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Executives

Jean-Paul Agon – Chairman and CEO

Jean-Régis Carof – Shareholders Relations Contact

Sylvie Barbosa – Director, Financial and Strategic Foresight

Christian Mulliez – EVP, Administration & Finance

Jean-Jacques Lebel – President, Worldwide Consumer Products Division

Nicolas Hieronimus – Managing Director, Luxury Products Division

An Verhulst-Santos – General Manager, Professional Products Division

Brigitte Liberman – President, Worldwide Active Cosmetics Division

Marc Menesguen – Managing Director, Strategic Marketing Department

Jochen Zaumseil – Managing Director, Asia Pacific Zone

Analysts

Celine Pannuti – JP Morgan

Simon Marshall-Lockyer – Jefferies

Emmanuel Bruley des Varannes – Societe Generale

Pierre – Natixis

Jean-Philippe Muge – SwissLife Gestion

Christian Muge – Journalist

Juliet Ghanni – La Tribune

L’oreal Co Adr (OTCPK:LRLCY) Q4 2011 Earnings Call February 15, 2012 3:00 AM ET

Jean-Paul Agon

Good morning, everybody. Welcome to this presentation – this Annual Presentation of our 2011 performance. I’d like to introduce to you the people sitting with me at the rostrum all the way to the right.

The new kid on the block, An Verhulst, she’s the new head of Professional Products. She took office on January 1, 2011, taking over from Nicolas Hieronimus. Welcome An to this very first presentation. Christian, everybody knows him. Everybody knows Jean-Jacques Lebel, who is the Head of the Consumer Products Division. Nicolas Hieronimus is now in charge of Luxury Products. And also Brigitte Liberman, whom you know very well, she’s in charge of Active Cosmetics.

As usual, we will hear a presentation by Christian Mulliez and presentations from the four division heads. The presentations will be shorter than usual. We wanted to make time for two additional presentations, which in my opinion would be of most interest to you. We’ll have a presentation about the digital revolution, which is currently underway at L’Oréal. Marc Menesguen is in charge of Strategic Marketing for the Group and he will explain to you the advances made by the Group at a digital level and the reason which the digital revolution is impacting our entire marketing model as well as communication with consumers and obviously, honor – to whom honor is due. We will also hear from Jochen Zaumseil who’s in charge of the Asia-Pacific region. The Asia-Pacific region is a pillar of our strategy for the Group’s future and also for the future of the entire market.

Jean-Régis, a few housekeeping announcements as usual.

Jean-Régis Carof

Good morning, ladies and gentlemen. Before we get started with the presentation, a quick reminder regarding the information and comments that you will hear today. Please read the disclaimer on the last page of the documents which you have received.

A few housekeeping announcements now with regard to today’s meeting. Item one, translation headsets are available at the entrance to this room. Please turn on the desired channel depending on which channel – depending on which language you wish to hear. You should be able to see the different channels available on the central screen.

The access hall to this room is equipped with WiFi in case you’d like to get an online connection. But as long as you are in this auditorium as well as in the adjacent room, please turn off or mute your cell phones now. WiFi access, please use the ID and password which you can now see on the screen.

At the entrance to this room, you’ll receive the copy of the charts that Mr. Mulliez will discuss. The information pertaining to Mr. Agon’s presentation will be made available at the break. Many of you – there are many of you in attendance and so there’s a second room where the rest of the audience is sitting. Sylvie Barbosa, please confirm that they can hear us okay. Sylvie, is everything in place?

Sylvie Barbosa

Yes, absolutely. Good morning, everybody. We can hear you loud and clear.

Jean-Régis Carof

Excellent. Thank you, Sylvie. You must have found cards on your seats. Those cards were designed for you to ask questions. Please do it in writing as a first step, don’t hesitate, and hand them over to the hostesses when you’re ready. And of course, after the break, you’ll have an opportunity to ask questions directly. However, please state your name and company name before you ask questions.

The entire meeting is being webcast on a special website that is dedicated to you, loreal-finance.com. And the entire meeting broadcast will be available as early as this afternoon. You will also be able to download the presentations by Mr. Milliez and Mr. Agon.

As usual, cocktails will be served at the end of the meeting. However, because we are doing renovation work at the headquarters, I’m sure you saw that this morning, the cocktails will be served in what we call the (inaudible) right outside this room. Enjoy today’s meeting. Thank you for your attention.

The place right outside this room where everybody had coffee this morning. We are renovating the headquarters so there’s a little bit of work going on.

Without further ado, let’s get started with Christian Mulliez’s presentation about L’Oréal’s performance in 2011.

Christian Mulliez

Good morning, all. The presentation of L’Oréal’s 2011 financial performance will include information pertaining to sales, income, cash flow, the balance sheet, and of course dividend. Consolidated sales came to EUR20,343 million, up 5.7% on a like-for-like ForEx basis. Like-for-like sales grew by 5.1%. The scope difference is slightly positive, up 0.6%. It is mostly due to the acquisition of a company called Q-Med, which was consolidated by Galderma on March 1, 2011; and also due to the acquisition of Essie, a nail polish brand on July 1, 2010; as well as consolidation starting December 15, 2011 of an American company, Clarisonic.

Taking into account the ForEx difference – the negative ForEx difference of 1.4%, the increase on reported basis comes to 4.3%. Regarding the ForEx difference, of course, it is premature to foretell what things will be like in 2012 so we do not wish to quantify this figure at this particular juncture. But I can already tell you that considering the current rates, the impact in 2012 is expected to be a positive one.

Regarding currencies, the main negative contribution to ForEx in 2011 were the US dollar, the Sterling pound, and the Russian rouble. However, the Brazilian real as well as the Japanese yen have risen against the euro. Please note, this is important, in 2011 the euro accounted for 29.5% – only 29.5% of sales compared with 30.7% in 2010 and 38% in 2005.

Our business in the eurozone, you’re seeing its relative weight waning on a regular basis. Now sales per branch and per division on a like-for-like basis. Professional Products up 2.5%. Consumer Products up 4.5%. L’Oréal Luxury has further fast tracked its growth compared with 2010, up 8.2%; Active Cosmetics up 3.2%. The Body Shop is recovering, up 4.2%. And lastly Dermatology, Galderma is posting yet a new year of solid growth, up 8.4% and even 17.1% on a reported basis, i.e. absorbing the impact of consolidating Q-Med. All-in-all, for the very first time, the Group has cleared the EUR20 billion mark in sales.

Every region is growing. Western Europe is up 0.6%, not forgetting North America which is up 5.5% and new markets which are up 9.5%. Please note the new markets are right on the heels – and I’m talking absolute terms here, right on the heels of Western Europe. The difference was only EUR30 million in 2011.

Now new markets. Asia-Pacific enjoyed strong growth up 13%, even more so if we exclude Japan, up 16.1%. The same is true for Latin America, which is up 13.2%. 2011 was not a good year for Eastern Europe, which enjoys negative growth, down 2.8%. Lastly, Africa and the Middle East enjoys growth of 10.5%.

Let’s zoom in on BRIMC countries, which are enjoying double-digit growth, 10.6%. Except for Russia, all of these countries are enjoying strong growth. China is up 18%, Brazil is up 10.1%, Mexico up 11.7%, and India is up 24.5%. Please note that China has EUR1.2 billion and therefore is asserting its status as the Group’s third largest subsidiary after the US and France with Germany in fourth position. In total, the new markets accounted for more than 38% of the cosmetic sales in 2011. As you can see on the chart, this means double the 2000 level, which was 19%. This buoyant trend means that the new markets as they reach 2012 are expected to become the leading region within the L’Oréal Group.

Let’s take a look at our P&L. Gross profit comes to 71.2% of sales, which is up 40 basis points compared with 2010. This is in line with what we indicated as early as mid-2011. Research costs have increased by 8.4% accounting for 3.5% of sales compared with 3.4% the previous year. This further growth, both in absolute and relative terms, reflects the Group’s strategic decision to make significant investments into research. A&P costs come to 30.9% of sales. Again, this is in line with what we indicated throughout 2011.

I would like to take this opportunity to remind you that A&P costs don’t just include media costs. Depending on the division, depending on the commercial channel, they cover different realities. Professional Products; costs include technical training for stylists, salon merchandising. For Consumer Products; we’re talking media expenses, merchandising costs, point-of-sale drives. L’Oréal Luxury; we’re talking media expenses, beauty adviser related costs, merchandising and samples. And lastly for Active Cosmetics; costs include visits to doctors by sales reps, media expenses, merchandising and pharmacies, et cetera.

Sales and admin costs, again this year, these costs grew – did not grow as fast as sales. They stand at 20.6%, which is a 20 basis point increase compared with 2010. All-in-all, operating income comes to EUR3,293 million, that is up 7.7%. Profitability is also – has also improved significantly compared with 2010, up 50 basis points.

As announced at the end of August, quarterly profitability was better balanced in 2011 than in the year before. In H1 2011, operating profitability was down by 50 basis points. But in H2, it improved by 150 basis points compared with H2 2010. Again, this shows that at L’Oréal, divisions and zones are managed on a yearly basis. As a result, the performance of one half year can never be extrapolated. This year again, every division, and that was also the case in 2010, each division has grown its operating profitability.

Professional Products is up 30 basis points. There’s work being done next door, no wonder. The show must go on. Now for those of you listening to us online, there’s work going on which explains the funny noises.

Consumer Products are up 40 basis points. L’Oréal Luxury is up 180 basis points. And Active Cosmetics is up 10 basis points. The Body Shop continues to further improve its profitability by 20 basis points. Lastly Dermatology, as announced during the H1 performance presentation, Galderma was impacted by competition from two generic products, Differin 0.1% and Loceryl.

Operating income per geographic area. Profitability for Western Europe is slightly down to 20.9%, which is the 2009 level. However, profitability for North America and new markets have again surged forward coming to 18.4% of their respective sales figures.

In addition to the chart on the weight of new markets in cosmetic sales, which we presented a couple of minutes ago, here you can see the weight of new markets in the Group’s operating income before non-allocated costs. With 36.4% of the total, the weight of the new markets is very close to their contribution to sales, which comes to 38%. L’Oréal’s growth in the new markets is therefore extremely profitable.

Part two. Our financial costs were down significantly this year coming to EUR25 million. This further decline is a result of a strong reduction in our average debt. For 2012, all other things being equal, we should expect very limited financial costs probably in the order of EUR15 million. Sanofi dividends came to EUR295 million. You probably remember that last week, Sanofi announced for 2012 that dividends would grow by 6%.

Taxes came to EUR977 million, i.e. a rate of 27.4%, which is slightly under the tax rate for 2010. As far as 2012 is concerned, at this juncture even though it’s a bit early to tell, the tax rate is expected to come to 28%. Net income, excluding non-recurring items, comes to EUR2,582 million, up 8.9%. Net earnings per share come to EUR4.32, up 7.8%.

For those of you who wish to run a simulation for 2012, it might be relevant to remember that the number of shares is slightly higher than 600 million, about 602 million to be a little specific. This is a conversation that we have every year.

Non-recurring items after taking those into account, which in 2011 came – included an after-tax expense of EUR144 million, net income comes to EUR2,438 million, up 8.9%. These non-recurring items include intangible asset impairments to the tune of EUR17 million as well as restructuring costs, mostly in the US to the tune of EUR40 million. And lastly, a change in the tax rate for Sanofi’s deferred tax liability to the tune of EUR62 million.

Cash flow came to EUR3,226 million. Depreciation came to EUR742 million in 2011, down slightly from 2010 when it stood at EUR768 million.

In 2011, there was a net reversal of provision coming to EUR128 million versus EUR34 million in 2012 – 2010, pardon me. This increase in the amount of net reversals is mostly due to the increase in the financing of our employee liabilities in 2011 and also a drop in the corresponding provisions and also a partial reversal of provisions for litigation with competition authorities which were allocated in 2010.

Working capital requirement to 2011 increased by EUR322 million. After two years of going down in absolute terms, we are now back in a situation that is more in line with the changes in our business. Inventories grew slightly as a percentage of sales, 10.1% at the end of 2011. This is a level that is slightly too high and therefore must be reduced in 2012.

Payables grew as well coming to 14.7% of sales. There – it has now come to a historically sound level. As announced, investments came to 4.3% of sales. Regarding 2012, we can expect an investment rate that will be close to 2011, slightly under 4.5% of sales.

Lastly, after dividend payouts and acquisition, acquisitions of the Q-Med and Clarisonic companies, residual cash flow comes to EUR559 million.

Balance sheet, we have a very robust balance sheet since shareholders’ equity came to 65% of the total assets at the end of 2011. Our strengthening in shareholders’ earnings – pardon me, shareholders’ equity compared with the end of 2010 is mostly due to retained earnings and also a net revaluation of Sanofi shares mark-to-market. We no longer have any net debt at December 31, 2011. We have a net cash flow position of EUR500 million.

