77 billion in published data it moves of 3

L ' Oréal saw its profitability erode on the first half of 2009. The Group recorded a decrease of 8.3 of its operating income to EUR 1.37 billion. In one year, its operating margin increased from 17.3 to 15.7. Cosmetics giant relativizes this underperformance by noting that it had released the first six months of its fiscal year 2008 its best historical return performance. In a difficult context, marked by stability of turnover semi-annual rose by 1.4 to 8.77 billion in published data (it moves of 3.2 on a comparable), l ' Oréal has a net income fall by 14 and a net result share of the group fell by 3.6.

In essence, operational performance degradation is explained by the difficulties concentrées at the top of range. The division produced luxury (Lancôme, Helena Rubinstein...) is the result drop in a year of 354,1 to 225.3 million euros. This division, affected by the déstockage and the crisis, is also adversely affected by the recent integration of Yves Saint Laurent cosmetics activities. Other activities emerged, they, the relatively stable results (Professional with Kérastase, products consumer products, with Garnier, l ' Oréal Paris...) or even growing (active cosmetic with Vichy, The Body Shop, dermatological Branch). Without taking into account the integration of Yves Saint Laurent (YSL), l ' Oréal to successfully reduce its administrative and commercial costs (to EUR 1.86 billion) for the first time in its history. To maintain its "engines", the Group increased by 2.9 expenses of research and development (R & D) and 30 basis points publi-promotional spending, which now represent 30 of the turnover. On the second quarter, organic growth of the group improved (-2,1 against 4.3 on the first three months of the year).

What are the good and bad surprises of these semi-annual

There are good and not bad. These results are both robust and encouraging. In a context very difficult, and compared to the all-time record in terms of profitability in the first half of 2008, the downturn of the result of 8.3, of the net result of 3 and the decrease of 1.5 on the part of the Group per diluted share show the strength of l ' Oréal. These results are healthy because they were acquired without any sacrifice on motor ways of business, i.e. R & D and the publi-promotional means. A choice that very few companies have done. We were already the first French advertiser, but our investment still increased by 8, while the market is negative. The improvement of the conditions of purchase allowed us to increase our advertising volume by 10 to 20. These semi-annual show also that what we do to adapt our model to the environment is bearing fruit: accessible innovation, the extension to new categories of products, the acceleration of globalization, increasing motor ways and reduce costs. Even if we have suffered a little more that others in luxury, in public large products, which represent 55 of our business, and professional products, we have generally won market share.

Most of the deterioration of the profitability is therefore due to the luxury sector

The integration of Yves Saint Laurent has weighed on the profitability of this division, with a dilutive effect of 2-3 points. But luxury, it is true, is the major challenge of the year 2009. He faced a very strong situation of destocking in the first half and it is very difficult to predict what will happen. I think that the pace of consumption should not change, it is dropped 5 at the global level. But there is not an effect of massive removal as at the beginning of the year. I am more confident because we have a plan of very significant launches, including a new perfume women at YSL in September, "Parisienne", another female in Armani, "Idol", and care for Lancôme and Biotherm product. The group is likely to turn to have a better semester.

Is this resistance proof that your affordable strategy worked

It is the result of our 5 priorities at the same time. In fact, our policy of products available is to deploy. The first products of care most of Garnier to 4 euros arrive at this time on the market. The Essentielles of Vichy, sold between 5 and 9 euros, will be launched later. We will also propose, in the luxury division, bottles of 30 millilitres of the new fragrance "Paris", while, normally, we were not this during a launch. Attention, l ' Oréal has not decreased its catalogue prices. It is an expansion of our product lines to create lines of access to all of our brands.

Also, you have increased your product offering

Historically, l ' Oréal has focused its development on the care of the hair, staining, face care, makeup and perfume. We complement this strategy by launching new categories of products such as body care, deodorants, care for men, that we already had, but we are going to develop. All our divisions there are still affected. In fact, the axes of our strategy are based on the same idea: expand our consumer base, either in terms of positioning price, in terms of category of products or geographic area. We are pursuing our globalization by accelerating in countries like China or the Brazil, where our sales grew in the first half of respectively 14 and 21, and we create subsidiaries where we have not yet, as in Pakistan and Egypt.

But, with a focus on the volumes, are you not likely to alter your margins

Non. Our strategy of products available is not negative in margin termes, because it arranges so that these products also have moderate costs. And volumes made these broader ambitions allow extraordinarily amortise the costs, so there is no sacrifice of margins. Finally, the new categories which we we have good profitability.

Where are you from your cost reduction plan

There were many initiatives in this area. Perimeter and comparable rate, excluding Yves Saint Laurent, our administrative and commercial costs decreased by more than 3. This is the first time in the history of the group that they decrease in absolute value, it is therefore a true turning point. It was obtained with a clamp of costs applied all over the place, with the judgment of industrial sites in Espagne, Monaco, England. We also frozen embauches, non-graduates, in developed countries and the workforce in developing countries. We have finally committed serious reorganization programs in the United States and in Body Shop. Efforts will continue.

What is your Outlook for the end of the year

The application should be comparable to that in the first half. It is not too dramatic. The world market of the cosmétiques withstands well, he moves between 0 and 1, even if orders from manufacturers fell further due to the phenomenon of removal. There is no collapse. I am confident. It is an area of offers related to the moral that will leave as soon as the mood of consumers will be changed.

But the stock market still seems to doubt

After twenty-three years of double-digit growth, some were surprised of the performance of the group face, however, to an unprecedented crisis. This perception changed again. I was well prepared to face this situation. I was sent in Asia three months before the Asian crisis of 1997 and the United States three weeks before the 11 September. This has helped harden me the leather. In addition, I have the full support of the Board of Directors. The strategy is not only validated by L'Oreal President Lindsay Owen-Jones, but agreed with him. The bold choice to increase our engines means, in times of crisis, was a recommendation of the Board of Directors. We also have teams very mobilized around the world.