Solid results
- Operating profitability at 15.7% of sales
- EPS* at 2.08 euros
- Strong improvement in operating cash flow
First encouraging effects of the anti-crisis strategyWith prospects of a gradual improvement in sales, the group is tackling the second half with confidence

Commenting on the figures, Mr Jean-Paul Agon, Chief Executive Officer of L'Oréal, said:
“Achieved in a particularly difficult context, the group’s economic performance in the 1st half is robust and encouraging. 
The sales trend has remained positive overall and is reaccelerating in the new markets. Following on from last year’s record levels, the financial results are solid and of good quality, in terms of operating profit, net profit and operating cash flow, which has grown strongly.
These results confirm the resilience of L’Oréal’s business model, and reflect the first effects of the anti-crisis strategy adopted: accessible innovation, opening up new categories, accelerating globalisation, ensuring sustained advertising and promotional investments, and reducing costs. 
These results also reflect the company’s adaptability, and the responsiveness and commitment of L’Oréal teams across the world.
With prospects of a gradual improvement in sales, and despite the continuing uncertainty of the market context, we are tackling the second half with confidence and the determination to keep on strengthening our positions.”

* diluted net earnings per share, based on net profit excluding non-recurrent items attributable to the group.

A – 1st half 2009 sales trends

- Based on reported figures, the group’s sales, at June 30th 2009, amounted to 8.77 billion euros, an increase of +1.4%. Like-for-like, i.e. based on a comparable structure and identical exchange rates, the sales trend of the L’Oréal group was -3.2%. The net impact of changes in consolidation, mainly as a result of the acquisitions of YSL Beauté, CollaGenex Pharmaceuticals and the 100% consolidation of Club des Créateurs de Beauté, amounted to +3.6%. Currency fluctuations had a positive impact of +1.0% (at current exchange rates, the negative impact would be -0.7% for the whole of 2009). Growth at constant exchange rates was +0.4%.

- The news release of July 30th 2009 details the activity of the cosmetics divisions and the geographic zones for the first half of 2009. This news release is available and can be downloaded from the site.

- The table of cosmetics sales by division and by geographic zone is provided in the annexe.

B – 1st half 2009: solid results

1) Operating profitability at 15.7% of sales

Consolidated profit and loss account: from sales to operating profit.

In €m06/30/08*% sales12/31/08*% sales06/30/09% salesGrowth
Sales8 646.3100%17 541.8100%8 769.4100%1.4%
Cost of sales-2 476.028.6%-5 187.229.6%-2 610.129.8% 
Gross Profit6 170.371.4%12 354.670.4%6 159.370.2% 
R&D expenses-278.83.2%-587.53.3%-286.93.3% 
Advertising and
promotion expenses
-2 567.329.7%-5 269.130.0%-2 634.530.0% 
Selling general and
administrative expenses
-1 826.621.1%-3 773.421.5%-1 864.121.3% 
Operating profit1 497.717.3%2 724.615.5%1 373.915.7%-8.3%

*Foreign exchange gains and losses, preciously presented on a separate line, have been reclassified to the various lines making up the operating profit. Net sales and operating profit remain unchanged.

Gross profit amounted to €6 159.3m. This represents 70.2% of sales, which is virtually stable as a percentage of sales compared with the full year 2008 and lower than in the 1st half of 2008.

Research and Development expenses increased by 2.9%.

Advertising and Promotion expenses came out at €2 634.5m. They accounted for 30.0% of sales, an increase of 30 basis points, compared to the first half of 2008. This rise confirms that strong advertising and promotional support is being provided, as announced in autumn 2008.

Selling, General and Administrative expenses amounted to €1 864.1m, accounting for 21.3% of sales. This rate is below the full year 2008 figure and represents a slight increase compared with the 1st half of 2008, when YSL Beauté was not consolidated.

Operating profit amounted to €1 373.9m, down by 8.3%, representing 15.7% of sales, compared with 15.5% for the full year 2008 and 17.3% for the first half of 2008.
Historically, the latter figure constitutes the highest level ever achieved.

2) Operating profit by branch and division

 €m % sales €m% sales€m% sales
By operational division      
Professional Products263.0 21.1% 518.8 21.0% 232.5 19.1%
Consumer Products*917.3 21.2% 1 566.4 18.6% 911.6 20.7%
Luxury Products354.1 19.6% 766.5 18.4% 225.3 11.9%
Active Cosmetics179.7 24.3% 259.1 20.1% 195.2 27.9%
Cosmetics divisions total1 713.7 21.1% 3 110.3  19.0% 1 564.6 19.0%
Non-allocated**-236.3 -2.9% -501.9 -3.1% -223.9 -2.7%
Cosmetics branch 1 477.4 18.2% 2 608.4  15.9% 1 340.8 16.3%
The Body Shop0.4 0.1% 36.2 4.8% 6.3 1.9%
Dermatology branch***19.9 11.2% 80.0 18.7% 26.8 11.6%
Group 1 497.7 17.3% 2 724.6 15.5% 1 373.9 15.7%

