LOreal 2016 Annual Report PDF

2016
A N N UA L
R EPORT
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Cover: L’Oréal dedicates the 2016 Annual Report cover page to the American make-up brand Urban Decay,
“prestige beauty brand winner of the year” by WWD magazine. This image was chosen from the Vice Lipstick
launch campaign, which is already a worldwide success.
Contents
Prospects
03 _ Prospects
by Jean-Paul Agon,
Chairman and
Strategy
Chief Executive Officer
06 _ Mission and Strategy
08 _ The Board of Directors
10 _ The Executive Committee
12 _ Commitments
14 _ Ethics
Performance
16 _ Cosmetics Market
19 _ L’Oréal in figures
24 _ Worldwide advances
Brands
26 _ Consumer Products
30 _ L’Oréal Luxe
34 _ Professional Products
Expertise 38 _ Active Cosmetics
42 _ The Body Shop
44 _ Research and Innovation
46 _ Operations
48 _ Digital
50 _ Human Relations
52 _ Administration and Finance
54 _ Corporate Social
Responsibility
89,300
A global
flotilla of
employees
34
complementary
brands
473
patents registered
in 2016
1 st
cosmetics
group
worldwide(1)
140 countries
25.84 billion euros
of sales
Commitments
4.54
billion euros
for 2020
“Sharing Beauty With All”
in operating profit(2)
2 (1) Source: WWD, “Beauty’s Top 100”, April 2016. (2) At 31 December 2016.
P R O S P E C T S
by Jean-Paul Agon, Chairman and Chief Executive Officer
2016 was another

good year for L’Oréal.
We accelerated our
growth, outperformed
the market once again
and increased our
worldwide leadership
of the beauty industry.
2016 was another good year for L’Oréal. Three of our Divisions, L’Oréal Luxe,
Consumer Products and Active Cosmetics, made great progress and we
gained market shares in each of our three strategic regions. 2016 was also a
great vintage in terms of emblematic innovations and strategic acquisitions.
With IT Cosmetics, Atelier Cologne, Saint-Gervais Mont Blanc and CeraVe(1),
we made four very diverse acquisitions that perfectly complement ou r
global flotilla of brands and allow us to respond to new beauty desires. And,
last but not least, we delivered a compelling set of results that once again
prove the robustness of L’Oréal’s economic model and its powerfu l
capacity to create value. •••
(1) Acquisition announced on 6 January 2017 and finalised on 6 March 2017. P R O S P E C T S 3

P R O S P E C T S
by Jean-Paul Agon, Chairman and Chief Executive Officer
2016 was also a year of great progress

in the transformation of our group,
with L’Oréal becoming even more digital,
efficient, agile and sustainable.
We increased our digital lead. Our that digitalisation offers. There is a
e-commerce sales grew by +33% (1) true industrial revolution taking place
and are now equivalent to the group’s throughout our entire value chain.
4th largest country. More than 30% of
our advertising is now digital, with We also profoundly transformed
even more targeted and efficien t ourselves to meet our sustainable
communications. We have recruited development targets, set by our
1,600 experts and trained almost ten “Sharing Beauty With All” initiative.
times that amount in-house. Across 2016 was a pivotal year for our 2020
all Divisions, digital is amplifying the objectives and a year of major achieve-
power of our brands and bringing ments, particularly in sustainable
them even closer to our consumers. innovation and sustainable production.
We achieved and even went beyond
Inauguration of the Charles Zviak Centre, We also continued our Industry 4.0 our goal of reducing CO2 emissions by
in Clichy (France). transformation programme, which 60%, four years ahead of schedule(2).
integrates all the new opportunities
If we have been working hard

to transform our company into
a New L’Oréal it is because
we believe that we are right now
at the dawn of a Bright
New World of Beauty.
The world is changing around us at an amazing speed, the
World of Beauty is also changing radically. As digital and
social media become omnipresent in our lives, we are
entering into the era of “social beauty”. An era where
beauty is becoming even more essential. The way you look
will be more important than ever in expressing your per-
sonality, crafting your image of yourself, and interacting
positively with others.
Visiting the L’Oréal factory in Karlsruhe (Germany).
4 P R O S P E C T S
This Bright New World of Beauty
is a unique opportunity for L’Oréal,
since we are uniquely positioned
to drive and lead this new era.
First, because our superiority in Research and up, natural beauty, or personalisation desires.
Innovation gives us an edge in the quality, effica- Moreover, because of our proximity and the
cy, safety and sincerity of our products. These quality of our interactions with consumers.
qualities are now, more than ever, required by Digital, in particular, offers opportunities for an
consumers. Our capacity for innovation also ongoing dialogue and personal advice. With
includes services such as the Makeup Genius over one billion viewers on our brand websites
app, the My UV Patch or the connected brush and social media pages, L’Oréal is clearly the
by Kérastase. champion of connected beauty. We are also
currently exploring all the direct-to-consumer
Furthermore, because we are able to track channels, from e-commerce to boutiques
emerging trends and quickly offer products opened by some of our brands.
that meet these new aspirations, such as make-
Finally, our unique

characteristics appear to
be perfectly fitted to
this New World of Beauty.
Our global flotilla of brands, each of which
addresses specific consumer needs; Our pres-
ence across all channels, categories, price
points and regions of the world; Our agile and
flexible organisation, strategically concentrat-
ed but operationally decentralised; And, last
but not least, our entrepreneurial culture and
highly engaged teams.
L’Oréal stand at the Vivatech fair in Paris (France).
We, at L’Oréal, plan to make the most of this new golden age
of beauty. More than any other company, since we are
and will be the beauty company, offering the best of beauty
to all women and men living on this planet, thus fulfilling
its mission: Beauty for All.
(1) Sales achieved on the brands’ own websites and estimated sales achieved by the brands corresponding to sales through retailers’
websites (non-audited data). Like-for-like growth. (2) In the plants and distribution centres. Period 2005-2016. In absolute value. P R O S P E C T S 5
M I S S I O N A N D S T R A T E G Y
O U R M IS S IO N
Beauty for All
Offering all women and men worldwide
the best of cosmetics innovation in terms of quality,
efficacy and safety to satisfy all
their desires and all their beauty needs
in their infinite diversity.
O U R S TR ATEGY
Universalisation
L’Oréal has chosen a unique strategy:
Universalisation. It means globalisation that captures,
understands and respects differences.
Differences in desires, needs and traditions.
To offer tailor-made beauty, and meet the aspirations
of consumers in every part of the world.
L’Oréal is driven by this vision of the world.
6 S T R AT E G Y
B R A N D S
O U R B R AN DS
A global flotilla
L’Oréal’s flotilla of brands is organised by Division,
which each develop a specific vision of beauty by consumption
universe and distribution channel.
CONSUMER PRODUCTS
L’ORÉAL LUXE
PROFESSIONAL PRODUCTS
ACTIVE COSMETICS
S T R AT E G Y 7
G O V E R N A N C E
The Board
of Directors
L’Oréal’s Governance
is solid, perfectly in line with
the challenges of tomorrow.
J E A N - PAU L AG O N
Chairman and Chief Executive Officer
This transparent and constructive dialogue culminates

Stable governance in a shared strategic vision, which gives the General
in the swiftly changing world Management the confidence that is necessary for its
implementation.
of cosmetics
Proactive and committed directors
The composition of the Board reflects L’Oréal’s share-
holding structure and guarantees the interests of all its
shareholders . Alongside the Chairman and Chief Extremely determined and proactive, the directors are
Executive Officer, there are five directors who represent convinced that stringent governance creates value for the
L’Oréal’s major shareholders, seven independent directors company, and they always keep the company’s long-term
and two directors representing the employees. interests first in mind as they voice their opinions.
The diversity and complementarity of the directors’ The directors play a dynamic and assiduous role in the
industrial, financial and entrepreneurial expertise equip work of the Board and its four Committees, which actively
them to quickly and thoroughly comprehend the develop- contribute to preparing the Board’s deliberations. The Board
ment challenges facing L’Oréal, the leader of a globalised closely monitors changes in best practices and, to ensure
and highly competitive cosmetics market in which the that constant progress is achieved, carries out a full review
need to innovate and adapt is crucial. Most of the directors of its modus operandi and organisation every year.
have experience managing international groups at the
highest level. In 2016, the Board’s composition became
even more diversified, with a higher proportion of women
Ethics at the heart of L’Oréal’s
and greater internationalisation. The Board’s women di- governance and commitments
rectors now represent 46% of the total, and 50% of the
Committees are chaired by women independent directors.
The Board of Directors places great importance on
respecting L’Oréal’s ethical principles – Integrity, Respect,
A role of reflection Courage and Transparency – and more generally the
and strategic impetus Code of Ethics. In 2016, the Senior Vice-President and
Chief Ethics Officer presented the ethics policy and the
initiatives taken in this field, as well as their results. The
The Board devotes the bulk of its work to strategic issues, Board considers these policies to be an integral part of
to foster and accelerate the group’s transformation into a L’Oréal’s growth model; it supports their implementation
more universal, more digital and more sustainable L’Oréal. and regularly measures the advances made.
The Board is kept informed throughout the year about
the group’s activities and results, its positions in relation
to its competitors, market trends and the expectations
of consumers all over the world. It examines acquisition
projects, which were numerous in 2016, and regularly holds
meetings with the group’s senior executives.
8 S T R AT E G Y
J E A N - PAU L AG O N P E T E R B R A B E C K- L E T M AT H E
Chairman and Chief Executive Officer Vice-Chairman of the Board
since 18 March 2011 (term of office renewed in 2013)
(term of office renewed in 2014)
F R A N ÇO I S E JEAN-PIERRE MEYERS
B E T T E N CO U R T M E Y E R S Vice-Chairman of the Board
ANA SOFIA AMARAL CHARLES - HENRI FILIPPI

(since 15 July 2014) (term of office renewed in 2015)
S O P H I E B E L LO N X AV I E R FO N TA N E T
(since 22 April 2015) (term of office renewed in 2014)
BELÉN GARIJO BERNARD K ASRIEL

(since 17 April 2014) (term of office renewed in 2016)
B É AT R I C E GEORGES LIAROK APIS

G U I L L AU M E - G R A B I S C H (since 15 July 2014)
(since 20 April 2016)
J E A N -V I C TO R M E Y E R S E I L E E N N AU G H TO N
(term of office renewed in 2016) (since 20 April 2016)
VIRGINIE MORGON
(since 26 April 2013)
S T R AT E G Y 9
G O V E R N A N C E
The Executive Committee,

the group’s management body
The Executive Committee members are in charge of the operational Divisions
and functional Departments, as well as the geographic Zones. They implement
the strategic guidelines and direct the activities of L’Oréal all over the world.
In 2016, Nathalie Roos and Vianney Derville joined the Executive Committee
as President Professional Products Division and Executive Vice-President Western
Europe Zone respectively. Alexis Perakis-Valat was appointed President Consumer
Products Division and Jochen Zaumseil Executive Vice-President Asia, Pacific Zone.
3
14
4 1
15
7
5 9
10 S T R AT E G Y
Members of the Executive Committee of L’Oréal
1 • JEAN-PAUL AGON 5 • BARBARA LAVERNOS 10 • ALEXANDRE POPOFF
Chairman and Executive Vice-President Executive Vice-President
Chief Executive Officer Operations Eastern Europe and
Africa, Middle East Zones
2 • LAURENT ATTAL 6 • BRIGITTE LIBERMAN
Executive Vice-President President 1 1 • LUBOMIRA ROCHET
Research and Innovation Active Cosmetics Division Chief Digital Officer
3 • VIANNEY DERVILLE 7 • ISABEL MAREY-SEMPER 12 • NATHALIE ROOS

Executive Vice-President Executive Vice-President President
Western Europe Zone Communications and Public Affairs Professional Products Division
4 • NICOLAS HIERONIMUS 8 • CHRISTIAN MULLIEZ 13 • FRÉDÉRIC ROZÉ

President Executive Vice-President Executive Vice-President
Selective Divisions Chief Financial Officer Americas Zone
9 • ALEXIS PERAKIS-VALAT 14 • JÉRÔME TIXIER

