Tomas Bata University in Zlín

Faculty of Management and Economics

Presentation on

The L’Oréal Group

( the company for beauty)

Subject: English language

Elaborated by: Sandra Antičová
Group: I 21/F

Introduction

Good morning Ladies and Gentlemen. It’s a great pleasure to have the opportunity to adress such a distinquished audience. Firstly, I would like to introduce myself. My name is Sandra Anticova. I work as a representative in the L’Oréal Czech Republic subsidiary. Today I’m going to inform you about L’Oréal, its history, products, sales, structure and something about its owners and shareholders. Please interrupt me if there is something which needs clarifying. Otherwise, there’ll be time for discussion at the end of my short presentation. I think that now it is time to start. So, I would suggest that we begin with the history of the company.

The history of the company

In 1907, Eugéne Schueller, a young French chemist, developed an innovative hair-colour formula. He called this new, perfectly safe, hair duy „Aurelióne“ . With this, the history of L‘Oréal began. Eugéne Scheller formulated and manufactured his own products, which he then sold to Parisian hairdressers. In 1909, Schueller registred his own company, the „Société Francaise de Teintures Inoffensives pour Cheveux“, the future L‘Oréal. The two guiding principles of the company were research and innovation in the interests of beauty, and these were put into place from the start. In 1920, the small company employed 3 chemists. By 1950, the research teams had 100 members, and the number reached 1,000 by 1984, and is nearly 3,000 today. In 1912, Eugéne Schueller started to export his hair-colouring product to Holland, Austria and Italy. A few years later, agents distributed these products to the USA, South America, Russia and the Far East. Today, the L’Oréal Group is present worldwide through its subsidiaries and agents. L’Oréal got its start in the hair-colour business, but the company soon branched out into other beauty products. The Group today markets over 500 brands and more than 2,000 products in all sectors of the beauty business: e.g. hair colour, permanents, styling aids, cleaners and fragrances and body cosmetics. These products are found in all distribution channels, from hair salons and perfumeries to hyper and supermarkets, health and beauty outlets and direct mail. Another key word in L’Oréal’s history is communication. Back when advertising was still in its infancy, L’Oréal commissioned promotional posters (still famous today) from graphic artists like Colin, Loupot, Savignec, to publicize the company’s products. In 1933, Eugéne Schueller created and launched Votre Beauté, a magazin devoted to women and their look. Four years later, he took part in a popular radio broadcast and started a campaign. The 1950s saw the advent of a new and exciting advertising medium: the movies. L’Oréal made its on screen debut with a campaign for Ambre Solaire, which was making a comeback on the market. In 1953, L’Oréal won an advertising Oscar, the first in a long series of awards.

That covers all I wanted to say about the history of the company, and now I’m going to comcentrate on some basic information about the company and on its profit.

Basic information about the company:

The company has over 50,500 employees worldwide, which are of 98 nationalities. The Group is present in 130 countries and has 290 subsidiaries. 76 ( of the personnel work out of France. There are 42 factories all over the world producing L‘Oréal products. The pie chart belowshows how are the products sold in different parts of the world:

[pic] Fig. 1

I’m going to analyze the categories of products later. Now, I would like to briefly go through the financial situation of L’Oréal and to inform you about the ownership. The structure of the owners can be seen on the next figure:

[pic]

Fig. 2

Now we come to the part, which is in my opinion the most interesting for investors. We are going to look at the profits and finance, which are shown on several bar charts and a table. In the barcharts the x-axes is in years, and the y-axes is in milloons of Euro.

[pic][pic] Fig. 3 Fig. 4

From the two barcharts we can see that consolidated sales has dropped a little bit, but pre-tax profit of the consolidated companies have risen slighty.
[pic][pic]
Fig. 5 Fig. 6

Also net operational profits and net dividends have increased. The next table shows how the profits of the companies of the Group and shareholders‘ profits acted. The table expresses the same data, but you must agree it is not as visual. The only additional information is the Gearing Ratio, which is calculated according to the formula below the table.