Lastly, our balance sheet is sound. It sounds pretty good. Our prospects are good and as a result, the board of directors has proposed to the General Meeting of Shareholders a new significant increase in the dividend up to EUR2 per share, i.e. an increase of 11%.

I’d like to remind you that 2012 is the very first time, the very first year, when a 10% increase will be paid out for registered shares, the very first time in two years. This increase in dividend is matched by a new increase in the payout rate, which this year comes to 46.3% and this reflects L’Oréal’s constant determination to maximize shareholder return. Thank you for your attention.

Jean-Paul Agon

Thank you, Christian. Let’s move immediately on to the presentation by Jean-Jacques Lebel on the Consumer Products Division.

Jean-Jacques Lebel

(Interpreted) Good morning to you all. The Consumer Products Division achieved growth of 4.5% in 2011 in a global market that we estimate at close of 4% up. So we outperformed the market, a market that remains solid and strong.

To strip by region is as follows. Western Europe up 0.3%, overall this is in line with the market. Our growth is particularly strong in France, up 3%, outperforming its market and in Germany where we’re doing much better than the market. In North America, we’re up 5.3%, our sell-through is 30% better than the market. Our new markets posting 8.2% growth.

I’d now like to turn to the highlights of the year. First of all, Maybelline. As you can see, Maybelline has had a second year of double-digit growth and I’d like to take a minute to explain this success. It’s a success across all areas. First in the US where our lead over the number two brand has grown, as you can see on this chart, our lead has gone from 0.3% market share in 2010 to 1.2% in 2011. The consolidation of our leadership in mascaras, here the launch of Colossal Cat Eyes; our growth in the foundation market with Fit Me, the first gel foundation for made-to-measure coverage; and continued growth in lipsticks with 24-hour SuperStay.

In Europe, Maybelline has grown its leadership with very strong progress in Germany. You can see this on the chart that we almost reached 25% market share in Germany and France. And in Northern Europe countries, the brand was very successful, particularly with Falsies Flared mascara and The Eraser foundation.

In Asia, Maybelline has grown by 18.6% with the continuation of the BB Cream saga, which now exists as a mousse and a powder compact; and the mascaras with the success of the Magnum; and the fantastic launch of Lashionista in Japan. Finally, the Colossal Kajal, our first smudge proof eye crayon in India. Alongside the products, there’s also the work on the brand which is bearing fruit, an unmistakable brand with a publicity style inspired by New York and an image which is dynamic, urban, always daring. Here’s a lipstick film.

(Video Presentation)

Next highlight, the launch of Essie, you’ll remember that we acquired the brand mid-2010. The launch in the American mass market in 2011 went incredibly well and the market share is far higher than our objective. The initial feedback from distribution in Europe we’re launching at the moment, also very favorable. This is even more promising as the nail varnish and nail care market is the most dynamic part of the make-up market, up 40% in 2011 in the US and Essie is on sale at the most expensive price in the mass market. With Essie, we now have a brand with a strong personality and truly great potential.

To sum up, make-up is our number one product category in turnover and the market that has grown the most over the past two years because both Maybelline and L’Oréal Paris are growing. We’re by far and away the world leader. It’s also an enhanced category, very dynamic with a lot of innovation.

This leads me to the third highlight, the acceleration of L’Oréal Paris that has grown by 4.5% in 2011 versus 2.8% in 2010. In terms of hair care innovation, Elsève Arginine, a new response to the problem of fragile hair that sheds easily, very big success in the countries where it was launched. Here’s the film.

(Video Presentation)

And then Hair Expertise, our upscale brand of shampoo without sulfate, sold at $6 which is being strengthened in the US with a module for dry hair that will be launched in Europe the beginning of 2012. Youth Code Lumiere, the first enhancing and anti-spot skincare for L’Oréal and Lumi Magique foundation are the two great innovations for the beginning of 2012. Here’s the foundation film.

(Video Presentation)

As for geographic expansion, in China, the L’Oréal Paris brand continues its progress with skincare and superb success with the Youth Code Serum; in India, the success of the launch of L’Oréal Paris Hair Care; in Brazil, the shampoo Elsève Total Repair 5 for hair that has been chemically strengthened; and lastly for men, the continuation of the Men Expert saga with Vita Lift 5. Here’s the film

(Video Presentation)

You can see the tone of the film is relatively upbeat. Fourth, highlighted the Garnier brand. We had a disappointing year. We know why we did not have the right launches. There was a change in rhythm at the end of the year. We end the year with a very strong launch of BB Cream inspired by Asian products. This product which – there’s five different things that you’ll discover in the film has been hardly endorsed by European consumers.

(Video Presentation)

Dark Spot Corrector, the first anti-spot skincare product on a mass market launched in the US, which has become number one in the skincare hit parade in the US. In Asia, we had a great success with Garnier Light Complete, a formula adapted to greasy skin, which has a matte effect on the skin and actiphyte, an anti-acne product as its name suggests, which consolidates the strong position of Garnier in Asia. To start 2012, we have the new generation colorant mousse, Nutrisse by Garnier. Here’s the film.

(Video Presentation).

So to sum up and looking at 2012, the priorities are innovation and value enhancement; continued geographic expansion in the search for the billion new consumers; the recovery plan in Eastern Europe in which I have complete confidence thanks to all the launches which will happen in the next few months; market share gains in Western Europe, there was a rebound at the end of 2012 2011 to 30:33 which is very encouraging; the correct allocation of our business drivers by category and by geography to continue to drive growth and profit.

The work already done on the Maybelline brand is underway for L’Oréal and Garnier. So the three brands, each with its own style, can benefit from the same modernity and maximize their feel to consumers. We are very confident for 2012.

Jean-Paul Agon

(Interpreted) Thank you very much, Jean-Jacques. And now, let’s hear about Luxury with Nicolas Hieronimus.

Nicolas Hieronimus

Hello, everyone. I’m delighted to be here to talk to you about L’Oréal Luxe that achieved a great year in 2011. In 2011, we benefited from a dynamic selective market acquainted for the luxury aspirations of the new middle and upper classes worldwide. After experiencing growth of 4.8% in 2010, the Luxury beauty market which is the most dynamic of all grew at an even faster rate at plus 7.7% according to our estimates. We consolidated our market share with growth up 8.2% on a like-for-like basis. Growth remained regular quarter-after-quarter resulting in total sales of EUR4.8 billion.

I’d like to highlight the four strategic advantages of L’Oréal Luxe in 2011. The Lancôme success; the rising level of Luxury of our two couture brands, Giorgio Armani and Yves Saint Laurent; the strength of our face and skincare strategy, in particular Kiehl’s; allowing us to support superbly in Asia the heartbeat of the Luxury market’s growth. Four strategic advantages that bode well for 2011.

In 2011, Lancôme, our first international Luxury brand, further increased the 2010 turnaround achieving its best growth figures for 2015, up 9.1%. Great leadership at the forefront of scientific innovation with Visionnaire, the advanced skin corrector for wrinkles, pores, and evenness, which was the big impact in the industry in facial skincare segment. The launch backed by 20 patents and 12 years of research, but highly visible results, proved a real phenomenon. A product designed for every woman in the world regardless of their skin type. Visionnaire was awarded the Marie-Claire Prix d’Excellence and since its launch, has become number one serum in many countries including Western Europe’s big five.

The brand image has also been rejuvenated and modernized with the advent of Emma Watson, an icon for young women worldwide, who accompanied the creation of the fragrance Trésor Midnight Rose and attracted new clientele. But also with the creation of products for younger generation with high diversities such as Hypnôse Doll Eyes mascara and Color Design eyeshadow, a big hit in the United States.

Finally, and most importantly, the values of luxury and service at Lancôme were highlighted by its new brand counters, also by the expansion of prestigious corners specifically designed for the premium ABSOLUE line, which will soon include an exceptional new skincare product, L’EXTRAIT with rose stem cells sold for around EUR300 in Europe.

The rising level of luxury in our couture brands, Giorgio Armani had a very successful year and is deploying evermore premium counters worldwide, notably in Asia. 2011 is a key year in strategic terms with the launch of the new Régénessence skincare line, which reports brand presence in all three segments.

Its major fragrance lines, the iconic Acqua di Gio and Acqua di Gioia, which achieved EUR74 million in its first year, but also Code and Code Sport driven growth. But beyond these strengths, the Armani brand endeavored to play the Luxury card like never before as embodied by La Femme Bleue, a perfume limited to 1,000 numbered bottles worldwide in 2011, bolstering the hyperselective lineup, mainly Prive, but also the launch of Essenza Acqua di Gio and Acqua di Gioia Essenza, which reflect the beauty of our Italian brand bottles.

Yves Saint Laurent, the resolutely Parisian luxury brand, symbol of upbeat elegance, gained market share in Europe and the US. The brand’s beauty initiatives such as the Colour Collections created by its star make-up artist, Lloyd Simmons; the stunning and extremely successful launches of Pure Chromatics, Mascara Volume Effect Faux Cils Shocking, and the already iconic Rouge Pur Couture Golden Lustre testified to the brand’s sophisticated cutting edge; the legendary Opium was boosted by powerful new ads, enabling the YSL brand to finish the year on a high.

Points of sale featured a symphony of black and gold synonymous with Luxury, which also conquered the world. Innovation, modernization, enhancement of products, and customer experience is the heart of the winning strategy for our three brands. Other strategic priority for our division, face care, exceptional growth in 2011 close to up17%.

The diversity and fit of our brand portfolio enabled us to roll out this particular category at the heart of L’Oréal’s scientific expertise at every price point and all its facets. Serums, concentrates of technology, and anti-aging performance prerogative of luxury skincare has been the success story for all our brands. Lancôme with Génifique, Visionnaire, and Blanc Expert. For Helena Rubinstein with POWERCELL enriched by native vegetable cells or with Régénessence, the Armani face care inspired by regenerative medicine. Natural ingredients and accessibility in the area of face and skincare was successfully showcased by Biotherm.

But it was Kiehl’s that achieved the most spectacular growth in face care, up 56% in 2011 with innovations such as the anti-aging cream, Rosa Arctica, Midnight Recovery Eye, and dermatologist solutions promoted by the famous Kiehl’s Cycle of Service which goes from customer contact to after sale support.

The Kiehl’s brand celebrated its 160th anniversary in 2011 with double-digit growth in every region of the world. This is more of a healthy growth on a comparable catalog and outlet basis. The success story continues. Skincare is the strategic and profitable priority for L’Oréal Luxe and it works. The success allows me to move on to Asia where L’Oréal Luxury is outperforming the market in an Asia-Pacific market that is dominated 60% by the healthcare sector, the progress has allowed us to move forward further.

The growth in 2011 is 1.5 times the market. In China, we experienced strong growth and we’re leader with 26% of the market. In Asia, we’re just rolling out all our cosmetic brands. Biotherm being renewed; Kiehl’s number two in the brand; Lancôme; and also Helena Rubinstein, the most prestigious signature of our portfolio, which is a resounding success. Yves Saint Laurent and Giorgio Armani are still just at the beginning of a promising Asian adventure.

And I’d like to highlight the local expertise and strong results achieved by our Asian brands. Shu Uemura enjoyed double-digit growth in 2011 thanks to products on the borderline of make-up and skincare. Yue Sai was relaunched and modernized to end the year on a high in China, the only country where it is distributed today.

Turning now to the outlook for 2012, which I believe to be rather positive, first, because the year ended on a positive note. Our success rate was promising in the final quarter where we gained market share. It was a particularly good year for fragrances. L’Homme Libre by Yves Saint Laurent boosted sales of the entire L’Homme franchise.

For young women, success of Trésor Midnight Rose by Lancôme with Emma Watson and Loverdose, already number one new European fragrance allowing Diesel to achieve growth up 28% for the year. Viktor & Rolf continued to ride the historic success of Flowerbomb breaking into the top eight women’s perfumes in the United States.

We’re therefore starting the first quarter with confidence with a market that looks set to continue to grow bolstered by significant initiatives across the brands. The make-up category makes a forceful return with Teint Idole by Lancôme that you saw recently in Paris, Rouge in Love by Lancôme continuing the Emma Watson saga, as well as a revolutionary product by YSL, the Rouge Pur Couture Vernis à Lèvres.

In skincare, we launched YSL Forever Youth Liberator, which is the first serum based on glycobiology, which has got off to a great start; Clearly Corrective, the anti-blemish solution from Kiehl’s; and Aquasource Nuit, which announces Biotherm’s bolder direction.

Finally in perfume, two new women’s fragrances: Ralph Lauren’s The Big Pony Fragrance Collection for women and L.I.L.Y by Stella McCartney. And two men’s fragrance: the daring Only The Brave Tattoo by Diesel and the superb Spicebomb by Victor & Rolf.

