LOréal Aktie

Good morning, everybody. We'll start the conference now. Pens ready, Copilot is ready. Let's start. So welcome to the 23rd Deutsche Bank Global Consumer Conference. This year, we have over 120 companies attending. We have over $5 trillion market cap in those companies attending. This is the consumer conference you need to be at.

Like any good product, we have our dupes. Nicolas will vouch for that as a trend in some areas, but you want to be inside the big tent, not outside looking in, especially when it really does feel like there's -- we are at such a pivotal moment, AI adoption, the conflict, the bifurcation of the consumer, the channel shifts occurring. You really need to hear how the best companies are handling these issues and you really need to be here.

So it's my pleasure to introduce the L'Oreal management. To start the conference Nicolas Hieronimus, CEO; Christophe Babule, CFO; and also Omar Hajeri, the President of the Professional Products division.

Thank you, Tom. Good morning to all. Happy to be the opener of this beautiful conference. And as always, at L'Oreal, without further ado, just to put you in the mood, and little video to remind you about who we are.

[Presentation]

So welcome to the world of L'Oreal. This morning, I am going to just make a few comments on the start of the year, try to explain to you why L'Oreal is today winning model. Then you'll have Omar who will present a deep dive on the Professional Products division, which has been our fastest-growing division over the last couple of years and continues to do so, and then tell you which -- that we still have a few acceleration engines for the future. So indeed, L'Oreal published its first quarter not so long ago, and it has been a great start of the year. But I would say for me, the most important element of the beginning of the year is, once again, the demonstration of the resilience of the beauty industry.

Last year, we ended the year at -- the market was around 3.5%. Right now, it's shy of 4%. So more or less in line with what was the end -- the second half of last year, which shows that despite everything that Tom has been commenting upon, despite all the events, the war, the conflicts, the tensions, people continue to buy beauty because either they need it, they want it, it's a bomb on their wounds, it's something that lifts the morale. And this is why this category continues to grow, and it grows because for all the reasons I mentioned, but also because it is constantly stimulated by new products, new innovations.

It's a category we have new services, whether in salons or in aesthetic clinics or even in department stores, you have new categories that are rising all the time, styling is exploding. All those supplements are back into the beauty game. And there are new technologies, LEDs are a part of the complement of what are the traditionally topical products. So it's a constantly expanding category, always innovating and always growing, which is why because I often have debates with investors about staples, which is why I'm eager to say that beauty is not staples.

First of all, you can't use that to make up on, but more importantly, it's a very animated, beautiful and sexy category, which, of course, we are happy and proud to be the leaders of. The start of the year, as I said, was good for L'Oreal. We did a first quarter at plus 6.7% adjusted of our IT transformation. And the market, as I said, it was between 3.5% and 4%. And a very good start of the year overall, with growth in all regions and all divisions. If I take all the regions, as you can see, all the regions were positive with double digit in the SAPMENA region, which is emerging markets, Southeast Asia, the Gulf despite the Gulf by the way, but North Asia was positive. Europe remains very positive. North America, very dynamic above the market.

The only region in the world that has shown a little slowdown at market level was Latin America, which we have continued to overperform. And in our divisions, as you can see, the 4 divisions were positive, with the Professional division in double digit like Dermatological Beauty, which was an important comeback as this division accelerated over the back end of last year. So we are back really with a very strong growth in derm beauty and luxury and mass growing mid-single digits, both gaining shares in sell-out.

So it is an acceleration that has been confirmed quarter after quarter or half after half. You see the first half of last year at 3% second half at 4.9% and first quarter of this year at plus 6.7%. It's true. It was our easiest comp as it relates to last year. But it's start of the year that we wanted that we planned because like 18 months ago, when we saw that the market was slowing down a bit, and the world needed some, I would say, excitation, we really truly decided to step up our innovation plan.

And we've really done it in a very significant way and it's not a one-off. It's a durable decision to step up our innovation. You see the weight of our launches in terms of extra basis points was 100 basis points more in the first half of '25, 200 basis points more in the second half and this first quarter was slightly above 350 basis points more of innovations because, of course, it takes a bit of time to get these launches ready and prepare them. So we are now, I would say, in a much more accelerated innovation pace because that's what the market needs, and that's what allows us to win and to gain share on all our categories.

And that's really, to me, at the heart of the L'Oreal winning model, which is made of many things. We'll talk about research, about creativity, about the know-how and beauty that we have. But we have, I think, something that's very unique, and that's our capacity to accelerate on launches in a very short period of time, as demonstrated. I think we have a very unique combination of scale. We are a big company. We're global. We've been there for 117 years, kind of agility. We have the capacity. Our teams at L'Oreal have a capacity not only to see the trends, but also to react very quickly, either geographically or by category when trends evolve or when there's a need to do more.

And I think that's what really allowed us to outperform our peers. And if I look here at the WWD ranking in terms of beauty players, you can see that obviously, we are by far the biggest. But if you look at the track record in terms of CAGR over the last couple of years, last 3 years exactly, we had a CAGR of plus 6.6% over the last 3 years, whereas the sum of all our followers was at half that growth speed. So it means that despite being big, because of this agility, because of the acquisitions we make, and I'll say a word about it, we have this capacity to overdeliver despite being already the leader of this market. But I would say with only 15% market share. So there's still room to grow, and that's what we intend to do.

And one of the ways for us to grow, of course, is organic growth. And there is acquisitions. They are at the heart -- I often get questions about acquisitions. Out of the 40-plus brands that we have at L'Oreal, only 2 were created by L'Oreal, Kerastase and L'Oreal, the rest were acquisitions made over the course of history. And if I take the last 10 years, around 1/4 of our growth has been generated by the acquisitions, which means that close to 3/4 were done by the organic growth of our brands. But it is something that we continuously do, and we made a few important acquisitions or deals last year. Because we are -- because beauty is a very, very diverse market in terms of consumers, expectations, price points and personas, architypes of beauty, which is why, and that's a chart I showed here for the first time in this conference last year, we have a very big portfolio of brands, but this portfolio of brands addresses different types of beauty from more to less premium or from more glamorous to more health-oriented.

And depending on the categories, the times of year and the countries, you will have different type of expectations. And this portfolio is being rolled out as we speak. And you can see that only part of it is everywhere. So part of the work that our teams are doing on the ground is constantly assessing which brands can we launch and is it relevant for our consumers? Not all brands are relevant for all consumers. We have a Korean makeup brand that's probably never going to be a big success in France, but it's great for Southeast Asia. So that's the work we do. And this occupation of the beauty playground allows us to have a multidivision category strategy and allow us to win on all categories.

An example is Fragrance, where actually it's only 1 division -- it was only 1 division where we have a 22% market share. And as you can see, we continue to outpace the market with Libre from Saint Laurent has become the #1 female fragrance in the world, and we have great successes from Prada, Valentino, now expanding ESOP into fragrance. But we really truly cover with our divisions the full price brackets. We've launched on NYX, which is a mass market brand -- mass market makeup brand, Mist that's very affordable. We are launching Mist on brand at Lancome or even Valentino, so we should to be able to attract younger consumers and counter for the most expensive fragrances.

But on the other end of the spectrum, you have people that want to have exclusive fragrances that are much more expensive, which is where the acquisition of Creed makes total sense, the acceleration we're right now making on ESOP and a few other brands. We do that in every category. It's true in makeup, where we are the world #1, and we have clearly been accelerating product launches, both in mass and luxury to satisfy all consumer price points. And a brand like NYX is doing phenomenal as well as Saint Laurent, so the two extremes in terms of price coverage.

Probably the 2 categories where we have, I would say, the biggest or the largest number of divisions trying to occupy the playground are skin care and hair care. On skin care, we are the leaders by 15%, and we have 4 brands in the global top 5. And what's interesting is that one is from our mass market division, L'Oreal Paris, two are from our dermatological beauty division, La Roche-Posay and CeraVe and one is from our luxury division. All different price points, different types of beauty approach, and that's how we grow and became by far #1 of the skin care market.

And we had lost a little bit of market share last year. We've reaccelerated again. It has proven to be effective on Elvive, which is now back to double digits. And again, when we see that the market is a bit slower, we double down on innovation. And last year, we innovated on dermatological beauty. Start of the year, we've had many initiatives on Lancome, on Kiehl's, on Helena Rubinstein and on our mass market brands to accelerate again on skin care. So it's, again, multi-division, different price points, innovation stream to occupy the market.

And the one category where we've really clearly had our best overperformance over the last 3 years is hair care. And hair care, as you can see, we've been growing at 13% last year, twice the market speed, still doing it this year and it was already the case at the end of 2024. Market share of 16%. And here, it is where we truly have the best multidivision strategy because we have mass markets and mass markets' flying right now, was in Brazil, on Spain last week and in the U.S., Elseve or Elvive depending on the name of the brand, it's like growing high double digits and really becoming a leader in many countries. But we're also addressing the more medical part of hair care, antidandruff antihairfall in pharmacies with the dermatological beauty division, and CeraVe launch is an example of that.

And of course, where we have the best performance right now and an absolute stellar success is in the professional premium hair care division with brands such as Kerastase and Redken and the likes, but to tell you more about that before I come back to conclude, I would like to hand over to Omar, who is the President of this beautiful division.

Good morning, everyone. I'm absolutely delighted to show you how the oldest division of L'Oreal, the founding division, has been able during the last years actually to reinvent itself and put the division on a strong trajectory in terms of growth. So we are the oldest, we have been founded 117 years ago. And since our foundation, actually, we have one mission, which is to serve the professional hair dressing market. A very fragmented one. There is more than 2 million salons in the world, 7 million stylists. It's quite a fragmented industry in France. Just to give you a perspective, there is more salons than bakery. So it's quite an important element. But it's an industry also which is generating quite a large business because the sell-out of this industry is EUR 140 billion in terms of services.

But this industry has been going through to deep massive transformation during the last 10 years. The first one, that is only visible when you are in this industry is that this industry is fragmented, but it's going through a hyperfragmentation because we see the rise of self-employed stylists everywhere in the world. They represent today more than 60% of states in the U.S., more than 60% of stylists in the U.K. But this phenomenon of self-employed stylists is going everywhere. So for a manufacturer like us, it means that our customer base is hyperfragmenting during the last 5 to 10 years. So I will show you how we have adapted successfully to this transformation.

The second big element, which is explaining actually that hair care is booming everywhere in the world is the change of consumers and the change of the habits of consumption of consumers all around the world. The first element that you need to have in mind is that women have long hair everywhere in the world. It's 79% of women in Europe. And this number has moved by 8 points in terms of penetration during the last 5 years. More than 83% in U.S., 94% in China, and it's across every type of consumers. Boomers in the U.S., women about 60 years old, where 10% of them 15 years ago, had long hair. Now they are 60%.

The second element that you need to have in mind is that the mixed hair population makes by itself that we have more women with curly hair. It's 1/3 of the millennials that today have curly hair in Europe. And this type of long hair and curly hair are demanding more hair care product, more treatment.

The second phenomena that we see everywhere in the world is the sophistication of hair care routines. We call it the skinification of hair care, meaning that in the routine of a woman today, they are using not only shampoo and conditioners, but also treatments such as serums, oils that has become embedded in the routine of women all around the world. Just an illustration. If you look at Europe, France, more than 72% of women actually have a routine of more than 3 steps, which is quite phenomenal.

The last element, women are ultra-connected. And I can tell you that the appetence, the desirability for hair care is big. When you look at the number of conversations that we have online on #hairstyling, it's more than 13 billion views every month on hair care, it's 6 billion view every month. And these women that are not only connected, but they buy online and a big proportion of them. In the U.S., almost 1 in 2 American women has bought a hair care product online during the last 6 months. It's a big phenomena. It's a big shift.

So when it comes now to our professional selling hair care market, it's a market of EUR 13.5 billion. And this market has grown steadily at 3% during the last 10 years year-on-year. But one element which is that you have to notice is actually that we see a strong acceleration of hair care on that market. That moved from a year-on-year growth from 2019 -- 2015 to 2019 by 4%, to now during the last 5 years an acceleration at plus 7%.

The second element in our professional hair care and professional industry is that we see the rise of new channel being e-commerce and selective retail. Now if we look at the weight of this channel, they represent 38% of the total value of the market, when they were representing in 2017 only 16%. So this market has become extreme omnichannel. On that market, we have drastically accelerated our growth. Our CAGR was from 2015 to 2019, a CAGR of 2.1%, and we have totally step changed our growth on that market, growing at 7.8%.

And as Nicolas showed you, the start of the year is very promising because we are now growing at plus 13.1%, so we keep accelerating. And we keep accelerating by gaining massive market share. We reached in 2025, our record market share of 27%. For you to have some perspective, which is higher than the fourth next market share of our competitors combined. So we are an absolute leader on this professional hair care market. And this has been done definitely by embracing the ominchannel landscape in which we are. As you can see on the chart, we keep accelerating on the hair care market that we add up on it e-commerce and selective retail, which has been massive accelerator for us.

The reason of success: number one, we have the most powerful portfolio of our industry. Going from brands which are accessible in terms of pricing like Matrix to ultimate selective, high-end champion such as Kerastase, our brands are culturally relevant. They are touching any type of consumers with a strong appeal of Gen Z. And last but not least, I would say, these brands are benefiting from incredible power of the R&I of L'Oreal. Thanks to R&I, the most advanced discovery in hair care category, unmatched performance.

And I have to say also, we benefit also from the science of perfume that the L'Oreal Group has because our formula smells extremely good. So the other element of success as it was mentioned prior is our omnichannel strategy. We are building equity in new channel and desirability and recruiting at scale new consumers, being on e-commerce, being in selective retail, and this is why we are saying that our omnichannel strategy is a winning one, whilst also continuing to accelerate in salons as well.

I was mentioning before the hyperfragmentation of the market that we are exposed to. What the division has done during last year is actually to transform itself from a salon model to a stylist-centric model. We have become completely of this scope. We've launched some platforms, online platforms, e-commerce platforms, such as L'Oreal Partner Shop, saloncentric.com. So it means that we have made our product accessible to any stylist whenever he wants. And these platforms are present in more than 36 countries in the world. We have digitalized our education, launching online education platforms, completely demultiplying our capacity to educate stylists. We were educating 900,000 stylists in 2019. We are now educating more than 2.5 million stylists. And last but not least, we kept our strong striking power in the field. We have more than 2,000 sales representative in the world, but also stores in the U.S. that are giving us an incredible competitive advantage.

But one element that you need to get in mind is that this transformation, an O+O transformation, has been also very strongly driven by data. We have now in our database more than 3 million stylists out of 7 million stylist worldwide, which gives us an incredible competitive advantage to reach the professional hair dressing market. So we are growing fast, but I can tell you, it's not going to stop because the outlook are very good.

When we look at the stage of premiumization of the hair care market, we are still in an early stage. When you compare the premium skin care market and total market versus the premium hair care market on total markets, on skin care, premium represents 50% of the value of the market. In hair care, it's only representing 25%. If I want to give you an illustration in volume, if you look at the most advanced premium market in the world, which is the U.S., only 1 out of 10 products sold in the U.S. is a professional hair care product. It shows the incredible potential of recruitment that we have still in front of us.

And we are going to grow in retail, but also in services, as Nicolas was mentioning prior. We strongly believe that the future of hair care will pass also to services in salons. What you can see on the chart here is the latest concept that we have launched in Saudi, which is a salon totally dedicated to hair care treatments. And hairstylists are going to play a very important role in terms of prescription because we are also giving to hairstylists some devices which are powered by AI to do the best prescription and recruit new consumers in salon under the hair care category.

