L’Oréal S.A. -Research Report

About Company 

L’Oréal S.A. is a France-based toiletries or personal care manufacturer with its head office at Clichy, Hauts-de-Seine. L’Oréal also has a corporate office in Paris, the capital city. 

L’Oréal is the biggest toiletries manufacturer in the world and has expanded operations in the domain focusing on skincare, hair color, make-up, sun protection, hairdressing, and fragrances.

Who is the founder of L’Oréal?

The founder of L’Oréal is Eugène Schueller, a France-based business tycoon, and chemist. 

Which are the subsidiary companies of L’Oréal?

The subsidiary companies of L’Oréal are the following:

• Maybelline
• Lancôme
• Garnier
• NYX Cosmetics
• AcneFree
• CeraVe
• Matrix Essentials
• Ambi

Brands collection

Typically, brands are grouped according to certain marketplaces like the specialized, bulk, deluxe, and active toiletries marketplaces. Galderma and The Body Shop are openly connected to the headquarters. Besides, the company enjoys stakes in different operations like wellness, fine chemicals, design, investment, insurance, and promotion.

Professional Goods 

• L’Oréal Professionnel, comprising Innate and ARTec
• L’Oréal Technique
• Kéraskin Esthetics, formed in 2007 by L’Oréal and concentrating on skincare experts 
• Kérastase (generated in 1964 by L’Oréal)
• Mizani, set up in 1991 and acquired in 2001 by L’Oréal 
• Matrix Essentials, set up in 1980 by Arnie Miller and purchased in 2000 by L’Oréal 
• Redken 5th Avenue NYC, established in 1960 by Jheri Redding and Paula Kent and bought in 1993 by L’Oréal 
• Shu Uemura Art of Hair
• PureOlogy Research, set up in 2001 and bought in 2007 by L’Oréal 
• Carita
• Carol’s Daughter
• Decléor
• Essie, set up in 1981 and purchased in 2010 by L’Oréal 
• Cheryl’s Cosmeceuticals
• Botanicals Fresh Care

L’Oréal Luxe

• Lancôme
• Giorgio Armani Beauty
• Kiehl’s
• Yves Saint Laurent Beauté
• Cacharel
• Biotherm
• Viktor & Rolf
• Diesel
• Shu Uemura
• Ralph Lauren Perfumes
• Guy Laroche
• Clarisonic
• Urban Decay
• Paloma Picasso
• Helena Rubinstein
• Yue Sai
• House 99
• IT Cosmetics
• Proenza Schouler
• Atelier Cologne
• Valentino

Active Cosmetics/toiletries

• La Roche-Posay
• Vichy
• Roger & Gallet
• Skinceuticals
• Dermablend
• Sanoflore
• Ambi
• AcneFree
• Logocos from 2018
• CeraVe

Consumer Goods 

• L’Oréal Paris
• Ombrelle
• Color&Co
• Maybelline
• Garnier
• SoftSheen-Carson
• NYX Cosmetics
• Créateurs de Beauté
• Carol’s Daughter
• Magic
• Essie
• Colorama
• Niely
• 3ce

L’Oréal Acquisitions

In 1973, L’Oréal acquired Synthélabo to chase its dreams in the domain of medicine. In 1999, there was a merger of Sanofi with Synthélabo. As a result, the new company got the name Sanofi-Synthélabo. In 2004, it amalgamated with Aventis to be known as Sanofi-Aventis.

On March 17, 2006, the company acquired The Body Shop, a well-known toiletries manufacturer at a valuation of £562 million.

Other Mergers 

In 2014 January, L’Oréal closed the merger of Magic Holdings, a prominent China-based beauty and wellness brand at the US $840 million.

In February 2014, L’Oréal consented to redeem 8% of its stake from Nestlé at €3.4 billion. Consequently, Nestlé’s shareholding in L’Oréal diminished to 23.29% from 29.4%. At the same time, the shareholding of the Bettencourt Meyers household grew to 33.2% from 30.6%. Since 1974, Nestlé has retained a shareholding in L’Oréal while it invested into the firm due to the entreaty of the L’Oréal originator’s daughter, Liliane Bettencourt, who was attempting to stop the involvement of France.

In 2014 February, Shiseido Company Limited consented to divest its Decléor and Carita brand names to L’Oréal at a valuation of US $312.93 million or €227.5 million.

In 2014 June, L’Oréal consented to buy NYX Cosmetics at an unrevealed value, reinforcing its cosmetics products in Northern US where its customer products division has waned.

