly improve its profitability.

In 2008, the Luxury Products Division should benefit from a buoyant environment. It will expand across the world the successes of its brands, symbolising a new kind of luxury: DIESEL, VIKTOR & ROLF, KIEHL’S, SHU UEMURA and YUE-SAI. It will step up the global development of its core brands, such as LANCÔME, GIORGIO ARMANI, RALPH LAUREN, BIOTHERM and HELENA RUBINSTEIN. Men will be at the heart of the Division’s objectives in fragrances and skincare. Finally, the Division will focus its energy and resources on major initiatives.

CONSOLIDATED SALES BY GEOGRAPHIC ZONE

CONSOLIDATED SALES BY BUSINESS SEGMENT

2006

2007

% of 2007 sales

E millions

Growth 2007/2006

2006

Like-for-like

Published figures

E millions

2007

% of 2007 sales

Growth 2007/2006 Like-for-like

Published figures

Western Europe

1,627.3

1,734.7

44.2%

+6.7%

+ 6.6%

Skincare

1,405.2

1,423.0

36.2%

+5.6%

+1.3%

North America

1,087.6

1 053.2

26.8%

+5.0%

–3.2%

Fragrances

1,488.3

1,641.6

41.8%

+14.0%

+10.3%

Rest of the World

1,058.2

1,140.0

29.0%

+14.7%

+7.7%

Make-up

879.5

863.3

22.0%

+3.3%

–1.8%

3,773.1

3,927.9

100%

+8.4%

+4.1%

TOTAL

3,773.1

3,927.9

100%

+8.4%

+4.1%

TOTAL

83

84

The Luxury Products Division develops, manufactures and markets luxury beauty product brands, primarily fragrances, skincare and make-up, in worldwide selective distribution (department stores, perfumeries, travel retail, brand or distributor sales websites, and free standing stores). The Division is focused on developing each brand with a unique business model, and thus building up a highly complementary portfolio.

Produits descriptif

LANCÔME /…iÊܜÀ`½ÃʘՓLiÀʜ˜iʏÕÝÕÀÞÊLi>ÕÌÞÊLÀ>˜`]Ê>ÊÃޓLœÊœvÊ Ài˜V…ÊÀivˆ˜i“i˜Ì]ÊiÝVii˜ViÊ>˜`Êi“œÌˆœ˜]ÊLANCÔMEʈÃÊ̅iÊ >˜Ìˆ‡>}iˆ˜}ÊΈ˜V>ÀiÊ>˜`ʓ>Ži‡Õ«Êi>`iÀʈ˜Ê̅iÊÃiiV̈ÛiÊ`ˆÃ‡ ÌÀˆLṎœ˜ÊV…>˜˜i°Ê ˜ÊΈ˜V>Ài]Ê̅iÊ>˜Ìˆ‡>}iˆ˜}Ê
L܏ÕiÊ*Ài“ˆÕ“Ê~ÝÊ܈̅Ê*Àœ‡ 8ޏ>˜i™Ê>V…ˆiÛi`Ê`œÕLi‡`ˆ}ˆÌÊ}ÀœÜ̅Ê>˜`Ê,j˜iÀ}ˆiÊœÀ‡ «…œˆvÌÊ,°
°,° °Ê«Àœ`ÕVi`ʜ˜iʜvÊ̅iÊLiÃÌʏ>՘V…iÃʜvÊ̅iÊÞi>ÀÊ ÜœÀ`܈`iʈ˜Ê>˜Ìˆ‡>}iˆ˜}ÊΈ˜V>Ài°Ê˜Ê“>Ži‡Õ«]Ê L ANCÔME ÀiVœÀ`i`Ê>˜œÌ…iÀÊÃÕVViÃÃÊ܈̅Ê6ˆÀÌ՞Ãi]Ê̅iÊLÀ>˜`½ÃÊLiÃ̇ Ãiˆ˜}ʓ>ÃV>À>ÊȘViʈÌÃʏ>՘V…°Ê/…iÊvi“ˆ˜ˆ˜iÊvÀ>}À>˜ViÃÊ>ÀiÊ ÃÌ>LiÊ̅>˜ŽÃÊ̜Ê/ÀjÜÀp>˜`ʈÌÃʘiÜÊ>`ÛiÀ̈Ș}ÊV>“«>ˆ}˜Ê ܈̅Ê>ÌiÊ7ˆ˜ÃiÌp}i˜iÀ>̈˜}Ê>Ê`œÕLi‡`ˆ}ˆÌÊ}ÀœÜ̅ʈ˜Ê̅iÊ >ÃÌʵÕ>ÀÌiÀÊÓääÇ°Ê/…iÊVœ˜µÕiÃÌʜvÊ̅iʓi˜½Ãʓ>ÀŽiÌʈÃÊ>VVi‡ iÀ>̈˜}Ê܈̅Ê>˜Vž“iÊi˜ÊΈ˜V>ÀiÊ>˜`Ê̅iÊÃÕVViÃÃʜvÊ̅iÊ vÀ>}À>˜ViÊÞ«˜žÃiÊœ““i° ՓLiÀʜ˜iʈ˜Ê>˜Ìˆ‡>}iˆ˜}ÊVÀi>“ÊΈ˜V>Àiʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ]Ê LANCÔMEʈÃÊ>ÃœÊ܈˜˜ˆ˜}ʓ>ÀŽiÌÊÅ>Àiʈ˜ÊΈ˜V>Àiʈ˜ÊÀ>˜Vi°Ê˜Ê
È>]Ê̅iÊLÀ>˜`ʈÃÊ>ÃœÊ>`Û>˜Vˆ˜}Êv>ÃÌiÀÊ̅>˜Ê̅iʓ>ÀŽiÌʈ˜Ê>˜Ê iÝÌÀi“iÞÊVœ“«ï̈ÛiÊi˜ÛˆÀœ˜“i˜Ì°ÊÌʅ>ÃÊÃÌÀi˜}̅i˜i`ʈÌÃÊ ˜Õ“LiÀʜ˜iÊ«œÃˆÌˆœ˜Êˆ˜Ê …ˆ˜>°Ê->iÃÊVˆ“Li`ÊÅ>À«Þʈ˜Ê̅iÊ ,ÕÃÈ>˜Ê“>ÀŽiÌʈ˜ÊÓääÇ°

Rénergie Morpholift R.A.R.E. by Lancôme, one of the top anti-ageing skincare launches worldwide in 2007.

