LOREAL_Registration_Document_2017

1 Presentation of the Group Integrated report A CLEAR STRATEGY : BEAUTY FOR ALL

BREAKDOWN OF THE WORLD COSMETICS MARKET IN 2017 (1)

BY PRODUCT CATEGORY

BY GEOGRAPHIC ZONE

37% 3%

Asia-Pacific Africa, Middle East

37% 22% 10% 19% 12%

Skincare Haircare Hygiene products

Western Europe North America Latin America Eastern Europe 6% 18% 25% 11%

Make-up Perfumes

Growth in the beauty market in 2017 was between 4 and 5%. However, overlapping distribution channels, and the extremely rapid growth of e-commerce make it more difficult to estimate the pace of growth in each channel. All in all, we saw contrasting growth patterns by region and by distribution segment. Growth was robust for make-up in 2017, particularly in the selective market. Skincare sales accelerated throughout the year to become the leading contributor to growth in the beauty market. The selective market surged ahead, powered by China and Travel Retail, to make the largest contribution to growth in the beauty market in 2017. We estimate that the pace of growth in the mass market was slower than in 2016, especially in the United States, Brazil, Japan and Russia. China recovered during the year, but conditions remained very tough in the Gulf states and in France.

Dermocosmetics continued to grow at a steady pace. The Professional market was flat. Across all segments, the sharp acceleration in e-commerce continued. After a difficult start, North America ended the year with growth down on 2016. Growth was solid in Western Europe, outside France, especially in Southern Europe. The pace of growth picked up in New Markets to account for two-thirds of the beauty market's global growth in 2017: Asia had an exceptional year, powered by the market in s China, with double-digit growth, and outside China. The beauty market in the Asia, Pacific region is now worth double the market in Western Europe. The picture in South America is more nuanced: economic s conditions were challenging in Brazil, while other countries, such as Mexico, performed well. Growth slowed in Eastern Europe, with Russia setting the trend. s

MAIN WORLDWIDE PLAYERS 2016 revenue in billions of US $ (2)

28,6

20,5

15,4

11,4

7,7

5,9

5,6

5,5

5,5

5,4

Procter & Gamble

Estée Lauder

Amore Pacific

L’Oréal

Unilever

Shiseido Beiersdorf

Kao Corp

LVMH

Coty

Source : L’Oréal estimates of the worldwide cosmetics market based on net manufacturer prices excluding soap, toothpaste, razors and blades. (1) Excluding currency fluctuations. Source : Beauty’s top 100, WWD, April 2017. (2) Competitive positions and market share held by the Group’s Divisions and brands mentioned in this Document are based on studies, panels and polls obtained from specialised organisations and companies, or, in the absence of comprehensive studies, are the result of estimates made by L’Oréal on the basis of available statistical data.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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