We have also another engine of growth for the division, which is styling. We just acquired Color Wow, which is the ultimate worldwide junction in the styling category, only present in U.S. and in U.K. And we are, as we speak, deploying Color Wow everywhere in the world and it's going to give us an extra boost because the styling market has been growing -- over the last couple of years, growing at plus 6%. So next to hair care, we have now styling, which is going to be a very strong layer growth.

So as you can hear, we are set for success, set for accelerating growth, and we will definitely keep significantly outperforming the professional hair care market. Thank you.

I think it's a good idea to invite my presidents of division to this type of conference because they make public commitments on acceleration, which, of course, everybody has taken note. So at least it's good for next year's budget to hear that. So how are we going to continue to accelerate or to drive growth on such a big company? Well, there are many growth drivers that I can share with you.

First of all, as we've already discussed here, the number of consumers who are going to be entering the beauty market, having the purchasing power to do so is very important. We have 400 million new consumers that are entering the growing middle classes in emerging markets. You have 125 million people that are going to be in age of consumption, so somewhere between 16 and 25. And of course, as the population ages, and we are one of these categories that you continue to use until you die. You have 170 million people that are 60-plus and people living until 100 years old that are going to be using beauty.

And our objective at L'Oreal is indeed to increase the number of consumers that we have to reach 2 billion consumers in the next decade. Today, we estimate that we have approximately 1.2 billion to 1.3 billion consumers using at least one L'Oreal product around the world, and we are on a recruitment mode to increase that number. And we do that through several strategies. The first one is affordability, indeed. On top of our very premium brands and luxury brands, we are making sure that consumers can enter the market either with mass market products that we have in our mass brands, also specific formats such as this Mini Kerastase that allows people to discover the professional quality and of course, also through e-commerce, which represents 30% of our business today and gives us a fabulous penetration tool to recruit, particularly in the emerging markets.

Now it's not just about units. It is also about value. And the great thing is that the beauty market is constantly sophisticating. You've seen it in hair care, where the number of products used, the quality that people are looking for is increasing constantly. And today, hair care has become a very profitable category, which probably it wasn't 10 years ago, but it's happening across many categories. So if we look at body care, body care was super basic and body care is increasingly sophisticating because people are paying more attention than ever at their body. I'm not even talking about the GLP-1 usage that generates some needs to firm the skin and to use more moisturizers. But this market is valorizing, as is the fragrance market, with a strong rise of oat perfumery. So we have really a market that both has more consumers coming in and prices going up with consumers sophisticating as they discover more and more beauty products.

Another driver of the market growth is the fact that there is an increasing diversification of what I would call cultural expectations. Beauty has always been very cultural. But I would say it's a market that was dominated by a couple of countries, France, Italy, where many of the categories were born, but it is really expanding to many sources of inspiration. Of course, you've heard about Korean beauty, about fragrances from the Middle East or even Chinese brands that are growing. And we are part of that game. We are part of that game, first of all, with our brand portfolio.

I've shown you another way to look at our brand portfolio, which is from its countries of origin. And as you can see, of course, we have, first of all, many American brands, which makes us a force to reckon with in the North America, European brands, but we also have Korean brands, Chinese brands, Japanese brands, ESOP as an Australian brand. And of course, we make sure that these brands are more connected to their original culture than ever. And as if it weren't enough, I think one of the L'Oreal strengths has always been to be able to adapt to the local taste and the local culture even with its global brands.

And here, what I have on the screens are 2 examples of the L'Oreal Paris brand and how it communicates to local consumers tapping into very important cultural festivals or moments like Chinese New Year with a very specific commercial or Diwali in India. These are with local celebrities, local teams that do local creation, and that allows us to really be often seen as local brands, even though we could be from France or Italy or the U.S.

And the fourth driver of acceleration is longevity, which is this new word you heard a lot about, but it is about the fact that people not only know they are going to be living longer, but they want to live longer, better and healthier, and it's redefining skin care. We've been investing a lot in understanding the mechanism of what happens at cellular level and what makes your skin age and how you can not just correct it, but anticipate it. And that is driving a lot of innovations that have just begun to appear on the market, like the new Longevity MD Lancome skin care line that's doing phenomenal and that make people use all sorts of, I would say, routines or techniques to protect their youth. It can be diagnostic tools, which is where our beauty tech investments have allowed it to propose very sophisticated recommendations. Of course, topicals, which remain the heart of our business, but devices or supplements, which are now integrated into the L'Oreal categories of products that we are launching on several brands.

And because we want to stay always at the forefront of these trends, we clearly invest. We invest in longevity, in understanding more longevity, more aesthetics, so it's L'Oreal Advanced research. We are one of the only beauty groups that has an advanced research, working upstream, trying to understand, create new molecules and understand the mechanisms of skin. We, of course, have announced a partnership with Kering on longevity, which we are just beginning to work on. And we have this investment in Galderma, which is very important for us to be both in the cockpit of this beautiful company and to understand more what are the mechanisms and the recipes for success in the world of aesthetics and be, of course, associated to this part of the business as we are with brands like Skinceuticals today sold and prescribed by derms. So really longevity is going to be a strong accelerator for the growth of L'Oreal.

And then, of course, I couldn't make this presentation without talking about AI. AI is truly going to power up beauty, to augment beauty in many ways. So we've embarked a few years ago now on AI and now generative AI. I think the R&D of L'Oreal was working with AI already a long time ago, but it's really a big acceleration now. And we have organized to really focus on our AI and transformation with 3 pillars.

One is the consumer engagement, how does the consumer look for products, get informed about products, how we improve and increase the efficacy of all our functions in the group. So it goes from BETiq, which is our AI-powered prognostic prediction tool for our A&P investment that really creates a lot of productivity. It's about creating content in our AI factories internally. And of course, it's our big IT transformation to create the backbone of this. And the third part, of course, is AI for our employees. We've trained more than 65,000 L'Orealans how to use AI with the L'Oreal GPT. They have a test that can help them assess their own mastery, and we provide more and more sophisticated learning.

So it is really transformative. And probably the part where it is the most transformative is on the way people look for beauty. They are now more than half of consumers, especially the younger ones, do not go through the search bar. They ask questions to large language models. And of course, we want to make sure that we become the reference source of knowledge for all LLMs. So we have multiple partnerships with all the big AI companies to make sure that the combination of our beauty know-how and their computing power allows consumers to find the best answers in their beauty quest. And of course, the best answers have to be the choice of a L'Oreal product.

Finally, as I said, AI is a big accelerator of our discoveries. Our R&I was at the forefront of this technology adventure. We have partnerships with companies like IBM to create formulas and we work with NVIDIA, too. And that allows us to increase, in a very spectacular way, our capacity to create new products, to scan molecules, to create the molecule that will make this new cream that indeed works on making your skin stay young or reset it. And in the last 12 months, we've tested more molecules than in the last 5 years. So it's an incredible acceleration. We use digital twins.

And frankly, again, if you combine our data with this computing power, it's a fantastic competitive advantage. It allowed us last year to be named #1 most innovative company in Europe across all sectors. But more than that, it's what lies behind the acceleration in product launches and innovation that I've shown at the beginning of the presentation, and that allows us to accelerate our outperformance versus the market.

So lots of possibilities to accelerate, lots of sources of growth, consumers, valorization, cultural relevance, AI to accelerate and augment, both the consumer and our employees. But I would say the one thing that -- and I tried to do a video, which I couldn't do to show you that, the real secret sauce of L'Oreal, I would say it all the time is the L'Oreal culture. For anybody want to spend some time at L'Oreal, it's a very unique blend of passion, energy, search for excellence, competitive fighting spirit. I put here a few images we had last week or 10 days ago our worldwide meetings where all the leaders of L'Oreal come to Paris to be presented the next year's plans by the brands, and they see all the brands that you know. And they spent a week, all the country managers, in a room where they see like a fireworks of initiatives, of engagements, of communication.

And I can tell you that the energy, not just the parties at night, but the energy in the room and the passion these teams have for beauty, which they all specialists of is absolutely uncomparable. And I think in the end, that's the one reason why I truly believe that L'Oreal will continue to grow and to outperform the beauty market, a beauty market that will indeed continue to be extremely dynamic and that is not just a staple. Thank you so much.

Thank you very much, everybody, for attending. We've come to the end of the time for the presentation. The company will also be attending meetings over the course of the next couple of days to ask questions. But Nicolas, Christophe and Omar, thank you very much indeed for your time.

Ladies and gentlemen, dear shareholders, dear friends, it is a great pleasure to see you all here at the Palais des Congrès for our Annual General Meeting. For me, this gathering holds a special significance. It has now been 20 years since I had the privilege and pleasure of serving this assembly, and it is now with the same emotion that I welcome you today for the 21st consecutive year.

First of all, I would like to thank you for your presence and your loyalty, and I welcome all those joining us for the first time. Every year, more and more of you choose to be part of the L'Oréal adventure. We now have nearly 430,000 individual shareholders which is the largest number of our history and a remarkable increase of over 10% in just 1 year. I would also like to thank the shareholders who voted by mail and those following remotely for the live broadcast at this Annual General Meeting. Finally, I thank the members of your Board of Directors who are all present in the front row, and I would like to extend my greetings to them. I would like to remind you that this meeting is open to the public through its live broadcast on the L'Oréal website.

As I say every year, it is intended to be friendly, warm and courteous as it has always been. As we know, this annual gathering is important, and we wanted to be as informative and enjoyable as possible. After the various presentations, you will have the opportunity to ask questions about any topics you would like to explore further. Our ushers are already available to collect any questions you may have on the cards provided for this purpose. And of course, these questions will be compiled before the discussion begins. Our shareholders joining us remotely may also submit their questions via the general meeting streaming platform, which is available on the lorealfinance.com website. These questions will be addressed during the general meeting based on a representative selection of the topics that have drawn a large number of shareholders' attention and within the allotted time.

Priority will be given as much as possible to questions asked by shareholders present in the room. Please note that the list of shareholders present or represented will be finalized at 11:30 a.m. in order to determine the voting conditions at the end of the meeting and to keep you informed. As usual, we will start a short film. It is very short, but as you know we renew it every year. We call it our L'Oréal business cards. So in just 2 minutes it sums up the key information regarding your group. Let's have a look.

[Presentation]

Thank you. I will now proceed with the official opening of our meeting. My capacity as Chairman of the Board of Directors, I will chair the meeting. These scrutineers are the 2 shareholder members of the meeting who either personally or as proxies hold the greatest number of votes who have agreed to serve in this capacity. They are Tethys represented for the purpose of serving as a scrutineer by Mr. [ Alexandre ] and Nestle represented by Ms. Béatrice Guillaume-Grabisch who serves as a scrutineer.

The Chairman and the scrutineers constitute the bureau of the meeting who appoints Ms. [indiscernible] sitting on my left as Secretary of the Board of Directors. As the Secretary of the meeting, Mr. Nicolas Hieronimus is the Chief Executive Officer and he needs no introduction, Mr. Christophe Babule needs no introduction either Chief Administrative and Financial Officer. They are also present here with me. The statutory auditors are present in the room, Ms. [indiscernible] representing EY and Mr. David Dupont, representing Deloitte. Mr. [indiscernible] is also attending this AGM for the 20th time, I think, he is also attending the meeting today.

No shareholder has requested the inclusion of proposed resolution or items on the agenda of the meeting. I will now ask Ms. [indiscernible] to provide us with the provisional quorum status as well as some additional information regarding our meeting.

Mr. Chairman, the shareholders were duly convened to this meeting in accordance with legal formalities. Prior to the start of this meeting, registration have not yet been completed. The provisional attendance sheet recorded the representation of [ 81.91% ] of the of the company's going shares. 1,200 shareholders are presented at today's meeting and I'd like to thank them. 90,000 shareholders have granted proxy to the Chairman and 15,560 shareholders have voted by mail. The meeting therefore, has the required quorum to pass resolutions on both ordinary and extraordinary matters. All documents required to be provided to shareholders have been made available to them. During the legal time frames the company has responded in accordance with legal requirements to request for documents submitted to it.

The documents related to the notice of this meeting are available right here on the table. The documents have been deemed in order by the bureau. And since these documents have been made available to you, as usual, we will not read them in full.

Mr. Chairman, the meeting is now duly constituted and may therefore validly deliberate.

Thank you, [ Emily ]. Now, very briefly, I would like to explain to you how our assembly will proceed. It is going to be very similar to the previous years. We listened carefully to your feedback to determine the topics that we could address during this assembly. The themes that you're most interested in. We send a survey to thousands of you to gather your opinions. We received a large number of responses, and we'd like to thank you for that. That is why this year, we have chosen to focus particularly on the topics that are especially relevant to you. The strategy and outlook for your group, especially regarding sustainable development and the use of artificial intelligence.

As we do every year, we will begin with Mr. Christophe Babule who will present the group's economic and financial performance in 2025. Mr. Nicolas Hieronimus will discuss the 2025 performance from a strategic point of view and will present the strategy and outlook for the group for the coming years. It will also be the opportunity to discuss some of the achievements under our L'Oréal for the Future sustainability program. Mr. Samuel du Retail will outline L'Oréal strategy regarding the use of artificial intelligence and the growth potential it represents.

This is a highly strategic topic. Then I will share with you my reflections on the year and the evolution of your company's governance. And I will report on the work carried out by the Board of Directors in 2025. Ms. Sophie Bellon, I would like to thank in advance, is the Chair of the Human Resources and Compensation Committee, she will provide an update on the compensation of executive corporate officers in connection with the resolutions to be voted on by the shareholders meeting. [ Ms. Emilie Thiery ] will present the various drafts resolutions, the statutory auditors will present their reports. And then of course, we will answer your questions during a general discussion.

Finally, we'll proceed to the vote on the resolutions. This is a very clear agenda. And will start with Christophe, who is going to present the group's performance in 2025.

Good morning, ladies and gentlemen. Let me share with you some of the key highlights of your company in 2025. Like-for-like growth came in at 4%, marking another year of market outperformance. At 74.3%, our gross margin reached a new all-time high, up 10 basis points from last year despite the adverse impact from tariffs in the U.S.A. Our operating profit margin increased 20 basis points reaching 20.2% for the first time, record margin. And our operating net cash flow was of EUR 7.2 billion, up almost 8%. Consolidated sales increased by 1.3% crossing the EUR 44 billion mark. On a like-for-like basis, growth amounted to 4%. The change in scope was a positive 0.9%, reflecting the acquisitions of the Korean brand Dr.G the styling brand Color Wow and the premium skincare brand Medik8 as well as the impact of hyperinflation accounting in Argentina and Turkey. ForEx had a negative impact of 3.6% due to the strengthening of the euro throughout the year.

As you know, your company is strengthening and modernizing its IT platform, which impacts the phasing of quarterly growth. As you can see on the left, like-for-like growth adjusted for the impact of this transformation accelerated quarter after quarter from 2.6% in the first quarter to 5% in the fourth quarter, driven by the ramping up of our innovation plan. On the right, we have the published like-for-like growth by quarter. As you can see, there is no difference over the full year between the adjusted figures and the like-for-like figures. By the end of 2026, we will have completed approximately 60% of our total IT transformation.