Lancôme, Italy.

Biotherm, Japan.

BUSINESSES // LUXURY PRODUCTS

BIOTHERM ˜ÊÓääÇ]Ê̅iÊ`ˆÃVœÛiÀÞʜvÊ>ʘiÜÊ«Àœ«iÀÌÞʜvÊ*>˜V̜˜Ê/…iÀ“>]Ê >Ê՘ˆµÕiʓˆVÀœ‡œÀ}>˜ˆÃ“ÊÕÃi`ʈ˜Ê>ÊBIOTHERMÊΈ˜V>Àiʏˆ˜iÃ]Ê “>ÀŽi`Ê̅iÊLˆÀ̅ʜvÊ`iÀ“œLˆœÌˆVÊVœÃ“ïVðÊ/…ˆÃʘiÜÊ>Ài>ʈÃÊ ÃÌÀi˜}̅i˜ˆ˜}Ê̅iÊLÀ>˜`½ÃÊÃÌÀœ˜}Ê«Àœ}ÀiÃÃ]Ê`ÀˆÛi˜ÊLÞÊ̅iÊ Ài“>ÀŽ>LiÊ`ޘ>“ˆÃ“ÊœvÊ̅iÊi“iÀ}ˆ˜}ʓ>ÀŽiÌÃp,ÕÃÈ>]Ê

…ˆ˜>]Êi݈Vœ]Ê ÕL>ˆp>˜`ÊÌÀ>ÛiÊÀiÌ>ˆ° BIOTHERMʈÃÊLՈ`ˆ˜}ʈÌÃÊÃÕVViÃÃÊLÞÊvœVÕȘ}ʜ˜Ê̅ÀiiʎiÞÊV>Ìi‡ }œÀˆiðʘÊv>Vˆ>ÊΈ˜V>ÀiÊvœÀÊܜ“i˜]Ê̅iÊLÀ>˜`ʈÃÊ̅iʓ>ÀŽiÌÊ i>`iÀʈ˜Ê“>˜ÞÊVœÕ˜ÌÀˆiÃʈ˜Ê̅iʓœˆÃÌÕÀˆÃˆ˜}ÊΈ˜V>ÀiÊÃi}“i˜ÌÊ Ì…>˜ŽÃÊ̜Ê̅iÊëiVÌ>VՏ>ÀÊ>`Û>˜ViÃʜvÊ
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È>°Ê˜ÊLœ`ÞV>Ài]Ê̅iÊLÀ>˜`ÊiÝ«>˜`i`ÊÈ}˜ˆvˆ‡ V>˜ÌÞÊ̅>˜ŽÃÊ̜Ê̅iʏ>՘V…ÊœvÊ̅iÊ œ`ÞÊ,iÃVՏ«ÌÊvˆÀ“˜iÃÃÊvÀ>˜‡ V…ˆÃi°Êˆ˜>Þ]ÊBIOTHERMʈÃÊÃ̈Ê}ÀœÜˆ˜}Êv>ÃÌiÀÊ̅>˜Ê̅iʓ>ÀŽiÌ]Ê Vœ˜vˆÀ“ˆ˜}ʈÌÃÊܜÀ`ʏi>`iÀÊ«œÃˆÌˆœ˜Êˆ˜Ê“i˜½ÃÊΈ˜V>Ài]Ê`iëˆÌiÊ ÌœÕ}…ÊVœ“«ï̈œ˜°

Reminerale, on sale since September 2007, is already making a strong contribution to BIOTHERM growth in the anti-ageing segment.

HELENA RUBINSTEIN /…iÊ«Ài“ˆÕ“ÊLÀ>˜`ÊHELENA RUBINSTEIN]Ê>ÊLÞܜÀ`ʈ˜Ê̅iÊ>˜Ìˆ‡ >}iˆ˜}ÊÃi}“i˜Ì]ʜvviÀÃÊΈ˜V>ÀiÊ>˜`ʓ>Ži‡Õ«Ê«Àœ`ÕVÌÃÊVœ“‡ Lˆ˜ˆ˜}Ê>`Û>˜Vi`ÊÃVˆi˜ViÊ>˜`Ê}>“œÕÀÊvœÀÊÃՓ«Ì՜ÕÃÊ>˜`Ê >ÃÃiÀ̈ÛiÊLi>ÕÌÞ°ÊÌÃÊ«Àœ“ˆÃiʈÃÊÃՓ“i`Êիʈ˜Ê̅iʘiÜÊLÀ>˜`Ê Ãœ}>˜ÊLive Brilliantly >˜`Êi“Lœ`ˆi`ÊLÞÊ i“ˆÊœœÀi° ÓääÇÊÜ>ÃʘœÌ>LiÊvœÀÊ̅iÊÛiÀÞÊÃÌÀœ˜}Ê}ÀœÜ̅ʜvÊ*Àœ`ˆ}ÞÊΈ˜‡ V>ÀiÊ>˜`Ê̅iʏ>՘V…ÊœvÊ>ÅÊ+Õii˜Êiˆ˜iÊ >VŽÃʓ>ÃV>À>Ê Ü…ˆV…Ê…>ÃÊLiVœ“iÊ>ÊVՏÌÊ«Àœ`ÕVÌʍÕÃÌÊ>ÊviÜÊÜiiŽÃÊ>vÌiÀʈÌÃÊ >՘V…°Ê iÜÊ>˜`ʅˆ}…ÞÊÜ«…ˆÃ̈V>Ìi`ÊÃÌ>˜`Ã]Ê>˜`Ê̅iÊvˆÀÃÌÊLœÕ‡ ̈µÕiʈ˜Êœ˜}Êœ˜}ʅ>ÛiÊ«Àœ`ÕVi`ÊÛiÀÞÊ«Àœ“ˆÃˆ˜}ʈ˜ˆÌˆ>Ê ÀiÃՏÌðÊ/…iÊLÀ>˜`Êi˜`i`Ê̅iÊÞi>Àʜ˜Ê>ÊÛiÀÞÊ`ޘ>“ˆVʘœÌi°

Giorgio Armani, Russia.

Lash Queen Feline Blacks mascara by Helena Rubinstein has become a cult product just a few weeks after its launch.