President Executive Vice-President
Consumer Products Division Human Relations and Advisor
to the Chairman
15 • JOCHEN ZAUMSEIL
Executive Vice-President
Asia, Pacific Zone
2 13
10
8 12
6
11
S T R AT E G Y 11
C O M M I T M E N T S
O U R CO M M ITM ENTS
INNOVATING SUSTAINABLY
By 2020, 100% of L’Oréal products will have an improved
environmental or social profile, for example thanks to
the reduction of the environmental footprint of formulas,
the respect of biodiversity or eco-design of packaging.
PRODUCING SUSTAINABLY
By 2020, L’Oréal will have reduced the environmental footprint
of its plants and distribution centres by 60% (1),
through the reduction of CO2 emissions(2), water consumption
and waste generation(3).
LIVING SUSTAINABLY
L’Oréal aims to empower its consumers to make sustainable choices.
To achieve this goal, the group is pursuing a number
of initiatives such as assessing the footprint of each product
and using the brands’ influence to raise consumer awareness.
DEVELOPING SUSTAINABLY
Sharing its growth with its stakeholders is a priority for L’Oréal, which fosters
access to work for people from underprivileged communities,
involves suppliers in its sustainable development commitments and ensures
that its employees around the world benefit from the best social practices.
12 S T R AT E G Y (1) From a 2005 baseline. (2) In absolute terms. (3) Per unit per finished product.
O U R CO M M ITM ENTS
The L’Oréal Foundation
The L’Oréal Foundation is committed to supporting
and empowering women worldwide. It helps them to
pursue careers in the fields of beauty and science,
through two specific programmes: “For Women in Science”
and “Beauty for a Better Life”.
“FOR WOMEN IN SCIENCE”

Celebrating women in science who have the power to change the world
The “For Women in Science” programme was set up in 1998
by L’Oréal in partnership with UNESCO with one aim in mind:
to ensure that women achieve equal representation
with men in all scientific disciplines, so that research benefits
from women’s intelligence, creativity and drive.
“BEAUTY FOR A BETTER LIFE”

The Maison Rose in Bordeaux
In February, the first-ever Maison Rose opened its doors in Bordeaux,
thanks to support from the L’Oréal Foundation. Based on a concept
invented with women cancer sufferers, the house provides
them with a space that fosters a sense of well-being. A range of activities
are available to help women feel better during
and after treatment, including beauty advice and care from
a specially trained socio-aesthetician.
S T R AT E G Y 13
E T H I C S
Ethics at the heart

of L’Oréal’s commitments
L’Oréal was built on strong ethical principles that guide
its development and contribute to building its reputation:
Integrity, Respect, Courage and Transparency. These principles are namely the foundation
of the group’s policies in terms of compliance, responsible innovation,
environmental stewardship, social responsibility and philanthropy.
Longstanding
commitment to the
United Nations
L’Oréal recognised by the
L’Oréal has been a signatory since 2014 of Ethisphere Institute
the Women’s Empowerment Principles
of UN Women, an initiative which aims to promote
for the 7th time
gender equality, and the empowerment of women
in the workplace, market place, and the community.
L’Oréal has been recognised as one of the World’s
In 2016, Jean-Paul Agon, Chairman and CEO
Most Ethical Companies 2016 by the Ethisphere
of L’Oréal, received the Women’s Empowerment
Institute, a global leader in defining and advancing
Principles CEO Leadership Award. On 1 January 2016,
the standards of ethical business practices. Receiving
the 17 Sustainable Development Goals for 2030
this honour for the 7th time underscores L’Oréal’s
– adopted by world leaders in September 2015
commitment to leading ethical business standards.
at a historic United Nations summit meeting –
came into force. As a responsible citizen,
L’Oréal is already strongly committed to 14 out of
the 17 goals.
The global network of
Ethics Correspondents
L’Oréal has set up a global network of Ethics
Correspondents to make sure each employee has a
local point of contact whilst favouring the normal
route for handling concerns by management.
THE ETHICS
L’ORÉAL’S CODE
E-LEARNING AND
OF ETHICS IS
AVAILABLE IN ETHICS HELPLINE,
L’ORÉAL ETHICS
45
LANGUAGES
OPEN TALK, ARE
AVAILABLE IN
MORE THAN
20 LANGUAGES
V I D EO O N L I N E
WATCH THE INTERVIEW WITH
VALENTINA R ANNO ,
ETHIC S C ORRESPONDENT
FOR L’O RÉAL I TALY
14 S T R AT E G Y
Chile Russia United States
Greece Vietnam
Switzerland
8th edition of
Ethics Day
Ethics Day has become a key date
on the group’s calendar.
Morocco
The central event is a worldwide
webchat with Chairman and CEO
Jean-Paul Agon, who answers live
hundreds of questions on ethics sent
to him by L’Oréal employees.
The General Manager of each
country also organises
a local session. In 2016 more than 60% Philippines
of L’Oréal employees took part
in Ethics Day, asking more than
4,800 questions.
Employees were also able to
participate in a global crowdsourcing
initiative, to gather collective
intelligence on the theme of
“How to better Work Together”.
More than 1,100 suggestions
were sent in, and over
4,000 votes cast.
Canada Turkey
S T R AT E G Y 15
C O S M E T I C S M A R K E T
The world of beauty

in 2016
The worldwide cosmetics market, estimated at a total of 205 billion euros, was stronger
in 2016, with growth of +4.0%(1). In this supply-driven market, spurred by innovation,
quality and perceived results, L’Oréal strengthened its leadership(2).
+5.0% +2.9% +1.0% +4.2% +4.6% +4.6% +3.8% +3.6% +3.9%

+4.0%
Growth of the
worldwide cosmetics
market over ten years(1)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Breakdown of the market Acceleration

by geographic Zone(1) of online sales
36.9%
Asia, Pacific
24.8% +20.7%
North America growth in worldwide
online sales(1)
19.3%
Western Europe
10.2%
11%
share of selective
Latin America cosmetics market e-commerce(1)
6.0%
Eastern Europe
2.9%
Africa, Middle East
Main worldwide players
in sales
(in billions of USD(3))
Breakdown of the market
by product category(1)
36.3%
Skincare L’ORÉAL
22.9%
Haircare
28.02 SHISEIDO
7.11(4)
18.2%
Make-up UNILEVER ESTÉE
20.47(4) LAUDER
12.0% 11.10
Fragrances
PROCTER
10.5% & GAMBLE
17.60(5)
Hygiene products
(1) Source: L’Oréal 2016 estimates of the worldwide cosmetics market in net manufacturer prices. Excluding soaps, oral hygiene, razors and blades. Excluding currency effects.
(2) Source: WWD, “Beauty’s Top 100”, April 2016. (3) Source: WWD, “Beauty’s Top 100”, April 2016. Based on 2015 sales. (4) WWD estimates of cosmetics sales. (5) WWD estimates
of cosmetics sales. Before the disposal of 43 brands to Coty.
16 P E R F O R M A N C E
BOOM IN
MAKE-UP MARKET
For the fourth consecutive year,
the make-up category drove cosmetics
market growth worldwide.
The reasons behind this swift expansion
across all regions and beauty
sectors are analysed in detail below. Lipstick hits
the headlines
A star segment
Record growth(1)
+13.6%
( 1)
+8.4% GROWTH
In all geographic Zones,

the make-up market is growing faster
than the cosmetics market (1)
1.5
BILLION LIP
MAKE-UP PRODUCTS SOLD
PER YEAR(3)
X6
X2
Western Europe
North America Powerful
growth potential
PENETRATION RATES
STILL RELATIVELY
MODEST IN SOME
X2
GEOGRAPHICAL AREAS
New Markets
UNITED STATES FRANCE
68% 60%
BRAZIL CHINA
50% 28%
% of women who use
at least one lip make-up product
per year(4)
Make-up is
the most dynamic category
in all sectors(2)
(1) Source: L’Oréal 2016 estimates of the worldwide cosmetics market in net manufacturer prices. Excluding soaps, oral hygiene, razors and blades. Excluding currency effects.
(2) Excluding dermocosmetics. Source: L’Oréal 2016 estimates of the worldwide cosmetics market in net manufacturer prices. Excluding soaps, oral hygiene, razors and blades.
Excluding currency effects. (3) Source: Euromonitor, 2015 data. (4) Source: Women aged between 15 and 75 in the United States and Europe, between 15 and 80 in Japan,
between 15 and 65 in Russia, Brazil and China, and between 15 and 55 in India, Beauty Track, 2012-2013.
P E R F O R M A N C E 17
C O S M E T I C S M A R K E T
New generations reinvent make-up

The make-up boom is driven by the selfie generation, and the fast-growing use of social media, which focuses
on appearance, self-expression and presentation. The new generations are reinventing uses, giving trends
their own spin, and creating buzz for new looks.
GENERATION Z
born between 1995 and 2010
Who are the new make-up MILLENNIALS
born between 1980 and 2000
consumer generations?
1980 1985 1990 1995 2000 2005 2010
New generations The new generations

have a significant beauty set and follow the trends
spending budget(1)
FRANCE Per capita
$35
14-18 year-olds
$28
19-24 year-olds
$42
CHINA Per capita

$77
14-18 year-olds
$71
19-24 year-olds
$85
UNITED STATES Per capita

$37
14-18 year-olds
$28
19-24 year-olds
$49
L’ORÉAL L’ORÉAL PARIS

AND NYX
IS IDEALLY MAYBELLINE
NEW YORK
PROFESSIONAL
MAKEUP
PLACED TO SEIZE The two top The highest growth LANCÔME,
YVES SAINT LAURENT,
worldwide make-up in the market
GIORGIO ARMANI,
THE POTENTIAL brands
URBAN DECAY
AND SHU UEMURA
OF THE MAKE-UP Emblematic signatures
IT COSMETICS with complementary
MARKET ESSIE A newcomer
positioning in
the Luxury sector
to the portfolio:
A specialist nail care
a skincare make-up
and varnish brand
brand developed
with plastic surgeons
(1) Source: Ipsos, 2015 qualitative study, “Only include the beauty products you buy with your own money and not products bought for you by other people”.
L ’ O R É A L I N F I G U R E S
A robust and balanced

business model
The group achieved a significant growth in sales and robust profits in 2016.
Operating margin and cash flows have set new records, confirming
that L’Oréal’s business model is set to deliver robust performance and create
significant value.
Growth in sales in all Divisions

and all geographic Zones
Consolidated sales
(in millions of euros)
+4.7%(1)
25,837
25,257
22,532
Weight of
21,638 22,124 digital in sales(2)
1.7
billion euros of sales
in e-commerce
6.5%
of consolidated sales
in e-commerce
+32.7%
of like-for-like growth
in e-commerce
2012 2013 2014 2015 2016
(1) Like-for-like: based on a comparable structure and identical exchange rates. (2) Sales achieved on the brands’ own websites and estimated sales achieved by the brands on retailers’
websites (non-audited data).
Breakdown of 2016
operational Divisions’ sales
BY DIVISION
48.1% 13.6%
Consumer Products Professional Products
30.8% 7.5%
L’Oréal Luxe Active Cosmetics
BY GEOGRAPHIC ZONE BY BUSINESS SEGMENT
32.1% 3 4%
39. 28.5% 12.1%
Western Europe New Markets: Skincare Hair colourants
22.6% Asia, Pacific 26.4% 9.5%
28.5% 7.4% Latin America Make-up Fragrances
North America 6.3% Eastern Europe
19.2% 4.4%
3.1% Africa, Middle East Haircare Other(1)
Record operating margin, representing 17.6% of sales

Operating Net profit Earnings
profit excluding non-recurring items per share (3)
(in millions of euros) after non-controlling interests(2) (in euros)

