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Clichy, January 25th, 2007 - 6.00 pm

2006 annual sales: target reached

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Strong growth in annual sales:
15.8 billion euros, up by +8.7%
Substantial increase in 4th quarter sales:
+9.5% based on reported figures (+6.5% like-for-like)
Significant growth in Western Europe
Rapid development of new markets
2006 profit targets confirmed

The sales of the L'Oréal group, at December 31st 2006, amounted to 15.79 billion euros, representing an increase of + 8.7%. In the fourth quarter, the sales growth rate was + 9.5%.

Currency fluctuations had a slightly negative impact of - 0.2%. Excluding currency fluctuations, the sales growth rate was + 8.9% for the full year 2006.
The net impact of changes in consolidation amounted to + 3.1%, mainly as a result of the acquisition of The Body Shop, consolidated from July 1st 2006 onwards.

Like-for-like (i.e. based on a comparable structure and identical exchange rates), the growth in the group's total sales amounted to + 5.8% at December 31st, 2006 (+ 5.7% excluding The Body Shop).
In the 4th quarter, the growth rate was + 6.5%. Commenting on the figures, Mr Jean-Paul Agon, Chief Executive Officer of L'Oréal, said:
"The strong growth of our sales at the end of the year enabled us to achieve the announced growth target for 2006.
This growth was achieved thanks to the renewed dynamism in Western Europe and the remarkable performance in the new markets, particularly in Brazil, Russia, India, Mexico and China. The Body Shop delivered a good second half performance, strengthening the group's growth.
Overall, the organic growth of our brands and the significant contribution made by the acquisitions led to a strong increase in the group's sales of + 8.7%. These good figures mean that we can confirm our profit targets".
Sales by operational division and geographic zone
At December 31st, 2006
At 31/12/06
€ million
Growth Life-for-like
At 31/12/06(*)
Growth Reported
At 31/12/06 (*)
By operational division
Professional Products 2,126 +3.8% +3.2%
Consumer Products 7,903 +5.8% +5.4%
Luxury Products 3,773 +5.1% +5.3%
Active Cosmetics 1,128 +12.2% +14.4%
Cosmetics total 15,011 +5.6% +5.6%
     
By geographic zone
Western Europe 6,992 +3.5% +3.7%
North America 3,954 +2.7% +2.2%
Rest of the world, of which: 4,065 +12.7% +12.8%
- Asia 1,476 +7.9% +7.4%
- Latin America 1,021 +16.1% +18.6%
- Eastern Europe 850 +22.0% +24.8%
- Other countries 718 +8.5% +4.5%
Cosmetics total 15,011 +5.6% +5.6%
The Body Shop 435 +9.7%  
Dermatology(1) 344 +8.6% +8.1%
Group total 15,790 +5.8% +8.7%
(Provisional, unaudited figures).
(1) Group share, i.e., 50%
At 4th quarter 06
€ million
Growth Life-for-like
4th quarter 06 (*)
Growth Reported
4th quarter 06 (*)
By operational division
Professional Products 528 +4.8% +0.8%
Consumer Products 1,923 +6.5% +2.4%
Luxury Products 1,080 +5.4% +2.5%
Active Cosmetics 233 +11.3% +9.5%
Cosmetics total 3,781 +6.1% +2.5%
     
By geographic zone
Western Europe 1,702 +3.1% +3.1%
North America 990 +3.6% -4.3%
Rest of the world, of which: 1,089 +14.0% +8.6%
- Asia 385 +9.4% +3.6%
- Latin America 277 +14.7% +8.3%
- Eastern Europe 247 +23.9% +25.0%
- Other countries 180 +11.0% +1.5%
Cosmetics total 3,781 +6.1% +2.5%
The Body Shop 263 +10.3%  
Dermatology(1) 105 +9.2% +4.5%
Group total 4,148 +6.5% +9.5%
(Provisional, unaudited figures).
(1) Group share, i.e., 50%
Cosmetics branch
Sales trends by division

- The Professional Products division recorded a like-for-like growth rate of +3.8%, with positive scores in Western Europe and very strong expansion in the "Rest of the World" zone.
In the United States , our brands achieved high sell-through figures. The year was however affected by inventory reduction in professional distribution and by a reshuffle of our distribution network at the end of the year.

- L'Oréal Professionnel benefited from the launches of the Play Ball and Hair Mix styling ranges, the Série Expert Lumino Contras t line for hair with highlights, and, at the end of the year, the hair colourant Symbio .
- Kérastase very successfully relaunched its Nutritive range and introduced Densitive nutritional complements.
- Redken launched the Blonde Glam haircare line and a new hair colourant Shimmer One .
- Matrix launched a new range, Matrix for Men , and relaunched its styling range Vavoom .

- The Consumer Products division achieved a like-for-like growth rate of +5.8%, with a substantial acceleration in the 4th quarter at +6.5%. Western Europe confirmed its upturn, and sales continued to grow in North America . The Rest of the World again saw its sales growth accelerate.

