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Earlier today, L’Oréal, the international cosmetics and beauty products giant, announced its financial results for its full 2013 fiscal year, and delivered up another excellent year’s performance.
In summary, for the twelve months to December 31st, 2013 L’Oréal reported total consolidated revenues of US$31.3 billion (Euros 23 billion) compared to US$30.6 billion (Euros 22.5 billion) in the previous year, i.e. an increase of about 2.3%.
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Net income before non-recurring items was US$ 4.25 billion (Euros 3.12 billion) for the whole of 2013, compared to US$4.05 billion (Euros 2.97 billion) in 2012, i.e. an increase of 4.9%. Additional, non recurring, expense items totaled only US$0.22 billion (Euros 0.16 billion) in any case, in 2013.
(L-R) Jean-Pierre Meyers, Francoise Bettencourt-Meyers and Liliane Bettencourt / Getty
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Finally, basic net earnings per share reached a record US$7.00 (Euros 5.13) per share for the full 2013 year, compared to US$6.70 (Euros 4.91) per share in the previous year, i.e. an increase of 4.4%.
Commenting on these results, Mr Jean-Paul Agon, Chairman and Chief Executive Officer of L’Oréal, said “2013 was another year of robust growth for L’Oréal. The Group achieved sustained sales growth and, in a market whose expansion was more moderate in 2013, accelerated its outperformance versus the market. L’Oréal is strengthening its worldwide positions across all divisions and all geographic zones.”
He also added, “…profitability reached a record level in 2013, confirming the relevance of our business model.”
L’Oréal has a whole additional smorgesbord of twenty eight famous beauty products brands on its table; including Lancome, Giorgio Armani Beauty, Yves Saint Laurent Beauté, Biotherm, Kiehl’s, Cacharel, Maybelline, Helena Rubinstein the Body Shop and more.
The company’s marketing slogan used to be the famous “Because I’m worth it”. By the mid 2000s, this morphed into “Because you’re worth it”. Eventually in 2009, it was adapted again to “Because we’re worth it”, following some careful motivational analysis and research into consumer psychology.
The company’s strategy of expanding into Asian markets and, particularly, into China is now showing some impressive results. This essentially justifies the care and attention L’Oréal has lavished in recent years on adapting its range of products to best satisfy the cultural preferences, and specific beauty needs, of consumers in those new markets. Careful listening, and focused investment, seems to be something they do rather well.
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Jean-Paul Agon
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About L’Oréal
L’Oréal is listed on the Paris Stock Exchange, and has a market capitalization of over US$100 billion currently (about Euros 75 billion). The shares of L’Oréal have basically tripled in value over the last five years reflecting its success in over 130 countries around the world. The company employs over 72, 000 people worldwide.
The company is led by its Chairman and Chief Executive Officer, Jean Paul Agon, who has been an excellent long term manager of the business.
L’Oréal’s Vice Chairman, however, is Jean-Pierre Meyers, who is the husband of the L’Oréal heiress Francoise Bettencourt-Meyers. He is also CEO of the family’s holding company, Téthys, and he apparently plays a critical, but very discreet and low-key, role in helping to manage the family’s huge fortune.
The Bettencourt family today still owns 30.5% of L’Oréal, a stake alone worth today about US$30 billion, and Francoise and her two children will eventually inherit all of her mother Liliane’s shares as well on her death, under French family law.
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About Liliane Bettencourt
Francoises’s mother Liliane was once one of Europe’s foremost beauties, and she played a key role building up the L’Oréal empire with her father after the Second World War. A well-known Nazi sympathizer even before the war started, Eugène Schueller was tried and acquitted of collaboration after it was over. Liliane inherited L’Oréal from him when he died in 1957.
Now 90 years of age, Liliane Bettencourt’s family fortune, taken as a whole, makes her the richest woman in France and in the world, and indeed also the 9th richest person on the planet according to Forbes, worth some US$30 billion.
After her husband André’s death Liliane then caused her family a good deal of pain, and also created a huge scandal, when she attracted a particularly charming and plausible hanger-on, named François-Marie Banier as a companion.
Banier allegedly eventually squeezed gifts out her of over $1 billion, as she became progressively more in the grip of dementia and Alzheimers. Liliane was also one of the most prominent victims of the whole Madoff ponzi scandal, as well, reportedly losing some US$30 million to his schemes in 2008.
