Goodwill is not amortised. It is tested for impairment at least once a year during the fourth quarter or whenever an adverse event occurs. Adverse events may result among other things from an increase in market interest rates or from a decrease in actual net sales or operational profit compared to forecasts.
Impairment tests consist of comparing the carrying amount of assets including goodwill and brands with the recoverable amount of each Cash Generating Unit. A Cash Generating Unit corresponds to one or more worldwide brands. A Cash Generating Unit can contain several brands in case of similar marketing position or depending on organisational criteria and particularly when distribution circuits and commercial/management structures are pooled. Recoverable values are determined on the basis of discounted operating cash flow forecasts covering a period of 10 years (the period considered necessary for the strategic positioning of an acquisition) and a terminal value.
The cash flows are determined in the currencies of the countries in question and are translated, in the same way as the net carrying amounts to which they are compared, at the estimated exchange rate for the following year. The discount rate used for these calculations is based on the weighted average cost of capital (WACC), which amounted to 8.5% in 2025, to 8.3% in 2024 and 9.2% in 2023 for amounts in euro. The discount rates are post-tax rates applied to post-tax cash flows, and result in recoverable amounts identical to those obtained by applying pre-tax rates to pre-tax cash flows. The assumptions adopted in terms of sales growth and terminal values are reasonable and consistent with the available market data (generally 2.5% for Europe and 3% for the rest of the world for terminal values except in specific cases).
The use of discounted cash flow forecasts is preferred in order to determine recoverable amounts, unless details of similar recent transactions are readily available.
Impairment charged against goodwill cannot be reversed.
Impairment tests of Cash Generating Units for which the carrying amount of goodwill and intangible assets with indefinite useful lives is significant, are carried out based on the following data and assumptions:
| € millions | 2025 | 2024 | 2023 |
|---|---|---|---|
| NET CARRYING AMOUNT OF GOODWILL AND BRANDS WITH AN INDEFINITE USEFUL LIFE | |||
| Retail Skincare (Luxe) | Retail Skincare (Luxe) 2025 2,350.9 |
Retail Skincare (Luxe) 2024 2,473.5 |
Retail Skincare (Luxe) 2023 2,431.2 |
| Maybelline and other Makeup brands | Maybelline and other Makeup brands 2025 1,916.8 |
Maybelline and other Makeup brands 2024 2,053.9 |
Maybelline and other Makeup brands 2023 1,998.0 |
| Perfumes | Perfumes 2025 1,841.2 |
Perfumes 2024 1,844.0 |
Perfumes 2023 1,842.0 |
| L'Oréal Paris and other Premium brands | L'Oréal Paris and other Premium brands 2025 1,581.2 |
L'Oréal Paris and other Premium brands 2024 1,259.7 |
L'Oréal Paris and other Premium brands 2023 1,227.7 |
| SkinCeuticals/Skinbetter Science | SkinCeuticals/Skinbetter Science 2025 917.0 |
SkinCeuticals/Skinbetter Science 2024 999.7 |
SkinCeuticals/Skinbetter Science 2023 921.5 |
| Garnier and other Access brands | Garnier and other Access brands 2025 888.3 |
Garnier and other Access brands 2024 966.1 |
Garnier and other Access brands 2023 989.1 |
| Makeup (Luxe) | Makeup (Luxe) 2025 884.6 |
Makeup (Luxe) 2024 971.2 |
Makeup (Luxe) 2023 940.2 |
| Lancôme | Lancôme 2025 860.4 |
Lancôme 2024 869.4 |
Lancôme 2023 845.0 |
| CeraVe | CeraVe 2025 798.2 |
CeraVe 2024 852.9 |
CeraVe 2023 823.2 |
| Redken/PureOlogy | Redken/PureOlogy 2025 775.5 |
Redken/PureOlogy 2024 833.3 |
Redken/PureOlogy 2023 789.6 |
| Matrix | Matrix 2025 697.3 |
Matrix 2024 773.3 |
Matrix 2023 734.1 |
| Skincare (Luxe) | Skincare (Luxe) 2025 682.7 |
Skincare (Luxe) 2024 722.4 |
Skincare (Luxe) 2023 712.3 |
| YSL Beauté | YSL Beauté 2025 535.8 |
YSL Beauté 2024 536.7 |
YSL Beauté 2023 536.2 |
| L'Oréal Professionnel/Kérastase | L'Oréal Professionnel/Kérastase 2025 425.5 |
L'Oréal Professionnel/Kérastase 2024 449.8 |
L'Oréal Professionnel/Kérastase 2023 422.4 |
| Vichy | Vichy 2025 317.1 |
Vichy 2024 328.8 |
Vichy 2023 322.4 |
| La Roche-Posay | La Roche-Posay 2025 176.2 |
La Roche-Posay 2024 184.0 |
La Roche-Posay 2023 169.6 |
The discount rates used at 31 December 2025 for the test were between 6.5% and 14.8% including 8.7% for the USA and 8.5% for international. This rate is the result of specific rates for each market or region based on the risks they represent.
At 31 December 2025, a 1% increase in the discount rate on all the Group’s Cash Generating Units would not lead to an impairment loss.
A 1% decrease in the terminal growth rate on all the Group’s Cash Generating Units would not lead to an impairment loss.
The terminal growth rate is consistent with market data, i.e. 2.5% for Europe and 3.0% for the rest of the world.
A 1-point decrease in the margin rate over the business plan period on all the Group’s Cash Generating Units would not lead to an impairment loss.