Let's now move on to our regions. All regions posted positive momentum with growth of almost 10% emerging markets are the most dynamic. SAPMENA-SSA grew by 10.9% and Latin America by 8.3%. Growth in Europe remained very robust at 4.4% with particularly strong performances in the Spain, Portugal and Germany, Austria, Switzerland clusters. In North America, sales increased by 3.4%, accelerating strongly between the first and second half of the year. In North Asia, sales grew by 0.5%. Let's take a closer look. Overall, growth in North Asia accelerated from minus 1% in H1 to plus 2% in H2. This was driven by Mainland China, our largest market in the region, where growth went from plus 1% to plus 5%, helped by the gradual recovery of the market, especially in our Luxe division.

Let's now move on to our divisions. All our divisions progress. On a like-for-like basis, they all grew and accelerated between H1 and H2. The Professional Products Division saw the fastest growth, up 7.5%, supported by the ongoing boom in the premium hair care. The Consumer Products division grew by 3.5%, driven by hair care and a clear recovery in makeup in the second half. L'Oréal Luxe grew by 2.8%, with momentum accelerating to 3.6% in the second half. And the Dermatological Beauty division grew by 5.5%, driven by both hair care and skin care. All key brands contributed and SkinCeuticals became the division's third billionaire brand.

Let's move on to our categories. All categories grew each of them progressed. At 12.9%, Hair Care was the most dynamic category driven by strong volume growth. All divisions, professional, consumer and dermatological contributed. Fragrances maintained their double-digit pace at 10.4%, growing twice as fast as the market driven by Cutera brands and boosted by a very successful launch plan. Make-up increased by 3.5% with a strong acceleration between the first and the second half, particularly in North America. Hair color grew by 0.6%, driven by consumer products and finally Skincare increased by 0.4%, gradually accelerating to reach nearly 2% in the second half. Thanks to the recovery of the dermatological Beauty division, driven by its innovations.

Next, I would like to share our e-commerce performance with you. E-commerce is growing by 13%. In 2025, sales in e-commerce amounted to EUR 13 billion, crossing the 30% threshold for the first time, an increase of 200 basis points compared to 2024. Let me remind you, 10 years ago, e-commerce contributed only EUR 1.3 billion or 5% of our sales. Why does it matter? First, it means that we are winning with the winners, global beauty market growth in e-commerce is 4x that in brick and mortar. Second, e-commerce is a true game changer in emerging markets, where its weight rose by 400 basis points in 2025. Third, e-commerce is not only margin accretive but also highly cash generative.

Let's now move on to the income statement. As you can see in this table, 2025 was a very good year in terms of results. The gross margin increased by 10 basis points. Operating profit increased by 2.4% to nearly EUR 8.9 billion. The operating margin reached a new record of 20.2%, up 20 basis points despite unfavorable exchange rates and tariffs. Net profit, excluding nonrecurring items attributable to owners of the company, slightly progressed to approximately EUR 6.8 billion. Net profit attributable to owners of the company after taking nonrecurring items into account amounted to EUR 6.1 billion. It was impacted by the exceptional French tax of EUR 253 million and a decrease in dividends received of nearly EUR 100 million following the reduction of our stake in Sanofi in February 2025. Finally, net earnings per share, excluding nonrecurring items stood at EUR 12.71 in 2025, slightly up compared to last year. Excluding ForEx impact, the increase is 2.8%.

Let's move on to the cash flow statement. Gross cash flow reached over EUR 8.3 billion. Working capital requirements improved significantly reflecting more efficient management across all its components. Investments reached EUR 1.5 billion or 3.4% of sales, slight decrease compared to 2024. Operating net cash flow amounted to approximately EUR 7.2 billion, an increase of 7.8% compared to the previous year. Our balance sheet remained robust with shareholders' equity of EUR 35 billion or 57% of the total balance sheet.

The financial situation remains sound. At the end of December, net debt amounted to EUR 2.1 billion and EUR 254 million, excluding financial lease debt. The gearing ratio stood at 5.9%, the financial leverage at 0.2x based on an EBITDA of over EUR 10 billion. As you know, last year, we announced the acquisition of Kering Beaute and the increase of our stake in Galderma. Both transactions were finalized in early 2026. We estimate that our financial leverage will be less than 1x EBITDA by the end of the year, a very healthy level that allows us to seize potential new opportunities.

The long-term issuer credit ratings that new group received from Moody's and Standard & Poor's remain unchanged and of great quality. This quest for robustness is ongoing. Group continued its efforts in many areas as part of internal control and risk management. In 2025, we can mention the monitoring of policies put in place for risk management related to the use of artificial intelligence, an update on fraud risks and the deployment of control systems, the monitoring of digital challenges and risks and the animation of ethical policies and culture. All of these initiatives were presented to the Audit Committee and for ethical polities and risk management to the Board of Directors.

The solid performance of your company in 2025 and the quality of its balance sheet led the Board of Directors to propose a further 2.9% increase in the dividend to EUR 7.2 per share. The dividend has progressed strongly throughout the last 10 years. As you can see on the graph on the left, over the last 5 years, L'Oréal's share price has increased. This performance put us clearly ahead of our peers in the Beauty and Luxe sectors, plus 9%. Over the same period, the CAC 40 increased by 31%, driven by banking, energy and defense stocks. On the right, total shareholder return for shareholders, which is a composite measure of profitability, including both share price appreciation and income received as dividends. So you can see that at the end of December 2025 this return stood at 10.6% for over 10 years.

Let's have a look at revenue for Q1 published 2 days ago. Your group is off to a great start this year, posting growth well above that of the market. In a geopolitical and economic context that remains disrupted. Sales amounted to EUR 12.2 billion, up 6.7% on an adjusted like-for-like basis and 3.6% on a reported basis. By division adjusted like-for-like growth is as follows. The Professional Products division posted exceptional growth of 13.1%. The Consumer Products division grew by 4.1%, driven by strong growth in emerging markets, notably in SAPMENA-SSA. L'Oréal Luxe recorded growth of 5.6%, supported by the continued momentum of fragrances and the gradual recovery in China. In the Dermatological Beauty division grew by more than 10% and driven by a solid innovation plan in skin care.

Let's move on to growth by region. All regions posted robust adjusted like-for-like growth. Emerging markets remain the most dynamic region with growth of 10.7%. North America had a very good start at plus 7.6%, and your group continues to gain market shares, thanks to the success of its innovation. Europe remains very robust at 5.5%; North Asia posted solid growth of 4.8%, driven by China; while Travel Retail Asia remained disrupted.

Now regarding our L'Oréal for the future ESG program. 2025 was a key year. The halfway point of this program we assessed our progress and learnings, refine our road maps and reinforced our commitments. We have introduced new targets addressing key material topics, including virgin plastic reduction, nature regeneration and water resilience.

Let's take an example. L'Oréal reduced the use of virgin plastic for product packaging by 37% in absolute numbers compared to 2019, and our objective is to reach 50% by 2030. Finally, in 2025, L'Oréal was once again rewarded for its social and environmental performance and recognized among the best companies in the world by nonprofit organizations, rating agencies and international bodies.

Thank you for your attention.

Thank you so very much, Christophe. I'd like to give the floor to Mr. Nicolas Hieronimus, CEO, who will present to you the company's activity in 2025, it's strategy and outlook.

Ladies and gentlemen, dear shareholders, I'm very happy to find you again at this general assembly meeting, a privileged moment, which reunites us each year, the great L'Oréal family. I have sincere thoughts for all our employees, business partners and all of our consumers who live in countries which are war-torn and suffer the train of tragic consequences. In this world of crises and of permanent volatility, your commitment in the long run, dear shareholders, is paramount to allow L'Oréal to approach the future with confidence and a steady heart.

I wish, therefore, to express to you our gratitude for a faithful support in 2025 and in the past because 2025 was determining year for L'Oréal. We achieved solid results, reinforcing our position as the world's #1 in beauty despite the geopolitical context while transforming the group in depth. Of course, none of this would be possible without the unfailing commitment of 95,000 employees of L'Oréal, who work daily to create the beauty that moves the world. It is, therefore, for me the occasion to pay tribute to their talent, which is the beating heart of the L'Oréal adventure.

Today, I'm preparing to share with you the key aspects of the performance of L'Oréal in 2025, but also to explain to you how we are transforming the group at high speed to accelerate the growth of your group. But before entering into the heart of my remarks, I'd like to thank the members of your Board of Directors, in particular, Paul Bulcke, Béatrice Guillaume-Grabisch and Thierry Hamel whose mandates are coming to their end today. And of course, our Chairman, your Chairman, Jean-Paul Agon, for his trust and his always clear cited advice.

The 2025 results are the perfect expression of the resilience and the agility of the L'Oréal model. Despite the headwinds linked to trade tensions in the political and physical instability in France, L'Oréal achieved a new year of growth at plus 4% on a like-for-like basis, a pace superior to the global beauty market, which grew by approximately plus 3.5%, allowing us to reinforce our leadership and to widen the gap with the majority of our major competitors.

L'Oréal's performance is all the more significant as it translated into a virtuous dynamic, which saw our sales accelerate from quarter-to-quarter throughout the year and which continues in 2025. In 2025, for the first time since 2022, all our regions, all our divisions and all of our categories were in growth. This performance rest on the combination of 3 key pillars. The strength of the multipolar model of L'Oréal; two, our multi-division category strategy; and three, the quality of the management of our profit and loss account.

The first major teaching of this year is, therefore, the exceptional resilience of our multipolar model. We have an operational footprint without equal within the beauty industry with 37 factories and more than 160 distribution centers across the world, combined with the balance of our geographical footprint, the agility of our operations teams allow us to adapt in real time to the jolts of the world economy. I particularly welcome the sustained growth pace of L'Oréal in emerging markets. And today, in total, they represented 17% of our turnover and nearly 40% of sales growth becoming real growth engines for the group with considerable potential. This performance in emerging markets is mainly supported by the Gulf countries cluster, which ranked as the fifth contributor to growth in 2025 and of which we are convinced that it will maintain its dynamic after the end of a conflict. The Gulf countries are followed closely by Mexico, Brazil, engine countries of South American continent.

In 2025, we also initiated a new strategy of conquest for the Indian market, which the members of your Board of Directors we're able to measure the promising perspectives during a trip organized in the autumn of which you see a few images here. The spearhead of a conquest of new consumers in emerging markets is the consumer product division very clearly, which is a pioneer in the development of accessible product innovations adapted to local cultures like the Garnier Toque Seco cream created for the needs of the Brazilian consumer and which is today marketed with success in numerous countries around the world.

The other major factor of the year 2025 is the return to growth of the North Asia zone with the promising celebration throughout the year of Mainland China, where our Luxury division reached a record market share, and more generally, the good performances of L'Oréal in mature markets. In North America, L'Oréal experienced a similar dynamic with a significant acceleration between the first half and the second half. While in Europe, L'Oréal continue to outperform a robust beauty market despite high market shares with growth of plus 4.4%, supported by the development of Eastern and Southern European markets. Finally, we are capitalizing on our lead in the digital universe that we master like no other large beauty group. E-commerce was in growth in all regions in 2025 and represent today 30% of L'Oréal's turnover.

Beyond the balance of the geographical footprint, the success of L'Oréal rests on capacity to implement a multi-division category strategy, which exploits the strength of each of our divisions to cover multiple categories at all price levels in all distribution channels. Say hair care, for example, we capitalize there on the striking power, the complementarity of 3 divisions to launch multiple innovations. With the acceleration of the ranges from L'Oréal Paris, Fructis from Garnier, the success of the dermatological hair care ranges, Dercos, CeraVe and Kerastase which is experiencing exceptional growth, we grew in total more than 2x faster than the market in 2025 to reach a global market share of 16%.

Historical leader in hair color with 27% market share, L'Oréal continues to irrigate the market with new innovations both on the professional circuit and on the mass consumption market. And if the complementarity of the divisions is the key to success, I wish to pay a particular tribute to the performance of the professional product divisions, the place of our birth, let's say, which reached this year a record market share of 27%.

In fragrances, L'Oréal is the undisputed world leader of the booming market with the entry of young consumers who are adepts of the use of multiple perfumes. In 2025, we strongly reinforced our leadership with growth of 2x superior to the market. How can one not mention the incredible success stories of Yves Saint Laurent, Armani and now Prada and Valentino, which demonstrates our unique capacity to combine the inspiration of the great Cutera brands with our own know-how in perfume creation and in marketing. And for the first time this year, 3 brands of L'Oréal rose the first 3 steps of the podium for feminine fragrances in Europe [ Libre by Yves Saint Laurent ]. This makes me really happy even snatched from channel the place of #1 perfume in the world. This is a great news, great work teams.

In makeup, the depth of our portfolio in terms of price levels and architypes of women, Couture Addicts Gen-Z passing through women allows us to satisfy and recruit all beauty fans. Makeup is the category where we most accelerate the pace of our launches and our activations in the consumer products divisions and the luxury Cutera brands because it is the category which evolves at the speed of culture and fashion. This winning recipe led us to reinforce our position as a world leader with a market share of 17%.

Finally, skin care is our first category at 37% of L'Oréal's turnover and presents a strong still growth potential. This growth is underpinned by a conviction that the future of skin care will intimately link beauty and health and a method and acceleration of our innovations founded on science. The success of the Dermatological Beauty division is, without doubt, the best example of it with a compound annual growth rate of 20% in skin care over the last 5 years. In 2025, all the brands of the division were in growth like SkinCeuticals, which became the third billionaire brand in euros of the division benefiting from the boom in aesthetic clinics where it is sold mostly in North America.

But L'Oréal is also ideally positioned to seize opportunities in skin care across all divisions, thanks to our unique brands portfolio, which allows us to play on multiple price levels from EUR 3 for our Garnier Sorbet hydration cream to EUR 450 for Helena Rubinstein. These innovations allow us to seduce new consumers in emerging markets while accompanying our existing consumers at all ages of life. It is this multi-division strategy, which allows us to place 4 brands in its global top 5 and to be the leader of it with 15% market share. As you have heard, our 2025 overperformance is not the result of chance, it rests on the complementarity of our brands and our divisions and of course, on the acceleration of the launches of new product innovations that were marketed in 2025. I want, therefore, as is our want, salute the unequaled creativity of our marketing research and operations teams by inviting you to see again in video their most beautiful...

[Presentation]

I think our teams do deserve a round of applause. This innovation plan is exceptional. I must say that because creativity and value creation go pari passu. I'd like to pay a particular tribute to our finance teams. Quality, Christophe Babule showed it to you earlier. L'Oréal released operating results represented 20.2% of our sales, that's an increase of 20 basis points compared to 2024. Like Christophe Babule showed it to you earlier, operating results represented 20.2% of our sales, that's an increase of 20 basis points compared to 2024, while ensuring the control of the headcounts and improving the efficiency of our advertising and promotional investments.

Thanks to the advances in artificial intelligence, which we'll address later. This exemplary management allows us to a new progression of the dividend, which is established this year EUR 7.20. As you know, at L'Oréal economic performance and social environmental exemplarity are intimately linked. These 2 pillars are the foundation of our sustainable value creation strategy and guide our investment choices over the long term, and I'm very proud that L'Oréal is the only company in the world to have been awarded a AAA by the CDP for the tenth consecutive year. This rewards the progress of our L'Oréal for the Future program and the work of our teams. I particularly welcome the fact that L'Oréal crossed, in 2025, a historical milestone by now reaching 100% renewable energy for its operated sites and its boutiques.

The solidity of our financial and extra financial performance is testimony to the reliability of our group even in the periods of major turbulence. This solidity is a key asset for L'Oréal, while we are entering a new era of profound technological, economic and geopolitical mutations, we have the necessary room for maneuver to invest in the transformation of L'Oréal and create the conditions for future growth.