We must also build the future of the division. We recently acquired Seattle’s Pacific Bioscience Laboratories and its Clarisonic brand, the number one in sonic technologies for skincare applications. The firm’s turnover was also EUR100 million last year, 95% in the US. Clarisonic was also the fastest growing brand in the US skincare, top 20 in 2011.

We will extend this success to the rest of the world as we did with Kiehl’s. The technology will also be offered to some of the division’s other brands. In short, this adds up to strong global potential offering new services to the Luxury clientele. Our division enters 2012 with a new name, L’Oréal Luxe, emphasizing its renewed ambitions to play a leadership role in a market where excellence when it comes to products and consumer experience is a guarantee of success. Thank you for listening.

Jean-Paul Agon

(Interpreted) Thank you very much, Nicolas, for this most convincing presentation. An, why don’t you talk to us about Professional Products and the Salon Commercial Channel?

An Verhulst-Santos

Ladies and gentlemen, good morning. In the year 2011, our division consolidated its strategic position. Despite a sluggish professional market worldwide, the division performed strongly, up 2.5% on a like-for-like basis and up 5.1% excluding ForEx impacts, including the acquisitions made at the end of 2010. We are increasing our market channel regions of the world to an estimated 28%. In 2011, we won over thousands of new hair salons taking our brand presence into more than 500,000 salons across the world. These strong results right on the back of innovations in our brands consistently championing the professional difference.

In hair color, INOA is fast becoming the new market standard with more than 50 million applications since the launch. With double-digit growth in 2011, INOA is proving to be a formidable tool for winning over salons and securing the loyalty of our customers. Also on the professional hair color sector, our US brands, Redken and Matrix are also – have also achieved and sustained growth.

In hair care, Fusio-Dose by Kérastase is a successful highly customized product. Fusio-Dose is the very first system using highly concentrated active ingredients that stylists can personally prepare to match the needs of each customer. Intra-Cylane in Force Architecte, lactic acid in Absolut Repair Cellular, IPN in Redken Haircare are further examples of technological breakthroughs driving the success of our exclusive salon services.

Matrix is also innovating with Total Results, its new haircare range for all salons. Finally, our new haircare oils have established themselves as leaders in this new category of haircare routine inspired by India. Elixir Ultime is now the number one product in the Kérastase range. Our division is selling an oil-based haircare product every five seconds. These major innovations have enabled us to consolidate our leadership position in mature markets particularly in France, in Germany, in the UK, and in the US.

2011 marked a new turning point because out of the 10 countries that contribute the most to our growth, six were new markets. Our growth is fast accelerating in these new markets, which continue to present a strong potential for the future. India, for example, is our third largest growth contributor and the biggest one for Matrix whereas China is now the biggest growth contributor for our Luxury haircare brand, Kérastase.

In 2012, our growth acceleration strategy will be based on the following specific measures. First of all, further gains in market share through even more innovation. Secondly, accelerating our penetration of new markets because share of our sales is still too small. And thirdly, we will take initiatives to invigorate our professional markets in order to boost its growth.

L’Oréal Professionnel will benefit from major innovations with the second generation INOA oil delivery service with no less than 22 patents. This revolutionary approach to hair color means simpler preparation for hair stylists and new unrivaled treatments and beautifying benefits for consumers. The launch had excellent results in France as early as January 2012, which means that we are very confident about the new INOA.

Let’s see the European TV campaign, which is designed to attract customers into salons.

(Video Presentation)

This new technological breakthrough in oil delivery systems will be extended to our two US brands starting with the launch of Redken Chromatics in March and then Matrix later in the year. Growth acceleration in new markets will be achieved via Matrix, which is very popular among middle income customers and the brand will continue to grow four times faster than the market. Meanwhile, L’Oréal Professionnel and Kérastase are continuing to expand in these new markets and boost value growth appealing to customers keen on luxury products.

Accelerated growth is also being driven through observation of local beauty routines. We are strengthening our hubs in Brazil, in India, and China for us to be able to provide evermore tailored products and services with strong growth potential.

Finally, as the worldwide leader in professional beauty, we have to drive and provide impetus to the market. We will achieve this through education, a cornerstone of our development strategy. We have a network of 5,000 trainers and every year they train nearly 2 million stylists, building their professional skills and of course their business acumen.

Moreover, in new markets where there is little or no formal hair design training, our institutes such as the one in Brazil are enabling us to train thousands of young people to be professional hair stylists. This is promoting sustainable growth for our professional channel. In the short term with new Chrysalis by Kérastase, we will bring more young customers into salons. And the launch of our new brand, Essie, into the professional market in Europe will also prove a valuable tool to boost traffic in salons leveraging the strong trend in nail care services. For all of these reasons, along with our fully mobilized teams, we are – I am very much looking forward to writing a new chapter in the story of the professional beauty market, a chapter based around an aggressive strategy which is the surest way forward for accelerated solid and sustainable growth.

Thank you for your attention.

Jean-Paul Agon

Thank you, An. Well, as you can see, we’re very determined not to continue on a market that is stagnant of professional hairdressing, to do everything that we can to boost the market and reinvigorate our growth through market share gains, innovation, winning over new salons, new geographies, boosting the channel. I can tell you that An, who’s probably one of the world’s finest experts when it comes to this channel because she spent her whole career there across continents and worldwide, is also very determined to boost this business. Contrary to what some might be writing, Professional Products is not at all a business of the past. Quite the contrary, it’s an activity for tomorrow and the future and we are going to demonstrate that.

Brigitte, tell us now about the dermocosmetics business. Is it also a forward-looking future activity?

Brigitte Liberman

(Interpreted) Good morning, everyone. In 2011, the Active Cosmetics Division achieved 3.2% growth on the dermocosmetic market which expanded by 2.5%. As a result, we consolidated our leadership position on this market, but above all, we pushed back the boundaries of beauty and health in three different areas. This opens up new growth prospects for the years to come. The first major step forward, we have increased our business outside of Western Europe. The new markets have grown steadily by more than 9% with an exceptional performance in Latin America, which was up by 25%.

In 2011, Brazil became the division’s third largest market with growth up 28%. What is amazing is that the division’s brand portfolio perfectly matches the expectations of Brazilian women not only with Vichy and La Roche Posay, but also with the new brands; SkinCeuticals, Roger&Gallet, and Innéov.

2011 was also a year of strong growth in the USA, in particular thanks to our increased penetration of American drugstores. Today with La Roche Posay, we have a presence in nearly 6,000 drugstores either via the pharmacy counter or in the dedicated areas where we can fully express what makes us unique through the presence of derma advisors who’ve been trained in our products. Finally, I should also mention the strong growth achieved by the division in the Africa and Middle East region.

Here’s the second major advance, the increasing importance of growth driving brands in our portfolio alongside the market leader, Vichy. First of all, La Roche Posay. La Roche Posay confirmed its tremendous success with yet another year of double-digit growth, which was boosted in particular by the success of recent launches; Tolériane Ultra, Anthelios child suncare, and the Cicaplast B5 lotion. This success reflects the relevance of its positioning as a dermatological brand with the business model based on paying visits to doctors and providing guidance to them. Riding on the back of the rise of medi spas and the development of aesthetic medicine, SkinCeuticals established itself as a champion of medical and professional skincare with growth of over 40% outside of the United States. Roger&Gallet successfully created a new category, wellness through perfume.

Outside of France, the brand who won over 2,000 new pharmacies particularly in Europe and Brazil, Innéov, has met with remarkable success in Latin America. These results clearly show how interested consumers are in these brands and their global rollout has only just begun.

2011, and that’s the third and major – final major advance. 2011 was the year when we broke into health distribution channels, which complements traditional pharmacies. Let me give you some examples. Consumer health stores enable us to win over a different type of consumers which accounts for around 13% of our sales in Western Europe drugstores. We’ve seen this progress in the US and also in Asia where they account for more than 20% of our sales in the zone and doctors themselves particularly for SkinCeuticals, which are now sold by more than 7,000 plastic surgeons, dermatologists, or spas throughout the world.

These three major strategic lines of development are our accelerated growth outside of Europe, the increasing importance of our younger growth brands, and the winning over of additional distribution channels will all generate tomorrow’s growth starting in 2012. As you can see, the division is full of ambition for 2012 with an ongoing innovation program across all our brands and also the revamping of the Vichy brand.

2012 will be a watershed year for the transformation of the Vichy brand. New packaging, new communication, great products as you can see on the screen, and all of those factors are at the service of the new Vichy brand. The launch of IDEALIA, the first product that creates ideal skin, even for sensitive skin that’s highly symbolic of this rebirth.

There are other major innovations. La Roche Posay will continue its mission to change the lives of people with sensitive skin with the launch of Rosaliac, which addresses redness, a problem that concerns no less than one woman in 10 across the world.

Innéov is starting the year with Innéov Anti-Age Cellulaire which has already resulted in two patents and six scientific publications. It is the very first hesperidin food complement – food supplement that ensures cell protection and slows down both body aging and skin aging.

Finally, SkinCeuticals and Roger&Gallet, which will celebrate its 150th anniversary will both in their respective turfs be gaining ground by intensifying their international presence. We are therefore starting 2012 with a lot of optimism and confidence in our ability to grow our business on every continent. Thank you.

Jean-Paul Agon

Thank you, Brigitte. As you can see, these four presentations clearly illustrate the difference in our businesses and their fit. The point in common at least for these four businesses as you can see is that our four divisions in 2011 strengthened their global positioning. And you will have understood that they’re all starting the year very determined with a clear growth objective. So, this year, we’ve also delighted to supplement these presentations that will be shorter, including my own two very interesting presentations. The first will be given by Mr. Marc Menesguen, who’s in charge of Strategic Marketing at L’Oréal, at how the digital revolution is proceeding at L’Oréal and what its impact is on the organization.

Marc Menesguen

(Interpreted) Good morning to you all. There is considerable affinity between our world of beauty and the digital field. This can be illustrated by few points. Beauty is one of the most discussed topics on social networks as shown by a survey of 25,000 women conducted by the Forrester Institute in the US, which has it topping the list.

In addition, still in the US, one in three skincare purchases are preceded by a search for information on the Web. Lastly, over 400 million beauty related searches are performed each month on Google. This affinity is a great opportunity for our brands to develop a new closer relationship with consumers the world over in three areas; the media, e-commerce, and services.

First of all the media, in 2011, we strongly increased our investment in digital media by 45% and they accounted for 8% of our totaled gross media spending digital media leverage, our brands offering a vast choice of communication methods boosting the performance of our ad spending. A telling example in Taiwan, our Garnier team devised a 100% digital campaign to support the launch of the skin lightening cream, Light.

Campaign was based on the testimonial of star beauty blogger, Niuer, gradually relayed by a whole group of Taiwanese bloggers in a display campaign that went viral and propelled Light to number one in the market in 2010. A year later in 2011, Light is still the market leader with a budget that is still 100% digital, accounting 25% of an average offline budget.

Another example is the launch of Trésor Midnight Rose. Digital allowed us to create additional emotion and imagination while not being subject to the limitation as a 30-second TV spot or double page magazine spread. For this fragrance targeting the young, the Lancôme team chose a multichannel campaign with strong aligned presence via displays and mobile applications generating over 50 million targeted contacts. Bringing on board Emma Watson, a real digital icon with over 4 million fans on Facebook further increased the choice of this campaign. Trésor Midnight Rose has been a resounding success.

Finally, digital technology is an opportunity for new brands to make a name for themselves. Dermablend’s Zombie Boy campaign received 10 million views in the US. This huge viral of success is due to the creative choice of Zombie Boy who’s tattooed from head to toe returns to initial campaign thanks to the Dermablend foundation. This YouTube campaign was a big hit among American Web users with an immediate and significant impact on sales of Dermablend.

Secondary of the digital revolution is the rise of e-commerce. For the Group as a whole, e-commerce grew over 35% in 2011. Online selling is a new distribution channel and an additional opportunity for growth. Two of the Group’s entities are paving the way, the Luxury Division and The Body Shop. The Luxury Division saw its online sales grow strongly in 2011, up 42%. Worth highlighting in particular the rapid rise of Kiehl’s which re-launched its e-commerce site in 2011.

Kiehl’s is a perfect example of a multichannel strategy offering a totally consistent customer experience in terms of atmosphere and service both in its e-commerce site and its stores and counters. The aim being to improve customer satisfaction wherever they wish to purchase the brands’ products. E-commerce accounts 9% of total sales of Kiehl’s and grew by a further 54% in 2011.

The rise also of online purchasing by mobile phones or m-commerce should be noted. Lancôme Japon is a brand paving the way, mobile sales accounting for over 20% of the brand’s online total.

Another great breakthrough, Body Shop saw its sales grow by 51% online boosting the brand’s growth thanks to a strong fit between the offline and online experience both on the website and the brand’s Facebook pages, which speeded up recruitment of new customers.