GIORGIO ARMANI ÓääÇÊÜ>ÃÊ>˜œÌ…iÀÊÞi>ÀʜvÊ`œÕLi‡`ˆ}ˆÌÊ}ÀœÜ̅ÊvœÀÊGIORGIO ARMANI ˆ˜Ê>Ê̅iÊ✘iÃÊ܅iÀiÊ̅iÊLÀ>˜`ʈÃÊÃÌÀœ˜}ÞÊiÃÌ>LˆÃ…i`Ê ­ ÕÀœ«iʳ£Ó¯]Ê1˜ˆÌi`Ê-Ì>ÌiÃʳ£Î¯]ÊÌÀ>ÛiÊÀiÌ>ˆÊ³£™¯®]ÊÜˆÌ…Ê Ã«iVÌ>VՏ>ÀÊ}ÀœÜ̅ʈ˜Ê̅iʘiÜÊVœÕ˜ÌÀˆiÃÊ­,ÕÃÈ>ʳǙ¯]Ê
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À“>˜ˆÊ œ`iÊvœÀÊi˜Ê ˆÃʘՓLiÀÊ̅Àii]Ê>˜`ʈ̽ÃÊܜ“i˜½ÃÊÛiÀȜ˜ÊˆÃʈ˜Ê̅iÊ̜«ÊÌi˜°
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À“>˜ˆÊ ˆ>“œ˜`Ã]ÊÜˆÌ…Ê >“L>ÃÃ>`œÀÊ iޜ˜Vj]Ê܅ˆV…ÊŜՏ`ʏˆvÌÊGIORGIO ARMANI vœÀÊ̅iÊ vˆÀÃÌÊ̈“iÊ̜ʘՓLiÀÊÌܜÊܜÀ`܈`iʈ˜Ê̅iÊvÀ>}À>˜ViÃÊÃi}“i˜Ì° œÃÌiÀi`ÊLÞÊ̅ˆÃÊ«œÃˆÌˆœ˜]Ê>˜`ÊLÞÊ̅iÊ«Ài“ˆÕ“ʵÕ>ˆÌÞÊ`iÛiœ«‡ “i˜ÌʜvʈœÀ}ˆœÊ
À“>˜ˆÊ œÃ“ïVÃ]Ê̅iʏÕÝÕÀÞÊLÀ>˜`ÊÃÕVViÃÃvՏÞÊ >՘V…i`ʈÌÃÊvˆÀÃÌÊՏÌÀ>‡«Ài“ˆÕ“ÊΈ˜V>ÀiÊÀ>˜}iÊ Ài“>Ê iÀ>Ê>˜`Ê …>ÃʘœÜÊLiVœ“iÊ>Ê}œL>Ê«>ÞiÀʈ˜Ê̅iÊLi>ÕÌÞÊÃi}“i˜Ì°

Lancôme, France.

85

86

Fuel for Life by Diesel, international success for fragrances which challenge perfumery codes.

DIESEL ÓääÇÊÜ>ÃÊ̅iÊÞi>ÀʜvÊ̅iÊLˆÀ̅ʜvÊ ˆiÃiÊvÀ>}À>˜ViÃ]ÊvœVÕÃi`Ê œ˜Ê̅iÊ«œÜiÀvՏÊBe Alive Vœ˜Vi«Ì°ÊÕiÊvœÀʈviʈÃÊ̅iÊvœÕ˜`ˆ˜}Ê «ÀœiVÌʜvÊ̅ˆÃÊVœœ]ʈVœ˜ˆV]ʈÀœ˜ˆVÊ>˜`ÊÃiÝÞÊLÀ>˜`°Ê ÛiÀÞÊ>ëiVÌÊ œvʈÌÃʏ>՘V…ÊÜ>Ãʈ˜˜œÛ>̈Ûi\Êۈ˜Ì>}iÊ«>VŽ>}ˆ˜}Ê܈̅Ê>ʅˆÃ̜ÀÞ]Ê >ÊVՏÌʓՏ̈‡ÛˆÃÕ>Ê>˜`ʓՏ̈‡Ã«œÌÊV>“«>ˆ}˜Ê>˜`Ê>ÊVœ““Õ˜ˆV>‡ ̈œ˜Ê«>ÌvœÀ“Ê܈̅ʓՏ̈«iÊVœ˜Ì>VÌÊ«œˆ˜ÌÃÊ܈̅ÊVœ˜ÃՓiÀÃ]Ê VÀi>̈˜}Ê>Ê՘ˆµÕiÊLÀ>˜`ÊiÝ«iÀˆi˜Vi°Ê““i`ˆ>ÌiÞÊ>vÌiÀʏ>՘V…]Ê ÕiÊvœÀʈviÊ«ÀœÛi`Ê>ÊÀiÜ՘`ˆ˜}ÊÃÕVViÃÃ]Ê>˜`Ê̅iʓi˜½ÃÊvÀ>‡ }À>˜ViÊÀi>V…i`Ê̅iÊ̜«Êxʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃÊ>˜`Ê̅iÊ̜«ÊÎÊ ˆ˜ÊÀ>˜ViÊ>˜`Ê̅iÊ1˜ˆÌi`ʈ˜}`œ“ÊLÞÊ̅iÊi˜`ʜvÊÓääÇ°

CACHAREL œÀʘi>ÀÞÊÎäÊÞi>ÀÃʘœÜ]ÊCACHARELʅ>ÃÊ>VVœ“«>˜ˆi`Êܜ“i˜Ê ˆ˜Ê̅iʈ˜Ìˆ“>ÌiÊiÝ«œÀ>̈œ˜ÊœvÊ̅iˆÀÊ«iÀܘ>ˆÌްʘÊÓääÇ]Ê̅iÊ ˜iÜÊvÀ>}À>˜ViʈLiÀÌjÊi˜>Li`Ê̅iÊLÀ>˜`Ê̜ʈ˜VÀi>ÃiʈÌÃÊÃ>iÃÊ LÞÊÌ>À}ï˜}ʓœÀiÊÜ«…ˆÃ̈V>Ìi`Ê>˜`ʓ>ÌÕÀiÊVœ˜ÃՓiÀðÊ/…iÊ œÌ…iÀÊvÀ>}À>˜ViÃÊVœ˜Ìˆ˜ÕiÊ̜ʫiÀvœÀ“ÊÜi\Ê
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Phyto Black Lift by Shu Uemura, the brand’s first global anti-ageing skincare range.