As you might have understood, we are resolved not to endure the transformations, but to come, but to contribute to shaping them by investing in the future. It is L'Oréal's DNA to seize what is starting, and we are determined to convert each challenge into an opportunity. Our objective is clear and unchanged to create value for the shareholders, the employees of L'Oréal and for society as a whole. To reach it, we are accelerating today more than ever the transformation of the group by carrying out massive investments in several strategic domains; acquisitions of new brands, which completes our coverage of the beauty market, to scientific research and innovation at the service of our performance and the deployment of new technological tools in the first place, of which is artificial intelligence.

In terms of acquisitions, 2025 was a major year. You know since its creation, the group has built itself through targeted acquisitions, which comes to nourish its growth over the long term. Thus over the last 10 years, external growth has contributed to more than 1/4 of the group's total growth. In 2025, we strongly strengthened our coverage of the beauty market, starting with the acquisition of the Korean skincare brand Dr.G, one of the leaders in the promising segment of K-Beauty with the acquisitions of Medik8, Color Wow selective high-growth brands endowed with innovative technologies that we will deploy globally and they also post strong growth. L'Oréal also consolidated its leadership in luxury beauty with the license of the fashion brand Jacquemus, and especially the acquisition of Kering Beaute, which represents a major growth opportunity in view of our unparalleled expertise and development of Cutera brands in beauty.

This acquisition allows us not only to exploit the licenses of 3 of the most beautiful fashion brands in the world, Bottega Veneta and Balenciaga and eventually Gucci, but also reinforces our presence in the fast-growing segments of [indiscernible]. L'Oréal's brand portfolio today, the richest and most diversified in the beauty industry. L'Oréal is the only group capable of answering to the entire spectrum of consumer aspirations. Thanks to the complementarity of its palette of brands, which covers all the nuances of beauty.

Concerning our investments in scientific research, the year 2025, also set apart as a record year so much so that L'Oréal was recognized by Fortune magazine as the most innovative company in Europe, all economic sectors combined. This recognition reflects the excellence of our 4,000 researchers and 725 patents filed in 2025, the highest number in the history of L'Oréal. The scientific excellence comes to feed our breakthrough innovations put on the market and our leadership in beauty tech once again rewarded by 8 prices at the CES in Las Vegas. At the same time, we reinforced an extended innovation ecosystem through partnerships with institutions at the forefront of global research, including the Institut Pasteur in particular, in biotechnologies, artificial intelligence and even aesthetics, we're a scientific partnership with Galderma.

The science is also an engine of the environmental transformation of L'Oréal. Last year announced to you the launch of Laccelerator. The sustainable innovation program endowed with EUR 100 million over 5 years, which was designed in partnership with the University of Cambridge has the ambition to identify and deploy on a large-scale innovation solutions coming from pioneering companies. Out of nearly 1,000 applications received, 13 companies were selected to participate in the first promotion of this program, which must allow L'Oréal to remain at the forefront of its sustainable transformation.

Finally, 2025 was a record year of investments in technological and IT tools with more than EUR 1.5 billion. These investments allow the harmonization of our 20 IT systems, of our data and processes to allow the creation of the unified operational language on scale of the group. They also contributed to reinforcing continuously the resilience of our supply chain and our operations which must adapt in real time to the hazards of international context always more unstable. More generally, we have the objective to integrate the best technological tools at the heart of our organizations and our ways of working to make them a long-term competitive advantage for us. The catalyst of this transformation will be a mastery of AI to seize all the potential of this technology. I created a dedicated structure led by Samuel du Retail, General Manager in charge of AI data Insurance Services, which -- who will present to you in a few minutes, our strategy in this field in partnership with the greatest global technological leaders.

L'Oréal's AI strategy is holistic and ambitious. It aims to integrate AI at all levels of the company from relationship with the consumer to the whole of our professions while valuing the developments of our employees and creating value for our shareholders. Of course, all these investments for the future fit into the one L'Oréal transformation agenda, which gives an overall consistency to the transformation of group in the beauty market, which is more and more fragmented.

The majority of our historical competitors struggle to adapt to the speed of evolution of the beauty universe in perpetual mutation where many in these brands multiplies a femoral as they are innovative in the modes of interaction with consumers. In this context, L'Oréal has all the assets to win the alliance on this -- of the scale capacity of our large international group and the agility of a start-up inherited from the entrepreneurial spirit of our founder. The one L'Oréal road map has, therefore, a simple ambition to reinforce these 2 key aspects of the L'Oréal model, scale, capacity and agility.

The other aspect of the one L'Oréal transformation and perhaps the most important is it's cultural dimension because beyond technologies and tools, a true asset of L'Oréal resides in its living forces and the extraordinary richness of the talents that compose it in the 4 corners of the world, one L'Oréal capitalizes on the spirit of solidarity and collective intelligence, which rains within the group, which one could summarize by the famous phrase, one for all and all for one.

Today, I'm convinced that L'Oréal is stronger than ever and in the best position to accelerate sustainably its growth. As you've been able to observe, L'Oréal continued its growth acceleration momentum in the first quarter of 2026 with sales increasing by plus 6.7% on a like-for-like adjusted basis. This confirms the dynamism of beauty and of L'Oréal's ability to continue to outperform, and this is Something I'd like to stress. Beauty is today the most commented upon category on social networks or conversations, tutorials and expert opinions continue to multiply. While the quest for health and longevity is lowering the consumption of other categories, it does increase the attention paid to one's appearance. Look good, feel good as we say and it boosts the desire for beauty. The beauty market is indeed stimulated by several major and lasting fundamental trends, which are our future growth drivers for L'Oréal.

First, and this is key, the number of consumers is constantly increasing under the combined effects of the emergence of young middle classes eager for beauty in emerging markets and the extension of light spans in mature markets. In this context, L'Oréal objective remains unchanged to reach 2 billion consumers in the next decade with priority given to the recruitment of new consumers to lead this conquest and accelerate our growth in units in the years to come, we can count on, first, our unique offering in terms of formats and prices, which offer accessible brands like Garnier, Maybelline and Mixa but also recruitment formats for our most premium brands in fragrance as in skin care.

And of course, our strength in e-commerce, an extremely dynamic channel, particularly in emerging channels -- in emerging markets, which we constantly outperform. In parallel beauty routines and protocols are becoming more sophisticated, creating new opportunity for value growth. Let's take hair care, for example, the increase in population diversity creates new needs. Simply consider that the textured hair population expected to grow by 400 million over the next 15 years. This type of hair requires more sophisticated, more numerous and higher-value products. We are responding to the explosion in needs for sophisticated hair treatments with multiple innovations across our brands, but also with our acquisition of Color Wow, whose original and unique technology propels us directly into a position of global leadership in the styling segment, which has seen strong growth recently.

Body care is part of the same dynamic of specification. We are, therefore, accelerating the development of higher-value body care, whether medical with CeraVe and Mixa were scented with Cutera hand creams and products from the new NYX body fragrances, not escaping the premiumization trend. To meet the rise of pouch Parfumerie, we've built an offering that covers the entire spectrum of the exceptional with Creed with the new ultra high-end jewel of the Luxe division L'Oréal reinforces its offering composed of the private collections of our [ Cutera ] brands.

Another major phenomenon is the strengthening of the culture and local dimension in beauty. With the parallel emergence of regional hubs of influence with global reach here again, L'Oréal is in a position of strength. It is our historical expertise to internationalize our brands while guaranteeing their resonance and relevance in each culture, much like L'Oréal which integrates Chinese New Year celebrations as well as the Diwali Festival in India into its universe. But we also seize these rising regional currents, such as K-Beauty with the acquisition of Dr.G the #1 skincare brand in Korea and 3CE with the first global Korean makeup brand. Finally, we're investing in Omani Beauty and Chinese Beauty with stakes in fragrance brands, Amoue and to summer.

Finally, and this is undoubtedly the strongest of all trends. I want to talk about longevity, the obsession with longevity and especially with aging better is fundamentally redefining the consumer journey in skin care emphasizing preventative health and holistic approaches. Our massive investments in research give us a head start, and we are ideally positioned to offer the most advanced beauty protocols. The most sophisticated ones, including diagnostic tools like cell by print, topicals like the new Lancome longevity cream with Urolithin A which has just been launched in the market. Beauty tech devices like the lead face mask that we presented at the CES in Las Vegas this year and beauty supplements, which we will extend to other brands this year and into the future.

Faithful to a matter of seizing what is starting or seize the moment we are fully aligned with this trend through our advanced research with a future a joint venture with Kering around wellness and longevity, but also by pursuing our exploration of aesthetics through the increase of our stake to 20% in Galderma. Beauty consumers indeed have a growing interest in aesthetic procedures, which have seen strong growth in recent years globally. As you've heard, L'Oréal is ideally positioned to seize all the opportunities offered by the beauty market and sustainably accelerate its growth.

To conclude, allow me to share a conviction with you. In this world of perpetual upheavals, one thing remains invariable, the essential role of beauty for mankind. This deeply human quest is the secret to the vitality of the beauty market in perpetual expansion, which today extends new services, new categories and new technologies that are all growth opportunities for L'Oréal. For over 116 years, we've moved forward with a thirst for innovation that remains intact, ready to meet the beauty aspirations of over 1 billion consumers across the globe.

As I said, we want to serve up to 2 billion consumers on the long term. L'Oréal's approaches the future stronger than ever and confident in its ability to continue to outperform beauty market. The challenges of the world in motion do not paralyze us. On the contrary, to stimulate L'Oréal's ability to reinvent itself around a unique combination of scale and agility, which is a major competitive advantage in our time. However, our most precious competitive advantage will always remain our collective, our group. It is the commitment of our teams and the deeply humanistic human-centered ethics of L'Oréal that cement our current and future successes. This foundation of values which continue -- will continue to guide us relentlessly their shareholders to write the next chapter of L'Oréal's Adventure and pursue our mission to create the beauty that moves the world. Thank you.

Congratulations, Nicolas. We're now going to move on to the next topic, a key topic that was introduced by Nicolas, artificial intelligence. So I'm a bit lost with my documents. Thank you, [ Emily ]. We're going to listen to Samuel du Retail, who's been with L'Oréal for a long time, and he is an expert in AI. Samuel is the General Manager of artificial intelligence, data and shared services. It's a role that was designed by Nicolas to ensure operational excellence in the group-wide deployment of AI and data as well as in our shared services centers.

Just like many other L'Oreal employees, Samuel, brings extensive experience within the L'Oreal Group, 30 years of seniority. It's not huge, but it's not too bad either. So he's had a Korean finance as a CFO of the Consumer Products division, he served as General Manager of the Consumer Products division in China and General Manager of South Korea, which he led with great success, achieving remarkable results and consistent market share gains across all 4 divisions. He will now outline the fascinating opportunities offered by the use of AI.

Thank you very much, ladies and gentlemen, dear L'Oréal shareholders, it is a great player to speak with you today to share a new chapter in our story. The profound and exciting transformation occurring in the heart of L'Oréal, artificial intelligence. AI represents a paradigm shift in just over 2 years, OpenAI, a global leader in AI models has reached more than 900 million users. It took 12 years for the Internet to reach the same milestone. In 2025, 39% of consumers were already using LLMs to learn about products. And as many as 54% among those aged 20 to 40. 47% trust these models more than friends and family. Previously, their preferred sources of advice as they provide highly structured and well-argued answers. On ChatGPT alone, more than 280 million messages related to health and beauty were exchanged every week in 2025. The good news is that we are in an excellent position to enter this new era.

As early as 2010, our group mobilized its entire organization to digitize our ways of working as well as our interactions with consumers and clients. With Beauty Tech, we are going even further, particularly through the categorization and structuring of the company's most critical data. We are consolidated 115 years of the world's largest beauty information database, 17 terabytes of proprietary data covering the 8 key areas of our business, leveraged by our 8,000 experts in technology and digital. These essential preparatory steps now offer us tremendous opportunities because without well structured data and digitized processes, large-scale AI is simply not possible. Building on these strong foundations, our ambition is to become one L'Oréal powered by AI with teams augmented by AI across all our activities.

We have structured our acceleration around 3 pillars: AI for our consumers, AI for our business lines and AI for our employees. Let me share a few examples among the many AI use cases at L'Oreal. Let us begin with AI for our consumers. Many of us have already changed our consumption habits in recent months. We used to search through search engines or our favorite e-commerce sites. Now AI invites us into a conversation within large language models like ChatGPT by OpenAI or Gemini by Google, whose capabilities improve every week.

Let's try an example together to find sunscreen product using a prompt. "I have fair skin and I'm heading to the Basque Coast this weekend. What sunscreen would you recommend?" AI recommends 2 products: Garnier Ambre Solaire Super UV 50 for the city and Vichy Capital Soleil UV Aqua 50 for the beach. Our portfolio of highly recognized brands, well differentiated, clear and explicitly stating their benefits is a major asset. Our products, the performance of our formulas and ingredients, all scientifically documented are signals that AI systems identify and amplify. By pioneering beauty diagnostic platforms, BeautyGenius and [indiscernible] are also powered by AI. It's self-fueled by our proprietary data.

Next, we want to accelerate AI for our business lines, already and increasingly many of our employees across all the departments no longer work alone. A personalized AI agent is embedded in their tools to support them in their daily tasks. Here are a few examples among many others. Our online beauty advisers worldwide engage in 80 million individual conversations per year, either orally or in writing. We have developed an AI agent that detects the nature of the consumer's request, gathers relevant response elements in the appropriate language automates response, phrasing and delivery. Responses are, of course, supervised by advisers. This human AI partnership enables responses that are 3x faster and more appreciated by consumers.

Advisers can focus more on meaningful interactions and spend up to 80% less time administrative tasks. A visual recognition agent helps our sales representatives in stores, verify product availability and detect potential stock shortages. This reduces verification time by over 50% with 99% reliability. A documentary AI agent enables more than 10,000 users in our research and marketing teams to securely access over 100,000 proprietary marketing studies across 70 countries. The agent synthetizes relevant reports on a given topic, it identifies global consumer trends, and it's very valuable for our international marketing teams.

For our marketing teams, we've also created a tool enabling them to generate brand images and video securely, CreAltech. These designs must comply with our ethics principles, especially inclusion, we do not allow AI generated human faces for advertising purposes. However, our creative teams can stage products, textures and ingredients in just a few minutes and with just a few prompts. Some partnered agencies also use this technology to create higher quality visuals at a lower cost. AI is also significantly accelerating our research and innovation teams in how they understand consumers, discover new molecules and develop new formulas.

AI allows us to create a digital hair that reacts to active ingredients similarly to its physical twin, enabling highly reliable predictions on new formula benefits. Of course, the best results are validated through physical testing, always with human supervision. In just 4 years, we have tripled the number of molecules, tested and reduced development time by factor 4, making research and innovation more precise and faster. These agents already exist. We're working to mainstream them and continuously improve their performance. AI helps free our teams from repetitive and low-value tasks. Collectively, we can be more productive and we can unlock new areas of value creation. These skills in using AI require intensive training.