Third and final facet of digital is the new service opportunities it brings. Advice and service are two key components in the beauty industry. Digital offers our brands a unique opportunity to stay in touch with their customers throughout the purchasing process and when they are using our products. Firstly, our brand sites. We’ve seen that a growing number of consumers seek information on the Web before buying their beauty products. In Germany, L’Oréal Paris brand produces explanatory videos almost in real-time in response to the queries most frequently submitted by the country’s search engines. La Roche Posay in facial care is endeavoring to strengthen closer ties with women with sensitive skin like here in China with highly personalized advice and the involvement of dermatologists.

Lastly Professional Products division, Salon World is a platform set up in France in 2011 to unite the country’s hairdressing community, offer them a personalized service in the artistic, technical, and management aspects. Great success. 29,000 hairdressers have joined up in France and it will be rolled out internationally this year.

To conclude, the huge popularity of social networks opens up new opportunities to interact between our brands and customers. Overall, our brands have 20 million Facebook fans. In Brazil, L’Oréal Paris assembled a community of 2.5 million fans, very interested in all the latest news. These loyal followers have taken the L’Oréal Paris brand to a new level of dynamism in Brazil.

In China, the Lancôme team has developed a social platform dubbed Rose Beauty by Lancôme, the number one online community for women in China with over 900,000 members exchanging beauty tips and come for advice from beauty experts. This platform is a great promotional tool for Lancôme that strengthens further its position as the leading luxury beauty brand in China. It’s also a valuable source of real-time information for us. In all emerging markets, listening to our consumers while on social networks allows us to better understand their expectations and drive our development effort in these new frontiers.

To conclude as you can see, L’Oréal is actively involved in the digital revolution worldwide. To further professionalize our digital rollout, we’ve put in place a set of KPIs to measure the return on investments and also to identify best practices and spread them throughout the Group. We will continue this digital transformation in 2012 to strengthen our model as number one in beauty and we know that the next billion consumers to be won over will be young and digital native. Thank you.

Jean-Paul Agon

(Interpreted) Thank you, Marc, it’s of prime importance. Digital changes everything, particularly in the field of beauty. The digital revolution as Marc’s shown changes the relationship with the consumer interaction both in style and substance and it’s key for L’Oréal to be a leader in this revolution. We are the third advertiser worldwide, number one in beauty, and it’s key for us to be at the cutting edge of this digital transformation and that is what we are doing.

Another area we’re at the cutting end, Jochen, is Asia. So this year, I’ve asked Jochen Zaumseil, who’s been with the company for a considerable time and has headed up divisions in just about every continent, who heads up the Asia-Pacific area to present the highlights, the major breakthroughs of L’Oréal in the Asia-Pacific region which is a key strategic focus area for us.

Jochen Zaumseil

(Interpreted) Good morning, everyone. Five key points define the way our businesses are growing in the 14 countries of the Asia-Pacific region. Well, first of all, our healthy performance in Asia. Over the past five years, L’Oréal has grown far more quickly than the market in Asia-Pacific region. L’Oréal sales in Asia-Pacific amounted to EUR3.6 billion representing Jean-Régis Carof: a growth rate of 13%, which is around three times the market trend. In 2010, the Group’s market share excluding Japan was 10.7% making it the top ranking cosmetics group.

Good results in 2011 have strengthened these positions. Again excluding Japan, the Group’s growth rate was up 15.5% enabling it to shore up its leading position with an estimated market share of 11.2%. In China, performance was once again extremely dynamic. With sales of EUR1.2 billion, an 18% growth that is 1.5 times the market trend, L’Oréal consolidated its number two position in this strategic country and is continuing to make inroads. Our goal, of course, is to someday become number one in this market.

Growth in Taiwan and Hong Kong was also very strong and well above the market trends. Beyond the Greater China area, L’Oréal is winning market share across all Asian countries. In Japan, despite the slightly negative trend in a market which contracted following the natural disaster in March 2011 and in South Korea where our growth is strong. There was also a strong growth in the Asian countries: Indonesia, Vietnam, the Philippines, and in Thailand where despite the flooding in Q4, growth exceeded 10%, well above the market trend.

Finally, in India, we are further increasing our market share. These results reflect the Group’s locally attuned strategy in Asia where thorough knowledge of the consumer is the basis for all of our initiatives. We carry out more than 100,000 consumer tests every year. Home visits are conducted on a regular basis and we have rolled out evaluation centers in all of those countries.

Two research and innovation centers are operational in Japan and in China and a third center is scheduled for opening in 2012 in India, which is another strategic market. These measures have enabled us to develop our global brands while attuning them as closely as possible to the specific characteristics and needs and consumption habits and beauty routines and aspirations of all of our Asian consumers.

The very strong increase in wealth levels is one of the most significant changes affecting these consumers. Over the next 10 years, it is estimated that there will be an additional 150 million Asian consumers, particularly in China while 750 million consumers are expected to attain middle class status with an income in excess of $7,500 a year. With these 900 million potential new consumers, the traditional wealth pyramid is being transformed, particularly in Asia, transformed into a diamond shape and this is the source of the Asia-Pacific region’s contribution to conquering 1 billion new consumers Groupwide.

Thanks to its wide ranging brand portfolio, L’Oréal is ideally placed to meet the beauty needs of these new consumers. As a result, our growth is very well balanced between our two main divisions. On the one hand; our Luxury brands such as Lancôme, Kiehl’s, Shu Uemura, our Japanese make-up artists’ brands, YSL, Biotherm, and Yue Sai, the pioneering luxury brand in China; and on the other hand, our aspirational consumer brands such as L’Oréal Paris, Maybelline, and Garnier. Our other divisions, Professional Products and Active Cosmetics, are market leaders in their channels and they must first further develop their respective markets.

The fourth highlight. Our growth strategy has relied on very clear choices about categories. Since the zone was created, we have concentrated our research and innovation efforts as well as our growth drivers on the number one category in the Asia-Pacific region, both in terms of weight and strength that is skincare which is also notable for its high level of consumer loyalty. In the growth markets, including China, the Group is number one in this segment which contributes more than 60% of our total growth in Asia. In 2011, the growth rate was once again three times the market trends. Our second priority is make-up. We’re also the market leader in that segment. And in haircare, we’re currently the challenger.

Our possibilities for expansion over the coming years are extremely substantial in haircare and make-up and also in skincare despite its very strong current position. Thanks to our brand portfolio and our highly targeted innovations at the right price, we are able to position ourselves at two strategic levels of the new consumption pyramid with prices ranging from EUR0.25 for Garnier sachets in India to EUR200 or rather EUR400 for Armani in China.

Half of the 900 million new consumers are of course men. In this extremely buoyant market, L’Oréal is the undisputed leader in facial skincare in 2010. Its market share came to 21.1%, in particular thanks to our brands Biotherm Homme, Kiehl’s, L’Oréal Men Expert, and Garnier Men.

Fifth highlight, we are continuing to expand our penetration of points of sale in order to provide consumers with access to all our brands and product categories. We have stepped up our breakthrough in traditional retailing in emerging countries. We’ve increased the number of our sales outlets in the Asian countries and in India to more than 1.2 million in 2011. This strong gain in market penetration has been achieved by the use of the right format, sachets in particular, which are fully in line with our quality requirements. In addition, we continue to constitute a benchmark in modern retailing. In addition to vertical expansion, there is also geographic expansion particularly in China.

In China, the population is getting richer and our leading position in Luxury has encouraged us to reinforce a pioneering status with Lancôme. Lancôme has opened counters in 15 new cities, making a total of 56 in China. Here you can see a counter in Yichang. In 2011, the sales for this counter exceeded those of the counter of many department stores in Paris.

In Consumer Products, our positions are advancing in mature cities, i.e. Tier 1 and 2 cities with a growth rate that is outperforming the market. Furthermore, in the emerging cities that is the Tier 3, 4, and 5 cities, our growth rate accelerated in 2011. L’Oréal therefore still has a large number of strong and targeted growth opportunities in the Asia-Pacific region and this is why after once again achieving a year of strong growth and market share gains in 2011, we are entering 2012 with a great deal of confidence.

In several Asian languages, including Chinese, the terms for risks and opportunities are very closely linked. Therefore, I am certain that 2012 will mark another step forward in L’Oréal’s efforts to become the number one player in beauty in the Asia-Pacific region.

Thank you for your attention.

Jean-Paul Agon

Thank you, Jochen. It’ll be more of an opportunity than a risk for us. Well, we all know in this room that Asia is the continent of the 21st century, but what’s happening there for us – for our business is simply quite extraordinary. Let me just tell you a brief story here. Christian doesn’t really agree that I should tell you this. But in January because of the Chinese New Year, for the first time, China alone generated more sales than France. France is our second ranked historic market. In January, the Chinese affiliate exceeded France and Asia-Pacific as a total exceeded North America.

Of course, it’s only January, the Chinese New Year, et cetera, we can’t extrapolate that. That’s Christian’s fear that I will extrapolate that for the full year. But nevertheless, it is a sign, a symbol that is quite revealing. It’s simply quite extraordinary. And I find that these two revolutions, the digital revolution and the Asian revolution, really personify the transformation of the market and the organization.

It’s my turn now. I know that. So, I’ll be shorter because much has already been said. I just like to share with you what I consider to be the highlights of the past year and our prospects for the coming year.

So in summary, I’d say that 2011 was a year of solid growth, market strength first of all with a trend that remained very favorable with growth that we estimate to be at plus 4.4%. After the rebound in 2010, this growth reflects a structural upturn of the cosmetics market. And 2011 is exactly in line with the historic growth trend of our market over the last 15 years.

On the other hand, in 2011, there have been extremely sharp contrasts in market trends. As you know firstly in geographic areas like last year, Western Europe remained slightly positive at 0.7%, still ahead but by the Southern Europe countries. North America accelerated like the American economy as a whole up 4.3%. No surprise that Japan was negative, down 3.6% even though there’s been something of a recovery in the past few months. And once again, it’s a very strong growth of the new markets, up 9% driving the global market.

Asia-Pacific as we’ve just seen, excluding Japan, accelerated once again, up 10.6%. Latin America slowing slightly, but still a high growth, at plus 10.9%. Africa, Middle East, 6.3% growth with a lot of disparities in the area, less dynamic. Eastern Europe with a growth rate of plus 4%. The contrasts were also very marked by distribution channels.

The global market was and remains clearly driven by Luxury that advanced by 7.7% in 2011. It’s clearly the rising affluence of the middle classes in emerging countries and the strong demand in the US and in travel retail that make this the most dynamic channel. Luxury is thus returning to the weight it represented before the crisis in market terms and we expect this growth momentum to be maintained.

The mass market is up by 3.8%, confirming its great regularity in spite of the sluggishness in certain European countries. Professional hairdressing, plus 0.8%, has not yet recovered its momentum because of the weight of emerging countries, as An said, not sufficient in the channel to offset the slightly negative market trend in North America and Western Europe.

Finally, the dermocosmetics global market posted another year of moderate growth, up 2.5%, driven by Latin America and Asia. And lastly, the direct sales channel posted a modest growth rate, up 4%. So overall in spite of a challenging economic environment in developed countries, the cosmetics market has delivered very solid growth.

At the same time, the growth of our sales as well as the trend of our positions by division and by region have also been very solid with cosmetic sales growth of plus 5% like-for-like and plus 5.7% excluding ForEx. The Group once again reinforced its position as the world’s number one in beauty. Four divisions achieved growth strengthening their positions in our respective channels. I won’t return to them because the highlights have already been presented by the division heads. I’ll just add a comment for two segments not represented today.

Firstly, The Body Shop brand has reached a turning point with the growth rate accelerating to 4.2% over the year and is reaping the benefits of its strategic changes and even stronger positioning on activist innovations, the acceleration of sales in new markets, and the rapid rollout in new distribution channels with a bright future such as e-commerce and travel retail.

For its part, Galderma recorded good growth, up 8.4%. The success of its major products enabling it to offset the negative impact of generic products. The acquisition of Q-Med, very strategic. Its flagship product, Restylane, the launch of Emervel, and success of Azzalure made Galderma one of the world’s leaders in the aesthetic and corrective dermatology market. The laboratory is now ideally placed in its three main strategic fields; prescription drugs, OTC products, and aesthetic and corrective medical solutions.

In geographic terms, our three major regions all achieved positive growth. Once again, L’Oréal has demonstrated its ability to significantly strengthen its position in new markets, but also to win over new consumers in major developed countries.

In Western Europe, the Group’s trend was slow but near in line with the market. But above all, it should be stressed that we’re making significant inroads in our two top markets, France and Germany. We also note at the end of the year an acceleration in sell-through of the Luxury consumer products and Active Cosmetics divisions.