* After reclassification of the “Distance sales” activity under the Consumer Products Division heading.
** Non-allocated = Central group expenses, fundamental research expenses, stock option expenses and miscellaneous items. As % of cosmetics sales.
*** Group Share: i.e. 50%

There were contrasting trends in operating profit of the cosmetics branch by division:
The profitability of the Professional Products Division amounted to 19.1%, compared with 21.1% in the 1st half of 2008.
Consumer Products profitability reached 20.7%, a level very close to that of the 1st half of 2008.
The profitability of the Luxury Products Division, at 11.9%, is significantly lower than in the 1st half of 2008, adversely affected by difficulties in the level of activity, particularly in the 1st quarter of 2009, as a result of contracting markets and substantial inventory reductions by its distributor customers.
The Active Cosmetics Division achieved an exceptionally high level of profitability, at 27.9% of sales, which reflected the phasing of launches and cannot therefore be extrapolated for the full year.
The operating profitability of The Body Shop is slightly positive, with the 1st half unrepresentative of annual profitability.
The dermatology branch, Galderma, saw its profitability grow in the first half of 2009, with a figure of 11.6%.

3) Net earnings per share: €2.08

Consolidated profit and loss account, from operating profit to net profit excluding non-recurrent items.

In €m 06/30/08 12/31/08 06/30/09 Growth
Operating profit1 497.7 2 724.6 1 373.9 -8.3%
Finance costs-66.7 -174.2 -49.7  
Other financial income (expense)-3.1 -7.2 -2.8  
Sanofi-Aventis dividends244.8 244.7 260.1  
Pre-tax profit excluding non-recurrent items1 672.6 2 787.9 1 581.5 -5.4%
Income tax excluding non-recurrent items-414.6 -721.5 -368.3  
Minority interests-1.8 -2.7 -2.1  
Net profit excluding non-recurrent items after minority interests*1 256.2 2 063.6 1 211.0 -3.6%
Net EPS** (€)2.11 3.49 2.08 -1.5%
Net profit after minority interests1 255.6 1 948.3 1 083.5  
Diluted net EPS after minority interests (€)2.11 3.30 1.86  
Diluted average number of shares 595 928 002   590 920 078   583 140 468   

* Net profit excluding non-recurrent items after minority interests does not include capital gains and losses on disposals of long-term asset, impairment of assets, restructuring costs, associated tax effects or minority interests.
** Diluted net earnings per share excluding non-recurrent items. After minority interests.

Finance costs have fallen sharply compared with the 1st half 2008. This is the result of lower interest rates and effective control of cash flow.
The dividend received from Sanofi-Aventis for 2008 amounted to €260.1m.
Profit before tax excluding non-recurrent items is down by 5.4%.
Income tax excluding non-recurrent items amounted to €368.3m. Tax rate, which is not representative of the annual rate, went from 24.8% during the first half of 2008 to 23.3% during the first half of 2009.

Net profit excluding non-recurrent items after minority interests amounted to €1 211m, down by 3.6%. After allowing for the positive impact of share buybacks carried out in 2008, that is +2.1%, EPS amounted to €2.08, down by 1.5% compared with the 1st half of 2008.

After allowing for non-recurrent items, – consisting of intangible assets impairment totalling €42m before tax and restructuring costs amounting to €127m before tax – net profit after minority interests amounted to €1 083.5m.

4) Strong improvement in operating cash flow and a robust balance sheet

Gross cash flow grew slightly compared with the first half of 2008. The change in working capital has clearly improved compared with the 1st half of 2008. This particularly reflects a reduction in inventories and trade accounts receivable from one half-year to the next, reflecting the management efforts made and the vigilance of our organisational structures. Total cash flows from operating activities (see cash flow statement in Annexe 6) grew strongly to €1 243m, compared with €903m at June 30th 2008, an increase of +38%.

Net debt totalled €3.66 billion at June 30th 2009, compared to €4.52 billion at June 30th 2008, representing 32% of shareholders’ equity, compared to 42% at end-June 2008.

The balance sheet structure is solid. Shareholders' equity represents 52% of total assets.

"This news release does not constitute an offer to sell, or a solicitation of an offer to buy L'Oréal shares. If you wish to obtain more comprehensive information about L'Oréal, please refer to the public documents registered in France with the Autorité des Marchés Financiers, also available in English on our Internet site
This news release may contain some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or projected in these statements

Contacts at L'Oréal

Individual shareholders and market authorities
Mr Jean Régis CAROF
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[email protected]

Financial analysts and institutional investors
Mrs Caroline MILLOT
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Extracts from the consolidated financial statements