TRIBUTE TO MR SHU UEMURA Mr Shu Uemura was an extraordinary pioneer, not only in the art of make-up, but also in the art of skincare in the great Japanese tradition. Following an initial alliance in 2000 and the acquisition of Shu Uemura Cosmetics, Inc. in 2004, L’Oréal’s teams had the great privilege of working for seven years with this outstanding visionary figure, in an atmosphere of passion and enthusiasm. The successors he trained are determined to continue his work while respecting his inspiration.

Shu Uemura, France.

Giorgio Armani, Ralph Lauren, Cacharel, Argentina.

BUSINESSES // LUXURY PRODUCTS

SHU UEMURA œÕ˜`i`Ê>˜`ʘ>“i`Ê>vÌiÀʏi}i˜`>ÀÞÊ>«>˜iÃiʓ>Ži‡Õ«Ê>À̈ÃÌÊ >˜`ÊLi>ÕÌÞÊ«ˆœ˜iiÀ]Ê-…ÕÊ1i“ÕÀ>]Ê܅œÊ`ˆi`ʈ˜ÊÓääÇ]Ê̅iÊLÀ>˜`Ê LÀi>ŽÃÊ>ÊLœÕ˜`>ÀˆiÃʈ˜ÊLi>ÕÌÞÊVÀi>̈œ˜Ê>˜`ʈ˜Ûi˜ÌÃÊ̅iÊ>ÀÌʜvÊ Li>ÕÌÞ° /…iÊLÀ>˜`½ÃÊ}ÀœÜ̅ʜ˜ÊΈ˜V>Àiʅ>ÃÊLii˜ÊvÕii`ÊLÞÊ̅iÊÃÕV‡ ViÃÃvՏʏ>՘V…ÊœvÊ*…Þ̜‡ >VŽÊˆvÌ]Ê̅iÊvˆÀÃÌÊ}œL>Ê>˜Ìˆ‡>}iˆ˜}Ê ÃŽˆ˜V>ÀiÊÀ>˜}iÊvÀœ“ÊSHU UEMURA]Ê>˜`ÊLÞÊ i>˜Ãˆ˜}Ê"ˆÊ*Ài“ˆÕ“Ê
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YUE-SAI YUE-SAI LÀ>˜`ÊÃÌ>˜`ÃÊvœÀÊ …ˆ˜iÃiʓœ`iÀ˜ÊLi>ÕÌÞ° Y UE -S AI Vœ“Lˆ˜iÃÊ>˜Vˆi˜Ìʎ˜œÜ‡…œÜʜvʈ˜}Ài`ˆi˜ÌÃÊÜˆÌ…Ê >`Û>˜Vi`ÊÀiÃi>ÀV…ÊÌiV…˜œœ}ˆiðÊ"˜iʜvÊ̅iʓœÃÌÊLi>ṎvÕÊ v>ViÃʈ˜Ê …ˆ˜>p̅iʓœ`iÊ ÕÊÕ>˜pÀiÛi>ÃÊ̅iʘiÜÊVœ˜Vi«ÌÊ ˆ˜Ê>˜Ê>`ÛiÀ̈Ș}ÊV>“«>ˆ}˜Ê܅ˆV…ʈÃÊ>ÌÌÀ>V̈˜}ʘiÜÊVœ˜ÃՓiÀÃ°Ê 6ˆÌ>Ê ÃÃi˜Ìˆ>]Ê܅ˆV…ÊVœ˜Ì>ˆ˜ÃÊ̅iÊ«ÀiVˆœÕÃʈ˜}Ài`ˆi˜ÌÊ>˜œ‡ `iÀ“>]ʈÃÊLiVœ“ˆ˜}Ê>ÊÃÌ>ÀÊΈ˜V>ÀiÊ«Àœ`ÕVÌÊvœÀÊ …ˆ˜iÃiÊ Üœ“i˜]Ê>˜`Êܜ˜Ê̅iÊ œÃ“œ«œˆÌ>˜Ê i>ÕÌÞÊ
Ü>À`Ê>ÃÊ̅iÊ Þi>À½ÃʓœÃÌʈ˜˜œÛ>̈ÛiÊ«Àœ`ÕVÌʈ˜ÊÓääÇ°Ê
ÌÊ̅iÊi˜`ʜvÊ œÛi“‡ LiÀ]Ê>Ê/6ÊV>“«>ˆ}˜ÊvœÀÊ6ˆÌ>Ê ÃÃi˜Ìˆ>Ê«Àœ«ii`Ê̅iÊLÀ>˜`½ÃÊ }ÀœÜ̅Ê̜Ê̅iʅˆ}…iÃÌʏiÛiÊȘViʈÌÃÊ>VµÕˆÃˆÌˆœ˜ÊLÞÊ̅iÊ}ÀœÕ«Ê ̅ÀiiÊÞi>ÀÃÊ>}œ°Ê"ÛiÀÊ̅iÊ܅œiʜvÊÓääÇ]ÊYUE-SAIÊ>V…ˆiÛi`Ê `œÕLi‡`ˆ}ˆÌÊ}ÀœÜ̅°Ê

Vital Essential by Yue-Sai, the brand that stands for Chinese modern beauty.

PARTNERSHIP

LANCÔME 20 years of expert skin diagnosis for women’s beauty In conjunction with L’Oréal’s laboratories, LANCÔME has succeeded in providing sales outlets with unique skin diagnosis expertise using sophisticated and affordable kits. Diagnôs Expert offers women all over the world a complete diagnosis of their skin for each ethnic group: identification of skin type and grain, pigment blemishes, and measurement of moisturising, firmness and lines so that the ideal personalised skincare can be recommended for each woman. Its portable version, Diagnôs Express, offers both women and men a practical skincare response in just a few minutes. The kits have been widely acclaimed by dermatologists from all over the world whenever congresses are held.

87

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BUSINESSES

ACTIVE

COSMETICS VICHY 
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DRAWING ON NEW HEALTH AND BEAUTY TRENDS The dynamism of the dermocosmetics market is supported by the growing importance of health in the demand for beauty products, the modernisation of the pharmacy and drugstore channel, and the increasing role played by dermatologists in beauty care. In this context, three strategic goals underpin the entire Division’s policy: to diversify our brand portfolio and thus seize new consumer trends combining health with beauty; to strengthen our special relationship with pharmacists and dermatologists; and to accelerate the roll-out of our brands in geographic zones with a very strong growth potential—not only Eastern Europe, Asia and Latin America, but also the United States. Brigitte Liberman Managing Director Active Cosmetics

Vichy, Poland.