(in millions of euros)
+3.5% +4.5% +4.6%

4,540 3,647 6.46
4,388 3,490 6.18
3,891 3,125 5.34

3,760 3,032 4.99
3,558 2,861 4.73
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
(1) “Other” includes hygiene products and sales made by American professional distributors with brands outside of the group. (2) Net profit excluding
non-recurring items after non-controlling interests does not include impairment of assets, restructuring costs, tax effects or non-controlling interests.
20 P E R F O R M A N C E (3) Diluted earnings per share, based on net profit from continuing operations, excluding non-recurring items, after non-controlling interests.
A balanced operating profitability
Profitability by Division Profitability by
(as % of Division sales) geographic Zone
23.2% (as % of Zone sales)
20.2% 21.2% 20.3% 22.9%
19.6% 19.7%
Total operational
Divisions’
profitability
20.7%
(1)
Consumer L’Oréal Professional Active Western North New

Products Luxe Products Cosmetics Europe America Markets
Solid balance sheet

Shareholders’ Net cash Capital
equi ty surplus of expe nditure
68.8%
of tota l a ssets
481
m illion eu ros
5.4%
of sales
A dynamic shareholder return policy
Dividend per share

51.1%(4)
(in euros) 50.6%
50.2%
€3.63 (2)
€3.41 48.7%
€2.97 €3.30 (3)
+6.45%
€2.75 €3.10
€2.53 €2.70 46.8%
€2.50
€2.30
2012 2013 2014 2015 2016

(5)
Pay-out ratio (as % of profit)
At 31 December 2016
€173.40 €97.4 Bn
2012 2013 2014 2015 2016 Share price Market capitalisation (6)
€3.63 = Preferential dividend of +10% for shareholders
who have held shares in registered form for two years (2).
(1) Before non-allocated: before central group expenses, fundamental research expenses, stock options and free grant of shares expenses
and miscellaneous items. (2) For shareholders who continuously hold their shares in registered form for a minimum of two full calendar years,
up to a maximum of 0.5% of the capital for the same shareholder. (3) Dividend proposed at the Annual General Meeting of 20 April 2017.
(4) Based on the dividend proposed at the Annual General Meeting of 20 April 2017. (5) Pay-out ratio based on diluted net profit excluding
non-recurring items, after non-controlling interests, per share. (6) On the number of shares at 31 December 2016, i.e. 561,855,741 shares. P E R F O R M A N C E 21
A dynamic
acquisitions policy
Ever since it was founded more than 100 years ago, the L’Oréal group has been building,
through a succession of targeted acquisitions, a global flotilla of emblematic and
complementary brands. Today it is the most powerful and diversified range of brands
in the beauty industry, and drives the group’s performance in a long-term perspective.
Find out how acquisitions enrich L’Oréal’s flotilla of brands,

to drive future organic growth
L’O r é a l co n soli dated sa le s
i n b i lli o n s o f eu ros
25
20
15
10
1967 1980 1985 1990 1995 2000 2005 2010 2015
Major acquisitions in 2016
IT Cosmetics, Atelier Cologne

a skincare make-up brand a niche perfume specialist
IT Cosmetics is one of the fastest-growing The brand has a distinctive offering
American selective beauty brands. of concentrated and refreshing pure perfumes,
Created by Jamie Kern Lima and Paulo Lima, or “colognes absolues”. Atelier Cologne
the brand was developed in conjunction has joined the prestigious brands
with renowned plastic surgeons of L’Oréal Luxe, such as Maison Margiela
to provide skincare make-up products and the exclusive collections
with a “problem-solution” approach. of Giorgio Armani and Yves Saint Laurent,
It is now part of the L’Oréal Luxe in the high-growth alternative
brand portfolio. fragrances segment.
2016 indicators
2016 is the third year of implementation of the social
responsibility and sustainability programme
“Sharing Beauty With All”, which aims to make L’Oréal
an exemplary company in sustainable innovation,
production and consumption, and in sharing growth
with all its stakeholders.
82% -67%
OF NEW PRODUCT S
ANALYSED HAVE
AN IMPROVED SOCI AL
CO 2 EMISSIONS (2)
-48% -35%
OR ENVIRONMENTA L WATER WASTE
PROFILE (1) CONSUMPTION (3) GENERATION (4)
More than
67,500 83%
90% 46% PEOPLE FROM SOCIALLY
OF THE GROUP ’S STRATEGIC
SUPPLIERS HAVE BEEN
OF THE BRANDS OF THE BRANDS AND FINANCIALLY EVALUATED AND SELECTED
HAVE EVALUATED HAVE CONDUCTED UNDERPRIVILEGED BASED ON THEIR
THEIR ENVIRONMENTAL A CONSUMER COMMUNITIES WERE PROVIDED ENVIRONMENTAL AND
OR SOCIAL IMPACT(5) AWARENESS INITIATIVE (5) WITH ACCESS TO WORK SOCIAL PERFORMANCE
88% 77%
OF THE GROUP ’S OF THE GROUP ’S
PERMANENT EMPLOYEES EMPLOYEES ATTENDED
HAVE HEALTHCARE AT LEAST ONE TRAINING
COVERAGE THAT SESSION IN 2016
REFLECTS BEST
PRACTICES IN THEIR
COUNTRY OF RESIDENCE TO FIND OUT MORE:
WWW.SHARINGBEAUTYWITHALL.LOREAL.COM
(1) New products, i.e. those for which new formulas have been developed and which are produced for the first time in the group’s factories, or products whose packaging was
modified/renovated in 2016. (2) In the plants and distribution centres. In absolute value. Period 2005-2016. (3) In the plants and distribution centres. Per unit of finished product.
Period 2005-2016. (4) In the plants and distribution centres. In absolute value. Period 2005-2016. Transportable waste (excluding reusable packaging rotation). (5) Calculated as a
proportion of 2015 consolidated sales.
W O R L D W I D E A D V A N C E S
Seizing the potential

of every market
In a favourable cosmetics market, L’Oréal in 2016 once again strengthened
its position as the worldwide leader in beauty(1), thanks to market share gains
in its three main geographic Zones – Western Europe, North America
and the New Markets.
United States
United Kingdom
Western Europe North America

L’Oréal once again extended its leadership 2016 was a year of acceleration in North America
in Western Europe, despite the difficult context for L’Oréal, which is consolidating its leadership
in France. The group made strong market share of the American beauty market(3). The Consumer
gains in the United Kingdom, where it posted Products Division made outstanding market
double-digit growth, and outperformed share gains. L’Oréal Luxe expanded
the market in Germany and Spain. The sales strongly thanks to the successes of Lancôme,
of the Consumer Products Division accelerated Urban Decay, Yves Saint Laurent and IT Cosmetics.
at the end of the year.
+2.4% 20.2% +5.8% 14.0%

L IKE - FOR - LIKE L’O RÉAL
L’O RÉAL GROWTH IN MARKET SHARE IN
L IKE - FOR - LIKE N ORTH A MERICA (3)
GROWTH IN MARKET SHARE IN N ORTH A MERICA (2)
WESTERN E UROPE (2) WESTERN E UROPE (3)
T W O E X C L U S I V E A R T I C L E S O N L I N E
Welcome to Travel Retail:

the USA! L’Oréal’s 6th continent
China
Argentina
Asia, Pacific Latin America

L’Oréal had a good year in Southern Asia L’Oréal made substantial market share gains
and the Pacific region, thanks to buoyant in Latin America, especially in Mexico, Colombia
markets in Indonesia, Thailand and Australia. and Peru, thanks to the dynamic growth of
Taiwan and South Korea also posted good growth. the make-up brands Vogue, Maybelline New York
In China, L’Oréal Luxe achieved double-digit and L’Oréal Paris. In Brazil, the Active Cosmetics
growth, but the Consumer Products Division, Division outperformed the market and
in a transitional phase, slowed. the Consumer Products Division benefited
from the successful integration of Niely.
+3.6% 9.5% +11.1% 8.8%

L IKE - FOR - LIKE L’O RÉAL MARKET SHARE
GROWTH IN IN A SIA , PACIFIC L IKE - FOR - LIKE L’O RÉAL
A SIA , PACIFIC (2) (EXCLUDING JAPAN) (3) GROWTH IN MARKET SHARE IN
L ATIN A MERICA (2) L ATIN A MERICA (3)
South Africa
Russia
Eastern Europe Africa, Middle East

The group had a very good year in Eastern All the Divisions consolidated market share
Europe. Russia, Poland and Ukraine in Africa, Middle East. L’Oréal sales slowed
drove growth in this Zone. The Professional at the end of the year, particularly because
Products Division, L’Oréal Luxe of Saudi Arabia. Egypt and Pakistan
and the Consumer Products Division however maintained their good growth rates.
all outperformed their markets.
+10.4% 12.8% +7.9% 13.0%

L IKE - FOR - LIKE L’O RÉAL
GROWTH IN MARKET SHARE IN
L IKE - FOR - LIKE L’O RÉAL A FRICA , M IDDLE E AST(2) A FRICA , M IDDLE E AST
GROWTH IN MARKET SHARE IN
E ASTERN E UROPE (2) E ASTERN E UROPE (3) (IN COUNTRIES WHERE
THE GROUP OPERATES) (3)
(1) Source: WWD, “Beauty’s Top 100”, April 2016. (2) Like-for-like: based on a comparable structure and constant exchange rates. Operational
Divisions’ growth. (3) Cosmetics Divisions market share. Source: L’Oréal 2016 estimates of the worldwide cosmetics market in net manufacturer
prices. Excluding soaps, oral hygiene, razors and blades. Excluding currency effects. P E R F O R M A N C E 25
CONSUMER
Products
L’ O R É A L P A R I S • G A R N I E R • M AY B E L L I N E N E W Y O R K
NYX PROFESSIONAL MAKEUP
E S S I E • N I E LY • D A R K A N D L O V E LY • M I X A
M G • C A R O L’ S D A U G H T E R
26 B R A N D S
Make-up
leading the way
D IVI S I O N
LI K E - FO R - LI K E
SA LE S G ROW TH A LE XI S
P E R A K I S -VA L AT
+4.4% President
Consumer Products Division
A year of acceleration
and innovations
INTERVIEW ONLINE for the Division
The headline news in 2016 was fans; and Essie, the nail varnish
the acceleration of our growth, brand with its iconic colours.
at +4.4%(2), reflecting a string Meanwhile, the Division tapped
E- CO M M ERC E
SA LE S G ROW TH ( 1) of game-changing innovations into the global natural haircare
and the success of our two strategic trend as it continued the global
+30.7% focuses: make-up and haircare.

