A COMPANY LIKE NO OTHER IN A SECTOR LIKE NO OTHER Kepler Cheuvreux - PowerPoint PPT Presentation

A COMPANY LIKE NO OTHER IN A SECTOR LIKE NO OTHER Kepler Cheuvreux Autumn Conference 12 September 2018 JEAN-PAUL AGON Chairman & Chief Executive Officer 12 September 2018 1

KEY INDICATORS - 2017 #1 BEAUTY PLAYER SALES 26 BILLION € WORLDWIDE OPERATING MARGIN 1 NET PROFIT 2 3.7 BILLION € 18% NET CASH FLOW EARNINGS PER SHARE 3 4 BILLION € 6.65 € MARKET CAPITALIZATION 117 BILLION € 4 1 As a % of sales. 2 Net profit excluding non-recurring items, attributable to owners of the company. 3 Diluted earnings per share based on net profit 12 September 2018 3 excluding non-recurring items, attributable to owners of the company. 4 Based on 29 August 2018 closing price of 209.1€

2018 - A STRONG FIRST HALF OPERATING MARGIN 19.2 % + 30 bps 4.08 € EARNINGS** CONSOLIDATED PER SHARE GROUP SALES + 6.6 %* + 5.3 % + 10.7 % AT CONSTANT ~+ 5 % CURRENCIES 130bps Sustained Research & Innovation investment gross margin improvement 10bps Additional Brand-building investments SG&A reduction BEAUTY MARKET ESTIMATES 12 September 2018 4 *Like-for-like sales growth **Diluted earnings per share based on net profit excluding non recurring items, after non-controlling interests

2018 - LOOKING TO H2 WITH CONFIDENCE FY 2018 CONFIDENCE IN OUR ABILITY TO: • OUTPERFORM ONCE AGAIN THE BEAUTY MARKET IN 2018 • ACHIEVE SIGNIFICANT LIKE-FOR-LIKE SALES GROWTH • DELIVER AN INCREASE IN PROFITABILITY 12 September 2018 5

L’ORÉAL A C O M PA N Y LIKE NO OTHER IN A SECTOR LIKE NO OTHER 12 September 2018 6

THE BEAUTY MARKET IS PERMANENTLY EXPANDING BEAUTY: +4% AVERAGE ANNUAL GROWTH* > +5%** 5.0% 3.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12 September 2018 7 *1993- 2017 L’Oréal BMS estimates - excluding soaps, toothpastes and razors. Net manufacturing price (sell-in) **Provisional estimate of growth at constant exchange rate.

THE BEAUTY MARKET IS PERMANENTLY EXPANDING A VITAL HUMAN BEHAVIOUR, STARTED WITH HUMANITY 12 September 2018 8

THE BEAUTY MARKET IS PERMANENTLY EXPANDING BEAUTY IS A PERMANENT QUEST 12 September 2018 9

THE BEAUTY MARKET IS ONLY PARTIALLY EXPLOITED BEAUTY CONSUMPTION PER CAPITA INDEX * 100 < 35 < 20 < 10 NORTH AMERICA WESTERN EUROPE EASTERN EUROPE ASIA JAPAN LATIN AMERICA MIDDLE-EAST AFRICA 12 September 2018 10 *L’Oréal 2017 BMS estimates - excluding soaps, toothpastes and razors. Net manufacturing price (sell-in) at constant exchange rate.

THE BEAUTY MARKET IS ONLY PARTIALLY EXPLOITED AWAKENING OF MAKEUP IN CHINA * MAKEUP WEIGHT IN THE CHINESE MARKET: 11 % VS MAKEUP WEIGHT IN THE US MARKET: 26 % MAKEUP CONSUMPTION PER CAPITA IN THE US: ALMOST 20 TIMES THAT OF CHINA 12 September 2018 11 *L’Oréal 2017 BMS estimates - excluding soaps, toothpastes and razors. Net manufacturing price (sell-in) at constant exchange rate.