[pic]

Table 1.

The second table informs us about the employees involved in research, about the research budget and about the new patents:

[pic] Table 2.

If you are more interested in this part, please contact L’Oréal International Information Department. The adress is:

L‘Oréal International Information Department

41, rue Martre, 92 117 Clichy, France

You could also phone, send a fax or just look on the World Wide Web
Tel. : +33 1 47 56 82 65
Fax. : +33 1 47 56 82 42
Internet: www.loreal.com

Now, we can have a look at the structure of the company shown on the next organigram:

The structure of the company

The highest organ in the company is the AGM. The Annual General Meeting meets once a year to approve results and agree on future development. The Board of Directors reports to the AGM. The Board of Directors is responsible for the overall planning and financial operations like investments. The Supervisory Board controls the dealing of the Directors. The Chief Executive Officer is responsible for day to day running of the company. The Vice-Presidents for Production and Technilogy, Human Resources, Corporate Communications, Administration and Finances, Research and Development, Strategic Business Development, Consumer, Luxury and Professional Products are below him and report to him.

The next point of my presentation is Research and Development. It is a very wide area, but I’m going to talk about our main purposes and areas in this sector.

Research

Since the company was founded in 1907 by the chemist Eugene Schueller, it has continued to invest in cosmetic research with one clear aim: to improve the quality and efficacy of its products through scientific innovation. Each year, the Group devotes 3% of its turnover to Research and Development.

Laboratories in France, the United States, and Japan employ over 2,900 scientists and support staff from over 30 disciplines : chemistry, biology, medicine, physics, toxicology, etc. Research findings are published in numerous international scientific journals, and in 2003 L'Oréal applied for 515 patents

L'Oréal Research missions are :

[pic] To gain an in-depth understanding of healthy skin and hair at the cellular level

[pic] To pinpoint the biological processes behind the skin aging process, sun damage, pigmentation changes as well as natural hair color, graying and loss

[pic] To synthesize active molecules which protect, repair or color: over 110 original molecules have been produced by L'Oréal Research

[pic] To design and develop new products in all cosmetic fields, including skin care, haircare and make-up: over 3,000 new formulas come out of our laboratories each year

[pic] To evaluate products‘ efficacy and safety using in vitro tests like human skin models, as well as sophisticated imaging techniques and sensory analysis.

Our company collaborates with research units in some twenty countries worldwide in advanced scientific fields.

The last point of my presentation is L’Oréal‘s products. They are divided into several categories, which have completely different images and belong to diferent price categories. Our company wants to suit clients of every age all over the world. There are sales statistics for every category. I’m going to present the last annual statistics. The first category is professional products.

Our products and how are they sold:

PROFESSIONAL PRODUCTS:

The most popular brands in this category are: KERASTASE, MATRIX, REDKEN and LUO COLOR. They are used bu hairdressers and cosmetitians all over the world.
After several years of rapid growth, the Professional Products Division has continued to win market share in all parts of the world. In 2003, it maintained a high growth rate: its sales improved by 8.6% In North America, the Division achieved growth of 10.7%. In Western Europe, the growth rate was 5.3%. In the rest of the world, growth reached 15.3%. The Division performed particularly well in Eastern Europe.

|Consolidated sales by geographic zone |
|€ millions |
|€ millions |
|2002 |
|2003 |
|% of 2003 sales |
|Like-for-like growth 2003/02 |
| |
|Western Europe |
|933.9 |
|969.5 |
|51.0% |
|5.3% |
| |
|North America |
|625.1 |
|601.9 |
|31.7% |
|10.7% |
| |
|Rest of the World |
|339.3 |
|328.6 |
|17.3% |
|15.3% |
| |
|Total |
|1,898.3 |
|1,899.9 |
|100.0% |
|8.6% |
| |

Table 3.