In North America, we once again put in a fine year strengthening our position thanks to significant market share gains in the mass market segment. L’Oréal, as you’ve seen, has made some strong breakthroughs in new markets.

The Asia-Pacific zone, as Jochen said, has been the growth engine. The Group’s growth was two times faster than the market excluding Japan, has now become market leader. And being out in front in a region expected to contribute half of all worldwide market growth over the next few years is of course a major asset for L’Oréal.

In Latin America, the Group has also strengthened its positions, particularly in Mexico, Argentina and the countries of Central America.

In Africa, Middle East, we grew slightly faster than the market driven by the countries of the Middle East, the Gulf, and Turkey, and by two recently created subsidiaries, Egypt and Pakistan, which are developing well. On the other hand, we clearly underperformed in Eastern Europe because of insufficient initiatives in Consumer Products and customer difficulties in the other divisions. We have every intention in 2012 of returning to positive growth in this region.

Overall, excluding Eastern Europe, 2011 had seen a solid strengthening of our positions across all regions and particular regions such as Asia that offer the most substantial growth prospects for our brand. And so in a market which reflected highly contrasting trends, L’Oréal once again took advantage of the diversity and complementarity of its presence in all channels and geographies to offset the disparities both through its expansion and capitalize on the sectors that are accelerating.

We also achieved a very solid year in terms of operating profit, results, and improving our financial performance. 2011 is another year of virtuous dynamics for our operating profit. On the one hand, we succeeded in spite of an adverse environment to boost significantly gross profit reaching a record level. The gains achieved in purchasing, but also in industrial efficiency offset in large part most of the upward spiral in raw materials cost. We’ve also kept a tight lid on ,expenses which have declined as a percentage of sales.

On the other hand, the Group has continued to prepare for the future in line with the strategy announced. Advertising and promotion expenses have been maintained at a high level and R&D expenses have grown faster than sales.

Overall, operating profit has improved substantially, up 50 basis points. And what we call available strategic resources, that is the sum of operating profit plus R&D expenses plus A&P expenses is up by 60 basis points over the full year. The operating profit has also been strengthened by the greater convergence in the profitability across divisions thanks to the very significant increase in the profitability of L’Oréal Luxury. Similarly in terms of regions, the strong growth in the operating profit at the North America area and that of the new markets contributing to greater uniformity in the profitability of our geographic areas.

The markets – the growth of the new markets’ profitability is key and strategic. These markets that are generating most growth are now delivering increasingly profitable growth. Finally, in financial terms, it’s clear that our financial situation is extremely solid with a balance sheet that could not be more robust, a substantially positive cash situation which is an important asset in the current environment. The solidity and quality of these results, which bode well for the future, have led the L’Oréal board of directors to propose a further substantial increase in the dividend, plus 11% at EUR2.

And now 2012. Well, as for 2012 and you will have understood this through the presentations that you’ve heard, we are approaching this year with very considerable confidence. Firstly, because we believe that in spite of the economic uncertainties, the cosmetics market will continue to be buoyant. At present, we’ve not observed any sign of a slowdown.

We currently estimate that global market growth in 2012 should be of the order of 4% with probably the same contrast as in 2011. And in addition to this solid growth, the other very good piece of news which is crucially important is that contrary to what many believed, the cosmetics consumer has not changed their behavior since the crisis and value remains intact in the industry. There’s been no downgrading, no reduction, and no one-size-fits-all in our market.

On the contrary, there’s more than ever genuine aspiration for quality, a premium for innovation technology, new ideas as shown by the major successes of Visionnaire by Lancôme, Elsève Arginine shampoo from L’Oréal, and BB Cream by Garnier. It’s crucially important more than ever, the cosmetics market is a supply led market driven by innovation where consumers are always eager for the ultimate in quality performance and perceived results. More than ever before, it is new, different, and better products that delivers success and growth thereby demonstrating more than ever the relevance of the L’Oréal model based on excellence in research and creativity in marketing.

Our confidence in 2012 is also based on our key asset. We have research and marketing teams which together can deliver these major innovations. As far as research is concerned, Laurent Attal and his team have undertaken a great piece of modernization and transformation work since 2010. This in-depth reorganization has strengthened L’Oréal’s ability to create major strategic assets and genuine technological breakthroughs capable of changing consumer behavior and opening up new areas of growth such as LR 2412. The Visionnaire research is also continuing to increase its global reach with the creation of new laboratories in Singapore, Brazil, and India.

Meanwhile, we are reorganizing and strengthening our marketing organization to be able to capture all the needs and requirements of our consumers throughout the world as they emerge. We’ve thus created for our Consumer and Professional Product brands marketing hubs in major strategic markets such as the US, Japan, Brazil, China, and India. The aim being to create major innovations there that will bring success for our brands in these markets, but in some cases, they will then be rolled out in the rest of the world using the principle of reverse innovation.

For 2012, we also have every confidence in our ability to develop our major brands. Several of them as you can see are undergoing major renewal. The most important are as follows. L’Oréal Paris is experiencing renewed dynamism in all its categories. Lancôme has recorded its best growth figure for 15 years, profoundly transformed. Maybelline is extremely healthy and can boast another year of double-digit growth. We are working on the transformation of the Garnier and Vichy brands and we already have extremely encouraging feedback about these two brands that have recently scored major product successes. And The Body Shop’s recovery has become – has begun.

Our growth relay brands are offering great opportunities for the future. The development of Yves Saint Laurent will of course be accelerate by the launch of its skincare range which should ensure that the gates to the American and Asian markets are opened wider to the brand. Kiehl’s is the growth champion in the cosmetics industry continuing its global rollout. La Roche Posay ideally positioned in the sensitive skin niche has great potential thanks to the support of dermatologists worldwide. Kérastase, the only luxury hair care brand, should be boosted by the worldwide luxury boom.

And Matrix, our affordable professional brand, still has hundreds of thousands of hair salons to conquer. Finally, we’re going to rapidly extend the recently acquired brands such as Essie and Clarisonic, supplementing our expertise, moving into high-growth areas, can and will become the Kiehl’s or La Roche Posay of the future. Overall, we are convinced that we have the most attractive, diversified, and comprehensive catalogue of brands in the industry to meet all consumers’ beauty needs and to fulfill their desires.

The fourth factor underpinning our confidence for 2012 is our ability to accelerate the globalization of our brands and fully leverage the growth opportunities in new markets. The weight of new markets has almost doubled in the 11 years between 2000 and 2011 and will continue to grow very rapidly. The new markets are said to become, for the first time in the history of the Group, the number one zone in sales for the company for the first time ever.

All our subsidiaries will accelerate the increase in their market share and sales growth and have the necessary resources to achieve that. It’s true of the major countries such as China, India, Brazil, Mexico, and India; but others we’re well-established such as Indonesia, Thailand, South Korea, Malaysia, South Africa, Argentina, Chile, and Colombia, and others. But it also holds true for the new subsidiaries that we’ve created over the past few years in key countries for the future; Vietnam, Pakistan, Saudi Arabia, Egypt, Nigeria, and Kenya.

All the company’s driving forces, research, manufacturing, marketing, sales teams, human relations teams, and administrative teams are focused around our unique strategy of making beauty universal to win over 1 billion new consumers, many of whom will come from these new markets. But the new consumers will also come from our penetration gains in major mature markets such as Germany and the United States where half of the population have not yet become consumers of our brands.

Finally, we’re approaching 2012 with the confidence that we’d be able to continue to make major breakthroughs in the manufacturing, supply chain, and organizational fields. Several years ago, we began making profound changes in our manufacturing and supply chain organization and these changes are paying off.

Our purchasing efficient programs are delivering very good results and we stepped them up with initiatives such as the systematic introduction of wall to wall which will lead our supplies in 2012 to manufacture 1.5 billion bottles in our production sites. We are continuing to perform extremely well in terms of industrial productivity that is up by 6% in 2011. We intend to continue efficiency savings thanks to streamlining our plants and rationalizing our catalog. And in terms of supply chain, all the efforts undertaken means that we’ve reached a historic best ever service ratio in 2011.

We’re now addressing supply chain costs with the same determination and the same systematic approach as adopted for purchasing and industrial cost. Overall, thanks to all these efforts and our determination to increase the value of our products per unit, we aim to continue improving our gross profit.

At the same time, as you know, our cost control and permanent restructuring efforts mean that we’re also confident in our ability to continue to reduce our selling, general, and administrative expenses as a percentage of sales. So bolstered by this confidence in our fundamentals, we are approaching 2012 with a very aggressive approach. Firstly, aggressive in terms of innovation as you’ll have seen in the presentation of the divisions, the lineup of launches for 2012 is a very rich one in all brands and all channels.

Secondly, we plan to aggressively capture market share. Our goal is to win market share in every division worldwide, but also in every region of the world in Group terms. Thirdly, we wish to aggressively transform our marketing models and make our investments in growth drivers more efficient and more productive thanks to digital means as well as all new measures for measuring advertising efficiency and also continuing to aggressively transform the company to make it leaner, more efficient, and more productive.

To sum up, it is our firm ambition to make 2012, despite the economic uncertainty, a year of opportunity, a year in which we intend to outperform a market which is itself buoyant and thus achieve once again growth in our sales and our results and keep improving our profitability.

2012 will be the first year in a new phase of L’Oréal’s development as the new markets now become the Group’s number one area in sales term while their weight will just keep growing. A new phase, devoting to delivering on our corporate mission of providing beauty for everyone is, implementing our strategy that is locally attuned and continuing to advance to our target of winning over 1 billion new consumers a new phase of solid sustainable and profitable growth, which will be a powerful creator of value for our company. Thank you.

Jean-Régis Carof

In.

Thank you very much and now a well-deserved coffee break. We’re right on schedule. Let us reconvene in 15 minutes. Thank you very much.

(Music)

Jean-Paul Agon

(Interpreted) Let’s get started. I’d like to say a few words about yesterday’s announcement regarding Ms. Bettencourt’s end of term as a Director. In particular, a press release was issued and I made a statement, which is being reflected in the press release and once again, I would like to tell you that everybody at L’Oréal are very grateful to Ms. Bettencourt for her constant support ever since her father died in 1957 and we at L’Oréal all believe that Ms. Liliane was the cornerstone of this company.

And thanks to her commitment, thanks to her board vision of the company, thanks to her constant support to the management team; the company has expanded its global reach. So on behalf every member of the L’Oréal Group, I would like to extend our warmest thanks to Ms. Bettencourt. And again, this transition confirms the Bettencourt mayor’s family’s commitment to the L’Oréal Group, which is excellent.

Okay, we can talk about that later. I have a favor to ask you. If possible, I would prefer if we were going to have the Q&A session in two different parts. Let’s first hear from the analysts, we can discuss the Group’s performance and prospects. And during the second part of our Q&A session, we will hear questions from journalists to try to maybe broaden our horizons and maybe expand the discussion to other subjects.

And of course, this hasn’t escaped you that today is Valentine’s Day so we have something special in store for you. For all of the ladies, of course, we have roses for Valentine’s Day and this was my daughter’s idea. My daughter is 18 years old and she suggested having roses ready for the gentlemen as well because the gentlemen should not forget that it’s Valentine’s Day today. So when you get home tonight, gentlemen, at least you have a rose and that’ll secure a very peaceful evening.

Let’s get started with the questions and answers. Eva? Eva was faster than Celine for once.

Question-and-Answer Session

Unidentified Analyst

I have three quick questions. First of all, about Western Europe, this question is actually twofold. Your performance is pretty much in line with the market trend. Can we have an overview of each division? Which divisions outperformed or underperformed? And also the slowdown in Q4, did you witness that in the market trends as well or do you have a weighting system (inaudible)?

And a same question as last year on a slightly different subject. How do you explain Garnier’s underperformance? Does it have to do with its image or its products or is it an advertising problem? And also what about L’Oréal Paris?

Third question, the weight of skincare at Group level, could you tell us more about that?

Jean-Paul Agon

I won my bet. I knew the first question was going to be about Western Europe. We’re going to hand over to each division head. That’s an opportunity for each of them to explain exactly where they stand. But what I would like to say is that for those of you who don’t want to be caught on the back foot in the next few quarters, don’t extrapolate the last quarter on to the new ones.

Global growth performance can be analyzed on a quarterly basis – on a half-year basis. Sell-through you will see for the various divisions, sell-through has improved at the end of the year so Q4 is slightly negative in Western Europe. I don’t think this is not symptomatic of anything and you cannot extrapolate that performance to future quarters or even half years. But each division head can now explain why.

Jean-Jacques Lebel

Jean Lebel. Well, as regards Consumer Brands billings, Q4 is on line with the previous ones as regards sell-through. Well, it’s in fact the reverse because in Q4 there was a real acceleration in Western European markets versus all previous periods. So, that’s excellent news and which bodes well for 2012 and seems to be continuing into the start of 2012. And as regards our market share, it’s also a strong rebound quarter across categories and in many countries. So for us, the end of the year is a good end of year and confirms our market share gains in countries where we’ve gained market share across the year, France and Germany, a rebound in Italy that is performing much better at the end of the year. So for us, good signs. Nicolas?