The Consumer Products Division
had a very good year in North
America, where it posted record
roll-out of Ultra Doux by Garnier,
the brand that posted the highest
growth in haircare in 2016.
market share. Growth in Western LOVE BRANDS(4)

Europe accelerated, with good AND E-COMMERCE
results in Germany, the United
Kingdom and Spain. It also Thanks to their strong presence
increased in the New Markets, on social networks, a strategy
with good performances in Latin of creating attractive and authentic
America, Eastern Europe, content, and connected beauty
Southern Asia and in the Africa, services like the Makeup Genius
Middle East Zone. app, today more than ever,
N O RTH A M ER I C A Z O N E our brands are “digital
LI K E - FO R - LI K E SUCCESS OF OUR love brands(4)”. The Division’s
SA LE S G ROW TH TWO STRATEGIC FOCUSES e-commerce sales are growing
strongly at +30.7%, with good
+7.5% Make-up, with growth of +10.3%(2),

is the Division’s flagship category:
our four brands increased sales
performances in China, where
online sales already account
for 28.2%, and by the United
and contributed to growth. Kingdom, where they are up
This clearly illustrates the strength by 62.1%(1).
of our portfolio of complementary
brands: Maybelline New York,
the world’s number 1 make-up
brand(3), which makes New York
style accessible to consumers;
L’Oréal Paris, the number 2
in make-up worldwide(3),
which combines everything that
is best in Parisian make-up style
NYX PROFESSIONAL MAKEUP
LI K E - FO R - LI K E and know-how; NYX Professional
SA LE S G ROW TH Makeup, the cult brand for make-up
+123.5% (1) Sales achieved on the brands’ own websites and estimated sales achieved by the brands corresponding to
sales through retailers’ websites (non-audited data). Like-for-like. (2) Like-for-like. (3) Source: Distributor panels
Nielsen/IRI/Intage/RTRI, market share value 2016. (4) Internet users’ favourite brands.
B R A N D S 27
C O N S U M E R P R O D U C T S
NEW BEAUTY STEPS

The Consumer Products Division is innovating with accessible products
that change consumers’ everyday routines and beauty rituals.
From concealing roots to micellar waters and clay or tissue beauty masks:
2016 was a great vintage thanks to a series of innovations.
An instant root spray

In 2016, L’Oréal Paris offered its consumers a completely
new hair colour service: a spray that colours and conceals
grey roots in a few seconds. With this launch, L’Oréal Paris
is further strengthening its market leader position
in the hair colour segment.
Clay and tissue beauty masks

With Pure Clay, L’Oréal Paris offers both women and men
the possibility of “Multi-Masking” that is combining different
masks in the range to suit each zone of the face. Pure Clay
masks are already contributing to L’Oréal Paris skincare
growth in Western Europe.
Garnier is launching its first Hydra Bomb tissue mask,
a cosmetics trend inspired by Asian beauty traditions.
This new well-being and beauty routine fits the Garnier
brand universe like a glove.
Garnier takes micellar waters

into the mainstream
2016 was also a year of continuing worldwide success for
Garnier’s Micellar range. Micellar Cleansing Water Sensitive
Skin Solution is already a success in numerous countries,
and this year Garnier launched Micellar Cleansing Water.
1 - MAGIC RETOUCH BY L’ORÉAL PARIS

This innovative product temporarily covers
roots and grey hair by matching hair colour,
and disappears after shampooing.
2 - PURE CLAY BY L’ORÉAL PARIS
Each mask in the range provides
a tailor-made solution, adapted to
the needs of each skin type.
3 - MICELLAR CLEANSING WATER
BY GARNIER
This product combines micellar water
and make-up removal oils to ensure 3
perfect skin cleansing, even
with waterproof make-up.
28 B R A N D S
INCREDIBLE
SUCCESS FOR
NYX PROFESSIONAL
MAKEUP
With sales quadrupling in just two years,
the American brand NYX Professional Makeup
posted spectacular growth.
It continued to extend its network of beauty
fans all over the world, thanks to
its strong online presence and a host
of successful launches. The brand is now
present in 45 countries in North America,
Europe and Asia, Pacific.
GLOBAL
ROLL-OUT FOR
ULTRA DOUX
Ultra Doux by Garnier posted
very good growth in 2016 as it continued
its international roll-out in countries
including the United States, China and India.
The brand provides the ideal response
to increasingly strong consumer demand
for natural haircare. The Ultra Doux
Delicate Oat line is a worldwide
success story.
+61.9%
ULTRA DOUX BY GARNIER
LIKE-FOR-LIKE SALES GROWTH
Digital love brands(2)

The Division’s brands have
a very high profile on social media
and engage strongly with their
communities. Maybelline New York
has more than 30 million followers
on Facebook and L’Oréal Paris The hottest trends
some 25 million(3).
within reach
thanks to
“Glossy Talk”, Maybelline New York
a successful web series The American brand was boosted
by performances in face make-up,
Maybelline New York has launched especially in the strobing(4)
its web series “Glossy Talk” segment with Master Strobing Stick,
in several countries, and in 2016 and in lip make-up with
the series was viewed Vivid Matte Liquid, highly successful
some 35 million times(1). in France and the United Kingdom.
(1) Source: SocialBakers. (2) Internet users’ favourite brands. (3) Source: statistics provided by social networks. (4) Make-up technique used
to layer highlights on the face to create an illuminated complexion. B R A N D S 29
L’Oréal
LUX E
LANCÔME • Y VES SAINT LAURENT • GIORGIO ARMANI
K I E H L’ S • U R B A N D E C AY • B I O T H E R M
RALPH LAUREN • SHU UEMURA • CLARISONIC • VIKTOR&ROLF
DIESEL • HELENA RUBINSTEIN • CACHAREL • IT COSMETICS
Y U E SAI • G U Y L A RO C H E • PA LO M A P I C A S SO
M A I S O N M A R G I E L A • AT E L I E R C O L O G N E
30
0 B R A N D S
Outstanding
success stories for luxury
D IVI S I O N
SA LE S G ROW TH
N I CO L A S
+6.9%
H I ERO N I M U S
President
Selective Divisions
Powerful, agile
signature brands
WATCH THE VIDEO
INTERVIEW ONLINE drive growth
L’Oréal Luxe posted a very good increased. In Asia, our designer
year in 2016, with growth at +6.9%(1) brands Yves Saint Laurent and
and market share gains on all Giorgio Armani posted outstanding
continents. Western Europe growth. Yves Saint Laurent had
performed well, while North America an exceptional year, with sales
MAKE- U P SA LE S G ROW TH
had an outstanding year and the exceeding one billion euros.
New Markets delivered an excellent Our strength is our ability to develop
+25% performance with double-digit

growth in Russia, Japan, Southern
Asia and China. Make-up became
and roll out a portfolio of
complementary brands that
appeals to all regions of the world
L’Oréal Luxe’s number 1 growth and all types of consumers.
driver. We strengthened our brand
portfolio with two strategic REACHING NEW CONSUMERS
acquisitions: in make-up, ONLINE
IT Cosmetics, an American brand
in the selective beauty segment, Today more than ever, luxury
which experienced the strongest consumers focus on a
growth in the sector(2); and in new interactive space: their
fragrances, Atelier Cologne, smartphones. To personalise our
a brand whose expertise in the niche services, we strive to get to know
DYNAMIC G ROW TH I N : perfume segment perfectly them better and to enhance
China +11.3% complements our collections. our direct relationship, whether
through targeted marketing
United States +7.7% FLAGSHIP BRANDS ALL OVER campaigns or our dedicated
United Kingdom +10.5% THE WORLD stores, particularly online.
Russia +25.0% Lastly, we are committed to ensuring
As the world number 1 luxury our brands are responsible,
women’s brand(3), Lancôme in line with the new generations’
moved into 2nd place in expectations. Many of our
the American selective market(4). products have a positive societal
Urban Decay continued its global impact, either through green
roll-out, with store openings design, refillable packaging or even
in 11 new countries and the successful contributions to charities. The
Vice Lipstick launch. Kiehl’s Shu Uemura eyeshadow palette,
continued to grow. The market the Biosource range by Biotherm,
share of alternative brands(5) or the Kiehl’s charities are good
and their contribution to growth examples.
Y V E S S AI NT L AU R ENT
B R A N D SA LE S G ROW TH
(1) Like-for-like. (2) Source: Aggregate skincare and make-up segments, NPD United States panel, market share
value 2016. (3) Source: Aggregate women’s skincare, make-up and women’s fragrances segment, aggregate NPD
+29.0%
France, United Kingdom, Spain, Italy, United States, IRI Germany, Asia Beauty Research (China, Japan, Hong Kong,
Taiwan, South Korea, Thailand, Singapore), Generation Travel Retail Worldwide, Segmenta (Brazil, Argentina, Mexico,
Uruguay, Peru, Chile) panels, market share value 2015. (4) Source: Selective market, NPD United States panel, market
share value 2015. (5) Brands that symbolise new luxury, such as Kiehl’s and Urban Decay.
B R A N D S 31
L ’ O R É A L L U X E
THE CONSUMER EXPERIENCE IS

AT THE HEART OF OUR STRATEGY
End consumers are the focus of the L’Oréal Luxe strategy. Looking beyond
the product, they expect services and an experience in line with their lifestyle.
The group brands have come up with a host of initiatives to bring consumers
a personalised experience.
Increasingly
qualified leads
L’Oréal Luxe is investing in getting
to know its consumers better.
The Division’s database continued
to grow in 2016, and now contains
more than 60 million qualified
leads. Getting to know consumers
better is the first step to better
understanding them and better
meeting their expectations in
a personalised way.
Targeted
communications
L’Oréal Luxe continues to develop
2 its expertise in the era of precision
marketing. In the United States,
Black Opium by Yves Saint Laurent
used this approach to attract
new generations, as did
1 - LE TEINT Énergie de Vie by Lancôme,
PARTICULIER which successfully reached out
BY LANCÔME to Millennials(1).
A foundation made
in a “mini factory”
at the point of sale Services and experiences
from a selection
of 22,000 possible The brands are inventing new
pigment relationships with their consumers
combinations. through services, like the Vice
2 - APOTHECARY Lipstick app by Urban Decay,
PREPARATIONS and unique experiences
BY KIEHL’S that embody the brands’ DNA,
A new personalised like launch parties filmed
service that allows
consumers to 3 and shared on social media.
formulate skincare
products based on
their specific needs.
Personalisation
Personalised products are symbolic
3 - VICE LIPSTICK
BY URBAN DECAY of new luxury and an important
The application trend for the future of L’Oréal Luxe.
enables consumers Kiehl’s launched Apothecary
to try on the range’s
Preparations and Lancôme
100 shades before
buying. developed Le Teint Particulier.
32 B R A N D S (1) Generation born between 1980 and 2000.

FOUR MAJOR
SUCCESSES IN WOMEN’S
FRAGRANCES
The group recorded very good results in fragrances,
with three perfumes in the women’s top 10 in Europe:
La Vie Est Belle by Lancôme came in 1st
for the second year running(1), followed by Black Opium
by Yves Saint Laurent and Sì by Giorgio Armani,
which ranked 5th and 7th respectively (1).
Mon Paris, the new women’s fragrance
by Yves Saint Laurent, has already been a big hit
for the brand, particularly in the United States,
where it made the top 10 women’s fragrances(2).
OUTSTANDING
PERFORMANCE FOR
L’ORÉAL LUXE IN
THE ASIA, PACIFIC ZONE
The Division recorded dynamic growth
in Asia, Pacific, with double-digit growth in China, Japan
and Southern Asia. Yves Saint Laurent, Giorgio Armani
and Lancôme spearheaded growth thanks
to the strong performance of make-up,
new point-of-sale concepts, and an aggressive
digital strategy.
Acquisition of
the perfume house
Atelier Cologne
L’Oréal Luxe strengthened
its expertise in the niche fragrance
market with the acquisition of
the perfume house Atelier Cologne
and its unique selection
of concentrated and refreshing pure
Quinoa:
Q uiinoa perfumes, or “colognes absolues”. American
Ameri ican
a new ingredient success stories for
for Kiehl’s L’Oréal Luxe
Micro-Peel is a night-time exfoliating Strong growth from Urban Decay,
skincare product made and from Yves Saint Laurent,
with sustainably sourced quinoa husk. whose Black Opium and Mon Paris
It is proving really successful fragrances made the top 10(3),
in Asia thanks to its immediate results, was backed up by the continued success
natural ingredients of La Vie Est Belle and very good sales
and “baby-smooth-skin” effect. of Teint Idole Ultra Wear by Lancôme.
(1) Source: Women’s fragrances segment, aggregate NPD France, United Kingdom, Spain, Italy and IRI Germany, market share value 2016.
(2) Source: Women’s alcohol-based fragrances segment, NPD United States panel, market share value during the period from July (launch)
to December 2016. (3) Source: Women’s alcohol-based fragrances segment, NPD United States panel, market share value 2016. B R A N D S 33
PROFESSIONAL
Products
L’ O R É A L P R O F E S S I O N N E L • R E D K E N • M AT R I X
K É R A S TA S E • P U R E O L O G Y • D E C L É O R • S H U U E M U R A A R T O F H A I R
E S S I E • C A R I TA • M I Z A N I
34 B R A N D S
Hair colour
takes centre stage
D IVI S I O N
SA LE S G ROW TH
N ATH A LI E
+1.8%
RO OS
President,
Professional Products Division
Professional beauty:
an attractive, rapidly
WATCH THE VIDEO
INTERVIEW ONLINE changing market
OUR AMBITION: PARTNERSHIP AND
1st
TO MAKE HAIR COLOUR CO-CREATION WITH BEAUTY
THE NEW MAKE-UP PROFESSIONALS
Mirroring the acceleration in make-up, The Division has been supporting