- L'Oréal Paris achieved a good year, with strong growth in skincare thanks to Age Re-Perfect and Men Expert as well as in make-up and in haircare with the successful launch of Elsève Nutri Gloss. Europe and the emerging countries are benefiting from the success of these launches . The hair colourant Casting Crème Gloss is confirming its success in Europe .
- Garnier sales grew strongly, driven by the successful hair colourant Nutrisse and the Fructis haircare line, and by successes in facial skincare, bodycare and sun protection. The brand's vision has been strengthened by the new "Take care" campaign which was internationally rolled out at the end of last year.
- Maybelline New York : The make-up brand achieved impressive growth, evenly distributed between the various zones, driven by the success of Dream Matte Mousse foundation and the great mascaras collection. The fourth quarter was notable for the launch of the highly innovative Watershine Elixir lipstick .

- The sales of the Luxury Products division have risen by + 5.1% like-for-like. The growth seen in Western Europe continued in the 4th quarter, with similarly dynamic trends across all the major markets. Sales improved slightly in North America , thanks in particular to the success of the facial skincare and perfume initiatives. The acceleration in the Rest of the World continued in the fourth quarter, particularly in China , Latin America and Eastern Europe .

- The dynamic growth trend of the fragrance business is continuing: the new fragrance for women, Code Donna from Giorgio Armani , continued to prove successful in Europe at the end of the year. The brand's flagship products Armani , Acqua di Giò and Armani Code confirmed their solidity over the Christmas period. Furthermore, Miracle Forever by Lancôme and Noa Perle by Cacharel strengthened the positions of the two brands concerned. Lastly Antidote , the new men's fragrance from Viktor & Rolf , proved extremely successful in the USA and in France , where it was first launched.
- Skincare sales growth continued to accelerate, with an excellent reception on all markets for Absolue Premium Beta X by Lancôme , featuring the newly developed molecule Pro-Xylane . Biotherm , with its Aquasource serum, and Helena Rubinstein, with its Prodigy tissular , have also seen their sales gather speed in the skincare business.
- Lastly, the make-up business saw the launch of Rouge Unlimited lipstick by Shu Uemura , which uses a revolutionary pigment technology and is proving extremely successful.

- The growth in Active Cosmetics sales continued, with a substantial advance in like-for-like sales of + 12.2%, reflecting strong contributions from all the geographic zones.

- All the brands achieved double-digit growth, thanks to a good performance from the products in our catalogue, and the positive impact of launches such as the skincare lines Neovadiol and Normaderm from Vichy ; Redermic anti-wrinkle skincare; and Toleriane Teint from La Roche-Posay . Furthermore, the sun protection products of the two brands enjoyed a good season.
- Innéov also achieved strong sales growth, thanks to the launch of Innéov Solaire , the first sun preparation product to include Skin Probiotic .
- Furthermore, the certified organic cosmetics brand Sanoflore joined the Division in November 2006.
Steady growth in Western Europe
The sales trends of each division confirm the return to growth in France , Germany and Italy , while strong growth continued in the United Kingdom and Spain . All the countries achieved positive scores.

Professional Products recorded growth in all product categories. The American brands Redken and Matrix demonstrated their very powerful appeal, particularly in France , Belgium and Spain .

The Consumer Products division saw sales grow in all countries, particularly in Spain and the United Kingdom . Thanks to its success in skincare (Age Re-Perfect and Men Expert from L'Oréal Paris ), facial skincare (Garnier) and haircare (Fructis by Garnier), it has made further market share gains in these categories.

Luxury Products are advancing in all the countries on broadly similar trends, with sales gathering speed for Lancôme , thanks to Absolue Premium Beta X at the end of the year, and excellent momentum for Armani and Biotherm , as openings of Kiehl's and Shu Uemura boutiques continued.

In the Active Cosmetics division, sales are growing at a rapid rate throughout the zone, driven by La Roche-Posay in particular. North America:
Growth despite a background of consolidation in distribution

In North America, the situation in the United States reflected a combination of turbulences in the distribution sector. The market grew less quickly than in 2005; although very dynamic in the mass-market segment, growth was slower in sales to salons and in the department store business.
As a result, like-for-like sales growth amounted to + 2.7%.

The Professional Products Division continued to make market share gains in sales to salons, with good scores for Matrix and Redken hair colourants and the Kérastase brand. The Division has strengthened its cooperation with its top-selling distributor, and readjusted its geographic distribution agreements. There was a noticeable reduction in the level of distributors' inventories .

The sales growth of the Consumer Products Division has been galvanised by the advances made by Garnier and its haircare lines Fructis and Nutrisse. Maybelline recorded a good growth figure thanks to Superstay lipstick . The growth rates of L'Oréal Paris varied by category, with a strong performance in make-up but a weaker one in skincare.