2007 HIGHLIGHTS

> LA ROCHE-POSAY accelerates in Western Europe, with growth 2.5 times faster than the dermocosmetics market. > Four years after its launch, INNÉOV becomes the European leader in oral cosmetics sold in pharmacies. > The Division moves into the fast-growing natural cosmetics market by launching SANOFLORE, the pioneering organic cosmetics brand, in seven European countries.

> SKINCEUTICALS begins its globalisation with launches in five European countries through selective distribution channels of pharmacies, premium spas and dermatologists. > VICHY is consolidating its leadership in men’s skincare with the success of the new Vichy Homme range.

BUSINESSES // ACTIVE COSMETICS

SANOFLORE

Farming the countryside and harvesting organic personal care products SANOFLORE controls the whole production chain thus securing its supplies of organic ingredients, their traceability and their quality. Systematic ongoing controls are carried by Ecocert, an independent organisation, to guarantee compliance with organic standards at each stage of production: raw materials, production facilities and finished products. At the heart of the products are essential oils, concentrated forms of the plant produced by distillation which have scientifically proven active properties. Organic ingredient content is exceptionally high, at up to 99% of the total formulation.

2007 REVIEW

2008 OUTLOOK

In 2007, the Active Cosmetics Division once again achieved double-digit growth (+10.8% like-for-like). Sales in Western Europe proved resilient, despite the seasonal weakness of sun and slimming products. Growth was dynamic in North America and continued its acceleration in the rest of the world—Latin America, Asia, Eastern Europe—which today represents 33% of sales. All the brands contributed to this achievement, which bolsters the Division’s worldwide position in its core skincare business.

For several years now, the dermocosmetics market has been growing faster than the worldwide cosmetics market as a whole. In 2008, several favourable factors will boost the sales of the Active Cosmetics Division: the diversification of its brand portfolio, planned innovations, particularly in skincare, the solid performances of each brand’s core products, and the acceleration of its drives into new markets.

CONSOLIDATED SALES BY BUSINESS SEGMENT 2006

CONSOLIDATED SALES BY GEOGRAPHIC ZONE 2006

2007

% of 2007 sales

E millions

Western Europe North America Rest of the World TOTAL

Growth 2007/2006

2007

% of 2007 sales

E millions

Growth 2007/2006 Like-for-like

Published figures

Like-for-like

Published figures

Skincare

879.6

978.4

78.4%

+12.1%

+11.2%

688.0

727.5

58.3%

+4.0%

+5.7%

Haircare

98.9

98.8

7.9%

+0.2%

–0.1%

99.7

105.1

8.4%

+12.6%

+5.5%

Make-up

81.0

93.7

7.5%

+17.3%

+15.8%

340.2

415.4

33.3%

+24.3%

+22.1%

Other

68.4

77.2

6.2%

+1.7%

+12.7%

1,127.9

1,248.1

100%

+10.8%

+10.7%

TOTAL

1,127.9

1,248.1

100%

+10.8%

+10.7%

91

92

The success of the Aqualia Thermal moisturising skincare line is strengthening VICHY’s position in this segment.

World leader in the dermocosmetics market, the Active Cosmetics Division has a portfolio of five unique and complementary brands to meet growing health and skincare needs. It offers effective and safe products all over the world, backed up by advice from pharmacists and dermatologists’ recommendations. It has special relationships with health professionals in all fields. As a result, the Division was able to raise its profile as a major partner of dermatologists during the 21st World Dermatology Congress, held in Buenos Aires in October 2007.

VICHY VICHY develops everyday skincare products focused on skin health and sold in pharmacies. In 2007, VICHY½ÃÊ}ÀœÜ̅ÊÜ>ÃÊLœÃÌiÀi`ÊLÞÊ̅iÊÃÕVViÃÃʜvÊ
µÕ>ˆ>Ê /…iÀ“>Ê“œˆÃÌÕÀˆÃˆ˜}ÊΈ˜V>ÀiÊ>˜`Ê œÀ“>Ìiˆ˜ÌÊ>˜Ìˆ‡ˆ“«iÀviV‡ ̈œ˜ÊvœÕ˜`>̈œ˜]Ê̜}i̅iÀÊ܈̅Ê̅iÊÀiÛ>“«ÊœvÊ6ˆV…ÞÊœ““i]Ê Ü…ˆV…ÊÕÃiÃÊ̅iÊ«Àœ«iÀ̈iÃʜvÊ«œÜiÀvՏÊ>˜`ÊÀiVœ}˜ˆÃi`Ê>V̈ÛiÊ ˆ˜}Ài`ˆi˜ÌÃÊ­ÃÕV…Ê>ÃÊV>VˆÕ“]ÊÀÊ>˜`ÊۈÌ>“ˆ˜Ê ®Ê܅œÃiÊivvˆ‡ V>VÞʈÃʓi>ÃÕÀi`Ê՘`iÀʓi`ˆV>ÊVœ˜ÌÀœ°Ê/…iÊ}ÀœÜ̅ʜvÊ̅iÊ VœÀiÊ«Àœ`ÕVÌÃÊVœ˜Ìˆ˜ÕiÃÊÜˆÌ…Ê œÀ“>`iÀ“]ÊvœÀʜˆÞÊΈ˜]Ê>˜`Ê jœÛ>`ˆœ]Ê܅ˆV…ÊVœÀÀiVÌÃÊ̅iÊivviVÌÃʜvÊ̅iʓi˜œ«>ÕÃiʜ˜Ê the skin.

Substiane with Pro-Xylane™ is reinforcing LA ROCHE-POSAY’s position in anti-ageing skincare.

Vichy, Russia.