Nicolas Hieronimus

(Interpreted) Yes. So on Luxury, for the full year was slightly below market in Western Europe, but I mean there’s nothing inevitable by that. We’re a market leader there. Was very exciting and what we know for this year is that the final quarter with quality initiatives that I mentioned in my talk, we significantly outperformed the market, gained strong market share in France, Germany, in most Western Europe countries, Russia too.

So today, we’re really on the offensive and with good products we’re gaining market share in Western Europe. So, you have accelerating sell-through. In fact, there’s a paradox. Western Europe Q4, the number is slightly negative, whereas sell-throughs are above the three previous quarters, and in particular, December, it’s an important month, counts double for Luxury sell-throughs across Western Europe, very positive, which demonstrates consumer appetite for our projects – products. Brigitte?

Brigitte Liberman

(Interpreted) Same conclusion. We’re underperforming the market slightly, but over the last quarter sell-through has accelerated so we are gaining market share in most Western European countries, in particular, due to Vichy LiftActiv (inaudible) and other new launches. So very good year, which means that we’re pretty optimistic with regard to 2012. What about you?

Jean-Paul Agon

Well, thank you. As far as the last quarter is concerned, our performance was pretty good. Globally we have gained market share in Western Europe. I have given you a number of examples of countries which are outperforming the market. Germany, in particular, superb performance, superb growth compared to the competition in Germany. So, we’re gaining market share in Germany. A number of initiatives have been taken. Launches in particular in Europe, which indicate that we are off to a very good start for the next few months. So, new launches, new product categories and new professions.

Jean-Régis Carof

Well, that sometimes the mystery is that the sales periods don’t always fit in with the product sell-through period is due to the launch time, the phasing of initiatives, et cetera. So it’s true that it’s rather difficult to understand that at the same time we have a negative number, in the same time the four divisions, they spontaneously, on the contrary, they’re posting good news. But that’s the reality of the situation. And other important piece of information I can say that we’re very determined not to let go on Western Europe.

I mean, of course, we talked to you about China. We talked to you about all these new markets. But it’s patently obvious the Western Europe is our domestic market. It’s the market where we have the strongest market share and we resolutely determined across the four divisions to not only consolidated our market share, but even bolster that market share. And we’ll do what it takes to achieve that in 2012. Well, of course, markets are not very positive, but we plan at the very least to achieve market growth.

Well, Garnier, I’m not at all happy with the Garnier year. Sales growth fairly positive. Disappointing year, but a contrasted year. US, good Garnier year; very good Garnier year in the US, we’re gaining market share across category, a very good Garnier year in Latin America and a very acceptable Garnier year in Asia. So, it’s really in Europe where things are more challenging for Garnier and that’s due simply to the weakness of our launches. I mean I have a slide I’d like to show the 2012 plan.

I’m very confident of the plan for 2012. I think it’s slide 291, here it is, which shows the start of the year launches. The new colourant hair and there’s also Color Sensation, which is a new technology launching at certain Western European countries, Eastern Europe, and also Brazil.

Haircare starting with a great relaunch 72 hours. In Skincare, there’s the Dark Spot Corrector, US, which is a real success that I mentioned earlier to be launched in Europe. BB Cream that is a big hit across European countries to be launched in Eastern Europe and in the US.

And then there’s the new, very original product produced by our labs, which is a combination serum and cream in one, Ultra Lift, and that’s starting off very well. And also next to that you have the new deodorant, Clean Sensation. We have the film. We can show that if you like. So, the pipe of Garnier launch is very powerful, which allows, really, I believe, to achieve a very good 2012. You have seen the new ads that are far more update, younger, more aspirational Garnier. And I think that reflects the work on the brand. As I said, we’ve modernized Maybelline. We’re currently modernizing L’Oréal. We’re also modernizing Garnier making it more aspirational.

Jean-Paul Agon

Well, it’s true that we didn’t put in a good year on Garnier so we’ve learned the lessons of that. And we’ve changed what needed to be changed, the brand strategy, advertising a number of things. But we are fairly confident that our 2012 plan is a very aggressive plan. And with that very efficient because these are real new, different, better products as I explained. Perhaps, some point we saw with Garnier that we could perhaps do without – with the green wave of really different, new, better products. And as I explained earlier, the market did dictate innovations, darn new, different, better products. And this is what we’re doing once again on Garnier as all our other brands and I’m sure it will be successful.

Third question, Eva, on care. What was the question? (Inaudible). So weighting in sales. Good question. We never have that. So, what’s – do we have a slide on the sales weight around 330 pounds.

33%? Okay. So, it’s not the slide number. That’s 33%. It’s not slide 33. It’s 33%. Okay. That’s category – that’s the leading category of the group, extremely important. Very interesting for several reasons. You’ve seen that across all our divisions save Professional Products for the time being because they don’t do much skincare. But across divisions, skincare has been a priority. Now, there are several reasons for that. First reason is that it was a category in which we had a spectacular R&D lead. I mean I don’t have the slide in front of me, okay? There it is, 28%, Christian, not 33%. Okay, but it will be soon because it’s rising regularly.

So, it’s a considerable weight, very strategic for us. First off, it’s the area we consider that we have the technological lead in our labs versus our major peers. Secondly, it’s a category that really – to which the consumers that are most loyal. In other words, when you have a good skincare product, you remain loyal, faithful to your product. And third advantage that will please you, that’s where there’s the best gross margin and best profitability level. So, strengthening skincare is a strategic priority in the company, but it’s organized by division, by brand, but it’s a joint effort.

Celine, as promised. Hello, Celine?

Operator

Celine, ready when you are.

Celine Pannuti – JP Morgan

Hi. I’m from JP Morgan. I have three questions. Question number one, 2012 prospects, the market is growing by 4%, more a bullish trend than most of the competition, which were a little more reserved, why? Is it because your sell through is good in Q1 or do you have other reasons that you believe that the market will continue to be buoyant in 2012?

Second question profit. Good increase in profit in 2011, 50 basis points, can you expect that to continue over the next few years on a recurring basis? 40 basis points?

Question number three, dividends. Dividends are up 10%. But generally, the balance sheet is sound, EUR0.5 billion in net cash. Can we expect a more significant increase in return on investments? Maybe a share buyback is a possibility? Thank you.

Jean-Paul Agon

Christian can talk about cash flow. He loves it. Our estimation of the market is obviously independent of our estimation of sell-through. Obviously, we estimate our sell-through – we don’t base our estimate of sell-through on market trends or market optimism and over the past few years, we haven’t made too many mistakes in our estimates. Now, I don’t know what the competition said the estimates would be and it’s not really my problem, but when we see a 4% of growth in the market, we have good reasons. Obviously, this is February, it’s too early to tell what – how the year is going to unfold.

There may be unforeseen economic developments, but all other things being equal, I would say that the market is off to a good start now. It’s in positive territory and it has pretty much the same pace as in 2011, maybe a slightly slower pace but there might be good news. In Japan, for example, Japan will make a larger contribution to the market’s positive trend. There’s a mechanical effect. As you know, every year, the balance of power switches more to emerging markets, and so there’s a mechanical effect which has been estimated to be 0.2% in 2011. It’s going to materialize in 2012 as well. So, for all of those reasons – it’s not because we’re in a good mood. It’s not because we’re both optimistic and aggressive. It’s simply because there are – we think there’s good reason for the market to continue at a 4% growth rate.

I have seen, however, a number of very weird market estimates from the Luxury segment. Plus 7.7% last year for the Luxury segment, looks like this trend is here to stay. We’re not expecting a – an abrupt slowdown contrary to what some people think. So, we are pretty optimistic. Again, our ambition is to outperform the market.

As usual, we’re now going to give you a clear guidance in terms of growth, but I’m sure you can calculate it pretty easily. Secondly, in terms of increased profitability, we will do what it takes in order to grow our profitability again in 2012. I think that we did a pretty good job of that in 2011; profitability increased by 50 basis points, pretty good as you said, and we’re going to try and do at least as well in 2012. I can’t tell you much more than that at this point. We might do better. Christian, cash flow.

Christian Mulliez

You may have noticed that our balance sheet is even more robust than before. Again, our net cash flow is in positive territory. As you know, the board of directors has always been determined to have a sound balance sheet and also the balance sheet should enable us to make acquisitions. And thirdly, we have an active dividend policy – an active and sustained dividend policy; again double-digit growth in dividends. At this point, we’re not planning anything else. We’re not planning any exceptional dividends or any share buyback programs. But dividends are growing handsomely and there’s a lot to be said about that.

Another question?

Simon Marshall-Lockyer – Jefferies

Simon Marshall-Lockyer, Jefferies. Three questions; the first on Western Europe, rather challenging context in Western Europe; could you give us some color, outlook, prospects; how are you going to retrieve the situation possibly or is there very specific macro context affecting you in these regions? That’s the first question. Second question, on Professional Products, your number one competitors are marked deep in business, especially at the end of the year there were value adjustments, et cetera, then losing ground on brands such as Wella.

Is there a change of momentum that is specific, that is sustaining you in Professional Products? I mean is there a momentum that tends to sustain you at this stage? Third question is more of a technical question. Is there a specific issue, challenge in terms of working capital or other linked to e-commerce? In other words, will there be platform adjustments, change of SAP platforms that will be adapted towards e-commerce? All major companies discuss their e-commerce platforms that remain relatively small in terms of sales but all that changes fast. I mean is there a specific issue in terms of working capital?

Jean-Paul Agon

Okay. So, we’ll both divide up the questions. Since you have the four division heads here, we are going to turn to them for their view on Western Europe. You’ll see that the response varies considerably from one region to another what we’re going to do in 2011, 2012.

Jean-Jacques Lebel

Jean-Jacques. Well, I’m not at all happy with the Consumer Products division in Eastern Europe, negative here in the region. It was relatively positive. Previously, we had major markets share growth – gains. Even in 2011, we’re still growing market share and volume in unit terms. It’s nevertheless a sub-par performance linked to the weakness of our initiatives, the weakness of our launches. So, it’s a bit like Garnier. We worked on that. There’s lot of Garnier in Western Europe. There’s a correlation between the two weaknesses.

This is the slide. I can show you the initiatives start of year, slide 290 on Eastern Europe. You have two columns here. You have the international initiatives on the left-hand column, the delay that have been shifted by a few months will come in Eastern Europe. And these are initiatives – we know that they’re working well, such as Elsève, Arginine and BB Cream, to be launched in the coming weeks and months. So, that’s going to allow us initially to really get off to a good start in 2012.

Then there are local initiatives such as Fructis Men that we’re starting, which is beginning to work well; Garnier Color Sensation which is the specific colorant for those countries; skincare L’Oréal Nutri-Gold for those countries; and Garnier anti-age essentials – face creams. So, we have a slew of initiatives in 2012 that will allow us to go off on the offensive with these good ideas. And it’s true there’s a correlation, 2011 Garnier weakness and Eastern Europe weakness, because Eastern Europe was overweighted in Garnier. So once we solve Garnier, we also solve Eastern Europe.

Nicolas Hieronimus

Nicolas, Luxury. Well, on Luxury, the situation in Eastern Europe, we’ve put in a growth year in Eastern Europe, about 2%. But there are two situations. Central Europe markets were a historic leader amongst the leading manufacturers to have opened affiliates where we’re doing well. We’re a leader. New countries, high-growth countries; Russia, Ukraine in particular where we’re a challenger, and we’re growing significantly faster than market sell-through.

Russia, up 17% sell-through, a market that’s a 12%; same ballpark in Ukraine; so for sell-through very good Luxury momentum in Eastern Europe, above-market overall but one-off on Russia in 2011, we had billings that were slowed. One of our main customers that had strong store opening expansions had allocated his cash to those openings. We wanted to control our billing advances with that customer. It’s a temporary situation but we’re confident for 2012. So, this is more of a credit issue. We’re very strict in terms of credit control and there our sell-throughs are up.

Brigitte, the same problem with the Russian pharmacies?

Brigitte Liberman

Yes, we in Eastern Europe actually suffered. The dermocosmetic market in our division was in difficult territory. Major clearance phenomenon on the wholesale side, and also Vichy continues to capture a large part of the division sales at the beginning of the year, and then things were turned around throughout the year. Liftactiv Sérum and other products were launched. So 2012, the environment is still unfavorable but for the Vichy brand in particular, which plays a very important role in Eastern Europe, a lot of initiatives have been taken and the brand is being transformed. The La Roche Posay is still a small-time player, but yet we’re growing pretty much everywhere, excellent.