And this brings us to our third acceleration pillar. AI for our employees, there should be no better consumer goods company than L'Oréal to learn and grow with AI. 73,000 employees have already been trained in degenerative AI module for all. All of our mandatory training programs have been enhanced with an AI component. And we're taking it a step further with the launch of our AmplifAI program in May, it's a comprehensive self-assessment tool that allows everyone to identify their AI knowledge in the areas where they need to improve. Our goal is for 40,000 employees to have completed the self-assessment by the end of the year. To support them, we have developed a powerful and secure proprietary conversational model, L'Oréal GPT. It allows us to choose among the best models on the market without depending on any single one. We've recently celebrated L'Oréal's GPT's second anniversary. Over 56,000 employees have access to it. With 21,000 using it at least once a day and over 1 million conversations take place each week. We continuously enhance it with new features.

Now we can optimize our office tools, spreadsheets, presentation software and internal messaging systems. Recently, we introduced companions to L'Oréal GPT. It's a safe internal environment, each employee can create their own personalized AI, a companion to help them with writing, brainstorming, project analysis, translation and planning. Adoption has been strong. Over 22,000 individual companions have already been created with 254 broader companions under business governance. Last but not least, we are committed to responsible and supervised artificial intelligence. We adhere to the highest standards in terms of personal data protection. We work to address potential algorithmic biases to ensure our systems are more inclusive and work effectively for all skin tones and hair types.

We measure the energy consumption of our technologies and prioritize the most energy-efficient conversational models. We work with data center partners who prioritize low-carbon energy sources. The logic which is sometimes complex. The logic behind algorithms is broken down so that it can be understood by those who use them. AI serves humanity, but humans must remain in control. As you can see, the new era is opening before us, a new field of possibilities dedicated to our purpose, creating beauty that moves the world. AI strengthens and accelerates our innovation capabilities and enriches the beauty conversation with our consumers, making it more personal, informed and intimate. This technology a source of productivity and creativity is not meant to replace the women and men at the heart of L'Oréal's success. The goal is to empower them in driving accelerated growth.

Thank you very much for your attention.

Thank you very much, Samuel. As you can see and as you already knew, artificial intelligence is the next revolution, it has already started, and it is L'Oréal's next revolution. Faithful to what we do, seizing the moment, it's something that we are embracing with great enthusiasm. As I remember, we were digital pioneers. And once again, we want to be leaders when it comes to using AI for L'Oréal.

Now it is my turn to speak. Ladies and gentlemen, dear shareholders, as I've already said, it has been 20 years since I first had the pleasure of addressing you to share the best of L'Oréal and the remarkable growth of your company, which the vast majority of you have witnessed. For those of you who attended the AGM in 2006, I'm not going to ask you to raise your hand, that will be embarrassing, but I think there are a few of you in the room. In 2006, remember, we had 18 brands, today we have 40. Our revenue was EUR 14.5 billion compared to EUR 44 billion last year. Market capitalization was EUR 41 billion compared to EUR 200 billion today. The share price key figure was EUR 62 for the 2006 AGM, and this morning, I mean, 5 minutes ago, it was EUR 372.5. The dividend has risen from EUR 1 to EUR 7.2 and more than 52,000 employees were part of the L'Oréal adventure in 2006, there are now more than 95,000.

Twenty years ago, I shared with you the reasons to believe in the L'Oréal model. These figures and history have proven it. And I believe in them even more deeply today. We have reinvented ourselves while preserving the very nature of the L'Oreal spirit, passion, entrepreneurial drive and the pursuit of excellence. Another pillar has remained intact. The quality of the bond that unites us. We had approximately 2,000 registered shareholders in 2006, and I am delighted that there are now more than 65,000 of you out of a total of over 430,000 individual shareholders. Your enthusiasm and loyalty honor us as much as they inspire us to do better. In a world brought with tension, this moment of sharing and looking toward the future is more essential than ever. And I hope that through the various comments made, you can feel that your company remains driven by tremendous momentum.

The strength of the L'Oreal model is within us, more vibrant than ever. It is this strength that enables us to weather the storms of a complex global environment. It propels us toward our destination with consistency and loyalty to our values. 2025 was a year of change, transformation and preparation for the future. Major strategic initiatives led by your CEO, with the full support of the Board, have been launched. Nicolas has presented them to you in detail, but I would like to revisit some of them because they are what makes the L'Oréal model so unique.

First, our obsession with innovation, which has been our top priority from day 1. L'Oréal was built on the belief that imagination is the only limit to the beauty market and that quality and performance always matter most to consumers. This obsession drives our growing research budgets and in 2025, a record investments in technology. Our brand portfolio next. It sets L'Oréal, a part in the industry, and it has grown even stronger with our recent major acquisitions. I fully believe that external and internal growth feed off each other and multiply our potential. And of course, our global footprint and local relevance ensure future growth drivers. And we are ready to seize every opportunity that present.

While preparing for the future, your company demonstrated its resilience in 2025 within a complex environment. L'Oréal has cemented its position as the world's #1 beauty company by widening the gap with its major competitors continuing its growth and strengthening its margin. This outperformance confirms once again the strength of our model, which consistently creates value. The Board of Directors has decided to propose a dividend of EUR 7.2, an increase of 3% compared to 2024. So over the past 20 years the dividend has increased sevenfold. For our registered shareholders who have held shares for more than 2 years, the dividend amounts to EUR 7.92. Your loyalty is the strongest work against the turbulence of the world. That's why we always strive to reward it over the long term.

Over the past 20 years, your investment has appreciated significantly. Your initial capital has increased 8.5 fold and the total return has averaged over 11% per year. Dear shareholders, you will be pleased to learn that together with our employees, you hold a larger share of the free float that French institutional investors. I would like to sincerely thank each and every one of you. As the Chairman of L'Oréal, I see this as a sign of your trust in our governance pioneering strategy of dual excellence in our business model. Rest assured that we are working tirelessly to earn it.

Our dedicated team that you know very well, channels all its energy and creativity into serving you by opening the doors of your home to let you experience L'Oreal from the inside through our extraordinary events, for example, which immerse you in both the excellence of our sites and the history of our business from the [indiscernible] to the state-of-the-art factories, including VivaTech, we fostered this connection through educational initiatives to make the stock market accessible through partnerships with engaged content creators and through our noble presence at the Paris Investor week.

We come to meet you all across France. Remember, at last year's AGM, a shareholder requested a meeting in Tolouse. Well, we weren't there on September 22, but not just in Tolouse, obviously. And I would like to take this opportunity to thank the members of the advisory committee for their sound advice, which helps us to better serve you. Our financial communications were recognized with numerous awards in 2025. I'd like to commend the outstanding work of the teams who go above and beyond every day to keep you informed. And as Nicolas said, if we cut our course in 2025, it is thanks to the strength of character of our 95,000 employees starting, of course, with your CEO, Nicolas Hieronimus whose determined and inspiring leadership gives the energy to transform together with his executive committee are present today, they have blazed new trails to combine growth, market expansion and the power of technologies that are already shaping the future.

L'Oréal's boldness has a face that of our employees. Each of our successes bears the mark of their unique spirit, their solidarity and agility. Our teams are fully aligned with our ambition and share that extraordinary resilience that is key to succeed in a challenging and uncertain world. On behalf of the Board of Directors, on my own behalf and on yours, I would like to thank and congratulate them most warmly. And I would like to tell them how proud I am of their ability to adapt while upholding our values because when it comes to responsibility, our commitment to action remains unwavering as evidenced by our steady progress.

As Nicolas pointed out, our environmental leadership has once again been recognized, and this recognition means a great deal to us. because it comes from the CDP, which is a fully independent global authority, the global reference. We have exceeded 5 years ahead of our schedule. Our goal of helping 100,000 people from disadvantaged communities find employment. And more than 5 million people have been supported globally through our brand's social engagement programs. Of course, we will continue to step up our efforts to support even more people.

Finally, the L'Oréal Foundation is more committed than ever to advancing women's place in society. It's a fight that requires constant vigilance, particularly among the youngest generations. In 2025, we announced that our -- for girls and science program, which has been active in French high schools for over 10 years, will expand to an international scale, thanks to UNESCO's support. Dear shareholders, I hope you share my belief that L'Oréal will continue to forge ahead no matter what. Your company is driven by its core values, sustainable responsible value creation, scientific excellence, the focus on people and a commitment to setting an example while turning every transformation into a new source of momentum. I have also trust in our people all focused on the same goal, inventing the future of beauty with high standards and responsibility. Thank you.

Me, more once more and now speak about governance every other member of the Board, I'm convinced that deeply that our governance semantics sustainable and plural is our strategic strength over the long term and an essential source of value for L'Oréal. It is our compass in a complex world. Your company can count on a highly committed Board of Directors composed of directors fully mobilized in the interest of the company, its shareholders and all its stakeholders.

Your Board of Directors, which I have the honor of chairing, is very proactive and particularly committed. In 2025, the Board met 8 times with an exemplary attendance rate of 99.4%. It's hard to improve this number. Beyond the figures, it is the depth of our reflections and the density of our discussions within the board that I wish to highlight. The Board fully played its role in defining the group's strategic orientations and examining its development opportunities in this context, 2025 was a pivotal year. The Board analyzed and approved several major acquisition projects including Kering Beaute, Color Wow, Medik8 as well as the increase in the stake of Galderma. These transaction strengthened the company's position in high value-added segments.

The strategic discussions also focused on development in key markets such as China and the U.S. The exploration of adjacent territories through research and innovation, particularly issues related to longevity and digital marketing with particular attention paid to the deployment of reliable and responsible AI, like Samuel mentioned. The Board's annual seminar was held in India as you saw last October, and it was an opportunity for directors to deepen their knowledge of this strategic market on the ground and to analyze the group's future performance drivers in this region. Geopolitical impacts, digital transformation analysis of the L'Oréal for the Future program, Human Relations and ethics were also at the heart of the Board's attention.

As you know, the decisions we take are largely based on the in-depth work of our 4 committees. They make a total of 23x in 2025 with an attendance rate of 100%. You cannot top this. I would like to acknowledge before you, there is central contribution of quality of their work. First, the Strategy and Sustainability Committee, this committee, which I chair, is at the heart of the analysis of L'Oréal's strategic outlook. It examines in detail the performance of brands, product launches and acquisition projects. It is also at the helm when it comes to monitoring the progress of the L'Oréal for the future sustainability program, particularly the climate strategy. The Audit Committee then of -- this committee chaired by [ Jacques Ripoll ] reviews the financial position and the risk mapping of the company. It was particularly involved the main issues and prevention program related to cybersecurity risk as well as sustainability matters notably in connection with the monitoring of the implementation of the CSRD.

The Nominations and Governance Committee. This committee chaired by Patrice Caine considered the composition of the Board and its committees supervised the annual assessment of the Board and the review of succession plan for the Chief Executive Officer and the Chairmanship. It also ensured the ethics of L'Oréal's practices, particularly in relation to artificial intelligence. The Human Resources and Compensation Committee at last chaired by Sophie Bellon. This committee made proposals regarding the compensation policy for corporate officers, the assessment of the CEO's performance and reviewed HR policies, including the diversity, equity and inclusion policy, the management of transformation of employees, skills and the sixth worldwide employee share ownership plan.

I would like now to share with you the upcoming changes in the composition of your Board in line with the end of their positions within the Nestle group, 2 eminent members of the Board have expressed their wish to end their term of office as Directors at the close of this meeting. First, Mr. Paul Bulcke, Vice Chairman of the Board and former Chairman of Nestle. If I may, dear Paul, you've embodied the strength, stability and mutual trust of the relationship between L'Oréal and Nestle. This historic bond, which we -- which you were the guarantor is an essential pledge for our long-term vision for more than 10 years. You've been a pillar of our Board. Your involvement has been complete and total as shown by your active participation in 3 of our 4 committees. You've left your mark on almost all of our work through your exceptional involvement.

What we have shared alongside you is the art of combining the global strategic vision with a very fine understanding of consumers on every continent. Your contribution has been decisive driven by your strong taste for innovation and breakthrough technologies, but also by your uncompromising standards in matters of social and environmental responsibility in particular. Beyond your involvement, I want to salute your mindset, your reflections have been very valuable to us in its growing subjects in all their complexity. You have this rare talent of knowing how to question the status quo of inviting us always with kindness to shift your perspective in order to explore new possibilities. Dear Paul, on behalf of the Board of Directors and on my own behalf, I would like to express our deepest respect and a full gratitude for the remarkable quality of our commitment and contribution to L'Oréal. Bravo.

Madam Béatrice Guillaume-Grabisch is also stepping down, after 10 years of outstanding commitment, she's a scrutineer, see her in red, very clearly on stage. After 10 years of remarkable commitment to the work of the Board and the Audit Committee, I would like to particularly acknowledge the quality of her advice, her active contribution for me as well as the richness of her expertise, notably in marketing and recognized skills in steering HR and IT transformation, these qualities have been major assets in the fulfillment of our duties. I'd like to extend to her my sincerest thanks for a constant involvement of her high professional standards and the quality over the exchanges we have shared over the years. Thank you very much, Béatrice.

It is now for this meeting to decide on the changes to the composition of your Board. The Board of Directors has decided to submit for your approval the appointment of 3 new directors. Following Nestle's proposal and on recommendation of the Nominations and Governance Committee, the Board first proposes the appointment of Mr. Pablo Isla, last October, he was appointed to succeed Paul Bulcke as Chairman of the Board of Directors of Nestle.

I invite you to get to know him on screen.

[Foreign Language] I am a lawyer by training, and I started my career as [indiscernible]. After that, I had different positions in the banking sector and in other companies. I joined Inditex in the year 2005 as Vice Chairman and CEO. And then in the year 2011, I became Chairman and CEO of the company until the year 2022. Inditex is the parent company of brands so well known as [ Zara ] Massimo Dutti, Bershka. During all those years together with the founder of the company, Amancio Ortega and of course, with the teams all across the world, we were able to achieve significant growth year after year.

I feel very proud about different things. But if I would have to mention too, without any doubt, the first one would be how we were able to achieve the integration between the digital and the physical world, keeping the essence of the company. And the second one is that all this growth was always having in mind that we needed to have sustainable growth in the company. I joined the Nestle Board in the year 2018 and then I became Vice Chairman of the company in the year 2024. And since last October, I have the honor to be the Chairman of Nestle.

I have always admired very much L'Oréal. I have always followed L'Oréal strategy, L'Oréal culture, L'Oréal values, I have always considered this company very, very close to me from many different points of view. The idea of having a global ambition, but at the same time, having a local approach, also combining the digital and the physical work, having always the consumer, the customer at the center of every decision. And I have always admired very much L'Oréal values such as respect, reliability, taking care of the communities in which the company operates.

I believe very much that success for our company is not only having good results. I think L'Oréal is an incredible example of that, having very good results and at the same time, very strong values and very strong corporate governance. I would be dear shareholders extremely honored if you decide to elect me as Board member of the company. I would love to be a very active part in the L'Oréal journey. Merci beaucoup.

We have understood with an exceptional career. Notably, as Chairman and CEO of Inditex, the mother entity of Zara. Mr. Pablo Isla will bring his recognizability, combine transformation and international growth as well as his expertise in governance. His expertise in e-commerce will also be a major asset. Subject to approval of this appointment, which I hope you will move forward with. He will become Vice Chairman of the Board and alongside Mr. Jean-Victor Meyers. The Board also proposes the appointment of Mrs. Anna Lenz, who will also address you also.

[Foreign Language].

I'm delighted to welcome to the Board, madam Anna Lenz, she will bring the full richness of her versatile career and the cross-functional expertise. It's an exceptional career, 30 countries, 6 languages in which you're affluent. Mathematics to HR, HR to finance. It's hard to tap this outstanding career. We will be delighted to welcome you within the Board, Anna. Finally, the Board of Directors proposed the appointment of a new independent director, Madam Christel Bories, who will also introduce herself.

