Value creation

At L’Oréal, economic performance and social and environmental exemplarity go hand in hand. Together these two goals are the foundation of our profitable and sustainable value creation strategy and guide our long-term investment decisions.

Christophe Babule, Chief Financial Officer, explains how L’Oréal drives the creation of financial, social and environmental value in the Group’s day-to-day business.

L’Oréal has always made visionary choices, especially when it comes to its sustainable transformation. Aligned with our ambition of dual excellence, our financial performance allows us to create positive value for our entire ecosystem, on human, social and environmental dimensions.

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Highlights

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A virtuous, forward-looking investment strategy

Data enhances investment efficiency and agility

To optimise value creation, we are developing revenue growth management – a technique that draws on a powerful digital resource combining financial and market data to help sales and financial teams develop strategies that optimise product pricing. Technology and data are invaluable decision-making tools that guide us towards relevant investment choices to support the Group’s future growth.

Revenue growth management relies on a powerful digital resource combining financial and market data to help sales and financial teams develop strategies that optimise value creation. Our goal is to improve product positioning and enhance value across different criteria (price, special offers, product assortment and distribution channels) to secure optimal return on investment. This approach gives L’Oréal the agility to seize valorisation opportunities whenever and wherever they arise. Thanks to these cutting-edge tools, our financial teams can engineer value creation and drive performance with sales colleagues. They also gain more time to focus on other high value-added projects, such as strategy development based on data analysis, risk management and forecasting.

A more comprehensive view of finance

Extra-financial data is at the heart of our overall performance measurement and goes hand in hand with a rigorous and disciplined approach to finance. Thanks to flexible P&L (profit and loss) management, we monitor our profitability and cash flow, ensuring that we have the investment capacity to finance major transformations and acquisitions. This keeps us on track to meet our far-reaching goals for sustainable development and growth. We have continued to implement our roadmap to achieve the targets set by the L’Oréal for the Future programme and to invest in external growth, as evidenced by the acquisition of the beauty brand Aesop in 2023 – the Group’s biggest acquisition to date.

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Finance: a catalyst for L’Oréal’s sustainability commitments

In line with its commitment to drive financial and social and environmental performance as one, L’Oréal is strengthening the role Finance plays in rolling out management standards for sustainability. The Sustainable Finance Department measures both the financial impact of our sustainable development projects and the social and environmental impact of financial decisions. As part of L’Oréal for the Future, the Group is also mobilising its entire ecosystem and helping partner suppliers accelerate their sustainable transformation and energy transition by providing favourable financial conditions. To this end, we are developing new finance models, including a debt fund developed in partnership with an asset management company specialised in debt financing and designed to finance the decarbonisation of our supplier ecosystem.

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BOLD: accelerating beauty innovation

L’Oréal celebrated the fifth anniversary of its BOLD venture capital fund, which purchases minority stakes in innovative startups specialising in science, technology and the environment, in line with the Group’s roadmap. The fund is an invaluable opportunity for L’Oréal to expand its capabilities, particularly in Research and Innovation, and to co-create and embrace an open-innovation mindset. In 2023 the Group invested in research on active ingredients with Debut, innovative alternative ingredients with Geno, and biotech with Shinehigh Innovation via the BOLD Meicifang fund in China. Having supported 23 startups since 2018, L’Oréal is now more than ever a driving force in the global cosmetics market as it extends its lead in shaping the future of beauty.