Now, Professional Products had a very good year in Eastern Europe, up 4%; and yes, absolutely, up 4% in a market that is deemed to be stable. The Russian market is growing and outperformance of three times that of the market. So, we are also very confident with regard to 2012. There’s a very good fit between our different brands which means that we can expand in buoyant markets as well as more difficult market segments. As you can see, there is no systemic or even structural reason that would explain a constant state of weakness in Eastern Europe.

On the contrary, in 2011 it was a case of counter-performance and we performed beautifully in Asia and Latin America and other countries. So, we are fully determined to deliver along the same lines in 2012 and we’ve taken the necessary measures. Before handing over, I would like to say that this is nothing new. We’ve done several meetings now. I’ve talked to you about one of our competitors in Professional Products and this competitor is having difficulties. This has been recognized. Officially, this was recognized recently. And obviously, this is an opportunity that we’re looking forward to seizing. Yes, it is indeed an opportunity.

I have no comments with regard to the strategic aspect of things. However, our strategy is compatible with all kinds of markets, buoyant ones, stagnant ones. So, we’re accelerating on the one hand and winning over new points of sale on the other. We have a very robust portfolio of brands. We’re constantly adding new categories, for example, nail care. I’ve talked to you about that. We’re also trying to attract young consumers to hair salons because that’s a buoyant segment. So, having a major competitor experiencing difficulties, this means there’s an opportunity that we should seize. And we have all of the brands to try to respond to that.

Jean-Paul Agon

We’re very confident for Professional Products. I mean there have been times in the history where we always tend to have a short memory, but there were times in history where the Professional Products market was very buoyant, positive, flat, slightly negative. I mean there are cycles in this business. So, it’s rather difficult to understand exactly why, but there are cycles. I mean we discussed this. It’s linked to fashion type of hairstyling, the atmosphere, et cetera, but we are born in Professional Products; unlike some of our competitors who tried to understand this business we’re born in it 102 years ago, it’s in our genes, and we’ll do what it takes to continue to expand and to drive for growth.

Christian Mulliez

Thirdly, e-commerce, Christian. Well, there are two aspects to your question, Simon. So e-commerce and the challenges, I mean there’s no working capital issue. There’s no working capital requirement issue because our inventories are not specific inventories and customers pay swiftly. But there are technical issues because we need to of course secure the payments.

And secondly, through the flurry of initiatives we have to overcome the technological risks that we’ve combined – our IT department had combined the sites on a single platform that’s outsourced. We outsource whenever necessary and we supply for very small funds for the business, EUR15,000 – EUR20,000 plug-and-shop site to trade in a secure and low-cost environment. Well, e-commerce is without a doubt a profitability opportunity because for most of our brands their e-commerce business is significantly more profitable than their normal business. So, more e-commerce expense even if it requires some organizational adjustment. It’s an opportunity and it’s profit accretive. Yes, Emmanuel?

Emmanuel Bruley des Varannes – Societe Generale

Hello. Emmanuel Bruley from Société Générale. I’ll limit myself to three or four questions.

Jean-Paul Agon

Well, that’s very kind of you.

Emmanuel Bruley des Varannes – Societe Generale

I’ll try. And they’re not too dastardly. First thing, what happened in the margin for Western Europe? What we see as a small disappointment for internal growth in Q4 only concerns one quarter and on the face of it only billings, not sell-through. But for the full year, the margin – I mean I don’t know how we can qualify this, has declined. I mean is that kind of a – sort of a trade-off, more A&P? Why? My second question concerns the trend going forward regarding the weight of A&P spend with digital revolution and the crossing of certain thresholds of certain countries of their sales thresholds, as of which the weight of A&P decreases.

So, I’m not asking for guidance for 2012 but it’s to know, is this going to gradually slide to the 30% mark or is it not going to decline? Third question, I’ll keep it brief, why L’Oréal Paris has not been able to double its growth rate in 2011? Sorry about that. And the last one and I’ll stop there, overall because we’d like to be flower on the wall and know how things happened, but in the Board – the board of directors, what does it change? Who exercises the voting rights? Is it on a – base is the number of participants? It’s just so that we can understand and avoid digressions.

Jean-Paul Agon

Okay, so let me start with the last question. It’s probably the simplest. The short answer is that it changes nothing because Mr. Jean-Victor Meyers has been co-opted to the board, Madam Bettencourt is no longer a board member. The family votes (inaudible) Tethys has the shares, so it changes absolutely nothing. There are the three board members of the Bettencourt family who represent all the family shares, which changes absolutely nothing to the agreement with Nestlé. So this transition, well, is, as it happens, an ideal transition because it changes nothing to the balance in the L’Oréal shareholdership and on the way the Board of Directors operate.

So, I think that really does answer your question. The voting rights, well, on the board it’s the three board members; so the three board members vote as one. They vote as one with Nestlé, so it changes absolutely nothing. So, there’s no change, and at the shareholders’ meeting ditto no change. It’s very reassuring. I mean this piece of news is very reassuring for the stability of the company, of its shareholdership and its future. Now, the Western European margin – would you like to say a word, Christian?

Christian Mulliez

Well, it’s declined slightly back to 2009 levels. I mean there was no kind of shedding up on the drivers that arithmetically may be the explanation, as Jean-Paul Agon said earlier. We will continue to invest in Western Europe because we believe that it’s a market that can expand, perhaps less so than North America or the New Markets. Well, fair again, I mean there’s nothing that’s inevitable here because I mean I know you have to re-crank the numbers, your models, et cetera. I don’t recommend that you factor into the model a regular and systematic decline of the profitability in Western Europe because it’s not at all our intent. In 2011, there was a degree of erosion of Western Europe’s profitability. But that’s not at all our intention for the coming years.

Well, it’s linked to a number of factors, perhaps firstly with sluggish growth. I mean it’s not easy to generate more profit. There was a promotional battle that affected things, the willingness to reinvest in order to re-invigorate our market share at the end of the year, which we’re currently succeeding in doing. So, I’d say there are number of decisions taken. I mean it’s not something that we were subjected to.

But it’s deliberate, not at all structural or permanent. We’re confident. We’re at least determined to ensure that our Western Europe margin is resilient. But a very good piece of news that you don’t mention because it’s a done deal is that the great, fantastic, improved profit margin of New Markets including North America. So, the New Markets which – is hugely important and strategic sign for the future because previously one of your favorite questions was, yes, okay, expansion of New Markets, worrisome since profit levels are lower. It’s going to dilute the group’s profitability, et cetera, whereas we’re demonstrating the opposite.

We’re demonstrating that markets where we’re investing, that we’re winning over that have strongest growth markets, so also becoming markets that are increasingly profitable. And I don’t rule out that one day that the profitability of New Markets could be the number one profitability of the group because it’s quite normal, as you say. There are critical mass effects such that sooner or later this New Markets area – we’ve always said paradoxically the competition was cheaper, will ultimately allow to make this New Markets area number one in terms of operating profitability. So, that’s very positive.

Jean-Paul Agon

So, you had lots of other questions. The key drivers for advertising, I mean there again that was deliberate. I mean it wasn’t by accident that we dropped to 30.9% as a percentage of A&P spend, exactly the same level at – as last year. We didn’t seem to be spot on the same level, but we consider it as you said, because generally we do what we say and say what we do. I mean it’s – there’s a level beyond which we don’t need to go and that’s what we did. And for the future we – there’s no reason to go beyond that threshold and then of course we do allow ourselves the possibility of coming down from that or not.

But well, you’re right, as what Marc explained this morning. What we didn’t present this time but may be some other time is everything we’re doing in terms of new, cutting-edge resources for measuring advertising performance where a major media investor to be able to assess and measure almost scientifically the ad efficiency over investment is very strategic. We made huge strides in this field the past couple of years and we’re rolling out worldwide econometric, very sharp, cutting-edge systems to measure the efficiency of our ad spend, both on the creations and optimizing media campaigns. So, digital and its progress lead us to believe that there’s no need to go beyond the 30.9 mark and maybe even one day maybe come down a little from that.

Emmanuel Bruley des Varannes – Societe Generale

L’Oréal Paris, Jean-Jacques. It’s true that you did say you were going to double that last time and I reminded you that during the year.

Jean-Jacques Lebel

Yes, absolutely right. Okay, but well, you can’t win them all. It was – that was a gamble. That was a promise, a pledge that I made here last time if you recall. But at the same time you asked me, am I going to have two double-digit growth years in succession from my billings? But I didn’t sign up to that. It’s all good to do one, deliver on one and you can’t always expect to. So, Maybelline is make-up. L’Oréal Paris put in a fine year for hair care and other categories. For make-up, we’re going to do far better in 2012. There’s the answer. And so, okay, we just need one point to have doubled because we’ve gone from 2.8% to 4.5%, isn’t bad after all; not that bad, maybe make-up, a case of Maybelline. So, you don’t pledge to double, no. I’m not signing up to anything. No more.

Jean-Paul Agon

Okay, very good. Next question, please.

Emmanuel Bruley des Varannes – Societe Generale

I work for Credit Mutuel-CIC. I have three short questions. One has to do with distributor brands. You get this question all the time. Carrefour has kicked off 650 different SKUs. They’re very aggressive and you showed that the distributor brands won their little market share in Europe in recent years except in Spain. A number of distributors there have a different strategy so aren’t you afraid of – in this kind of situation in some Western European countries in 2012 and beyond? Second question, Brazil, Q4 in particular, has there been any changes between Q4 and the other – and previous quarters in terms of organic growth? Some consumer groups, are they more prudent in Brazil?

And compared to the increase of 10% to 18% in 2011, what do you expect to happen in 2012 in those two markets? One question regarding e-commerce, you’ve talked about the 9% as the share of Body Shop in sales. What about the Luxury product division, what is the share of that division in e-commerce?

Jean-Paul Agon

Distributor brands, well, in Western Europe distributor brands aren’t moving much. There are two countries where they are growing, Spain, they’re continuing their progression in Spain and also in Germany as far as the new products that have been announced. I can’t tell you anything yet. I haven’t seen them, so I don’t know.

As far as the other European countries are concerned, nothing significant is happening on the distributor brands side. If we don’t know, we can’t tell you. What we do know, however, is that cosmetics is, as far as I know, the category where distributor brands have the weakest position, not because they didn’t try. They’ve been trying for 20 years, 30 years. And I joined this group 33 years ago, and I saw it happen – I saw it happening 33 years ago. But there are fundamental reasons why consumers prefer to buy own brands as opposed to distributor brands. So they will try again, and we will decide against their efforts and we do it via innovation, innovation, quality, efficiency, brand recognition, having new, better, different products. That’s how we respond to this – to these distributor brands. We’re not worried to tell you the truth. Again, even if we – even if they gain a little market share, we won’t lose any. Generally, cannibalization affects mostly entry-level products and that’s not who we are. So we’re paying close attention to those developments, but we’re not very worried as far as 2012 is concerned.

Jean-Régis Carof

Brazil now. What can I say about Brazil? At the end of the day, Q4 wasn’t bad. Q1 was outstanding. So obviously when you compare Q1 and Q2 for Latin America, you’ll find that there’s been a little slowdown but there are historical reasons in countries such as Brazil – obviously, there’s concertina effect. Whenever you’re launching your product, obviously this creates a very high baseline and it’s hard to go back up to that.

Now Brazil is a rather volatile country, a rather volatile market that sometimes the market speeds up very quickly and then it contracts a bit like the rest of the economy. In Brazil, we saw economic figures for Brazil recently and they were a bit disappointing. But as far as we are concerned, we have a strong commitment to our presence in Brazil. We’re in there with the rest of them. This is a priority market in Latin America. So, we will do whatever it takes in order to grow our presence there in 2012. But in substantive terms, this is a market that is bound to grow. It’s a beauty market, lots of consumers on that market. It is the third leading cosmetics market in the world, a very powerful market.

Jean-Régis Carof

Question number four, China, oh, yes, let’s not forget China. Now, there is more regularity in China, however, our growth has been steady. The market has grown steadily as well. Sometimes in the press you read that the Chinese economy has gone from up 10% to up 8% or 9%. It doesn’t really affect our position in the Chinese market, which is extremely robust, very steady. It is a robust market because China is experiencing a “deepening effect.” It’s very important, both for the Chinese market and for our brands.

Consumption of cosmetics is penetrating the rest of the country in geographic terms also, but in terms of city size. It all started with tier 1 cities and then tier 2 cities and then tier 3 and then et cetera, et cetera. So, we’re gradually – we’re witnessing a gradual penetration of Cosmetics Products, all brands included in Tier 4 and Tier 5 cities. But a Tier 4 city in China is much bigger than our biggest cities here. So, we are fully confident that we will ride this wave because this wave is going to continue for many, many years.