LA ROCHE-POSAY LA ROCHE-POSAY œvviÀÃÊiÛiÀÞ`>ÞÊΈ˜V>ÀiÊ>˜`ʓ>Ži‡Õ«Ê«Àœ`ÕVÌÃÊ ÀiVœ““i˜`i`ÊLÞÊ`iÀ“>̜œ}ˆÃÌÃÊ>˜`Ê«…>À“>VˆÃÌÃÊvœÀÊ>ÊŽˆ˜`ÃÊ œvÊΈ˜]ʈ˜VÕ`ˆ˜}Ê̅iʓœÃÌÊÃi˜ÃˆÌˆÛi°Ê-Õ««œÀÌi`ÊLÞʓœÀiÊ̅>˜Ê Óx]äääÊ`iÀ“>̜œ}ˆÃÌÃÊܜÀ`܈`i]Ê̅iÊLÀ>˜`½ÃÊÃ>iÃÊ}ÀœÜ̅ʈÃÊ >VViiÀ>̈˜}Ê­³£n°{¯®]Ê܈̅ʓ>œÀÊ«Àœ`ÕVÌÊÃÕVViÃÃiÃÊÃÕV…Ê>ÃÊ Ì…iÊ>˜Ìˆ‡>}iˆ˜}ÊÀi«i˜ˆÃ…ˆ˜}ÊΈ˜V>Àiʏˆ˜iÊ-ÕLÃ̈>˜iÊ܈̅Êx¯ÊœvÊ *Àœ‡8ޏ>˜i™]Ê>˜`ÊÜÊ1Àj>ÊӜœÌ…ˆ˜}Ê>˜`ÊÀi}Տ>̈˜}ÊLœ`ÞʓˆŽ]Ê >˜`Ê܈̅Ê̅iÊ ÕÀœ«i>˜Ê>՘V…ÊœvÊ̅iÊ«ÀœviÃȜ˜>Ê>iÃ̅ïVÊ VœÀÀiV̈Ûiʏˆ˜iÊ ˆœ“i`ˆV]ÊiÝVÕÈÛiÞÊvœÀÊ`iÀ“>̜œ}ˆÃÌð

La Roche-Posay, Singapore.

Sanoflore, Spain.

BUSINESSES // ACTIVE COSMETICS

INNÉOV œÕÀÊÞi>ÀÃÊ>vÌiÀʈÌÃʏ>՘V…]ÊINNÉOV]Ê>ʍœˆ˜ÌÊÛi˜ÌÕÀiÊLiÌÜii˜Ê ½"Àj>Ê>˜`Ê iÃ̏j]ÊLiV>“iÊ̅iʘՓLiÀʜ˜iʜÀ>ÊVœÃ“ïVÃÊ LÀ>˜`Ê܏`ʈ˜Ê ÕÀœ«i>˜Ê«…>À“>VˆiÃ]ÊvœœÜˆ˜}ÊÛiÀÞÊÃÌÀœ˜}Ê Ã>iÃÊ}ÀœÜ̅Ê>Ìʳ{ä¯ ­£®°Ê/…iÃiÊ>V…ˆiÛi“i˜ÌÃÊÀiviVÌÊ̅iÊ Ài“>ÀŽ>LiÊÃÕVViÃÃʈ˜ÊÓääÇʜvÊ̅iʘiÜÊ«Àœ`ÕVÌʘ˜jœÛÊ i‡ ÕˆÌi]Ê>˜`Ê̅iÊLÀ>˜`½ÃÊVÀi`ˆLˆˆÌÞÊvœÀʍœÕÀ˜>ˆÃÌÃ]Ê«…>À“>VˆÃÌÃÊ and consumers. INNÉOVʈÃʘœÜÊ>Û>ˆ>Liʈ˜Ê£{ÊVœÕ˜ÌÀˆiÃʈ˜Ê̅iÊ ÃŽˆ˜V>Ài]ÊÃ՘ʫÀœÌiV̈œ˜]ʅ>ˆÀV>ÀiÊ>˜`ÊViÕˆÌiÊÃi}“i˜Ìð

Innéov becomes the leader of the European oral cosmetics market.

Sanoflore’s globalisation begins. SkinCeuticals was launched in five European countries in 2007.

SKINCEUTICALS
ʓ>œÀÊ«>ÞiÀʈ˜Ê̅iÊ
“iÀˆV>˜Ê“>ÀŽiÌÊvœÀÊ«ÀœviÃȜ˜>ÊΈ˜V>ÀiÊ products, SKINCEUTICALSʈÃÊÃÌÀœ˜}ÞÊ`iÛiœ«ˆ˜}Ê­³£{°Ó¯®ÊˆÌÃÊ«œÃˆ‡ ̈œ˜Êˆ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃʈ˜ÊÃiiV̈ÛiÊ`ˆÃÌÀˆLṎœ˜Ê̅ÀœÕ}…Ê`iÀ‡ “>̜œ}ˆÃÌÃ]Ê«>Ã̈VÊÃÕÀ}iœ˜Ã]Ê>˜`ʓi`ˆ‡Ã«>Ã]Ê«>À̈VՏ>ÀÞÊ܈̅Ê

ÊiÀՏˆVÊÃiÀՓ]ʅ>ˆi`ÊvœÀʈÌÃÊivviV̈Ûi˜iÃÃÊ>ÃÊ>˜Ê>˜ÌˆœÝˆ`>˜Ì°Ê i>˜Ü…ˆi]ÊSKINCEUTICALSʈÃÊLi}ˆ˜˜ˆ˜}Ê̜Ê}œL>ˆÃiʈÌÃʜ«iÀ>‡ ̈œ˜Ã]Ê܈̅ÊÃÕVViÃÃvՏʏ>՘V…iÃʈ˜ÊvˆÛiÊ ÕÀœ«i>˜ÊVœÕ˜ÌÀˆið

SANOFLORE >LœÀ>̜ˆÀiÃÊ->˜œvœÀi]ÊL>Ãi`ʈ˜Ê̅iÊ Àž“iʈ˜Ê̅iÊÜÕ̅ʜvÊ À>˜Vi]ʍœˆ˜i`ʽ"Àj>Êˆ˜Ê"V̜LiÀÊÓääÈ° *Àœ`ÕVˆ˜}]Ê`ˆÃ̈ˆ˜}Ê>˜`ÊvœÀ“Տ>̈˜}ʈÌÃÊ«Àœ`ÕVÌÃ]ÊSANOFLORE ˆÃÊ«œÃˆÌˆœ˜i`Ê>ÃÊ>˜ÊiÝ«iÀÌʜÀ}>˜ˆVÊLÀ>˜`ʈ˜Ê«…>À“>VˆiÃ]ÊÜˆÌ…Ê >ÊvՏÊÀ>˜}iʜvʜÀ}>˜ˆVÊVœÃ“ïVÃ]Ê>Àœ“>̅iÀ>«ÞÊ>˜`Ê«…Þ̜‡ therapy products. In 2007, SANOFLOREÊLi}>˜ÊˆÌÃÊVœ˜µÕiÃÌʜvÊ ÕÀœ«i]Ê>˜`Ê>ˆ“ÃÊÌœÊ LiVœ“iÊ>ʓ>œÀÊ«>ÞiÀʈ˜Ê̅iÊv>Ã̇}ÀœÜˆ˜}ʓ>ÀŽiÌÊvœÀʘ>ÌÕÀ>Ê VœÃ“ïVÃʈ˜Ê̅iÊ«…>À“>VÞÊ`ˆÃÌÀˆLṎœ˜ÊV…>˜˜i°Ê

(1) Source: IMS October 2007—Europe 7 Cumulative Value.