G ROW TH the strong attraction of hair colour hairdressers with its education
CO NTR I B U TO R C ATEG O RY : for consumers is continuing, programmes for more than
HAI R CO LO U R
amplified by the boom in social 100 years. To ensure that our
networks. Asserting personality hairdresser partners worldwide are
through hair colour is becoming always up to date with the latest
a real beauty statement, trends, we are constantly in touch
and hairdressers are at the heart of with the most recent information.
the movement: only professionals We contact trendsetting
have the skills to personalise professionals at fashion shows
colours and master the techniques and reach out to celebrity
involved. As the market leader hairdressers to co-create exclusive
in professional beauty(1), professional launches and tutorials.
our ambition is to expand on this With its monthly Flash Trend Alerts,
emerging trend. L’Oréal Professionnel keeps
23
million
Hair colour was the top contributor
to growth in 2016, and all our
brands increased sales in this
category, thanks to our solid core
the whole hairdressing community
up to speed, and raises awareness
of the latest consumer expectations
and professional techniques.
I N OA
CO LO U R franchises, boosted by colour This close relationship means
APPLIC ATIONS ON AVER AG E innovations, trend-inspired we can take hairdressers’ needs
PER Y E A R (3) collections and new services. on board, and make sure that
Two examples are Inoa, adopted they are fully involved in designing
by more than 100,000 salons our innovations. A prime example
worldwide(2) and boosted by Inoa is Smartbond by L’Oréal
Blond Resist in 2016 or Diarichesse Professionnel, co-created with
Hi-Visibility by L’Oréal Professionnel. 12 international colour specialists.
Meanwhile at Redken, City Beats
by Shades EQ was launched in the
United States at the end of the
year, and was showcased on social
R ED K EN B R A N D networks by Chloe Nørgaard,
LI K E - FO R - LI K E a DJ with a strong online following,
SA LE S G ROW TH who dons one of the range’s
12 bold shades each month.
+2.4 % (1) Source: Kline data, 2015. (2) Source: Internal data. (3) Source: Internal estimates.
B R A N D S 35
P R O F E S S I O N A L P R O D U C T S
THE PROFESSIONAL
ADVANTAGE: A STRONGER
FOCUS ON PERSONALISATION
Through its haircare innovations, attuned to consumers’ strong
aspirations for tailor-made beauty, the Professional Products Division
offers exclusive salon services that showcase the advantages
of professional services.
The Pro Fiber saga continues

Building on a successful launch in 2015,
L’Oréal Professionnel continued the international
roll-out of Pro Fiber. This haircare line places
the hairdresser’s expertise at the heart of
the protocol, with an intricate application technique.
In 2016, the brand produced a video tutorial
– available on YouTube and through a free app –
to train hairdressers and support them in hair
diagnosis and choosing the most suitable range
of products. The Re-create line, for thinning hair,
was launched this year.
Kérastase: the expert in extreme

personalisation
Fusio-Dose by Kérastase, a haircare protocol
that is an emblematic expression of extreme
personalisation, is performing well, especially
in Western Europe. Feedback from both
professionals and their customers is very positive,
with results that are immediately perceptible
1 to the touch. 2016 also saw the re-launch
of Nutritive, a micro-targeted haircare line
enriched with a major active ingredient
discovered by L’Oréal Research, intra-cylane,
which durably strengthens the hair fibre.
1 - PRO FIBER 2
BY L’ORÉAL
PROFESSIONNEL
This haircare line
provides lasting
hair repair and
establishes continuity
between professional
salon services
and home haircare.
2 - FUSIO-DOSE
BY KÉRASTASE
The hairdresser
selects a combination
of concentrate and
booster ideally suited
to the consumer’s
hair, then mixes the
active ingredients on
the spot.
36 B R A N D S
BIOLAGE R.A.W.:
AN ENVIRONMENTALLY
FRIENDLY
PROFESSIONAL
HAIRCARE LINE
Biolage R.A.W.(1) was launched
in the United States to meet the growing needs
of consumers and hairdressers for natural
beauty: eight of its formulas are biodegradable
at 95% and its portfolio includes between
70% and 100% of ingredients of natural origin.
Biolage R.A.W. encourages eco-responsible
consumption habits, by raising
hairdressers’ awareness about the potential
impact of their everyday behaviour
INDIA: “BEST IN CLASS”
on the environment. IN EDUCATION
AND THE TOP
CONTRIBUTOR
TO GROWTH (2)
In India, education is the backbone of market

expansion. L’Oréal has focused its efforts
on developing and reinforcing the expertise
of professionals through education,
while moving the quality of hair salons
upmarket. This professionalisation strategy
has extended the Division’s distribution
network and enhanced its value.
+17.6%
PROFESSIONAL PRODUCTS DIVISION
SALES GROWTH IN INDIA(3)
Hair Fashion Night

rolled out
in 25 countries
In 2016, it reached 40,000 women
in France, for example.
The event brings professionals
and consumers together so all
Bonders(4): participants can enjoy the professional
beauty experience.
Decléor:
a new growth-driver a holistic vision
service of beauty
A service that protects hair The pioneering aromatherapy
during and after all types of technical brand posted +10.3% growth
services(5) for a guaranteed in 2016(3). Its philosophy
professional result, which encourages “Skin, Body, Spirit”
hairdressers to make daring is fully in line with consumer
transformations. expectations.
(1) Raw.Authentic.Wholesome. (2) Professional Products Division growth. (3) Like-for-like. (4) A formula that protects keratin bonds inside
the hair fibre. (5) Such as hair colour, bleaching and texture (e.g. permanent straightening). B R A N D S 37
ACTIVE
Cosmetics
L A R O C H E - P O S AY • V I C H Y • S K I N C E U T I C A L S
ROGER&GALLET • SANOFLORE
38 B R A N D S
Worldwide leader
in dermocosmetics (1)
D IVI S I O N ’S
SA LE S G ROW TH
B R I G IT TE
+5.7%
LI B ER M A N
President
Active Cosmetics
Health and
beauty together
WATCH THE VIDEO
INTERVIEW ONLINE leads to growth
In 2016, the Active Cosmetics 1,000 women on this topic in five

L A R O C H E -P OSAY Division maintained its growth countries: 57% of them believe that
LI K E - FO R - LI K E momentum. With a +5.7% increase daily beauty rituals have an impact
SA LE S G ROW TH in sales(1), higher than market on health(4). The survey also
growth, we confirmed our confirms the importance of the
+12.0% worldwide leadership in

dermocosmetics(2). It was another
year of strong sales growth for
values of protection, tolerance,
naturalness and ethics, and the
expectation of advice from
La Roche-Posay and SkinCeuticals, healthcare professionals.
especially in the United States, Thanks to another worldwide
where the Division’s growth was survey, we have identified a target
outstanding. Latin America with real potential: 360 million
and the Africa, Middle East Zone women who have concerns about
posted double-digit growth. health issues. They live all over the
Online sales rose by +40%(3), world, with 75% of them outside
contributing to the Division’s Western Europe(5). Two goals
dynamics as a whole. Skincare, motivate their use of skincare
our flagship category, continued products: preserving their beauty
D IVI S I O N ’S 2 N D to grow and win market shares, capital through a holistic approach
L A RG E S T CO U NTRY driven by our innovations to well-being and naturalness,
and the recommendations made and using products with high
United by healthcare professionals. technological added value
to actively improve their skin.
States HEALTH DRIVES SKINCARE

GROWTH
Our five very complementary brands
are well-placed to meet the
expectations of this universal
The Active Cosmetics Division trend.
firmly believes that “Health is
the future of beauty”, which means
it is fully attuned to the increasing
universal and multigenerational
trend towards health and tolerance
in cosmetics. To obtain clearer
consumer insights, we interviewed
29
(1) Like-for-like. (2) Source: 2016 panels and L’Oréal estimates. (3) Sales achieved on the brands’ own websites and
estimated sales achieved by the brands on retailers’ websites (non-audited data). Like-for-like. (4) Source: Ipsos
2016, L’Oréal study “Health is the future of beauty”. 1,000 women in the United States, France, Germany, and Brazil
(aged 16-75); in China (aged 18-50). National representation via quotas and weighting in the United States, France,
Germany, among SEC A/B/C in Brazil / among 50% highest income earners per tiers (1/2/3) in China. (5) Source:
Sociovision 2016, L’Oréal study “Health Potential Consumers”, 15 countries extrapolated to 84 countries (included
the 15 countries), covering North America, the whole of Latin America, Western and Eastern Europe, North East
D ER MACENTERS I N Asia and Australia. The United Nations, Department of Economic and Social Affairs, Population Division, 2015. “World
TH E TR AV EL R E TAI L M A R K E T Population Prospects: The 2015 Revision”, custom data acquired via website.
B R A N D S 39
A C T I V E C O S M E T I C S
TWO AMERICAN MARKET

CHAMPIONS
The Division’s expansion was remarkable in the United States, which has now 1 - SKINCEUTICALS
PREMIUM SPAS
become its 2nd largest country after France in terms of sales. The market In the United States,
was driven by SkinCeuticals and La Roche-Posay, which both continued to the brand opened
some ten centres
develop the dermocosmetics category in particular in drugstores(1). where it works closely
with aesthetic
practitioners on an
exclusive basis.
SkinCeuticals,
No.1 American medical aesthetic
skincare brand worldwide (2)
In its home country, SkinCeuticals owes its success

to a unique positioning, increased visibility
and high value-added innovations. Its approach
to skincare as an integral part of aesthetic
procedures designed to improve their
performance or lessen side effects. In 2016,
studies demonstrated the post-procedure
effectiveness of two facial skincare treatments:
Metacell Renewal B3 (IPL) to complement intense
pulsed light sessions, and Phyto Corrective
Masque to calm the skin after laser treatment.
La Roche
Roch -Posay
2 winning ovoverr drugstores
drugst res
La Roche-Posay – a trusted name in the fields
of sun protection and acne-prone skin –
ramped up its development in the United States.
The brand was boosted by the Division’s creation
of the dermocosmetics category in drugstores(1).
Growth at La Roche-Posay was also driven
1 by the impact of physicians’ recommendations,
linked especially to the success of its Effaclar
and Anthelios ranges.
2 - LA ROCHE-POSAY POINTS OF SALE

The Division drives the dermocosmetics
category in dedicated areas in drugstores(1)
such as CVS and Walgreens.
3 - TRIPLE LIPID RESTORE BY SKINCEUTICALS
This concentrated treatment contains three
3 essential skin lipids in pure form. It was one of the
most successful launches of the last eight years.
40 B R A N D S (1) Retailers offering

of products ranging from food items to pharmaceuticals. (2) Source: Euromonitor International Limited, 2016.
THE MISSION OF
LA ROCHE-POSAY:
CHANGING BEHAVIOUR
The brand is stepping up its initiatives
in skin cancer prevention, with My UV Patch,
the first connected patch that helps people
to adopt the right skin protection habits,
and the roll-out of its viral
“Become a Skin Checker” campaign.
VICHY SLOW ÂGE,

A NEW APPROACH
TO ANTI-AGEING
Vichy is moving for the first time
into the scientific field of the exposome,
which takes into account all the factors
– particularly environmental –
that can have an impact on skin ageing.
Vichy Slow Âge is an everyday preventive
treatment designed to help slow
the appearance of the signs of ageing.
It is based on an innovative combination
of baicalin, with its antioxidant properties,
bifidus lysate, and Vichy spa water, together
with an SPF 25 filter.
130
doctors at the
SkinAlliance Forum
In October 2016, the Active Cosmetics
Sanoflore delivers Division brought together 130 future
opinion leaders in dermatology
Roger&Gallet
strong growth from 39 countries for the second launched in China
SkinAlliance Forum. During
in France the two-day event, dermatologists
The flagship brand is making
the most of Chinese consumers’
exchanged views with L’Oréal researchers
The organic cosmetics brand strong affinities for naturalness,
and international scientists to develop
recorded its third year of double-digit well-being and authenticity:
their expertise in dermocosmetics.
growth in France, and is launching it is opening eight stores that focus
Aqua Rosa, a cosmetic water on introducing consumers to
inspired by the beauty routine the brand and providing
of Japanese women. a rich sensory experience.
B R A N D S 41
T H E B O D Y S H O P
THE BODY SHOP

