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About L'Oreal Produktions Deutschland GmbH & Co. KG

L'Oréal's success is built on a strong foundation. The world's largest beauty products company, it creates cosmetics, perfume, and hair and skin care items under some 35 brand names. Its principal brands are L'Oréal Paris, Garnier, and Maybelline (aimed at the mass market), Lancôme (luxury market), and Redken and L'Oréal Professionnel (retail and salon sectors). L'Oréal also holds the cosmetics and fragrance licensing rights for Yves Saint Laurent and produces active cosmetics under the SkinCeuticals and CeraVe brands. Products are sold through third-party retailers, concession stands, pharmacies, and professional outlets. L'Oréal's largest shareholders are the Bettencourt family (matriarch Liliane passed in 2017) and Nestlé.

Operations

L'Oréal is organized around four product categories: Professional Products (salon hair care), Consumer Products (hair and skin care, makeup), L'Oréal Luxe (beauty products, fragrances), and Active Cosmetics (dermo-cosmetic products).

Consumer Products is the largest of the four at around 45% of sales. It includes some ten brands, led by L'Oréal Paris, Garnier, and Maybelline New York. Maybelline New York and L'Oréal Paris are the #1 and #2 cosmetics brands in the US. L'Oréal Paris is also #1 in China.

L'Oréal Luxe serves a higher price point and generates more than 30% of sales. It principal brands are Lancôme, Yves Saint Laurent (under license), Giorgio Armani, Kiehl's, and Urban Decay, alongside some 12 others. It reaches Asian consumers via duty-free stores in several major airports.

The Professional Products segment primarily serves around 1.5 million salons worldwide with hair care and beauty products. Its key brands include L'Oréal Professionnel, Redken, Matrix, Kératase, and Shu Uemura. The segment accounts for nearly 15% of sales.

Active Cosmetics accounts for under 10% of sales and provides dermocosmetic products under the brands La Roche-Posay (#1 in dermocosmetics globally) and SkinCeuticals (leading US aesthetic medicine skincare brand).

Geographic Reach

L'Oréal has a global reach and sells its products across 150 countries. It has leading market shares in many of the world's most important cosmetics markets, including the US and China. L'Oréal makes around 30% of sales in both its established markets of Western Europe and North America. The remaining 40% comes from its new markets, particularly the Asia/Pacific region (25%), and Latin America and Eastern Europe (around 7% each).

L'Oréal has logistics centers in 50 countries, 16 evaluation centers, 20 research centers across six regional hubs (US, Japan, China, India, Brazil, and South Africa), and around 40 production sites.

Sales and Marketing

L'Oréal has no owned store network and instead sells its beauty items globally through retailers, distributors, and online. L'Oréal's consumer products division distributes products worldwide to mass-market channels, such as supermarket, drug stores, and mass merchants. The Active Cosmetics business has close links with health professionals, dermatologists, paediatricians, and doctors practicing aesthetic medicine. It has some 250 million followers on social media.

Online sales account for around 8% of total sales.

Financial Performance

Note: Growth rates may differ after conversion to US Dollars.

L'Oréal has achieved steady long-term annual revenue growth as it adds brands to its portfolio and successfully taps new markets. In fiscal 2017 revenue squeaked up less than 1% to €26.0 billion as strong 5% like-for-like sales were offset by the divestiture of The Body Shop in 2017. The strongest growth was recorded in the Asia/Pacific region, driven by demand among Chinese consumers and e-commerce sales. Growth in North America was sluggish due to haircare weakness, while Africa and the Middle East shrank due to instability in the region.

Net income increased 17% to €3.6 billion due to higher operating profit and an impairment charge booked in the previous year relating to the Body Shop sale.

Cash from operations increased 12% to $5.2 billion thanks to stronger cash generation and changes in accounts payable.

Strategy

L'Oréal is making eyes at the Chinese market. Already the market leader in the country, the company hopes to capitalize on fast growth in the high-income classes, who are expected to number 330 million by 2030. A subset of the demographic shift includes a surge in Chinese tourist spending, which grew from $13 billion at the turn of the millennium to $261 billion in 2016 -- nearly half of all tourist spending globally. L'Oréal continues to develop its Travel Retail channel's duty-free stores to capture these shoppers, particularly younger tourists who see designer cosmetics are as a cheaper way of accessing L'Oréal's desirable brands.

L'Oréal is also intent on growing e-commerce sales, and in 2017 it achieved growth of 34%, surpassing €2 billion for the first time. Much of the growth came in China, which has a highly developed e-commerce infrastructure. L'Oréal partners with the likes of Alibaba, JD.com, and VIP to target the consumer festival Singles' Day, where it achieved 100% growth in 2016. Chinese e-commerce customers buy almost exclusively through mobile channels, and as such most of L'Oréal's online development focuses on mobile.

In 2017, L'Oréal completed the sale of The Body Shop, which had been suffering from low sales due to an unclear customer proposition and competition from online retailers.

Mergers and Acquisitions

L'Oréal makes one or two acquisitions each year. In 2017 it acquired CeraVe, a US skincare brand.

Company Background

The family of the late Liliane Bettencourt, director and daughter of founder Eugène Schueller, are L'Oréal's primary stockholders. They own about 31% of the company's shares, while Nestlé owns about 30%. The Bettencourts and Nestlé have been indirect owners of L'Oréal through the Gesparal SA holding company for some 30 years. (Gesparal merged into L'Oréal in 2004.)

L'Oreal Produktions Deutschland GmbH & Co. KG

Hertzstr. 175
Karlsruhe, Baden-Württemberg 76187
Phone: 49 7219-7270

Stats

Employer Type: Public
Executive Board Member: Daniel Seh
Employees (This Location): 384
Employees (All Locations): 384

Major Office Locations

Karlsruhe, Baden-Württemberg