PARTNERSHIP

LA ROCHE-POSAY The partnership with dermatologists has been strengthened through three major initiatives. “Resident Courses”, rolled out in fifteen countries, provide training for students in the final year of dermatology specialisation, focussing on the benefits of cosmetics products and aesthetic procedures. The La Roche-Posay Foundation, established in Asia in 2007, has enabled the Division to achieve its aim of participating in dermatological research on all four continents by awarding research and publication fellowships. The “Master” training programme has been set up to develop dermatologists’ management skills and modernise their practices.

93

94

THE BODY SHOP

BUSINESSES // THE BODY SHOP

/ Ê " 9Ê-"*

ONGOING COMMITMENT TO NATURAL AND ETHICAL COSMETICS A TRIBUTE TO DAME ANITA RODDICK, FOUNDER OF THE BODY SHOP Passionately interested in ecology and a true pioneer of sustainable development, Dame Anita Roddick, founder of The Body Shop, passed away in September 2007. Throughout her life, she fought with determination for her ideals, which she forged into the five pillars of The Body Shop: Protect our planet, Support community trade, Against animal testing, Defend human rights, and Activate selfesteem. She had the ability of communicating her passionately held convictions to all those she met. Her creative energy will remain an inspiration to the teams of The Body Shop. The Body Shop, Poland.

The strategy of The Body Shop is underpinned by three major goals: launching new ranges of products based on natural ingredients that continually broaden the brand’s portfolio and strengthen its identity, expanding into new markets with high growth potential, and developing multi-channel distribution to increase the number of contact points with consumers. Following the acquisition of The Body Shop in July 2006, the gradual process of integration into the L’Oréal group is continuing, and the brand is starting to benefit from the group’s research and development resources and its marketing expertise.

NUMBER OF STORES At December 31st, At December 31st, 2006 2007 Company owned stores Franchisees TOTAL

Variation in 2007

886

1,008

+122

1,379

1,418

+39

2,265

2,426

+161

2007 REVIEW Consolidated sales grew by +5.7% in 2007 with all regions recording strong performances, except for the United States. Growth in retail sales(1) reached +7.9%, driven by strong growth, on a comparable store base, in the United Kingdom, Singapore, Hong Kong and Eastern Europe. 161 stores were opened in 2007, taking the total to 2,426 in 59 countries.

SALES 2007 Like-for-like growth

E millions

Retail sales(1)

1,291.9

+7.9%

Retail sales with a comparable store base(2)

1,071.7

+3.3%

787

+5.7%

Consolidated sales

RETAIL SALES(1) BY GEOGRAPHIC ZONE 2007 E millions

% of 2007 Like-for-like retail sales growth

Western Europe

584.8

45.3%

+6.3%

North America

235.1

18.2%

–3.9%

Rest of the World

472.1

36.5%

+17.5%

1,291.9

100%

+7.9%

TOTAL

2008 OUTLOOK The Body Shop will continue its growth momentum on existing markets through its multi-channel strategy, which is designed to enhance the brand’s accessibility, offering customers the ability to purchase in retail stores, on-line and through The Body Shop at Home. Asia and Eastern Europe also offer promising growth prospects, which The Body Shop will exploit in collaboration with its solid network of franchisee partners. The product innovation programme, particularly in skincare and make-up, will further enhance our customer reach.

(1) Total sales to consumers through all channels. (2) Total sales to consumers by stores which operated continuously in 2007 and over the same reference period in 2006.

95

96

Body Focus, Asian markets have given an enthusiastic welcome to the Body Focus bodycare range.

Created in the United Kingdom in 1976 and today operating in 59 countries, The Body Shop has become a well-known brand amongst consumers all over the world for its pioneering use of natural ingredients and its strong commitment to values. It offers a large number of consumers naturally inspired, appealing products that contain community trade ingredients that help support more than 25,000 people worldwide.

2007 HIGHLIGHTS

> Strategic acquisition of franchisees in Sweden and Portugal. > Opening of the first The Body Shop stores in the Czech Republic, Poland and Namibia. > Launch of Wise Woman, a skincare range to target the specific needs of the mature customer.

PARTNERSHIP

In 2007, growth was driven by successful launches in all segments, particularly in skincare with the Wise Woman and Body œVÕÃÊÀ>˜}iðÊ/…iÊÃÕVViÃÃvՏÊÀiÛ>“«ˆ˜}ʜvÊ̅iÊ-i>Üii`Ê>˜`Ê Tea Tree lines in skincare, and the relaunch of emblematic 7…ˆÌiÊÕÎÊi>ÕÊ`iÊ̜ˆiÌÌi]ÊVœ˜ÌÀˆLÕÌi`Ê̜Ê/…iÊ œ`ÞÊ-…œ«½ÃÊ growth. The brand continues to extend its network of exclusive boutiques across the world. There are now 20 stores in India. The ˜Õ“LiÀʜvÊÃ>iÃʜÕ̏iÌÃʅ>ÃÊÀˆÃi˜ÊvÀœ“Ê£xÊ̜Êӣʈ˜Ê,ÕÃÈ>]ÊvÀœ“Ê ΣÊ̜Ê{Óʈ˜ÊÀ>˜Vi]Ê>˜`ÊvÀœ“Ê££ÓÊ̜ʣÓ{ʈ˜Ê->Õ`ˆÊ
À>Lˆ>° /…iʅœ“iÊ`ˆÃÌÀˆLṎœ˜ÊÃÞÃÌi“Ê/…iÊ œ`ÞÊ-…œ«Ê>ÌÊœ“iʜ«iÀ>ÌiÃʈ˜Ê̅iÊ1˜ˆÌi`ʈ˜}`œ“]ʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃ]ʈ˜Ê
ÕÃÌÀ>ˆ>Ê and in Germany. With its established retailing expertise, the brand reinforces its strategy by constantly improving the quality of service provided to consumers. Initiatives to reinvigorate and communicate the essence of the brand will increase awareness and build customer engage“i˜Ì°Ê/…iÊ œ`ÞÊ-…œ«Ê܈Ê«ÕÀÃÕiÊ>ÊÃÌÀœ˜}ÊÛ>ÕiÃÊ>}i˜`>ÊLÞÊ Vœ˜Ìˆ˜Õˆ˜}ÊivvœÀÌÃÊ̜ʫÀœ“œÌiʈÌÃÊ-̜«Ê6ˆœi˜Viʈ˜Ê̅iÊœ“iÊ «Àœ}À>““i]Ê>˜`ʈÌÃʜ˜}œˆ˜}ʈ˜ÛœÛi“i˜Ìʈ˜Ê̅iÊ
 -Ê«ÀiÛi˜tion campaign.