THE BEAUTY MARKET IS ONLY PARTIALLY EXPLOITED THE NUMBER OF SENIORS URBANIZATION CREATES MEN: WILL ALMOST DOUBLE NEW NEEDS AND NEW DESIRES STILL THE BEGINNING MEN’S MARKET SENIORS URBAN POPULATION 1 bn * 5 bn * < 10% ** by 2030 by 2030 of the beauty market 12 September 2018 12 *Source : Euromonitor **L’Oréal 2017 BMS estimates - excluding soaps, toothpastes and razors. Net manufacturing price (sell-in) at constant exchange rate.

THE BEAUTY MARKET IS ONLY PARTIALLY EXPLOITED RISE OF THE MIDDLE & UPPER CLASSES +2.4 Bn UPPER MIDDLE + UPPER CLASSES MIDDLE & UPPER CLASSES (NUMBER OF PEOPLE) SPENDING BY 2030 5.6 WESTERN EUROPE x1.5 NORTH AMERICA 3.2 LATIN AMERICA x2 AFRICA MIDDLE-EAST x3 ASIA 2015 2030 12 September 2018 13 Source: World Data Lab for L’Oréal

THE BEAUTY MARKET IS PREMIUMIZING MORE THAN A FUNCTIONAL NEED, BEAUTY IS AN ASPIRATION 12 September 2018 14

THE BEAUTY MARKET IS PREMIUMIZING L’ORÉAL, CHAMPION OF HIGHEST PROPENSITY BEAUTY WITH A PREMIUM TO TRADE UP 20 10 BEAUTY 16 8 HOUSEHOLD CLEANING SUPPLIES TRADE DOWN* TRADE UP* 12 September 2018 15 *% of people who traded up/down - Source: McKinsey Global Consumer Sentiment Survey, 2016

DIGITAL & BEAUTY: A PERFECT MATCH THE ERA OF ‘SOCIAL BEAUTY’ ENHANCES THE IMPORTANCE OF SELF-CARE 12 September 2018 16

L’ORÉAL A COMPANY LIKE NO OTHER 12 September 2018 17

ONLY BEAUTY … 12 September 2018 18

… ALL ABOUT BEAUTY 7 DISTRIBUTION CHANNELS DEPARTMENT STORES PHARMACIES DRUGSTORES HAIR SALONS MASS RETAIL PERFUMERIES MEDISPAS BRANDED RETAIL TRAVEL RETAIL E-COMMERCE 5 BEAUTY CATEGORIES ALL ALL PRICE ALL PSYCHOGRAPHICS SEGMENTS REGIONS HAIRCARE HAIR COLOR SKINCARE FRAGRANCES MAKEUP 12 September 2018 19

3 STRONG FUNDAMENTALS BRANDS PEOPLE RESEARCH POWER OF PRIORITY 83,000 BEAUTY OUR BRANDS TO RESEARCH EXPERTS 12 September 2018 20

ADAPTING IN REAL TIME SEIZE WHAT STARTS AND SCALE IT MAKEUP ASPIRATION FOR BOOM HEALTH & WELL-BEING NEW PERSONALIZATION NATURALS 12 September 2018 21

ADAPTING IN REAL TIME 15 % TO 20 % NEW PRODUCTS / YEAR 12 September 2018 22

UNRIVALLED FLOTILLA OF ICONIC BRANDS L’ORÉAL PROFESSIONAL CONSUMER ACTIVE PRODUCTS PRODUCTS LUXE COSMETICS 12 September 2018 23

ACQUISITIONS TO CAPTURE NEW BEAUTY DESIRES DIGITAL PROFESSIONAL ORGANIC & BEAUTY NATURALS K-BEAUTY * ** MASS MEDICAL LUXURY * 12 September 2018 24 *Long term license **Agreement to acquire

L’ORÉAL: DIGITAL IS A BOOSTER BOOSTING CONSUMER ENGAGEMENT 1 BILLION VISITS ON OUR WEBSITES 300 MILLION SOCIAL FOLLOWERS 4 BRANDS IN THE EMV TOP 10 3 BRANDS IN L2 DIGITAL IQ TOP 5 USA / CHINA 12 September 2018 25