Body and skincare
N E T SA LE S
are at the heart of
G ROW TH
the brand’s expertise
+0.6% J ER EM Y
S C H WA RT Z
Chairman and CEO
of The Body Shop
Our strateg y is to be
a pioneer in nature-inspired
products, personalised service
and ethical business
3,082
S TO R E S
The Body Shop creates nature-
inspired products using the finest
design is being renovated across
all 950 products and over 100
WO R LDWI D E
ingredients of natural origin trial-size and travel-size products.
sourced from around the world. Consumers today are looking for
The brand has always been more experiences in retail, as well
committed to animal welfare, as authenticity and ease of shopping.
campaigning against animal Many of The Body Shop’s
testing; it is 100% vegetarian stores are being renovated
and it supports fair trade through and redesigned to attract more
its Community Trade programme. consumers. In 2016, The Body Shop
The Body Shop is one of the also launched a new mobile
“youngest” brands in the United responsive, state of the art
Kingdom, its historic market, e-commerce platform.
SKINCARE with most consumers under
SA LE S G ROW TH
35 years old(1). To further increase
+7.0%
the brand’s appeal, the packaging
(1) Source: Internal survey, The Body Shop Brand Healthy Survey, 2016.
42 B R A N D S
THREE STAR PRODUCTS
UCTS
OF THE YEAR
Body and skincare are at the heart of
The Body Shop’s expertise, clearly demo onstrate
rated
by the extensive range of products, dedica
cate
ted
d
in-store consultations and nature-inspired
innovations: the Himalayan Charcoal purifying
glow mask, the Drops of Youth serum
and the Hawaiian Kukui Cream.
OUR
COMMITMENT:
ENRICH
NOT EXPLOIT™
75
M I LLI O N SQ UAR E M E TR E S
O F B I O D IVE R S E R I C H HAB ITAT
At The Body Shop, the Enrich Not Exploit™
Commitment reflects the brand’s
belief that business can be a force for good,
TO B E R EG E N E R ATE D BY 20 20 which means enriching people as well as
WITH TH E B O DY S H O P the planet, its biodiversity and resources,
BIO-BRIDGES while also developing sustainable
and ethical products.
Beautiful
Beau
Briitish ros
Br roses
The ne
new BrBritish Ro
Rose ra range fea
feattur
ures
es
the
e e
essence of of ha
hand-picke kedd, or
organic rosroses
from a ffa
arm inin th
the U
Unnited K Kiingdom,
producing a ne new BBrritish tta
ake on
on a c cllass
assiic
beauty and ffrragra rant
nt iin
ngre
gredient.
Now in
Chile!
In 2016, The Body Shop
opened three new stores in Chile,
its 66th global market.
B R A N D S 43
R E S E A R C H A N D I N N OVAT I O N
Innovating
for the beauty
of the future
SCAN TH I S PAG E
FO R E XC LU S IV E VI D EOS
L AU R E N T A N D ARTI CLE S O N LI N E
AT TA L
Executive Vice-President,
Research and Innovation
The digitalisation of our laboratories is intensifying and

opening up new horizons. Combined with the know-
ledge base L’Oréal has built up over the years, it bolsters
our innovation model, from the science stage through
to formulation and product evaluation. New data pro-
cessing techniques are combined with artificial intelli-
gence to foster and support scientific discoveries. Digital
tools now extend to molecular modelling and rapid-result
testing robots, to continue to guarantee L’Oréal’s high
standards for quality, efficacy and safety.
Connected beauty is pushing back the limits of the
consumer experience, with personalised services, like
the My UV Patch for sun protection.
In Advanced Research, we are continuing our work on

sun protection and pollution, investing in particular on a
new scientific area: the exposome. The term encom-
passes all the environmental exposures an individual is A new Research and
subjected to over the course of his or her life. Our goal is
to measure the impact of the exposome on skin health, Innovation Centre
with a promising cosmetics angle: how can we protect
the skin from daily aggressions and slow ageing? in Sub-Saharan Africa
To expand its knowledge of the specific needs
of African hair and skin, and develop
innovations in tune with the beauty rituals
and expectations of consumers, L’Oréal
opened a new Research and Innovation Centre
in Johannesburg, South Africa. It is L’Oréal’s
sixth Research and Innovation regional hub
worldwide, and it is home to consumer insight,
advanced research, development, and product
evaluation teams who work with the region’s
scientific ecosystem.
1 GLO BA L CE N T R E
IN FRANCE
850
THE CHIMEX PLANT WON
THE PIERRE POTIER PRIZE
FOR ITS QUINOA EXTRACTION
PROCESS. L’ORÉAL’S QUINOA
HUSK EXTRACT ALSO WON
THE SUSTAINABLE INGREDIENT
6 REGIONAL HUBS
( U N I T E D STAT E S ,
J A PA N , C H I N A ,
INDIA, BR AZIL,
SOUTH AFRICA)
M I LLION EUROS
OR 3.3% OF SALES
INVESTED IN
R ESE ARCH AND
I N N O VA T I O N
AWARD AT THE SUSTAINABLE
BEAUTY AWARDS.
44 E X P E R T I S E
Advances in
connected cosmetics
With the My UV Patch, L’Oréal has entered

the era of electronic sensors.
This adhesive patch precisely measures
the wearer’s exposure to UV rays in real
time. It is connected to a smartphone
application that alerts the wearer
when his or her sun protection becomes
insufficient, and offers customised advice.
The My UV Patch was launched in 2016
by La Roche-Posay, a brand that has
proven its commitment to helping
consumers protect their skin from the sun.
The My UV Patch is an innovation
developed by the Connected Beauty
Incubator created by L’Oréal in 2014 to
invent the products and services of the
future by combining cosmetics research
and digital innovation.
473 PATENTS
FILED
IN 2016
L’Oréal
is moving into a
new scientific field,
the exposome, A NEW GENERATION
which takes OF BIODEGRADABLE
into account SHAMPOOS
To reduce the environmental footprint
all environmental of products that consumers rinse off (1),
one of the avenues L’Oréal Research and
factors that Innovation is exploring is how to improve
their biodegradability. Among the new products
can affect health, launched by the group’s brands in 2016,
many are between 95 and 99% biodegradable.
and its relationship One prime example is the Biolage R.A.W.
haircare line by Matrix, which was developed
to skin ageing. with this approach in mind.
(1) Such as shampoo, hair dye and shower gel. E X P E R T I S E 45

O P E R AT I O N S
Cutting-edge
expertise and agility:
driving innovative
consumer SCAN TH I S PAG E
experiences FO R E XC LU S IV E VI D EOS
A N D ARTI CLE S O N LI N E
BARBAR A
L AV E R N O S
Operations
L’Oréal’s Operations(1) draw on a wealth of diverse pro-

fessional skills and expertise to serve the end consumers
of all the group’s brands in every country. With one fun-
damental responsibility: to guarantee the quality and
safety of the group’s products to consumers worldwide
while protecting the environment.
To enhance agility and efficiency, we are continuing to
integrate all the opportunities opened up by digitalisa-
tion. A number of advances highlight this transformation
throughout our chain of expertise:
• our design centres use rapid 3D printer prototyping
techniques to optimise time-to-market for new products;
• in production, our industrial platform delivers precise
responses for all needs, from large to “tailor-made”
series, with ultraconnected plants equipped with cobots(2)
that are bringing us on the path to Industry 4.0. Finally,
our supply chain(3) is becoming even more responsive
to take up the key challenge of e-commerce.
Another major success in 2016 was our shared commit-
ment and contribution to the “Sharing Beauty With All”
programme. L’Oréal has been recognised as a leader by
the CDP(4) for its initiatives on three fronts: combating
climate change, managing water in a sustainable way
and protecting forests. A more agile and more
digital supply chain
To make sure consumers get the best service
wherever and whenever they need it, L’Oréal’s
42
supply chain(3) is evolving as fast as digital
technology itself. The challenge is to ensure
total consumer satisfaction, both in stores
and online, by taking on new challenges:
FAC TO R I E S
the ramp-up of e-commerce, the personalisation
WORLDWI D E
of products, and the management of products
88
PA C K A G I N G A N D
P R O C E S S E S PA T E N T S
data and different delivery modes. All the while
with the same guarantee of quality, swiftness
and safety.
(1) Operations orchestrates cutting-edge expertise in fields ranging from

F I L E D I N 2 016 packaging design and product development, sourcing of packaging and
raw materials, production to the distribution of all the group’s products.
(2) Cobotics (collaborative robotics) involves the use of a robotised
system to assist an operator in a task that remains under human control.
(3) L’Oréal’s supply chain handles and optimises all information flows
and physical product flows from suppliers to points-of-sale. (4) CDP is
an independent global organisation that evaluates companies’
46 E X P E R T I S E achievements in their environmental performance.
From hyper-
automation
to luxury
know-how
The very broad range of expertise and
the excellence of quality systems at L’Oréal
mean its industrial facilities have a real competitive
edge. With AGVs(1) now in use, and the completion
in 2016 of an automated storage system,
the Karlsruhe plant in Germany enjoys a high level
of automation. The upgrade has increased
the plant’s productivity and speed of execution,
particularly on very high speed lines. The key
advantage of the Lassigny plant in France
is the combination of the “tailor-made”
luxury approach and agility. It is equipped
to produce with excellence either large
or exclusive series, and can thus adapt to meet
specific consumer demands.
Strongly committe
Strongly committedd
environment
15
CARBON-NEUTRAL
In the United States L’Oréal is committed to a project to build
two large solar power plants, which means that 100%
of production at its two plants will be powered
INDUSTRIAL SITES by renewable energy. In Italy, for the Settimo Torinese plant,
the water resource is at the heart of the team’s commitment.
L’ORÉAL,
A RESPONSIBLE
WORLD LEADER
CDP(2) has awarded L’Oréal an “A” rating
– the best possible score – in three fields
of environmental protection: fighting
against climate change, managing water
in a sustainable way and protecting
forests. Only two companies worldwide,
out of some 3,000, were awarded
this distinction in 2016.
(1) Automated Guided Vehicles. (2) CDP is an independent global organisation that evaluates companies’ achievements in their environmental
performance. E X P E R T I S E 47
D I G I TA L
Continuing to
reinvent our
marketing model SCAN TH I S PAG E
and relationship FO R E XC LU S IV E VI D EOS

with consumers
WATC H TH E VI D EO
I NTERVI E W O N LI N E
LUBOM IR A
RO C H E T
Chief Digital Officer
Digital has changed the way we do marketing. Our

first challenge was to successfully transform our
brands into digital “love brands(1)”, capable of creating
rich and personalised relationships with their consumers
and producing content that appeals to them, which they
then share with others. Our brands are becoming ubi-
quitous on the web and are at the top of the rankings. Developing
We are always looking to enrich our relationship with
consumers. Thanks to the data now available across our connected beauty
range of consumer data bases and a detailed under-
standing of their expectations, we can adapt our pitch start-ups
to make sure we send out the right message at the right
time. That gives L’Oréal a clear competitive edge. In May 2016, the group invested
Our consumers are also eager for new services that in Founders Factory, a London-based start-up
help them when they are choosing or using products. incubator and accelerator, to become
its exclusive partner in the beauty sector.
This is the mission of our connected beauty incubator,
L’Oréal and Founders Factory will assist
which has developed ideas such as My UV Patch, a
five recently-founded companies and will
sensor that informs users so they can protect their
together create two start-ups each year.
skin from the sun. Going one step further, in 2016 we The group’s aim is to intensify its digital
became the exclusive beauty partner of Founders innovation strategy by gaining access
Factory, a start-up accelerator. Our partnership with to a worldwide ecosystem of promising talent
the Partech early stage fund in France expands our and cutting-edge technology.
dense worldwide network of talented entrepreneurs
and promising start-ups in the digital beauty field.
+32.7% E - COMMERCE
MILLIONS OF
VIEWS FOR
LI KE - FOR- LI KE
S A L E S G R O W T H (2)
“GLOSSY TALK”
31.9% NET MEDIA

