GENERAL DISCUSSION:
YOUR QUESTIONS, OUR ANSWERS
During the Annual General Meeting, shareholders had the opportunity to take the floor and ask questions. Read a summary of some of the topics discussed during these exchanges between L’Oréal and its shareholders.
L’Oréal achieved a record margin in 2024. Do you intend to continue this momentum, and what impact will this have on investments in Research & Innovation and marketing?
2024 was another year of margin improvement, despite a challenging environment. In good times and bad, we consistently manage to grow our margin steadily and progressively. In 2025, we intend to build on this momentum while continuing to invest in the strategic areas that underpin the Group’s strength today and into the future, namely Research & Innovation (representing 3% of sales) and advertising and promotional activities. Tight management of our gross margin and operating expenses remains a top priority.
What impact will the new US tariffs have on L’Oréal? How is the Group organised to respond effectively to these measures?
US tariffs will affect businesses worldwide. L’Oréal is in a relatively favourable position thanks to its geographical footprint, among the most diversified in our sector. We operate 36 factories worldwide, manufacturing products as close as possible to our consumers. We have strengthened this local presence and reduced our dependence on certain markets. In the United States, we have several factories that produce just over 50% of the L’Oréal products sold there, representing just under half of our sales in that market.
The estimated impact of customs measures to date, based on the current context which is very changeable, represents approximately 50 basis points for L’Oréal over the year, mainly in the second half. We anticipated these measures by building up inventories in the United States at the beginning of the year, particularly of luxury products. We also have the capacity to continue adapting our geographical footprint and leveraging our products and innovations.
Is the slowdown in China cyclical or structural?
China has been a powerful growth driver for the Group for almost a decade. L’Oréal was one of the first Western companies to truly establish its beauty business there over 25 years ago. Post-Covid Chinese consumer confidence has declined, but we believe this to be temporary. Of the 400 million Chinese consumers who could buy our products, we are currently reaching just 100 million. There is still work to be done to attract these potential consumers, especially in mid-sized and smaller cities. Furthermore, China is determined to do whatever it takes to stimulate consumption. We do not know exactly how long this will take. We also know that the Chinese love beauty, luxury and quality products. And while local competition has intensified, L’Oréal remains the No.1 beauty company in this market. We will therefore continue to innovate to stimulate and satisfy Chinese consumers’ appetite for beauty.
How are you positioned in men’s products?
Men, especially the younger generations, are increasingly concerned about their appearance and are investing more in beauty. This is clearly a key growth driver for L’Oréal. Apart from men’s fragrances, where L’Oréal is very strong, we are somewhat underrepresented in this segment, but we are very active and the momentum is there. One example is the successful launch of Elvive Growth Booster, a product that promotes hair regrowth. We are also capitalising on new unisex brands such as CeraVe, whose buyers are evenly split between men and women in the United States. The name, the packaging, the fragrance, the texture quality and communications all make it an appealing brand for men and women alike. L’Oréal is committed to expanding its footprint in the men’s segment.
In terms of competition, are independent or local brands serious contenders?
Among the major incumbents, L’Oréal is the most resilient and continues to gain market share. Faced with competition from independent brands – Indian, Indonesian and Chinese - L’Oréal’s strength lies in its ability to combine the power and economies of scale of a large group with local agility. This allows us to identify emerging trends and deliver innovations that resonate with consumers’ beauty expectations. Beauty is a growing market that continues to attract many players. But there is only one world champion – and that’s L’Oréal.