[Foreign Language].

I welcome to the arrival of Madam Christel Bories to the Board. Chairwoman of Eramet and leading executive. She will bring to the Board her ability to steer deep transformations as well as her knowledge of industrial value chains across all continents. The Board of Directors also proposes the renewal of 2 terms of office as Directors. First, the term of office as Director of Mr. Patrice Caine, Chairman and Chief Executive Officer of Thales. He's been a Director of L'Oréal since 2018, Chairman of the Nominations and Governance Committee and a member of Strategy and Sustainability Committee.

Mr. Patrice Caine is an independent director, who's very much involved in work and discussions of the Board and the committees of which he is a member. In addition to his strategic vision, his understanding of major geopolitical issues and his industrial expertise, he brings to the Board his in-depth knowledge of new technologies and cybersecurity. Over the 4 years of his term, his attendance at Board meetings has been a 97% and 100% for the committee.

Finally, you'll also be asked to decide on the renewal of my term of office as Director subject to approval of this renewal. The Board of Directors will reappoint me as Chairman of Board of Directors or so, I hope should you place your trust in me. I wish you -- wish to assure you my full commitment to chairing the Board's work and of my total determination to serve the definition of L'Oréal's development strategy. Finally, the Board is preparing to welcome Ms. Catherine Olivry, as director representing the employees. She joined L'Oréal in 1989 within research and innovation and succeeds Mr. Thierry Hamel, whom the Board thanks warmly for the quality of his participation.

Mr. Benny de Vlieger remains the second director representing the employees. If the meeting approves the proposed candidates, Mr. Pablo Isla would join the Strategy and Sustainability Committee and the Nominations and Governance Committee. He would also join the Human Resources and Compensation Committee, as would Madam Catherine Olivry, Director of representing the employees. And Madam Anna Lenz, who joined the Audit Committee, the Board of Directors would be then composed of 18 Directors, 40% women and 56% independent directors. More than ever, I'm convinced that the complementarity of expertise, freedom of judgment and breadth of perspective of directors are fundamental to deciphering the complexity of our challenges and shaping together future of L'Oréal.

I now give the floor to Madam Sophie Bellon, Chair of the Human Resources and Compensation Committee for the presentation of the resolutions relating to the compensation of executive corporate officers. Madam Bellon you're on.

Ladies and gentlemen, dear shareholders. As every year, the Annual General Meeting is called to approve on the one hand, the components of remuneration pay package to the corporate offices paid or granted 2025 as required by the remuneration policies you approved. And on the other hand, the 2026 pay packages from which the components on the remuneration will be paid or granted to the directors and corporate officers as a chairwoman of the Human Resources and Remuneration Committee, I will present these components of remuneration.

First of all, for 2025, you are called to vote on the pay package paid to Mr. Agon as Chairman of the Board of Directors. In 2025, the compensation of Mr. Agon is exclusively composed with a fixed annual amount of EUR 950,000 to the exclusion of all any other compensation regarding the components of compensation paid or granted in 2025 to Mr. Hieronimus as CEO. His compensation is as follows: fixed annual remuneration of EUR 2.3 million and a target annual variable compensation of EUR 2.6 million, with a maximum of EUR 3 million or 130% -- 130.4% of the fixed compensation in case of outperformance compared to the set objectives. The objectives and weighing are displayed on the screen.

The Board of Directors assessed the performance of Mr. Hieronimus and has set the payment rate at 106.2% of the target bonus i.e. 102.1% for the financial criteria and 112.4% for the nonfinancial and qualitative criteria. Subject to the favorable vote of this resolution, Mr. Hieronimus would be awarded an amount of EUR 2,762,000. The total of the fixed and annual variable payment package of Mr. Hieronimus for 2025, therefore, amounts to [ EUR 562,000 ]. The Board of Directors also decided to grant 20,000 performance shares to the Chief Executive Officer for 2025.

Then regarding the compensation policies of the directors and corporate officers. Regarding the pay package policy of the Chairman of the Board of Directors, applicable to Mr. Agon for the year 2026, the Board of Directors renewed the compensation policy applicable to the Chairman of the Board of Directors a fixed remuneration of EUR 950,000 to the exclusion of any other components, no variable compensation, no performance share, no compensation as director. You are then called to approve the compensation of the CEO applicable to Mr. Hieronimus for the year 2026. The Board of Directors renewed the compensation policy applicable to the CEO. You can see the main lines displayed here on screen.

This policy balance between short-term and long-term compensation. The compensation of Mr. Hieronimus is composed of a fixed compensation and annual variable compensation and the grant of performance shares, 77% of this compensation is subject to performance conditions. Mr. Hieronimus' fixed compensation remains set as EUR 2.3 million. The target annual variable compensation remains set as EUR 2.6 million and could reach up to 130.4% of the fixed compensation in case of outperformance compared to the set of objectives. The Board of Directors has chosen to renew the same balance between financial and nonfinancial criteria and they are here with displayed on screen. These criteria are directly linked to L'Oréal's strategy and integrate the sustainable development program for 2030 L'Oréal for the Future.

Finally, the Board of Directors may decide to grant performance shares to the Chief Executive Officer, this grant would be between 50% and 60% of the maximum annual compensation. Performance conditions would apply to 100% of the granted shares. I remind you that in addition to financial performance criteria, which are being renewed, nonfinancial performance criteria have been introduced since 2022.

Finally, regarding the Directors' compensation policy, the Board proposes to the AGM to slightly review the maximum amount of the annual compensation for Directors currently set as EUR 2 million and to increase it to EUR 2.1 million. The goal is to take into account the increase of the number of Directors in view of the appointments submitted for approval to the AGM as well as the evolution of the compensation for members of the Audit Committee. The latter would change as follows: the variable portion of the compensation linked to attendance would increase from EUR 20,000 to EUR 25,000 as the number of meetings held by the committee has increased.

To conclude, I would like to thank the members of the Human Resources and Remuneration Committee for their active participation and commitment. Thank you for your attention.

Thank you very much, Ms. Sophie Bellon. I will now ask Ms. [ Emilie Thiéry ] to present the resolutions that will be put to a vote.

Regarding the ordinary meeting, the first 3 resolutions concern the financial statements and the dividend. These elements were presented to you by Mr. Christophe Babule at the beginning of the AGM. Resolutions 4 to 6 concern the appointments of 3 new Directors, namely Mr. Pablo Isla, Ms. Anna Lenz and Ms. Christel Bories. Resolutions 7 and 8 concern the reappointment of Mr. Jean-Paul Agon and Mr. Patrice Caine as Directors. These appointments and reappointments were presented to you by the Chairman during his presentation on the governance of your company.

The ninth resolution concerns the revision of the maximum manual amount that may be allotted to Directors, which would be increased from EUR 2 million to EUR 2.1 million, taking into account the increase in the number of directors. Resolutions 10 to 15 concern the compensation elements of the corporate officers. Ms. Sophie Bellon, Chairwoman of the HR and Remuneration Committee reported on this in detail to you a few moments ago. Resolution 16 concerns the new authorization to be granted to your company to continue where applicable its policy to buy back its own shares outside of public offer periods. The authorization will cover a maximum of 10% of the share capital and the purchase price per share may not exceed EUR 700.

Regarding the extraordinary meeting in the 17th and 18th resolutions, the AGM is asked to grant the Board of Directors the authorization to decide for a period of 26 months on a share capital reduction by canceling the shares acquired by the company subject to a limit of 10% of the share capital existing on the date of cancellation and on free grant of shares to employees and corporate officers. In the 19th and 20th resolutions, the AGM is asked to delegate to the Board of Directors the authority to decide on a capital increase up to a maximum amount of 1% of the share capital reserved for employees who are subscribers of an employee savings schemes for a period of 26 months and for employees of foreign subsidiaries for a period of 18 months.

The cumulative amount of all the capital increases that may be carried out pursuant to all these resolutions may not exceed the maximum amount of 40% of the existing share capital. With the 21st resolution, it is proposed to amend Article 12 of the Articles of Association relating to the general rules about AGMs in order to allow the widespread use of electronic notices of meeting to shareholders, including registered shareholders as permitted by the so-called attractiveness degree into simplify its wording by replacing certain regulatory references with reference to the applicable regulations.

Resolution 22 will concern the powers for formalities. Mr. Chairman, we have detailed all the draft resolutions.

Thank you very much, Emilie. I will now give the floor to Ms. Celine Eydieu-Boutté, Ernst & Young, to speak on behalf of the joined statutory auditors. Thank you very much.

Thank you, Mr. Chairman. Ladies and gentlemen, shareholders, good morning. On behalf of the joint auditors, Ernst & Young Audit and Deloitte, I am pleased to present the reports on the performance of our statutory audit engagement for the 2025 financial year. We have issued several reports to enable you to form an informed judgment when voting on the proposed resolutions. Our reports relating to the ordinary general meeting covered the statutory audit of the financial statements and related party agreements. While those issued in connection with the extraordinary general meeting are required by law in relation to proposed capital reductions, authorization to grant free shares and capital increases reserved for employees.

In addition, although not subject to a specific resolution submitted for your vote, we have also issued a report on the certification of sustainability information. All of our reports have been made available to you by the company and are included in the universal registration document filed with the AMF published on L'Oréal's website. I will not review each report in detail, but I will focus on the key matters arising from our work and the conclusions reached.

With respect to the ordinary general meeting, we issued reports on the statutory audit of the financial statements of L'Oréal S.A. and the consolidated financial statements of the group. As of December 31, 2025, the purpose of our work is to provide you with a reasonable assurance that the financial statements submitted to you do not contain any material misstatements that the accounting methods adopted are appropriate. Any risks are sufficiently covered and prevailing laws and regulations are complied with.

We coordinated audit works in more than 15 countries on accounts and internal controls that covered current operations as well as specific events occurring in 2025, such as changes in the scope of consolidation with Color Wow and Medik8 acquisitions and other significant transactions, including IT systems migrations and new debt issuances. As part of our audit of the consolidated financial statements, our report highlights 3 key audit matters that we consider to be most significant or that required particular attention. For each of these matters, we assess the key judgments underlying management's estimates, verify the absence of material misstatement and ensure the appropriate disclosures were provided in the notes to the financial statements. The first point is about the valuation of goodwill and indefinite live brands, which represent approximately 1/3 of the consolidated statement of financial position as at 31st December 2025.

The second point is about revenue recognition and the estimation of items deducted from revenue, such as discounts, rebates and other benefits granted to distributors or consumers. Finally, the last point concerns the valuation of positions for tax risks and uncertain tax positions. Regarding the financial statements of L'Oréal S.A., we identified evaluation of investments in intangible assets as a key audit matter. Our work and conclusions were regularly discussed with the Audit Committee and the Board of Directors. In conclusion, having the necessary resources to fulfill our responsibility we issued an unqualified audit opinion on both the statutory financial statements of the parent company and the consolidated financial statements of the group.

Within the scope of the ordinary general meeting, we also issued an additional report relating to related party agreements. As we were not informed of any new agreements authorized during the past financial year, our report simply reiterates the continuation of the existing agreement relating to the employment contract of your CEO which was approved by the AGM held on April 20, 2021. With regard to the resolutions concerning the company's share capital submitted within the framework of the extraordinary general meeting, we issued 4 reports. These 4 reports required by law related to proposed authorizations or delegations of authority granted to your Board of Directors in respect of capital transactions, in particular, issuances of shares and securities reserved for employees and beneficiaries of the company savings plan as well as for employees of foreign subsidiaries. None of these reports contains any observations on our part. Where applicable, we will issue supplementary reports when your Board of Directors makes use of these authorizations.

For the second consecutive year, we issued a report on the certification of sustainability information. Our work was performed in order to provide limited assurance on the following 3 specific areas: the compliance of the process implemented by your group to determine the sustainability information to be disclosed in accordance with the European sustainability reporting standards ESRS. We also checked compliance with ESRS for the publication of this information in the sustainability report. And the compliance with the disclosure requirements pertaining to the taxonomy. Based on these verifications, we did not identify any material errors, omissions or inconsistencies across these 3 areas.

Ladies and gentlemen, shareholders, Mr. Chairman. I thank you for your attention.

Thank you very much. Thank you very much, Ms. Eydieu-Boutté. Let's open the discussion. We received written questions -- 2 written questions. Question from the forum for responsible investment, FIR, 2 questions, including 4 sub-questions. So they are very long questions, and it would have taken the whole Q&A session to answer them orally. So we thought it was a good idea to answer them in writing on our website and the answers have been approved by our Board of Directors.

And there was also a question from Mr. [indiscernible]. So the Board of Directors met on April 23, and has responded to them. It was decided to publish the Board's responses to these written questions not to take the whole time of this Q&A session at this AGM. I would like to remind you that questions may be submitted to us in 3 ways: first, questions from the floor, asked directly into the microphone provided by the ushers. And I would like to ask each shareholder to kindly introduce themselves and to ask 1 or 2 brief questions so that as many people as possible may speak. Second, there are questions from the audience that can be collected on the cards provided for this purpose.

And finally, questions may be submitted to us via the AGM streaming platform. So far, no question has been asked on the platform. So to allow the ushers to distribute themselves throughout the room, I would like to ask Emilie to read a few questions, the most frequently asked questions prior to the AGM, and we will answer them briefly. Emilie?

The most frequently asked questions is about the stock price. Given that the operational fundamentals remain robust, how do you account for the still disappointing performance and volatility of the L'Oréal's stock price?

It's a question that's quite relevant for all shareholders. It's the key question. So in order to answer this question, I would like to take a step back. Since the beginning of the year, and at the beginning of 2025, if we have a look at the situation, there was a 10% increase in the L'Oréal's stock share. And the CAC 40 increased more than the L'Oréal's share price, which is quite new for us. So I promise you that we will make sure this situation does not last for too long.

Over many years, L'Oréal's stock price increased more quickly than the CAC 40 average. We will make sure that it is still the case. Our industry was confronted to global headwinds. For the last couple of years, first of all, there was the slowdown in China. As you know, China's development supported the L'Oréal's stock price, but there was this slowdown in China for a couple of years now, and there was also the impact of U.S. tariffs that didn't help and the war in the Middle East. So there are several externalities creating headwinds that are quite challenging even though the company is performing well.

And there's another point something that accounts for the increase in the CAC 40 stock price. Other industries are better supported. The defense sector, for example, Mr. Caine is one of our directors, and he must be pleased, but we do not work in defense. We think that beauty is the best defense. There's also finance and the banking sector. They have never done very well in terms of stock price, but they have pretty good momentum at the moment. In the past few days, you must have seen that the publication of revenue growth in Q1 led to a 9% increase of the stock price in just 1 day. And we are convinced that whatever the environment, at the end of the day, it's up to us to prove through the strength and the momentum of the group that the best investment, the best value is L'Oréal's. And I can assure you that Christophe, Nicolas, myself and everybody in the group are determined to make sure that it will happen. So that's the first answer. Emilie, another question?

Yes, there is a question on the situation in the Middle East, what's the impact on the group and its supply chain?

Yes, this is a very relevant question. Nicolas?

Absolutely, the situation in the Middle East. Well, the first thing that I would like to say is that all of our employees, 1,500 employees working in Saudi Arabia or others are protected. We took all the necessary measures to have them work from home. There's one production plant that's in Egypt, but it's not concerned by the conflict. Other than that, no production site in these territories. So there's no impact for us.