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About Francoise Bettencourt-Meyers
Francoise Bettencourt-Meyers, today age 60, is the only daughter and sole heiress of Liliane Bettencourt. Liliane’s father Eugène Schueller had first founded the L’Oréal cosmetics and beauty products empire, more than one hundred years ago, in 1909. Francoise’s own father was André Bettencourt, a prominent French politician and businessman, whom Liliane married in 1950 and who died in 2007.
Francoise took the very significant step of converting to Judaism after she married her husband, Jean-Pierre Meyers, in 1984, and their two children Jean-Victor, born in 1986, and Nicholas, born in 1988, were subsequently brought up in the Jewish faith as well.
Francoise later was basically forced to feud with her mother very publicly, and in the courts, for several years to try to protect her from the machinations of Banier and other would-be predators.
Finally she succeeded in gaining legal guardianship over her mother’s affairs in 2011. As part of the new legal-custodial arrangements Francoise’s eldest son Jean-Victor now sits on the board of L’Oréal on his grandmother’s behalf, and of course he also represents the new generation.
Today, as well as her involvement in L’Oréal, Francoise is an established author writing on Jewish-Christian relations, something for which she is likely eminently well qualified given her own difficult personal family history.
Her mother Liliane, as part of what seems to have been a particularly dysfunctional mother-daughter relationship in any case, was said to have been particularly insensitive to Francoise’s decision to bring up her two children within Judaism which is her husband’s own, and her adopted, religion.
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About Jean-Pierre Meyers
Jean-Pierre Meyers is a businessman, whose grandfather was a well-known French rabbi who was murdered in the holocaust. Today Francoise and Jean-Pierre both sit on the Board of Directors of L’Oréal, and control its destiny through the family holding company, Téthys SAS, of which jean-Pierre is also the CEO.
Jean-Pierrre also sits on the Board of Directors of Swiss company Nestlé, and is a member of its Compensation Committee – usually a key board appointment, for obvious reasons. The Bettencourt family still has a substantial ownership position in Nestlé – today alone worth several billion dollars.
Jean-Pierre Meyers is also Vice Chairman of the Bettencourt-Schueller Foundation. From 1980 to 1984 he was a director of the bank Odier Bungener Courvoisier.
He was educated at the Université de Paris in Economics, and later became an Assistant Professor at the Ecole Supérieure de Commerce in Rouen.
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L’Oréal Potential Shareholder Restructuring
The Betttencourt family’s stake in Nestlé was originally acquired in 1974 when there were concerns of possible nationalization of L’Oréal during a period of Socialist administration, under the government of then new French President the Socialist Francois Mittérand. Accordingly, as a precaution Liliane Bettencourt sold 29% of the company, or about half her then interest, to Nestlé and taking back an interest in the shares of the Swiss company as well.
The cross-ownership of shares between the two companies is governed by a shareholders agreement, but one that expires during this current year 2014 after forty years in effect. Under it Nestle has been obliged, amongst other provisions, to offer a first right of refusal to the Bettencourt family if it wishes to sell its shares in L’Oréal. This provision will now lapse in the coming months, leaving them freer to market their shares if they should so choose.
There has been more than one report in the press, recently, to the effect that since Nestlé has now firmly moved away from a strategy it had once thought of pursuing, namely to push further into personal care products, it may indeed now wish to sell all of its interest in L’Oréal in the year ahead.
With a completely bullet proof balance sheet L’Oréal, for its part, is well placed to simply buy back the whole stake, and then re-issue some of the shares back to the public. In addition L’Oréal also holds a non-strategic 10% stake in drug company Sanofi, a stake alone worth some US$12 billion, which would certainly help to pay for it, as would cancellation of the Bettencourt family’s own remaining stake in Nestlé itself.
L’Oréal shares rose 4% during the day’s trading today on the Paris Stock Exchange, before their annual financial results were issued after the market closed. Clearly the price move reflected not just expectations for reasonable results, which after all were very much in line with most analysts expectations, but also perhaps hope on the part of some investors with respect to such a possible repurchase of the Nestle bloc in the company at some point.
We will only find about such potential strategic moves, of course, as the year 2014 progresses.
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