This weekly web series, launched in
four countries in 2016, highlights make-up tips
and features the well-known beauty blogger
EnjoyPhoenix. It has enabled Maybelline New York
to become the number 1 beauty brand
SPENDING ON
D I G I TA L YouTube channel in France.
(1) Internet users’ favourite brands. (2) Sales achieved on the brands’
own websites and estimated sales achieved by the brands on retailers’
48 E X P E R T I S E websites (non-audited data).
Digital skills
for everyone
Enhancing the skills of employees is a keystone
in L’Oréal’s digital acceleration strategy. More than
14,000 people have already benefited from
the Digital Upskilling Plan, a massive training programme.
Its goal is to build digital expertise at grassroots level
and integrate it into all functions on an everyday basis.
To engage strongly with key employees, L’Oréal has
a wide spectrum of flexible and interactive methods,
including immersion in digital start-ups and reverse
mentoring, with a senior employee receiving coaching
from a junior digital expert.
DIGITAL
CHAMPION BRANDS
The impact of L’Oréal brands is very strong online. In 2016,
the group totalled more than one billion visits across all
the Internet sites and some 300 million subscribers
on social media. Meanwhile, L’Oréal Paris is generating
over 20 million video views on YouTube every month(1).
The e-commerce
acceleration
With online sales(2) of 1.7 billion
euros in 2016, e-commerce
represents 6.5% of group sales,
which is equivalent to L’Oréal’s
4th country. This growth
is being driven by
new partnerships with local,
regional and global players,
such as Alibaba, Amazon,
BOL.com, Boots.com
and Ulta.com, and by L’Oréal
brands’ e-commerce websites.
(1) Statistics provided by social networks. (2) Sales achieved on the brands’ own websites and estimated sales achieved by the brands
on retailers’ websites (non-audited data). E X P E R T I S E 49
H U M A N R E L AT I O N S
Innovating to recruit,
develop and engage SCAN TH I S PAG E
FO R E XC LU S IV E ARTI CLE S
O N LI N E
with talented people

all over the world New challenges for
the L’Oréal “Share & Care”
social programme
J ÉRÔ M E
TIXI ER
Human Relations
and Advisor to the Chairman
The role played by our 89,300 employees in creating

long-term value at L’Oréal is crucial. They are the key
players in the group’s transformation and the future
leaders of a new L’Oréal they are helping to build.
To find, attract and recruit the top candidates with the
most diverse profiles, we are seizing all the opportuni-
ties that digital technology is opening up. We are also
creating conditions that meet the expectations of the
talent we want to attract, particularly in the younger
generations, whose relationships with companies and
the world of work have changed fundamentally.
To deepen our connection with employees, and en-
At the end of 2015, the L’Oréal “Share & Care”
gage with them on an ongoing basis all over the
programme achieved its first goal: to guarantee
world, we are building an ecosystem that will enable that L’Oréal employees all over the world
them to flourish and perform at their best. Because benefit from the best practices in terms of
while they drive the success of the company, they social protection. The group’s subsidiaries are
are also its best ambassadors. Meanwhile, to pro- continuing to develop local initiatives,
mote and support the transformations that are mak- particularly in the area of quality of life in
ing L’Oréal more universal, digital and agile, we are the workplace. Programmes to make working
introducing a more collaborative way of working to hours more flexible are being developed in all
co-construct our vision of tomorrow’s L’Oréal with L’Oréal entities.
the teams.
ONLINE
TRAINING SPEEDS
TRANSFORMATION
Training for everyone is one of the priorities of
th Human Relations – one that is now possible
9
PL AC E WO R L DW I D E
thanks to an e-learning platform open to all
employees. L’Oréal has also sealed a partnership
with Coursera, a
leading player in
I N S T U D E N T S’ the MOOC(2)
“ M OS T AT T R AC T I V E sector, to offer
E M P LOY E R S R A N K I N G” ,
U N I V E R S U M 2 016 (1)
77 %
O F E M P LOY E E S
employees
programmes
certified by the
most prestigious
universities
H AV E T A K E N
A TR AINING COURSE worldwide.
(1) Source: Business students, all sectors of activity, Universum, 2016.

50 E X P E R T I S E (2) Massive Open Online Course.
New Diversity
& Inclusion Index
Launched
by Thomson Reuters,
this new index
ranks L’Oréal 19th
out of more
than 5,000
companies rated
worldwide.
th
How L’Oréal 5 Initiatives
D isabilit y
recruits new talent Trophies
To continue attracting a wide and diverse range of talent all over the
ACCELERATING
world, the group has changed the way it develops relationships with THE INCLUSION OF
candidates as well as its recruitment techniques. To construct its new DISABLED PEOPLE
employer promise, L’Oréal uses an innovative approach combining IS THE OBJECTIVE OF THIS
digital data analysis with the customary in-house and external surveys. IN-HOUSE COMPETITION,
L’Oréal is relying more heavily on digital tools in its recruitment WHICH REWARDS
strategy, and is intensifying its presence on social networks. Staying
INITIATIVES IN THIS FIELD
at the cutting edge in talent evaluation and selection, and improving
the candidate experience are priorities for the group,
BY L’ORÉAL SUBSIDIARIES.
which is strengthening the expertise of its recruitment teams.
THOUSANDS
OF HOURS OF
VOLUNTEER WORK
ON CITIZEN DAY
Citizen Day is a celebration of solidarity that brings
together thousands of L’Oréal employees all over
the world. In 2016 there was an increase in participation
with a total of 164,000 hours of volunteer work
completed, making a real difference for more than
150,000 beneficiaries.
E X P E R T I S E 51
A D M I N I S T R AT I O N
AND FINANCE
Building trust
and supporting
the sustainable growth
of L’Oréal SCAN TH I S PAG E
FO R E XC LU S IV E ARTI CLE S
O N LI N E
Data protection:
C H R I S TIA N
a crucial
M U LLI E Z
Chief Financial Officer
challenge
2016 was another year of growth in sales, results and
profitability. Working closely with the group’s different
entities, the administration, controlling and finance
teams help to build and foster a solid relationship of
trust that is essential for L’Oréal’s sustainable growth.
This trust is based on constant vigilance, fairness,
transparency, professionalism and an ethical approach
in our relations with all stakeholders. This year once
again, we strongly contributed to the economic and
financial management of L’Oréal’s businesses, the
identification of risks and opportunities, and the opti-
misation of resource allocation.
The relationship of trust between L’Oréal and all its
stakeholders is maintained through constant vigilance.
The group’s financial health depends on closely
monitoring cash flow and making sure that financing
is secure. With suppliers and customers, the relation-
ship of trust is based on professionalism and ethical
behaviour in all exchanges. As for shareholders and The IT security and legal teams work alongside
investors, the financial communications team maintains all the group’s entities to identify sensitive data
a close relationship with them by welcoming dialogue – such as consumer, financial and research data –
and providing fair and transparent information about to ensure it remains confidential. L’Oréal’s
the group’s activities. The teams work to assist the cybersecurity programme is based on three
core priorities: risk management,
Board of Directors and its Committees, striving to
the introduction of appropriate and coherent
maintain the highest quality standards.
protection solutions, and a principle of
detection-reaction to deal with any threats.
45 L’ORÉAL RECEIVES
GRAND PRIX FOR FINANCIAL
I NTERNAL AU D IT
MISSIONS CONDUCTED MORE THAN
TRANSPARENCY
I N 2 016
At the 7th Grands Prix for Financial Transparency,
1,800
SHAREHOLDERS
which reward best practices in regulated financial
information, L’Oréal
received the 2016 Grand Prix
AT T E N D E D T H E A N N UA L
in the “Consumer Goods
GENERAL MEETING and Health” category.
52 E X P E R T I S E
IT provides crucial leverage
(1)
for L’Oréal’s digital acceleration

In a changing world that is constantly
driven by digital technology, the expertise
of the IT teams is at the heart of digital
acceleration at L’Oréal. The IT experts
contribute to operational excellence,
by developing innovative solutions
in close collaboration with experts
in each business, to optimise or reinvent
working practices and make them
secure. Good examples are the global
solution for managing economic
activity that has been rolled out across
the controlling functions or other latest
generation business applications
available in the Cloud.
55 IT Days
WERE HELD
IN 30 COUNTRIES TO HELP
EMPLOYEES APPROPRIATE
THE LATEST TECHNOLOGICAL
ADVANCES.
FINANCIAL COMMUNICATIONS LISTENS TO Investors and

SHAREHOLDERS’ VIEWS financial analysts
Financial Communications puts
shareholders at the heart of its content
at Founders
and its tools. This year the Annual
Report has been co-constructed with a
Factory
panel of shareholders, to ensure the During the Capital Market Days(2),
navigation experience is as smooth and investors and analysts were invited
intuitive as possible. User surveys have to witness L’Oréal’s digital acceleration
also been conducted on the L’Oréal for themselves with a working session
Finance app to make sure it is always at the Founders Factory in London,
attuned to users’ expectations. This a start-up incubator
approach reflects the close relationship, and a global
based on mutual trust, that L’Oréal has accelerator in
with its shareholders. which the group
is investing.
(1) Information technology. (2) Event organised by the L’Oréal Investor Relations team. E X P E R T I S E 53
C O R P O R AT E S O C I A L
RESPONSIBILITY
Combining economic
growth with
ambitious sustainable
development
commitments SCAN TH I S PAG E
FO R E XC LU S IV E VI D EOS
WATC H TH E VI D EO
Moving towards
I NTERVI E W O N LI N E
“zero deforestation”
A LE X A N D R A
guaranteed palm oil
PA LT
Chief Sustainability Officer
2016 was a milestone year: we are halfway to our 2020

commitments, and there has already been a clear
change in the way we work. Each time we invent, de-
velop or revamp a product, we think not only about
its efficacy and profitability, but also about the contri-
bution it makes to sustainable development.
Four years ahead of schedule, L’Oréal has not only
achieved its objective of cutting the quantities of CO2
emitted from its factories and distribution centres(1) by
more than 60%, but exceeded it, over a period when
production volume rose by some 30%. With such out-
standing figures, L’Oréal continues to prove its ability
to combine economic growth with ambitious climate
protection commitments.
This performance has been acknowledged inter-
nationally: CDP(2) has awarded L’Oréal three “A” ratings
– the best possible score – in each of the three fields of
environmental protection: combating climate change,
managing water in a sustainable way and protecting
forests.
We want to be attentive to the current and future sus-
tainable development expectations and concerns of our
consumers, and this year we have set up a consumer In June 2016, L’Oréal published its first palm oil
advisory committee in France. Helping consumers sourcing progress report. It reviews the
make decisions that match up with their convictions strategy and initiatives introduced by the group
as citizens remains one of our key challenges. to ensure a sustainable approach to sourcing
palm oil.
82%
O F N E W O R R E VA M P E D
-67%
P R O D U C T S I N 2 016
H AV E A N I M P R O V E D
E N V I RO N M E N TA L
O R S O C I A L P R O F I L E (3)
OF CO2 EMISSIONS ALL T H E 2 016 R E S U L T S O F
I N A B S O L U T E VA L U E L’ O R É A L’ S
S U S TA I N A B L E D E V E LO P M E N T
F RO M FAC TO R I E S P RO G R A M M E C A N B E F O U N D AT
AND DISTRIBUTION W W W. S H A R I N G B E AU T Y W I T H A L L . LO R E A L . C O M
C E N T R E S S I N C E 2 0 0 5 (1)
(1) Period 2005-2016. In absolute value. (2) CDP is an independent global