PALM OIL The Body Shop is an ethical brand, committed to developing innovative solutions for the protection of the environment and natural resources. In 2007, to combat the rapid destruction of ancestral tropical forests by the uncontrolled production of palm oil, The Body Shop was the first brand to source sustainable palm oil for inclusion in its products. This pioneering initiative is a significant advance which shows how a global brand can foster sustainable development. Closely involved for several years in this issue, The Body Shop has been an active participant in the Roundtable on Sustainable Palm Oil (RSPO) for four years. L’Oréal supports this initiative, and joined RSPO in 2006.

> Launch of RougeBerry eau de toilette, in partnership with the television channel MTV, to support the AIDS prevention campaign. > Introduction of performance-based, targeted body care products under the Body Focus franchise, which was particularly well received in Asian markets.

BUSINESSES // DERMATOLOGY


 ,


MAKING DERMATOLOGY MOVE FORWARD

Galderma delivers innovative solutions that empower physicians and improve patient’s health.

Galderma’s ambition is to be recognized as the most competent and successful innovation-based company focused exclusively on dermatology. With significant investments in research, in providing training for physicians and information for patients, the company is actively shaping the future of dermatology as it pioneers medical solutions for unmet patient needs. In 2007, Galderma continued to innovate in its core therapeutic areas while expanding into the rapidly growing field of corrective dermatology. ˆvviÀˆ˜® 0.3% gel was approved and launched in the United -Ì>ÌiÃÊ>˜`Ê >˜>`>°Ê/…iÊVœ“«>˜Þ½ÃÊ̜«ÊœvÊV>ÃÃÊÃ>iÃʜÀ}>˜ˆÃ>tion established this improved formulation as front line therapy for acne by the doctors and patients, based on its safety and effectiveness. Epiduo™, a new and unique combination product with significant potential for the treatment of acne, was approved in
À}i˜Ìˆ˜>Ê>˜`Ê ÕÀœ«iÊ܈̅Ê>««ÀœÛ>Ãʈ˜Ê̅iÊ1˜ˆÌi`Ê-Ì>ÌiÃÊ>˜`Ê the rest of the world expected early 2009. This product was discovered and developed by Galderma and is an excellent iÝ>“«iʜvʜÕÀÊ,E Ê«œÌi˜Ìˆ>° /…iÊÃÌ>Ìi‡œv‡Ì…i‡>ÀÌÊ,E Êv>VˆˆÌÞʈ˜Ê-œ«…ˆ>‡
˜Ìˆ«œˆÃÊ­À>˜Vi®Ê became fully operational during the year and has attracted researchers from around the world. /…iÊ`i`ˆV>Ìi`Ê«ÀœviÃȜ˜>Ãʈ˜Ê>`iÀ“>½Ãʓ>˜Õv>VÌÕÀˆ˜}ʜ«iÀations continued to deliver the high quality products that have defined the industry, while constantly striving to improve efficiency. Galderma has also made progress in its commitment to develop a significant presence in the corrective dermatology Ãi}“i˜Ì°Ê
˜Ê>}Àii“i˜ÌÊÜ>ÃÊÈ}˜i`Ê«ÀœÛˆ`ˆ˜}Ê>`iÀ“>Ê development and distribution rights for an innovative topical anesthetic which should be widely adopted by the industry as a new standard of care. In addition, the company licensed the Àˆ}…ÌÃÊvœÀÊ>ÊLœÌՏˆ˜Õ“Ê̜݈˜Ê/Þ«iÊ
Ê«Àœ`ÕVÌʈ˜Ê ÕÀœ«i]Ê-œÕ̅Ê
“iÀˆV>Ê>˜`ÊÃiÛiÀ>ÊœÌ…iÀÊÈ}˜ˆvˆV>˜ÌÊVœÕ˜ÌÀˆiÃ°Ê Thanks to its excellent perspectives in terms of growth, Galderma has every reason to feel confident and look forward to a bright future. œÀÊvÕÀ̅iÀʈ˜vœÀ“>̈œ˜]Ê«i>ÃiÊVœ˜ÃՏÌÊ>`iÀ“>½ÃÊÜiLÈÌi\Ê www.galderma.com

2007 REVIEW 2007 was a year of strong and accelerating growth for Galderma. Sales grew +12.7% with balanced contributions across all geographic zones. This growth was based on the continued success of established products such as Clobex® (psoriasis), Cetaphil® (therapeutic skin care for health care professionals) and Loceryl® (onychomycosis) and the innovative Differin® 0.3% gel for acne, launched at the beginning of the third quarter. Nearly 2,700 employees contribute to the company’s success, a company which ranks respect for people as one of its highest values.

2008 OUTLOOK Growth from Galderma’s flagship brands will be complemented by the launches of several innovative pharmaceutical products such as Epiduo™ (acne). In addition, its ongoing expansion into the dynamic corrective and aesthetic dermatology segment will provide additional growth opportunities with Pliaglis™, an innovative topical anesthetic for aesthetic medical procedures, and a best-in-class botulinum toxin Type A product.

CONSOLIDATED SALES BY GEOGRAPHIC ZONE(1) 2006

2007

% of 2007 sales

E millions

Growth 2007/2006 Like-for-like

Published figures

Western Europe

174.6

187.2

25.5%

+7.6%

+7.2%

North America

388.0

409.8

55.8%

+14.9%

+5.6%

Rest of the World

124.6

138.0

18.8%

+13.7%

+10.8%

687.2

735.0

100%

+12.7%

+6.9%

TOTAL (1) 100% of Galderma’s sales.

97

98

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