In 2014 September, L’Oréal declared that it had decided to take over Niely Cosmeticos Group, a Brazil-based hairdressing firm for an unrevealed sum.

In 2014 October, L’Oréal purchased Carol’s Daughter, the multi-ethnic brand.

In 2016 July, L’Oréal approved to buy IT Cosmetics at a valuation of US $1.2 billion.

In 2018 March, L’Oréal took over ModiFace, the beauty-amplified reality firm. 

In 2018 May, L’Oréal declared an upcoming wellness and perfume collaboration with Valentino.

L’Oréal Spokespersons

2015

Soo Joo Park was nominated as the first worldwide spokesmodel of L’Oréal for the Asian-American region.

Kristina Bazan was chosen as the first global e-spokeswoman of L’Oréal.

Bollywood actress and Miss World 1994, Aishwarya Rai is a worldwide spokesmodel of L’Oréal from 2003. 

Viola Davis, the prizewinning actress serves as the international spokesmodel of L’Oréal since September 2019.

L’Oréal Corporate Matters

Headquarters 

The headquarters of the L’Oréal Group are located in the Centre Eugène Schueller, Clichy, Hauts-de-Seine, near Paris. The edifice, built in the 70s with steel and brick, substituted the earlier Monsavon industrial unit, and workers shifted into the site in 1978. Around 1,400 workers are engaged in the edifice. In 2005, Der Spiegel reporter Nils Klawitter stated that the edifice, with its brown shiny frontage of windows, was not looking good and the same applied for its locality. Klawitter further stated that the plant appears like a high-security area because of the security devices and CCTV cameras. The biggest beauty salon in the world lies within the headquarters premises. Till 2005, ninety hairstylists were serving three hundred ladies, comprising students, retired persons, and jobless individuals every day; the visitors function as trial subjects for novel hair colors.

The overseas divisions of L’Oréal include the following:

• L’Oréal Canada Incorporated – Activities in Canada, located in Montreal
• L’Oréal USA, modified from Cosmair in 2000 – The head office is in New York City, and the unit has the responsibility for activities in the US.
• L’Oréal Nordic – Headquarter is based in Copenhagen, Denmark
• L’Oréal Australia – Headquarter is located in Melbourne
• L’ORÉAL Deutschland GmbH – The legal bench is situated in Karlsruhe and the headquarter is based in Düsseldorf

L’Oréal Stakeholders

At the year ending of 2013, the stakeholding scenario of L’Oréal stood as below:

Breakup of stake ownership: 

• The Bettencourt household – 33.31%  
• Global institutional investors – 21.8%  
• Nestlé – 23.29% 
• Individual stakeholders – 5.7%  
• France-based institutional investors – 9.3%  
• Staffs/workers – 0.7% 
• Treasury stock – 1.9% 

L’Oréal Management

The Board of Directors of L’Oréal comprises sixteen members and it symbolizes an unparalleled stockholding pattern and protects the interests of all the stakeholders. Given below is the constitution of its BoD.

• The Chairman of the Board of Directors
• The Chief Executive Officer (CEO)
• 3 Directors representing the Bettencourt Meyers household 
• 2 Directors representing the Nestlé company
• 7 Independent Directors
• 2 Directors representing the workers

As of May 1, 2021, the members of the BoD of L’Oréal represent 7 separate races. Fifty percent are independent directors and the rest fifty percent are women.

Jean-Paul Agon

Jean-Paul Agon serves as the current Chairman of L’Oréal. Jean, aged 64, became a part of the group in 1978. In 2005, Agon was recruited as the Deputy Chief Executive Officer of the company after an illustrious overseas career as:

• Global Managing Director of Biotherm 
• General Manager of L’Oréal Paris in France and the Consumer Products Division in Greece 
• Chief Executive Officer and Chairman of L’Oréal USA and General Manager of the Asia Zone 
• General Manager of L’Oréal Germany 

Subsequently, in 2006 April, he was appointed as the Chief Executive Officer of L’Oréal, and ultimately Chief Executive Officer and Chairman in 2011.

Since 2006, Jean-Paul Agon has been a Director of L’Oréal. Besides, he serves as the Chairman of the Planning and Sustainability Committee. 

Agon serves as the Director of Air Liquide and Chairman of the L’Oréal Corporate Foundation as well.

Jean-Paul has been occupying the Chairman of the Board of Director’s office without holding the office of CEO since May 1, 2021.