Jean-Paul Agon

E-commerce now, look – Luxury Products, yes, e-commerce accounts for 2.7% of our sales in Luxury Products, so we are well within the market bracket between 1.5% and 3%, up 42% this year with brands – with American brand such as Kiehl’s – or 9% of sales already are Clarisonic. That’s an acquisition that we just made 10% of sales. E-commerce accounts for 10% of this sales, so it’s a buoyant trend for the Luxury products, and this also means that we can really keep in touch with our consumers.

Jean-Paul Agon

Any other questions? Yes?

Emmanuel Bruley des Varannes – Societe Generale

Hello. Agon. Two quick ones; the first on the split of organic growth, volume and price effect in 2011; what would be your attitude in terms of price increases in 2012? Thanks.

Jean-Paul Agon

Christian, would you like to say a word about that?

Christian Mulliez

Yes. So the 5.1% organic growth split, 4.3% volume and 0.8% value. And as regards 2012, by definition, we don’t yet know but our ambition is indeed to continue to value enhance notably through innovation. You know that in our business the prime tool for boosting value is the launch of new products rather than price increases on existing products. But as every year there are between 15% and 20% catalogue renewals that come quite rapidly, and the initiative plan that was shown to you is generally comprised of initiatives with high value added that in 2012 should allow us to enhance value.

But you’re right, it’s an important point. It remains absolutely fundamental. That is to say that the affordable innovation strategy is not – doesn’t counter to that of value and the idea is to produce products that are more sophisticated, higher technology, higher value added but that are nevertheless sold at prices that are viewed as legitimate by the consumer. The most striking example of that is Visionnaire. Visionnaire, EUR86, in the selected channel; it’s a very good price for a product with that level of quality. Isn’t that so, Nicolas?

Jean-Paul Agon

Next question, please.

Pierre

Hello, Pierre from Natixis. I have a question within the price mix effect. You said that throughout the year – the end of last year, you’ve seen no sign of a slowdown of the cosmetics market. Could we have, by division, without necessarily having numbers, but just some indication as to what are the divisions that can grow their mix, divisions that are maintaining their mix and possibly divisions that might be showing signs of weakness, either across the year in Q4, to see what is the kind of interplay between each of the divisions in terms of preserving value on the cosmetics markets in 2011 or at the end of the year.

Jean-Paul Agon

Speaking of the value, value volume mix, Jean-Jacques?

Jean-Jacques Lebel

Well, we have growth, 4.5%, so, fourth quarter 0.4% in volume, 0.4% in value with an additional effect at the – higher effect in Q4. Q4, the value effect 1.6%, so positive effect says Mr. Agon. That was the value effect in the launches which – our launch is underway, both for L’Oréal Paris and Maybelline, are enhanced launches. You see, with the hair care products, hair expertise sold $6 in the U.S. working. Well, we’re going to launch in Europe at prices far higher than market prices. Also, face care, foundation, makeup, L’Oréal products. These are upper-end of the range and thanks to which there’ll be a positive value effect that will continue.

Luxury has also a very positive value effect, Nicolas, 2.2% to be precise Nicolas, supporting the growth of our skincare activity to boost our growth margins and boost value. And that should continue because your innovations next year, for example, looking at your new Lancôme’s skincare products, EUR300, the value effect should be positive, absolutely. Increasing, putting ever more quality into our products. That’s what I wanted to by going Luxury, that of course with the products in question, is reflected in the value.

Emmanuel Bruley des Varannes – Societe Generale

Brigitte, you have a slightly negative value effect that’s linked to your attempts last year to have more kind of entry-level products. That wasn’t very conclusive, so you probably pulled back from that.

Brigitte Liberman

Absolutely. We carried out a number of tests on large formats in countries such as the Eastern Europe, and these have – did not deliver the results that we expected. Now throughout the year, we find the things are improving in the second half of the year, particularly due to our launches which enhanced the value of Liftactiv Sérum, for example, by Vichy retailed for EUR36 in Europe or even the launch of an Aminexil-based anti-shedding treatment. And these launches are working really well which sort of turns the trend around. So, I think we should expect the value to increase throughout 2012.

What about you An?

An Verhulst-Santos

Well, the two-thirds of the growth has to with volumes and the remaining one-third has to do with value and there’s a balance between access brands such as Matrix and higher value brand such as Kérastase and L’Oréal Professionnel. You may remember that three years ago at the time of the crisis, we said two things; we said that our innovation policy should be accessible. We wanted innovation to be priced optimally, so as to optimize both volumes and value. We thought that was every important.

We want innovation to be accessible, affordable, and also via our brands we decided to launch entry-level products, accessible products, and we found that our efforts weren’t too successful. So, we’ve come around – we’re coming around gradually, and this should have a positive effect on value in the next quarters in the next few years. The most important thing in our eyes is again to promote innovations, to have new, better, different products to provide better benefits to consumers than the competition after the optimal price. We’re not here to fight the entry-level, the cheap brands.

Jean-Paul Agon

Thank you, dear journalists, for your patience. For the sake of fairness, we’re going to broaden the discussion to the journalists. Members of the press, if you wish to ask any questions; yes?

Emmanuel Bruley des Varannes – Societe Generale

Good morning. My name is Catherine Rolland from Capital Markets. I’m sorry I didn’t see you there. Could you please tell us the percentage of shares based on your products in 2011 and what do you expect to happen in 2012? Do you expect a more sustained pace of new launches? Do you intend to maintain the same rhythm, the same pace as in 2011?

Jean-Paul Agon

If I remember correctly, the ratio was 16% in 2011 – the rate was 16%. And our ambition for 2012 is to be slightly higher than 16%. But that is a rather steady pace. Obviously, the pace varies from one quarter to another, from one half year to another, but it seems pretty steady from one year to another. What does make a difference between high growth one year and less growth another year is quality. The difference is quality. It is the strength of the various initiatives that we take as opposed to their number. So next year, we’re also expecting the pace to be about 16% or slightly higher in terms of innovation. And this is across the board, across all divisions.

Let’s take questions from the other room. Our apologies, we forgot about you; in a minute. Any questions from the panorama room?

Jean-Philippe Muge – SwissLife Gestion

Thank you. My name is Jean-Philippe Muge from Gestion. Considering the changes that are happening in our country, don’t you fear that your tax rate might increase?

Jean-Paul Agon

Christian, what do you think?

Christian Mulliez

We’ll see what happens.

Jean-Philippe Muge – SwissLife Gestion

France is a very important country for L’Oréal. It is the legacy country. It accounts for 10% of sales. So, France is a big country, a very important country for the L’Oréal Group.

Christian Mulliez

We’re not going to answer that. No commitment one way or the other. We’ll see what happens and we will adapt. Any other questions?

Christian Muge

Yes. Hi. My name is Christian Muge. I’m a journalist. Good morning. There’s been a lot of talk about aggressive growth.

Jean-Paul Agon

Yes. We’re not offensive at L’Oréal. We are aggressive.

Jean-Philippe Muge – SwissLife Gestion

Could you please give us more details about potential avenues that you could explore, for example, (inaudible) in Brazil; more details about your M&A policy, potential acquisitions in terms of the country, in terms of the market segment?

Jean-Paul Agon

Well, we have an aggressive growth strategy and not through acquisitions; we want to gain market using, our existing brands, our existing channels, our existing divisions in all of the market segments where we operate. You may have seen in the various presentations by the division heads that we have a resolutely aggressive approach for 2012. As I said before, this is our intention and this is how we devised or launched plans or support plans. On a market-by-market basis, we want to gain market share so that we can move faster than the markets in 2012.

So, you know that organic growth takes pride of place in our growth strategy and we have to be on the offensive. And on top of that, we’re always open to potential acquisitions and recent experience has shown that we have – we’re rather open-minded on that front. Clarisonic was an unexpected acquisition in the eyes of many, but it’s a very interesting market segment adjacent to cosmetics and it’s off to a very good start and we’re expecting this to become a very buoyant market in the next few years so we want to get a head start in terms of leadership.

So, there’s another example. We can take one brand, not a local brand per se but say a US brand and we’re turning it into a global leader and these efforts have paid off handsomely. This is our approach and we’re going to keep it up. By definition, I can’t tell you what our next targets are because as you all know, this would mean the price tag would increase immediately as a result. So, I can’t do that. In any case, we are on the lookout for any potential acquisitions that could perfect our strategic fit and also fast track our pace of development and growth.

Yes, sir? (Inaudible)

Jean-Philippe Muge – SwissLife Gestion

(inaudible) Stake in Sanofi revalued by EUR1 billion, if I regenerate it close on EUR300 million in dividend. In so far as you’re now cash positive and that’s going to get worse as I speak, is it not possible given the return yielded by Sanofi to reinvest your dividend? You like your own shareholders to reinvest their own in L’Oréal shares.

Jean-Paul Agon

You’d like us to buy Sanofi shares. No, instead of buying German bonds, even short-term bonds that yield little or dangerous US (inaudible), that’s creative. Christian, what’s your view?

Christian Mulliez

Well, that’s a creative idea. Very, very good idea, (inaudible) I’m sure that people from Sanofi would be very happy to hear that. Well, okay, we’ll give it some thought. Thank you for that.

Jean-Philippe Muge – SwissLife Gestion

You’re right, the Sanofi share price has moved up considerably last year. (Inaudible) confidential, could you give us more details regarding the growth of Clarisonic in geography retail distribution, and how you’re going to work with the other brands in the division?

Jean-Paul Agon

Yes, very good question. Nicolas, over to you.

Nicolas Hieronimus

Well, let’s have slide – let’s follow up slide 315 that will give you a view of what Clarisonic is which is a company, Pacific Bioscience Labs, based in Seattle founded in 2001 by David Giuliani. You can see that it’s a market-leader in personal skincare devices, the global market of these devices at EUR1.4 billion manufacturer’s price. Clarisonic is the number one in the US market, 61%sales in retail, but also a presence in Professional Products and dermatology.

It’s an international presence as you can see that’s very minimal at 3% of sales, some UK, some Japan, a slight – a small presence in Hong Kong. So, we’re really at the beginning of international expansion of this brand so that’s the prime mission that we set ourselves. Of course, it hasn’t prevented Clarisonic from growing sharply as you can see from the numbers. But we’re going to – with our subsidiaries, with our business, we’re going to over the expansion of the Clarisonic brand as of no doubt the second half of this year. And then for those of you, if we could see the next slide just to see what Clarisonic is, the current range, a lot of brushes with the sonic technologies very swiftly rotating and invisible to the naked eye, offering in-depth cleaning, but quite a unique skin quality.

So, this technology is a skills-and-efficiency platform for the Group. So, we’re going to spread that to other divisions in the Group, no doubt to offer new services to the consumer at the counter because Luxury is also service. And with this type of product, we’ll be able to offer it to our customers. So, it’s in that spirit two steps that we see the inclusion of Clarisonic.

With Clarisonic, what’s interesting says Mr. Agon will serve as the launch pad for a new cosmetic – instrument cosmetics business. Personal devices in the Seattle base will serve as a hub for personal devices’ research. And these personal devices cosmetics will be one of the major sectors for cosmetics in the next 10 years, 20 years. So, it’s of prime strategic importance for us to be the first to assume leadership to be at the cutting edge of innovation in this field. So, we’re very, very excited, as we say, by this acquisition and the potential that it offers.

Jean-Paul Agon

Next question, please?

Juliet Ghanni

Juliet Ghanni from La Tribune. I’d like to know whether 2012 was as disappointing for YSL as for Garnier.

Jean-Paul Agon

Thank you so much, Juliet for this very blunt question. Well, we’ll ask Nicolas to answer you as bluntly and as frankly.

Nicolas Hieronimus

Quite frankly, no. (inaudible) for Garnier either. But it’s – sorry, I thought that we are trying to do better. Obviously, we hope to do better in billings on YSL, in particular, with the rollout in Asia which is one of the goals of the launch of the care line that I made. Forever Youth Liberators that is off to a wonderful start both in London, Tokyo, as well as Hong Kong. But to return to 2011, YSL has grown and sell-through outperformed the market, gained market share both in Western Europe as in the US.

However, the weight that Europe still represents in the sales of this brand doesn’t at global level allow it to have growth levels on a par with other brands in the division. But I’d say that we’re very bullish notably with the start of year initiatives for YSL, which in the out year is said to become a leading multi-focus brand and a global brand which isn’t the case yet today.

Jean-Paul Agon

Well, what is true is that if all our brands were as successful as those that worked the best at the plus, we’d do – we’d put in plus 12% every year. I mean it’s the goal of all of us who are here on stage today to ensure that all our brands are as successful as Maybelline, La Roche Posay, Kiehl’s, et cetera. It’s not always easy, but I promise that we’re doing our utmost to achieve that. Next question.

Jean-Paul Agon

(Interpreted) Well, if there are no further questions, time for a drink. Thank you all for your attendance, for your questions, and refreshments in (inaudible) outside. Thank you.

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