But there are a few types of impact. For example, there's the stock price, as Mr. Agon said, it's still much better than our competitors. There's been an impact on revenue. For Q1 '26, it should be around EUR 100 million, but we offset it, thanks to our great sellout in all of our regions. That's the beauty of L'Oréal. When one region in the world is impacted, other managers in other regions of the world are trying to make up for it. That's what we did in Q1, and we're going to do it in Q2.

So the region accounts for less than 3% of L'Oréal's revenue. So it's still manageable. We've, of course, a specific challenge for Travel Retail. The Dubai Airport is one of the most important hubs, but the situation is manageable. There are other effects, for example, the impact on logistics, costs or if the conflict were to last, there might be an impact on the price of raw materials for the second half year. And if the brand stayed at around $100 as it is today, that would be an over cost for the group of EUR 100 million in the operational account, so that's the situation we need to face. We need to find a way to juggle the situation and anticipate this situation.

Thank you, Nicolas. Yes, it's something that I did not mention, but over the period on which our stock price increased by 10% in 2025. For our competitors, the stock price went down 17%. And for the luxury sector, I'm sure that you're aware of it, the stock price went down 25%. So when you look at yourself, you feel concerned, but when you compare yourself, you feel better. I'd rather compare myself to the defense sector. And beauty hopefully should carry more value than defense, we'll do everything we can to reach that goal.

Third question, Emilie.

There's a question on the future impact of AI on productivity and employment at L'Oréal.

Nicolas, on to you.

Right, I'll be concise. You saw the detailed presentation by Mr. [indiscernible] earlier. The idea of it is quite simple. AI at L'Oréal is the augmentation of human skills of whatever we do. [ Poets ] and farmers can be augmented by AI just as well. We see very clear that iterative task like data compilation and others can be taken up by AI very well, and that frees up some time and energy for employees to focus on higher value tasks. So when we mention increase just like Samuel did, the idea for us is to accelerate growth, thanks to AI not to replace our employees to compensate a lack of growth.

We want to pursue growth. That's what we do. And thanks to AI, we can multiply a research, marketing, content creation capacity. And thanks to this, we will be able to increase the pace of growth in the coming years.

Thank you, Nicolas. Fourth question, a very frequent question. What is the impact of tariffs by the Trump administration in the U.S.? How does your organization enable you to respond effectively? Nicolas?

Right. Last year's tariffs have come in, in the summer. So over the 6-month period accounted for a little less than EUR 100 million, has impacted the products we export to the U.S. We produce in the U.S., about half of the units that are sold there. So this is what's great about our multipolar model. We have many plants around the world, including in the U.S. We've 4 plants in the U.S. We've plants in Mexico, 2 in Canada as well. So we dodged, for the most part, the cost of tariffs. It comes in at under EUR 100 million. It's lower than the impact of ForEx effect. So we estimate that -- we estimated that for this year, the impact would be double, but the Supreme Court, as you know, declared that these tariffs are illegal.

So just like everyone else, we observe the situation. We may get good news in this year's accounts if for the tariffs are canceled or brought down. That is the tariffs announced by Trump coming at 15%. But our management team is exceptional. The structure of our accounts allow on both fronts to deliver good results despite these factors.

Let's move on to the questions rooms. Let's start with the advisory committee for shareholders around there. I think -- sorry, I can't see clearly, I've lights on my eyes.

[indiscernible] registered shareholder, a member of the commission you just mentioned. I have 3 questions for you. What is the impact of additional corporate tax in France? Is this extra cost born at the expense of the dividend, investment or wages, acquisition, the acquisition of Kering Beaute division. Could you detail its components and what contribution to results is expected from this EUR 4 billion investment?

And then in 2024, you acquired Dr.G founded by a dermatologist in response to the growing success of K-Beauty. Where do you now stand on the Asian market, particularly compared to the competition from local Chinese or Korean brands or other digital native brands?

Questions that are write-down, Nicolas.

Great. I'll first start with the first question, additional corporate tax in France. This is not a happy topic exactly. Right, what is this tax? Does it amount to -- is additional exceptional task on corporate entities in France? Cost us EUR 243 million in 2025 accounts this exceptional task. So in total, more than EUR 1 billion were paid this year. EUR 243 million is about 20% of our research budget. So this is not a trifling matter.

This is not born at the expense of dividends, investments or wages. It does have an impact on the per share earnings. It's also impacted by lower dollar price, and we offset this by increasing the distribution rate, allowing us to increase the dividends up to EUR 7.20, but this exceptional tax must be just that exceptional. And there will be -- there will have to be good management effort by the French state to make sure that we don't continue -- it doesn't continue to pick the pockets of French companies. There was recently a ranking published by the OCD. France is first in terms of corporate tax rates.

I'd rather be #1 in beauty than #1 in corporate tax rates. So over the long run, obviously, companies can and do contribute when they can. They do contribute, but they can contribute to France in other ways by employing people the success of L'Oréal investments, 15,000 L'Oréal employees in France, but jobs generated, overall partners, secondary employments, hairstylists. In total, there are about 100,000 jobs in France. This is part of our value and our ability to help France shine through its products and culture also accounts for something. So let's hope that this tax will be exceptional. We'd rather give back value to shareholders and do something else with our money.

Thank you. Thank you for your diplomacy -- diplomatic terms. We could have answered otherwise. But -- let's not do that today. Then, Kering, right, this is an important question. Big acquisition, if I might say. So yes, we are very happy to have been able to move on with this acquisition. It's not only an acquisition, it's a partnership with Kering. It's a good player, a great player in the fashion industry in France, and this confirms definitively L'Oréal's leadership and especially L'Oréal Luxe.

Luxe's Leadership in Luxury beauty. I mentioned Armani, Prada, Yves Saint Laurent obviously, this is a brand owned by Kering. It generates EUR 3 billion in sales. It's over and beyond fashion sales. So with this acquisition of Kering Beaute we acquired licenses for 50 years of 3 brands. From today, the acquisition was signed on 31st of March. Brands I mentioned earlier, Bottega notably, we started working on this with getting us teams and on the longer term when there will be an agreement between Kering and Coty, which holds license for mid-2028.

We will gain the license for Gucci. We'll be able to work 1 year ahead of time. So this is not yet part of our portfolio, but it's in the interest of everyone to gain this license at an earlier date. And let's end on another topic. It's a brand that has more than EUR 300 million in sales, Creed. It's a high-growth brand. We have relatively lower share of fragrance in the market. So thanks to Creed, we enter this industry in full frontal way, and we can rely on their strength to sell their perfumes. We have high ambitions because I don't have figures in the head, but I know that Gucci is much smaller than Yves Saint Laurent in beauty products, but much bigger in fashion. So you see there's high potential if we apply the winning recipes to all our targets.

And then we have Dr.G, which we've acquired, let's speak to this.

Yes, I did mention this in my presentation. This is the first -- the biggest well-being brand in South Korea, founded by a dermatologist, very light texture, seen as Asian brands, EUR 100 million in sales. We're deploying it globally, progressively. It's already in the Chinese market. I won't give you the full roadmap here in the spirit of secrecy, but we're working on the segment of K-Beauty through this brand.

On to this question, there's the very clear emergence of Korean brands, but this accounts for less than 3% of global growth, it's is still non-considerable. Korean producers play a great part. We work with them through French formulas. And in Asia, I'd like to end on this topic by saying that we are gaining market shares in China luxury or beauty products and our market share in skin care is very high, Lancome, CeraVe, La Roche-Posay winners. So La Roche-Posay won, but came at the detriment of other Asian brands rather than French brands like ours. So we hold our good position in Asia. And thanks to the Korean brand, we will continue on this good trend.

Thank you. Do we have anyone else. There's a gentleman here moving about over there, seems to be anxious to ask questions.

Hello, individual investor for a long time, well before 2006, kudos to you, and very happy with the consistency of your results, and thank you for the wonderful dynamic presentation you've just shown. I still have 3 questions to you to understand the group better. First, on progression margins. After good results across all divisions, I still wonder what can be improved? What are the weaknesses of L'Oréal at this date?

Good question. We'll ask Nicolas.

Then L'Oréal versus the low-cost fragrance boom, what do you think about this trend adopt for example, highly rated perfumes, low cost and -- which went high appraisal among young people.

Three, solidity of L'Oréal's model against other groups, L'Oréal versus Coty's model. But for L'Oréal what do you think were the major mistakes of Coty's Group, what would you avoid doing? And if I may, I'd like to congratulate you for a great sense of timing. We have -- you managed to organize a visit to 3 days before it was broken into.

Thank you. You've been a shareholder for how long, since when?

'98.

Very good. That's not too old. I entered in '78 this company, so I've been here for a long way. Let's first start with the Coty model. And very quickly less mention this now because I don't think we will be able to talk about it next year. This is how the cookie crumbles. The life cycle of the company, some are born, some other die and Coty, unfortunately, is part of the ones that are dying. So I won't speak ill of this company, of course. I don't think they have a model proper. So nothing to say really about this, but contrary to them, we can still improve. What can we improve, Nicolas?

Well, we often have made proverbs worries that are helpful among the many proverbs that are. We can always improve. 3 out of 4 divisions are top 1 in the world, professional products, Luxe and other products. So this is -- this means that the fourth division can reach #1. And this will mean relying on emerging markets. We have lots of consumers, lots of potential. Why do we have a lower market share in emerging markets as compared to other markets like India and other regions because in these markets, we have a less structured distribution compared to France or in the U.S., small boutique, small shops across huge vast territories like India, Indonesia, let's not even mention Africa and our products, mostly more expensive products couldn't really reach their full potential.

And thanks to e-commerce, we're able to do better in India. We have a market share of about 9%, 10%, it's about 8 in shops and already at about 13, 14, 15 on e-commerce side. So there's real potential to improve here, emerging markets, fast-moving goods. And there are always things we can improve. Last year, I said that in skincare, we underperformed, relatively speaking. So we should be able to innovate more to cater to the new taste of consumers. As Mr. Agon said it very currently earlier, beauty is perpetually being renewed. So we cannot sit on our laurels. We must continue to innovate and take on new challenges.

And if I may reassure you saying if we have defect we don't have beyond all the nice beauty -- the beauty of our presentations and the appearance is that we are never satisfied with ourselves. We're always criticizing each other constantly egging each other on. I think my colleagues will be able to confirm that. We challenge each other on a daily basis. But this is the recipe for success. I think we're never satisfied. We're always looking up and looking to do better.

Low-cost perfumes. Good question, adopt. This is a nice French success story created by previous L'Oréal employee. I think this shows that consumers and young consumers globally have an interest for perfume, especially post COVID. So globally, generally speaking, it's a good news. We have new market entrants. Consumers can try new products -- low-cost products. Low to mediocre quality. And then these consumers can go up the range up to Yves Saint Laurent or other consumers, while Yves Saint Laurent move up to Creed or [indiscernible] so there's a progression across the board for consumers.

So this augments the penetration of fragrances, but we do to be careful, and we are careful when fighting against counterfeited goods. We work with our legal teams, sometimes not with this particular brands, there are counterfeited goods that are very close to our products, and we do prosecute or take legal actions against them, so we must remain vigilant in defending our brand and interest. So more fragrances is good news for us. We are #1 in procurement.

Thank you, Nicolas. Let's take another question. I can see someone with their arm raised.

This is a challenging time with the war in the Middle East. You have been very positive and reassuring. And I must say that this AGM is a very high quality. So congratulations to all of you. Special congratulations for Mr. Samuel du Retail.

I've been an individual shareholder for a long time now. And I have 2 questions. I'm sorry if I'm a bit unpleasant. I was a bit upset when I watched the TV program, [indiscernible] hearing you this morning. I'm feeling much more reassured, but I would like to know how this TV program was perceived and if you felt concerns?

The second question is also a comment. You've been doing great, but there's something missing from your presentation, which is the environment and biodiversity. There are key challenges globally, global warming, for example, and a few years ago, young women took the floor. She was brilliant. I'm being provocative on purpose. What about the environment and biodiversity? Why are they missing at L'Oréal?

Thank you. Your questions are very relevant. I'm sure you're not the only one who had them in mind. So it's great that you asked them. So let's go back to this [indiscernible] program. To be honest, we were very upset watching it, too. And I will ask Nicolas to answer this question. And we'll also get back to you for your second question, which is very relevant.

Of course, we -- it really hurt our feelings. And it also heard our employees' feelings people working in research and development people, who put so much -- so many efforts in developing our formulas. And regarding this program, they want to go viral with biased approaches. So we were not happy. And to be honest, we sent our answers in a 30-page document, we answered 80 questions, demonstrating the quality of our products. How seriously we design our advertising campaigns, use precautions for coloring products, the quality of the social model of L'Oréal, how we commit to sharing value with a company and our employees.

Unfortunately, as you were able to see, truth was not the approach that they adopted. They wanted to create something controversial. We did not like it. We shared the information that we -- with our employees, the same information that we shared with the TV program. But bottom line is, as shareholders, you can be fully confident in the fact that L'Oréal focuses on the quality of its formulas and how the company is managed and how employees are managed. Basically, we were pretty angry.

Yes, and it's all the more upsetting as in this industry, the company investing the most in R&D is L'Oréal. The most generous company from a social point of view is L'Oréal in France. And it also has the highest level of safety for its products. So every single time they tried to hit us where it hurt, and I think that ethically speaking, it is not acceptable, but anyway, there's nothing we can do about it. So we have to deal with it.

The other topic that is quite relevant is sustainable development in biodiversity. Let me reassure you. These are not points that we forget or leave behind, not at all. There is a major topic that we need to focus on. So sometimes sustainable development in the past few years was the key element, and we needed to share key developments with you. This year, we thought that AI was close to your concerns but I would like to reassure you, we are more committed than ever in terms of sustainable development.

Regarding the CDP, no one knows what it is, CDP is the carbon disclosure project. It's an independent body and is the most serious independent body in the world in terms of recognition of sustainable development commitments at corporate level. And no one notices it. There's just one company globally across all industries -- is no such company in France, Germany, Japan, no other company got a perfect rating in the past 10 years. Only L'Oreal got that rating. We're the only ones. And we have the same rating this year, which shows that we're consistent. And you recall the presentation made by Alexandra Palt a few years ago regarding the unique commitment of L'Oreal in terms of sustainable development in biodiversity. I can assure you that it is a relevant as ever. Nicolas?

Yes, let me add a couple of things. Last year, in my presentation, I shared the new objectives for the L'Oreal for the future plan. We removed goals that we had already reached. We removed goals that were not realistically reachable. So we talked about this accelerator program. We're going to look for start-ups that can find new types of plastics and new greenfield polymers.

But let me share with you a few highlights, things that I'm proud of, 100% of renewable energy for all of our operated site and stores, that's very important biodiversity as part of our goals, 95% of our biosourced ingredients are traceable and there is 56% of the water used in our industrial processes that we use a recycled -- it's the waterloop. Our goal is to reach 100% and that's key for me.

We talked a lot about Scope 1, Scope 3. So the overall amount of carbon emissions across the group which also depends on our partners and suppliers. In 2023, there was a reduction in Scope 3, even though the revenue went off, those are values, and we think that in the future, it will be a competitive edge as well, especially vis-a-vis younger generations who carefully select brands focusing on economic performance, but also the environmental commitments. Thank you very much.

So there are people who ask their questions using cards. Question, Nicolas, what about production sites outside of France for the Luxe division, unit development in fragrances.