CONSUMER PRODUCTS:

The Consumer Products Division markets its products through mass-market retailing channels, enabling all consumers to take advantage of its high technology products at competitive prices. The Division’s brands develop haircare, skincare, make-up and perfume products that meet the aspirations of all of its customers. As the most famous brands in this cathegory I can manage: L‘Oréal Paris, Garnier, Maybelline New York, C. C. B. (Club des Créateurs de Beauté).

|Consolidated sales by business segment |
|€ millions |
| |
|2002 |
|2003 |
|% of 2003 sales |
|Like-for-like growth 2003/2002 |
| |
|Haircare |
|4,048.4 |
|3,957.3 |
|52.7% |
|6.2% |
| |
|Make-up |
|2,100.0 |
|1,982.8 |
|26.4% |
|5.9% |
| |
|Skincare |
|1,019.8 |
|1,178.9 |
|15.7% |
|23.7% |
| |
|Perfumes |
|150.6 |
|128.4 |
|1.7% |
|-11.9% |
| |
|Other |
|282.2 |
|259.0 |
|3.5% |
|-6.4% |
| |
|Total |
|7,600.9 |
|7,600.9 |
|100.0% |
|7.7% |
| |

Table 4.

LUXURY PRODUCTS:

The Luxury Products Division develops global prestige brands sold in exclusive and selective outlets: department stores, perfumeries, travel retail outlets and the group’s own boutiques.
Its mission is to offer customers personalised advice and service. There are many brands in this category on which our company can be proud of. The most well known are: LANCOME, BIOTHERM, HELENA RUBINSTEIN, PRESTIGE ET COLLECTION, GIORGIO ARMANI, RALPH LAUREN, CACHANEL, PALOMA PICASSO, KIEHLS, SAU UEMURA.

|Consolidated sales by business segment |
|€ millions |
| |
|2002 |
|2003 |
|% of 2003 sales |
|Like-for-like growth 2003/2002 |
| |
|Skincare |
|1,288.0 |
|1,233.3 |
|35.8% |
|6.0% |
| |
|Perfumes |
|1,458.6 |
|1,358.2 |
|39.5% |
|2.2% |
| |
|Make-up |
|895.1 |
|849.1 |
|24.7% |
|4.9% |
| |
|Total |
|3,641.7 |
|3,440.6 |
|100.0% |
|4.2% |
| |

Table 5.

ACTIVE COSMETICS

The Active Cosmetics Department designs and markets dermo-cosmetic care products sold in pharmacies and specialist sections of drugstores. Its products offer consumers proven safety and efficacy, backed up by pharmaceutical advice and dermatological prescription. the most sold brand are Vichy and LA ROCHE-POSAY.

| |
|Consolidated sales by business segment |
|€ millions |
| |
|2002 |
|2003 |
|% of 2003 sales |
|Like-for-like growth 2003/2002 |
| |
|Skincare |
|510.2 |
|565.4 |
|75.5% |
|15.4% |
| |
|Haircare |
|63.3 |
|65.9 |
|8.8% |
|7.2% |
| |
|Make-up |
|65.2 |
|61.5 |
|8.2% |
|-1.3% |
| |
|Other |
|56.1 |
|56.3 |
|7.5% |
|-1.2% |
| |
|Total |
|694.8 |
|749.0 |
|100.0% |
|11.9% |
| |

Table 6.

Summarizing:

So, I have told you something about the history of the company, its sales, products, research, owners and shareholders.I hope that you gained some interesting or useful information today.

The End of the presentation:

Thank You for your attention. You have been a wonderful audience. If you need any further information, please write me an e-mail, my e-mail adress is: sandraanticova@loreal.cz or phone me, my mobile phone number is: +420 731200258. And now I’d be glad to try to answer any questions.

Questions: ……………………..

-----------------------

Annual General Meeting

Executive Vice-President
Corporate Communications and External Affairs

Executive Vice-President
Strategic Business Development

Executive Vice-President
Research and Development

Executive Vice-President
Production and Technology

Vice-President
Administration and Finances

President
Professional Products

President
Consumer Products

Executive Vice-President
Human Resources

President
Luxury Products

Board of Directors

Supervisory Board