L'Oréal - 2018 Registration Document

Presentation of the Group Integrated report GOOD GROWTH MOMENTUM FOR SHARED, LASTING DEVELOPMENT

L’Oréal’s investment policy responds 1.3.1.5. to long-term objectives L’Oréal is a growing industrial company thanks largely to two types of investments: scientific and industrial, which are described in several 1. sections of this document (paragraphs 1.2.7. and 1.2.8. in particular); and marketing, which are made on an ongoing basis and are 2. inherent to the Group’s activities in the cosmetics industry. Indeed, winning new market share requires in-depth and situation-specific studies, as well as advertising and promotional expenses attuned not only to the familiarity of brands and their competitive position, but also to constant changes in consumers’ aspirations – something that the subsidiaries’ sales and marketing teams monitor constantly. Lastly, investments in point-of sale (POS) advertising materials ensure optimal presence for our brands in points of sale.

For reasons relating to strategy and competition, L’Oréal cannot therefore provide any systematic information on future investments. In 2018, the Group’s investments totalled €1,416 million (1) , or 5.3% of its sales. This level reflects the Group’s constant efforts in terms of improving industrial efficiency, research and digital development performance and enhancing brand value. Investment commitments in 2018 can be broken down as follows: production and the physical supply chain represent s approximately 27% of total investments; marketing investments, including moulds, POS advertising s materials and stores account for 47%; IT investments spread over all these categories represent s 20% of total investments; research and the head offices in different countries s account for the remainder.

1

See notes 3.2.2, 7.2 and 13.2 to the Consolidated Financial Statements for more details of these investments. Despite their strategic nature, none of these investments taken individually is material enough at Group level to warrant more detailed disclosure.

See Statement of Cash Flows, consolidated financial statements, Section 4.5. (1)

REGISTRATION DOCUMENT / L'ORÉAL 2018

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