Françoise Bettencourt Meyers

Francoise Bettencourt Meyers serves L’Oréal in the following positions:

• Member of the Planning and Sustainability Committee
• Vice-Chairperson of the Board of Directors
• Member of the Wage and Human Resources Committee
• Member of the Administration and Appointments Committee

Aged 67, Francoise Bettencourt Meyers is the granddaughter of Eugène Schueller, the man who set up L’Oréal, and is the daughter of Liliane Bettencourt. Francoise has been serving in the following positions:

• Chairperson of the Supervisory Board of Téthys Invest, the investment subsidiary company
• Chairperson of the family-held Téthys holding company since January 31, 2012
• Honorary President of the Pour l’Audition Foundation and Chairperson of the Bettencourt Schueller Foundation

Since 1997, Mrs. Bettencourt Meyers has been serving as a L’Oréal Director. Serving since 2020 as the Vice-Chairperson of the Board of Directors of L’Oréal, Mrs. Bettencourt Meyers is a member of the following committees as well:

• Appointments and Administration Committee 
• Planning and Sustainability Committee 
• Wage and Human Resources Committee

Nicolas Hieronimus

Nicolas Hieronimus is the CEO (Chief Executive Officer) of L’Oréal. He is also a member of the Board of Directors of the company.

Since 1987, Nicolas has been associated with the L’Oréal Group. In 1993, Mr. Hieronimus was appointed as the Marketing Director of Laboratoires Garnier.

In 2008, Nicolas Hieronimus was nominated as the President of the L’Oréal Professional Products Unit and became a part of the Executive Committee following a far-famed overseas career as the following: 

• General Manager of the Garnier Maybelline Unit in the United Kingdom 
• General Manager France 
• CEO of L’Oréal Mexico
• Overseas General Manager of L’Oréal Paris

In 2011, Nicolas was employed as the President of L’Oréal Luxe, a position that Hieronimus retained till 2018 end. Nicolas assumed the role of the President of Selective Divisions in 2013 (Active Cosmetics, Deluxe, and Professional Brands).

In 2017 May, Nicolas was nominated as the Deputy Chief Executive Officer of the company at the helm of Divisions.

Since May 1st, 2021, Hieronimus has been serving as the Chief Executive Officer of L’Oréal.

Paul Bulcke

Aged 66, Paul Bulcke serves as the Chairman of the Board of Directors of Nestlé. He is of Swiss and Belgian origin. From 2012 to 2014 June, he served as a director of L’Oréal and subsequently once more from 2017.

Paul Bulcke serves as the Vice-Chairperson of the Board of Directors of L’Oréal, and he is a member of the following committees:

• Appointment and Administration Committee 
• Planning and Sustainability Committee 
• Wage and Human Resources Committee

Bulcke serves as a Director of Swiss-based Roche Holding as well.

L’Oréal Financials – Half-yearly Results

All values are in Million Euros (€) unless otherwise stated

For the period ending 30/06/2021, operating profit stood at 19.7% of sales. Gross profit to the tune of 11,327 million € emerged at 74.5% of revenue/sales, a growth of 140 basis points in comparison to the 1st half of 2020. Generally, operating profit emerged at 2,988 million €, a rise of 170 basis points in comparison to the 1st half of 2020, with 19.7% of sales. The earnings per share (EPS) calculated at 4.63 €, rose by +21.1% in comparison to the 1st half of 2020.

L’Oréal S.A. Stock Performance  

The stocks of L’Oréal are publicly traded on the Euronext Exchange with the ticker symbol OR. It is also a CAC 40 constituent. On September 2, 2021, OR closed trading with Euronext at €400.15 at 17:35:29 pm.

Viewpoint of L’Oréal S.A.

L’Oréal S.A. is dedicated to creating a more accountable and eco-friendly business model. Their dedication concentrates on three major domains – the earth, its population, and its products. In doing so, L‘Oréal S.A. is adopting various endeavors and activities to fulfill its objectives. Since they are dedicated to performing everything in their capacity to be archetypal, they stand out from others operating in the beauty and wellness industry. Since the time of its origination, L‘Oréal has been particularly conscious about the significant requirement to deal with the difficulties resulting from the worldwide environmental predicaments. Consequently, they have set certain targets for 2030.

Disclaimer: This article has been particularly authored for academic benefits and research goals and you should not consider it to be investment advice. It is always recommended that you discuss with your investment counselor when you are thinking about any kind of investment.