organisation that evaluates companies’ achievements in their environmental
performance. (3) New products, i.e. products for which new formulas have
been developed and which are produced for the first time in the group’s
54 E X P E R T I S E plants or products for which packaging was changed/updated in 2016.
A new way
of innovating
82% of LL’’Oréal p prroduc
ductts iin
n 20
20116 a ren
a re newa
wablble
e rraaw m maaterial co
cont
nteent
have aan
n iim
mprove
oved deen
nvironment
mental above 9 944% , iin
nclud
luding B Biiolage
lage
or so
social pprrof
ofiile. T
Thhe gr
group isis R.A
R. A .W. U
Upplif t sh
s h a m p o o, M
Miidnight
aiming
i i for 100% by 20 2020.
20 R
Recovery Bot
B taniicall Cleansiing Oil
To achieve this ambitious target, by Kiehl’s and Ultra Doux Honey
the group is focusing on several Treasures hand cream by Garnier.
aspects: improving the water One of L’Oréal’s approaches
footprint of formulas, using raw to improving packaging is
materials that are renewable an ongoing policy of replacing
or based on green chemistry, traditional materials by others
and optimising packaging. that are recycled or biosourced.
The bottles used for Biolage
A cosmetics product’s water
footprint is one of the main
expressions of its environmental
impact. L’Oréal makes a special
R.A.W. shampoos, and the
haircare ranges Aura Botanica
by Kérastase and Botanicals
Fresh Care by L’Oréal Paris
54%
OF RAW MATERIALS
effort to ensure the – apart from the caps and pumps – USED BY L’ORÉAL
biodegradability of its formulas, are made of 100% recycled ARE RENEWABLE(1)
and several products launched plastic, and can be recycled again THAT IS
in 2016 have biodegradability after use.
levels above 98%, including
Ultra Doux 5 Precious Herbs
shampoo by Garnier, Aura Mirabilis
make-up remover mask
1,540
RAW MATERIALS
by Roger&Gallet, and Absolue FROM MORE THAN
Precious Oil by Lancôme. 350 PLANT SPECIES,
L’Oréal favours the use of SOURCED FROM
renewable raw materials that
AROUND 100 COUNTRIES
are responsibly sourced.
In 2016, several products have
(1) By volume. E X P E R T I S E 55
Consult all
the 2016 publications
Discover more content

online at loreal.com
or by flashing this
page with the
L’Oréal Finance app
ANNUAL
REPORT
Overview of L’Oréal in 2016,
its Divisions, brands and
countries, driven by its mission
– Beauty for All – and
strategy – Universalisation.
REGISTRATION
DOCUMENT
This document includes the
Integrated Report, in particular the
2016 financial statements, the Annual
Financial Report, the Management
Report of the Board of Directors
including a section on Social
and Envrionmental Responsibility.
PROGRESS
REPORT
2016 Progress Report of
the “Sharing Beauty With All”
sustainability programme.
Published by the Administration and Finance and the Image and Corporate Communication Departments.
This is a free translation into English of the 2016 L’Oréal Annual Report issued in the French language
and is provided solely for the convenience of English–speaking readers. In case of discrepancy, the
French version prevails.
Photograph credits: Urban Decay (cover, 2nd cover page, 32, 56, 3rd cover page), YSL Beauté (2nd cover
page, p.20, 30, 33), Patrice Lariven (2nd cover page, p.31), Thomas Gogny/L’Oréal (p.1, 3, 13, 44, 50, 3rd
cover page), NYX Professional Makeup (p.1, 18), L’Oréal China (p.1, 41), Matteo/L’Oréal Research &
Innovation (p.1, 44, 45), Getty Images/Paul Vision (p.2), Claudius Holzmann/Cream Pictures (p.4),
Jean-Claude Guilloux/L’Oréal (p.4), Alain Buu/L’Oréal (p.5), L’Oréal Paris (p.6, 18, 26, 28, 29, 49),
L’Oréal (p.8, 13, 50, 53, 55, 56), L’Oréal Foundation/DR (p.9), Ethisphere (p.10), L’Oréal/All rights
reserved (p.11, 38, 40, 41, 45, 54, 3 rd cover page), Marcel Grubenmann (p.13), Stéphane de Bourgies
(p.13), Stéphane de Bourgies/L’Oréal (p.13, 14, 15, 39, 50), Getty Images/Westend61 (p.17), Maybelline
New York (p.18, 29, 48), Agence Packshot/Lancôme (p.20), Stock Image/deyangeorgiev (p.23), Getty
I m a g e s / Vu l t u re L a b s ( p . 24)/C h r i s to p h e L a u n ay ( p . 24)/ i s py f r i e n d ( p . 2 5 )/ K a r i n e Ve r a
(p. 25)/2013©Sergey Alimov (p.25)/Artie Photography (Artie Ng) (p.25), Thomas Gogny/Divergence
(p. 27, 35, 52), Fabien Sarazin (p.28, 36), Amir Heshmati (p.29), Garnier (p.29), Grigorii Vishnevetskii
(p. 32), White Honey (p.32), Charlotte Garnier/Lancôme (p.33), Coloredge (p.33), Giorgio Armani/All
Your contacts rights reserved (p.33), Lancôme (p.33), Romain Ricard (p.33), L’Oréal Professionnel (p.34, 37),
Bellanopolis (p.36), Alexis Raimbault/L’Oréal (p.37), L’Oréal Professionnel India (p.37), Matrix (p.37),
Steve Hellerstein/Red Productions Inc. (p.37), La Roche-Posay/All rights reserved (p.38, 41, 45, 3 rd
cover page), Geoff Shirley gsStudios LLC (p.40), Skinceuticals (p.40), Shutterstock/Pirtuss (p.40),
Franck Salier (p.41), Packshot Pro (p.41), The Body Shop (p.42), Matthew Shave (p.42, 43), Carlos
INDIVIDUAL SHAREHOLDERS AND Damanée (p.43), Hungry Tiger (p.43), The Body Shop/All rights reserved (p.43), L’Oréal USA (p.45),
Pierre-Olivier/CAPA Pictures for L’Oréal (p.46), Shutterstock (p.46), Adrian Bedoy/L’Oréal Germany
FINANCIAL MARKET AUTHORITIES (p.47), Eric Larrayadieu/L’Oréal (p.47), Kuchik photography ltd (p.47), Alain Buu (p.48, 53), Big Shot
(p.48), Palita Photographer (p.49), Aline Massuca/L’Oréal (p.50), Eric Mercier/L’Oréal (p.51), L’Oréal
Jean Régis Carof Malaysia (p.51), Thomson Reuters (p.51), iStock Getty Images/D3Damon (p.52), Founders Factory
jcarof@loreal-finance.com (p.53), Philippe Calandre (p.54), X.
Design and production: Publicis Consultants l Verbe

Valerie Boas 133, avenue des Champs-Élysées, 75008 Paris – France
vboas@loreal-finance.com
From France, toll-free number for
shareholders: 0 800 666 666 Competitive positions and market share held by the group’s Divisions
and brands mentioned in this report are based on studies, panels and polls
From outside France: +33 1 40 14 80 50 obtained from specialised organisations and companies, or, in the absence
of comprehensive studies, are the result of estimates made by L’Oréal on
Service Actionnaires L’Oréal the basis of available statistical data.
BNP Paribas Securities Services
Grands Moulins de Pantin
9, rue du Débarcadère
93761 Pantin Cedex – France The digital version of this document is conform to Web content accessibility standards,
WCAG 2.0, and is certified ISO 14289-1. Its design enables people with motor
disabilities to browse through this PDF using keyboard commands. Accessible for
people with visual impairments, it has been tagged in full, so that it can be transcribed
FINANCIAL ANALYSTS AND vocally by screen readers using any computer support. It has also been tested in full
INSTITUTIONAL INVESTORS and validated by a visually-impaired expert.
Françoise Lauvin E-accessible PDF by

flauvin@loreal-finance.com
Investor Relations Department – L’Oréal
41, rue Martre
92117 Clichy Cedex – France
JOURNALISTS Incorporated in France as a “Société Anonyme”

with registered capital of 112,371,148.20 euros – 632 012 100 R.C.S. Paris
Stéphanie Carson Parker Headquarters: 41, rue Martre – 92117 Clichy Cedex – France
corporatepress@loreal.com Tel.: +33 1 47 56 70 00 – Fax: +33 1 47 56 86 42
Registered office: 14, rue Royale – 75008 Paris – France
Corporate Media Relations – L’Oréal www.loreal.com – www.loreal-finance.com
41, rue Martre – 92117 Clichy Cedex – France
Environmental calculator(1)
size quantity
22 × 30.5 cm 4,000
TEXT PAGES
brand basis weight number of pages
Cocoon Silk 150g/m2 56
COVER PAGES
brand basis weight number of pages
Cocoon Silk 300g/m2 4
By using Cocoon Silk rather than a non-recycled paper,

the environmental impact was reduced by:
L’ORÉAL FINANCE 1,189 kg of landfill

AT YOUR FINGERTIPS!
Download the L’Oréal Finance 160 kg CO2 and greenhouse gases:
app on your smartphone
or tablet to access the group’s 1,598 2,526
latest financial news: km travel in an average kWh of energy
European car
strategic presentations, share price,
webcasts of events and more. 44,962 1,932
litres of water kg of wood
(1) Carbon footprint data evaluated by Labelia Conseil in

accordance with the Bilan Carbone® methodology.
Calculations are based on a comparison between the
recycled paper used versus a virgin fibre paper according
to the latest European BREF data (virgin fibre paper)
available. These results are based on technical information
and are subject to change.
FOR THE FULL VERSION OF THE 2016 ANNUAL REPORT
visit loreal.com or scan this page
with the L’Oréal Finance app
loreal.com
loreal-finance.com

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2016

The digital version features exclusive

* How to access the website from this printed version?

2016 was another

(1) Acquisition announced on 6 January 2017 and finalised on 6 March 2017. P R O S P E C T S 3

2016 was also a year of great progress

If we have been working hard

Visiting the L’Oréal factory in Karlsruhe (Germany).

Finally, our unique

L’Oréal stand at the Vivatech fair in Paris (France).

This transparent and constructive dialogue culminates

ANA SOFIA AMARAL CHARLES - HENRI FILIPPI

BELÉN GARIJO BERNARD K ASRIEL

B É AT R I C E GEORGES LIAROK APIS

The Executive Committee,

3 • VIANNEY DERVILLE 7 • ISABEL MAREY-SEMPER 12 • NATHALIE ROOS

4 • NICOLAS HIERONIMUS 8 • CHRISTIAN MULLIEZ 13 • FRÉDÉRIC ROZÉ

9 • ALEXIS PERAKIS-VALAT 14 • JÉRÔME TIXIER

“FOR WOMEN IN SCIENCE”

“BEAUTY FOR A BETTER LIFE”

Ethics at the heart

The world of beauty

+5.0% +2.9% +1.0% +4.2% +4.6% +4.6% +3.8% +3.6% +3.9%

Breakdown of the market Acceleration

In all geographic Zones,

New generations reinvent make-up

1980 1985 1990 1995 2000 2005 2010

New generations The new generations

CHINA Per capita

UNITED STATES Per capita

L’ORÉAL L’ORÉAL PARIS

A robust and balanced

Growth in sales in all Divisions

2012 2013 2014 2015 2016

BY GEOGRAPHIC ZONE BY BUSINESS SEGMENT

Record operating margin, representing 17.6% of sales

(in millions of euros) after non-controlling interests(2) (in euros)

+3.5% +4.5% +4.6%

3,891 3,125 5.34

Consumer L’Oréal Professional Active Western North New

Solid balance sheet

A dynamic shareholder return policy

Dividend per share

2012 2013 2014 2015 2016

Find out how acquisitions enrich L’Oréal’s flotilla of brands,

1967 1980 1985 1990 1995 2000 2005 2010 2015

Major acquisitions in 2016

IT Cosmetics, Atelier Cologne

Seizing the potential

Western Europe North America

+2.4% 20.2% +5.8% 14.0%

Welcome to Travel Retail:

Asia, Pacific Latin America

+3.6% 9.5% +11.1% 8.8%

Eastern Europe Africa, Middle East

+10.4% 12.8% +7.9% 13.0%

+30.7% focuses: make-up and haircare.

market share. Growth in Western LOVE BRANDS(4)

+7.5% Make-up, with growth of +10.3%(2),