In Luxury Products , amounts invoiced were held back throughout the year by the merging of the two main department store chains and the closure of 80 outlets. The Division improved its skincare positions thanks to the success of Absolue Premium Beta X and Collaser Eye by Lancôme , and in women's fragrances thanks to the success of Armani Code Women and Hypnôse by Lancôme .

The roll-out of the Active Cosmetics Division gathered speed, with the launch of Vichy in the north-east of the United States and in California , and strong growth for Skinceuticals. Rapid development in all the new markets
The expansion in the Rest of the World continued, gathering speed in the fourth quarter when like-for-like growth reached +14%.

- Like-for-like sales growth in the Asia zone amounted to + 7.9%.
In the Japanese market, which was very competitive, Professional Products turned in a good performance.
Asia excluding Japan had a good year, at + 11.8%, with a sharp acceleration in the second half.
In China, the acceleration was particularly noticeable, with sales growth of +21.2%. Growth for the Consumer Products Division was very strong in facial skincare, thanks to L'Oréal Paris (White Perfect , UV Perfect) . This division was strengthened in 2006 with the launch of Garnier skincare which is gradually being rolled out.
The Luxury Products Division has confirmed its leadership, driven by the Lancôme and Biotherm brands. In the Active Cosmetics Division, Vichy and La Roche Posay are continuing their breakthrough in pharmacies.
In South Korea , the situation is gradually improving, as the country returns to growth.
Furthermore, growth rates in Indonesia and Thailand were high, particularly in the Consumer Products Division.

- In Eastern Europe the group's performance over the full year 2006 was excellent at + 22% like-for-like, with a strong contribution from the Russia and the recently created subsidiary in Ukraine .

Professional Products turned in an excellent performance, particularly in the Russia. Matrix continued its breakthrough in the zone as a whole.

In Consumer Products , L'Oréal Paris recorded very good scores in make-up and haircare with Elsève . Garnier sales grew very strongly in haircare and facial skincare, and growth was also strong in bodycare.

In a rapidly expanding luxury market, the Luxury Products division achieved very high growth, particularly in the Russia, the Czech Republic , Slovakia and Hungary , driven by the success of the Lancôme , Biotherm and Armani brands.

Active Cosmetics produced another year of strong growth, confirming its leadership in a pharmacy channel whose modernisation is gathering speed.

- Like-for-like sales growth in Latin America was very rapid at + 16.1%, thanks to the strong sales recorded in Brazil , Mexico and all the other countries in the zone.

The sales of Professional Products grew thanks to the L'Oréal Professionnel brand, and particularly to the successful launch of Matrix in Brazil , Chile and Venezuela .

Sales in Consumer Products advanced at similar rates across the various countries in the zone, driven in particular by the success of the major launch NutriGloss from Elsève .

Luxury Products , whose sales grew strongly, took advantage of the good performance of Biotherm and the success of Ralph Lauren and Giorgio Armani fragrances.

Active Cosmetics is continuing its very high growth with Vichy and La Roche-Posay , which have recorded substantial market share gains in dermocosmetics.

In the Other Countries , like-for-like sales growth amounted to + 8.5%. In India (+ 40.3%), our businesses continued to grow very strongly, bolstered by the remarkable success of Garnier with Skin Naturals , Color Naturals and Fructis . The Middle East again proved extremely dynamic with double-digit growth. Good year-end for The Body Shop
Consolidated since July 1st, The Body Shop recorded a second half-year of solid growth, with a large increase in sales at the end of the year. Net consolidated sales grew by + 9.7%.
Retail sales (1) increased by + 6.5% (+ 2.7% with a comparable store base) (2).
The number of stores increased by 89 in the second half of 2006. At December 31st, the total number of stores was 2,265, of which 886 are owned by The Body Shop.
These figures reflect particularly good results in Europe and Asia, with very strong performances in United Kingdom, Norway, and Japan.
Growth was strengthened by the success of launches such as the Aloe Vera skincare range and the Neroli Jasmin fragrance, and by gift sets, which sold very well at the end of the year.

(1) Retail sales: Total sales to consumers through all channels.
(2) Retail sales with a comparable store base: total sales to consumers by stores which operated continuously from July 1st to December 31st, 2005, and over the same period in 2006.
Dermatology
Each of the zones made a positive contribution to this growth figure. The Clobex range for treating psoriasis,
together with Metrogel 1% and Loceryl Nail Lacquer, have strongly bolstered the growth of Galderma. Contacts at L'OREAL
Individual shareholders and market authorities
Mr Jean-Régis CAROF
Tel. : +33.1.47.56.83.02
http://www.loreal-finance.com

Financial analysts and institutional investors
Mrs Caroline MILLOT
Tel. : +33.1.47.56.86.82
Fax : +33.1.47.56.80.02

Journalists
Mr Mike RUMSBY
Tel. : +33.1.47.56.76.71
http://www.loreal.com