L’ORÉAL: DIGITAL IS A BOOSTER BOOSTING BRANDS THE BIG QUALITY BRANDS GET BIGGER DOUBLE-DIGIT PRODUCTS LFL GROWTH SUPERIOR HERO STRONG QUALITY PRODUCTS BRANDS WINS WIN WIN IN A WORLD OF RATINGS, REVIEWS AND ALGORITHMS 12 September 2018 26

L’ORÉAL: DIGITAL IS A BOOSTER BOOSTING THE BEAUTY EXPERIENCE PERSONALIZATION AR & AI VOICE 3D VIRTUAL TRY-ONS LIVE STREAMINGS 1-1 CONSULTATIONS CONVERSATIONAL COMMERCE 12 September 2018 27

L’ORÉAL: DIGITAL IS A BOOSTER BOOSTING MEDIA EFFICIENCY PRECISION ROI OBSESSION ADVERTISING DIGITAL 42% OF MEDIA COCKPIT IS DIGITAL* 12 September 2018 28 *H1-2018

L’ORÉAL: DIGITAL IS A BOOSTER E-COMMERCE LEADING O+O ACCELERATION +36% H1-2018* 9.5% OF SALES *Like-for- like sales growth. Sales achieved on our brands’ own websites and estimated sales achieved by our brands corresponding to sales through retailers’ websites (non -audited data) 12 September 2018 29

L’ORÉAL: A FULLY DIGITIZED COMPANY PARTNERING WITH DIGITAL THE BEST TECH TEAMS AT THE CORE & START UP HUBS 20K 2K + UPSKILLED EXPERTS & IN REAL TIME DATA SCIENTISTS 12 September 2018 30

L’ORÉAL THE FIRST BEAUTY TECH COMPANY 12 September 2018 31

UNIQUE CULTURE & ORGANIZATION A LEADER WITH THE SPIRIT OF A CHALLENGER A LARGE COMPANY WITH THE SPIRIT OF A START-UP 12 September 2018 32

UNIQUE CULTURE & ORGANIZATION UNIQUE ORIGINAL ORGANIZATION APPROACH STRATEGICALLY SHORT-TERM CONCENTRATED PRAGMATISM OPERATIONALLY LONG-TERM DECENTRALIZED VISION 12 September 2018 33

VALUE-CREATING, ROBUST BUSINESS MODEL FOCUS ON 1 TOPLINE GROWTH GROWTH FOCUS + DISCIPLINE OPERATIONAL 2 DISCIPLINE 12 September 2018 34

VALUE-CREATING, ROBUST BUSINESS MODEL BALANCED PROFITABILITY 2017 2017 OPERATING MARGIN OPERATING MARGIN BY REGION* BY DIVISION* (AS A % OF SALES) (AS A % OF SALES) 22.9% 22.6% 21.9% 20.3% 20.0% 20.0% 19.2% 20.8 % L’ORÉAL WESTERN NORTH NEW PROFESSIONAL CONSUMER ACTIVE EUROPE AMERICA MARKETS PRODUCTS PRODUCTS LUXE COSMETICS *Before central group expenses, fundamental research expenses, stock options and free grant of shares and miscellaneous items 12 September 2018 35

VALUE-CREATING, ROBUST BUSINESS MODEL SUSTAINED PROFIT INCREASE* NET PROFIT SINCE 1987 IN MILLION EUROS 3,749 X23 IN 30 YEARS 162 1987 2017 *Net operating profit, excl. non-recurring items attributable to owners of the company, with Synthélabo consolidated fully up to 1998; net profit excl. non-recurring items attributable to owners of the company, with Sanofi-Synthélabo equity consolidated from 1999 to 2004; net profit excl. non-recurring items attributable to owners of the company including Sanofi dividend from 2004; IFRS since 2005 12 September 2018 36

VALUE-CREATING, ROBUST BUSINESS MODEL OPERATING MARGIN 18.0% 17.0% 17.3% 17.4% 17.6% 16.6% 16.5% 16.2% 16.1% 15.3% 15.6% 15.7% 15.5% 14.9% 14.8% 14.0% 12.9% 12.1% 11.7% 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 IFRS 12 September 2018 37