L'Oréal - 2018 Registration Document

Corporate Governance RISK FACTORS AND CONTROL ENVIRONMENT

Industrial and environmental risks 2.8.5.3.3. In order to improve the efficiency and productivity of its industrial processes, L’Oréal carries out most of its production in 40 plants, each specialising in a specific type of technology.

INDUSTRIAL AND ENVIRONMENTAL RISKS \ PRODUCTION AND SUPPLY CHAIN Risk identification Risk management

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To prevent this risk, business continuity plans exist for each operational site. The Group is currently deploying a single methodology of business continuity plans at all its plants and all its distribution centres. These plans aim at planning for the unavailability of part of the Group’s supply chain as far as possible and resuming business activities as quickly as possible.

Products must be made available on the market on the scheduled dates to meet time-to-market and customer demands, in order to enable new product ranges to be referenced by distributors in a cosmetics market that requires companies to be increasingly responsive. A major stoppage of activity at a plant or distribution centre could therefore have an adverse effect on the achievement of commercial objectives. INDUSTRIAL AND ENVIRONMENTAL RISKS \ SOURCING Risk identification L’Oréal is dependent on its external suppliers for the delivery of materials (raw materials and packaging items) that are essential for the manufacture of finished products, which may therefore suffer a disruption as the result of a failure by an important supplier. The increasing world scarcity of resources (difficulty to access basic materials or climate risks, etc.) and supplier dependency are the main causes of unavailability.

Risk management

To prevent these risks, L’Oréal regularly updates its inventory policies, reserves capacities with suppliers and negotiates long-term contracts. L’Oréal also looks for alternative sources for its raw materials, duplicates packaging moulds for its strategic products, implements operational continuity plans with its suppliers and reviews, if required, the design of its formulas and finished products.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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