So for the Luxe division, our manufacturing sites are mostly in France, north of France, and we're very proud of it. We create jobs and there are a few luxury items produced in our Japanese plant, [ Gotemba. Suzhou ] for China in particular. And also the Takami brand, which is our Japanese brand. But overall, well, there are few formats are produced in our Chinese plants. But in the Luxe division, we're talking about a few items, few units. So everything can be done in France as a for -- in terms of logistics and costs of -- we can stay in our local plants producing the U.S.A. for the U.S. market. But in the Luxe division, the vision is to stay focused on our fresh plants and made in France for a luxury product, is a great selling argument.

What about Gucci fragrances and skincare products. Well, it depends on the discussions between Kering and Coty. At the latest, the license will come to an end mid-2028. So at the latest, it will be mid-2028 hopefully a bit earlier. There's something that are close to my heart. In the presentation, Africa who's not mentioned it's a very powerful continent with its demographic growth.

So what about L'Oreal? Well, 5 years ago, we started working with Saharan Africa, which is very small for L'Oreal scale. We're reaching EUR 300 million in this region. The continent has a huge population for the number of people who can buy our products. Well, we have 2 subsidiaries, Kenya and South Africa. We're talking about 20 million people spending small amounts or smaller than average. So we need to support this demand with the right products, hair care products, but we're developing double-digit growth last year. And now we have 18 -- sorry, 13% of market shares in South Africa, which is close to our global market share. So it's still small, but it will be better in the next decade. Yes, it will be for the future.

For the people replacing us, it is very important. There's 1 continent in the world in which women are truly passionate about beauty. And it's the African continent. So Africa will be an outstanding growth driver for L'Oreal in the next decade.

Going back to questions in the room, we'll take 1 or 2 because we are a bit behind schedule. If you would like to have a lunch, we need to wrap up quickly. Number three, please.

Louis Vuitton [ Kering ]. I'm a registered shareholder. You talked about AI. I asked Mistral to ask you a question. There were a couple of recommendations -- don't be ignored. Sometimes managers can try to beat around the bush. Also, I should try not be perceived as being hostile to you.

Anyway, they talked about cash investigation, we talked about this already. And then in 2023, the CEO, Nicolas Hieronimus, received 300x the minimum wage. So how do you account for this concentration of wealth while employees do not benefit from the same increase?

Well, thank you very much, Mistral, for this recommendation. Future AGMs should be interesting. But please do not just send your Mistral AI to ask us questions. Otherwise, it's going to be boring for us. I hope you can attend in-person in the future.

So Nicolas Hieronimus is not Chairman and CEO. And AI sometimes make a lot of mistakes. So he's not Chairman and CEO because I'm the Chairman. You can let Mistral know.

Let me answer on behalf of Nicolas regarding his wage. He is Chief Executive Officer. Second, market capitalization in France, global leader of beauty and his compensation is quite consistent with other French CEO. And it's around 50% of the global competitors or sometimes 2, 3, 4 times smaller than us. So there is the compensation committee that decides based on a benchmark they decided that this compensation was justified.

Now regarding shareholders' dividend, let's ask people in the room, dear shareholders, what do you think? Do you think that shareholders got too much money from L'Oreal? No. Okay. So you can tell Mistral that its comments are not quite relevant. If you want to develop a company, if we want to turn the company into a leader and a pioneering company for the future, you need well paid leaders and well paid shareholders. Thank you, next question, please.

Last question. I hope it's not going to be asked by Mistral or Claude. Go ahead, number 6.

I have been shareholders since the 1970s. Congratulations to all of you for your work. Congratulations to your employees. You answer just more question partially regarding the recycling of water in your side. What about PFAS and TFAs. Can you tell us more about them? Congratulations. Thank you, sir.

PFAS and TFAs. Okay. I'm not an expert in TFA, but for PFAS. What I can tell you is that we fully removed them from our products. 100% of L'Oreal products on the market since early 2025 that do not contain any PFAS. TFA, well, I'm not quite confident to answer you. I could ask somebody. Barbara Lavernos is in charge of research, she's great, she's telling me it's the same answer, so her answer must be right.

Now regarding water, that's a very important topic for us. So we talked about what we call the waterloop having a closed loop for water in our industrial side not to lose any, the goal is to reach 100% by 2030, we're at 56%. And why aren't we at 100% yet because it means investments and we do it in priority in regions with a huge water stress. So we do it there first rather than in other regions.

And also one of our new commitments, L'Oreal for the future in regions impacted by water stress. In each category, we want to have, at last, 1 product that can be used without water. So dry shampoo, leave-in conditioner, we know that water is a key challenge. That's the answer what I would like to share with you. No PFAS, no TFA. Thank you very much, sir. Thank you for being a shareholder since 1970s.

We'll now move on to the vote of resolutions. Before that, Madam Emilie Thiéry will give you a final quorum and a few practical explanations on voting procedures. Shall we now give you the final quorum?

The final attendance sheet records the representation of 436 million and some shares, that's a little more than a 81% of the total shares composing the company's share capital entitled 1,797 shareholders present at the meeting. 340 shareholders represented. 9,050 shareholders granted proxies to the Chairman and 15,000 in some shareholders have voted by correspondence. As a reminder, resolutions of an ordinary nature are approved by simple majority of resolutions of an extraordinary nature by 2/3 of the majority to vote, you'll need only 3 buttons on the votingvoting table. The green button for favor, yellow for abstention and red for against, for the record abstentions is not considered a vote cast.

We will announce the opening of the vote, an hour glass will appear on the screen, and we will then indicate the closing of vote. Final results will be projected after the vote on each resolution. At the end of the meeting, the full results will be displayed on the screens and will then be available on the website, loreal.finance.com.

First resolution, approval of the 2025 current company financial statements. Voting is on.

[Voting]

Voting is closed. First resolution is adopted more than 99% to approval to 2025 consolidated financial statements. Please vote now.

We have technical issues -- is it working now?

Tablet is not working, is that right? Technical glitch? Unable to unlock it.

So the second resolution is carried by more than 99% of -- all tablets working.

Fixed tablets, we need to end this meeting at 1:00 p.m.

Third resolution, allocation of the company's net profit for financial year 2025 and setting of the dividend. Please vote now.

[Voting]

We have people helping us with the tablets, please. Voting is close. Resolution is carried, 99% of votes are in favor.

Fourth resolution, appointment of Pablo Isla as a Director. Please vote now.

[Voting]

Are they working now? [indiscernible] was to solve this issue.

[Technical Difficulty]

[Foreign Language].

Moving down [indiscernible] I had a question on the company's capital. Nestle transferred all its shares that remain in 2025 to holding in Luxembourg for the future of events as there will be new members of Nestle on the Board.

Other question on the capital held by the family limited to some 33% after an agreement to last year. Today, the company has a 30%, the family has 34% for some of our company's shares. Over the past 2 years, we have a quorum of 82%. So this brings the total a little more than 40% of the total capital is Nestle not controlling the Bettencourt family in effect and what's the legal teams position, our control -- de facto as the family has more than 30% moved over the threshold after an agreement a couple of years back. We have 82% of total capital represented here, Thiéry, our only Secretary, she's also a legal scholar. She's a specialist in these matters.

On Nestle's participation, there was an internal reclassification within the group with no impact on the ownership of shares by L'Oréal. So this does not predict any future evolution.

On your question -- for your question on de facto control for this legal matter, there are legal actions at the Court of Cassation and Paris and other courts on the de facto control, but to have the de facto control, you have to have more than 50% of shares to be in such a position by law. So this is the legal answer.

The more general answer is this. My knowledge -- Pablo and Anna will certainly be appointed as directors. It doesn't mean that Nestle is not in control of L'Oréal. We understand the question. However, the reclassification of -- internal reclassification has no impact on the situation.

Now secondly, I think we can be happy about the fact that Bettencourt Meyers family has a strong presence. This, of course, is the family of the founder, Eugène Schueller, strongly has a strong presence in the company's capital. It gives us continuity, stability, this is very much positive for the company and for the shareholders. Thank you for your question. So I want to answer them in full.

Our tablets are working now? I don't know we need to answer questions. I can't hear you, speak louder please.

Share buyback program, what's on that -- purpose is very simple. We want to maintain the number of shares stable. There in and out to stop dilution. As you know, each year, we have employees the shareholding scheme. We also attribute shares -- allocate shares to Directors and we create shares each year. And if we didn't buy back shares, there will be each year more shares floating around and therefore, dilution for all shareholders. That's the idea if Having a very reasonable amount of share buybacks are about 0.5 million each year to stabilize the overall number of floats so that we avoid any dilution of all shares, including yours.

Now, our tablets, are they working? WiFi was reset. I was told 30 seconds ago that in a minute, it will be all right.

One more question. Lady in orange, next question, please.

It's [ Vanessa Ruiz ], I'm Colombian and Spanish, and like many foreign students, I came to France with the dream to start working in a large company like L'Oréal, have the opportunity to have an open ended contract with Bouygues. We work for you, the group. And today, I'm looking for a new opportunity.

I have 2 questions. And you're right. It's a perfect place, Jean-Claude, the Head of HR is here. 2 questions first. What are you looking for in terms of the profiles, what's the differentiating factor with strong suit? And secondly, may I take a picture with you?

This is a perfect demonstration of your interest for L'Oréal, someone being a shareholder and above and beyond, wanting to work for our group, that's great. At the end of the meeting, we'll introduce you to Mr. Le Grand, the Director of HR. He's a remarkable man.

We are on a look out for all talents, young people, many talents with a ambition, motivation. The group's development and you seem to fit the build. And congrats also to you because it's the right place in time to say this.

Tell us working, I need to from the beginning, Number one. Is it working now? Great.

Resolution 1, approval of the 2025 parent company financial statements. Please vote now.

[Voting]

Time's up. Resolution 1 is adopted with 99.94% of the votes.

Resolution 2, approval of the consolidated financial statements for 2025. Please vote now.

[Voting]

Time's up. Resolution 2 is adopted with 99.94% of the votes.

Resolution 3, allocation of the company's net profit for financial year 2025 and setting up the dividend. Please vote now.

[Voting]

Resolution 3 is adopted with 99.98% of the votes.

Resolution 4, appointment of Pablo Isla as a Director. Please vote now.

[Voting]

Resolution 4 is adopted with 96.64% of the votes.

Resolution 5 appointment of Anna Lenz as a director. Please vote now.

[Voting]

Resolution 5 is adopted with 95.29% of the votes.

Resolution 6 appointment of Christel Bories. Please vote now.

[Voting]

Resolution 6 is adopted, 96.95% of the vote.

Resolution 7 reappointment of Jean-Paul Agon as a Director. Please vote now.

[Voting]

Resolution 7 is adopted with 96.73% of the votes.

Resolution 8 reappointment of Patrice Caine as a Director. Please vote now.

[Voting]

Resolution 8 is adopted with 98% of the votes.

Resolution 9, establishment of the total maximum amount allowed to Directors as remuneration for their office. Please vote now.

[Voting]

Resolution 9 is adopted with 99.78% of the votes.

Resolution 10, approval of the information on the remuneration of each of the Directors and corporate officers required by Article L. 22-10-9, of the French Commercial Code. Please vote now.

[Voting]

Time's up. Resolution 10 is adopted with 96.92% of the votes.

Resolution 11, approval of the fixed and variable components of the total remuneration and benefits paid during financial year 2025 to Jean-Paul Agon, in his capacity as Chairman of the Board of Directors. Please vote now.

[Voting]

Time's up. Resolution 11 is adopted for 97.67% of the votes.

Resolution 12, approval of the fixed and variable components of the total remuneration and benefits paid during financial year 2025 or allocated for that year to Nicolas Hieronimus, in his capacity as CEO. Please vote now.

[Voting]

Time's up. Resolution 12 is adopted with 95.33% of the votes.

Resolution 13, the approval of the remuneration policy for Directors. Please vote now.

[Voting]

Time's up. Resolution 13 is adopted with 99.89% of the votes.

Resolution 14, approval of the remuneration policy for the Chairman of the Board of Directors. Please vote now.

[Voting]

Time's up. Resolution 14 is adopted with 97.91% of the votes.

Resolution 15, approval of the remuneration policy for the Chief Executive Officer. Please vote now.

[Voting]

Time's up. Resolution 15 is adopted with 95.61% of the vote.

Resolution 16, authorization for the company to buy back its own shares. Please vote now.

[Voting]

Time's up. Resolution 16 is adopted with 99.39% of the votes.

Extraordinary resolutions. Resolution 17, authorization granted to the Board of Directors to reduce the share capital by canceling the shares acquired by the company under Article L. 22-10-62 of the French Commercial Code. Please vote now.

[Voting]

Time's up. Resolution 17 is adopted with 99.54% of the votes.

Resolution 18, authorization granted to the Board of Directors to carry out free grant of existing shares and/or shares to be issued with cancellation of shareholders' preferential subscription rights to employees and directors and corporate officers. Please vote now.

[Voting]

Time's up. Resolution 18 is adopted 97.42% of the vote.

Resolution 19, delegation of authority granted to the Board of Directors for the purpose of carrying out a capital increase reserve for employees with cancellation of shareholders' preferential subscription rights. Please vote now.

[Voting]

Time's up. Resolution 19 is adopted with 99.49% of the votes.

Resolution 20, delegation of authority granted to the Board of Directors for the purpose of carrying out a capital increase reserved for categories of beneficiaries consisting of employees of non-French subsidiaries with cancellation of preferential subscription rates. Please vote now.

[Voting]

Time's up. Resolution 20 is adopted with 99.49% of the votes.

Resolution 21, amendments to Article 12 of the articles of Association related to the General rules of our General Meetings. Please vote now.

[Voting]

Time's up. Resolution 21 is adopted with 99.99% of the votes.

Resolution 22, powers for formalities. Please vote now.

[Voting]

Resolution 22 is adopted with more than 99.99% of the votes. Thank you very much.

The resolutions have all been adopted. It's been a bit challenging. But I would like to thank you for that. Please apologize for the technical problems. If some of you experienced difficulties that we have been identified during the vote, please reach out to [ Optivia ] staff. Sorry, again.

I would like to thank you for this moment of exchanges, which is very valuable for us, and I hope that you understood the great outlook for L'Oreal for the years to come.

Let's meet again here next year at Palais des Congrès, on Wednesday, April 21, 2027, have a great year. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Welcome to the conference call regarding L'Oréal Sales at 31st March 2026. The conference is about to begin. I'll now hand over to Eva Quiroga. Ms. Quiroga, please go ahead.

Thank you, Sabrina, and good evening to you all. Thank you for joining us on this call for our first quarter 2026 sales. As always, I'm here with Nicolas Hieronimus, our CEO.

Good afternoon.

Christophe Babule, our CFO.

Hello. Good afternoon.

And Laurent Schmitt, our Head of Corporate Finance and Financial Communications.

Good afternoon.

Nicolas will make some brief opening remarks, and we will then go straight to Q&A. Over to you, Nicolas.

Okay. Thank you, Eva. So good evening to you all. As you could see in our numbers, we're off to a good start. Our like-for-like growth adjusted of all IT transformation impact between last year and this year was at plus 6.7%, well ahead of the global beauty market, which we estimate to be close to plus 4%.

And we have been gaining share in all regions and divisions. It was driven by the further acceleration in our innovation rate as we launched several new products with blockbuster potential. This allowed us to further expand our market share in fragrances, hair care and makeup while starting to see some green shoots in skin care.

And we continue to strongly outperform in e-commerce, particularly in emerging markets. Even if we are wary of the potential impact of the Middle East conflict, we are optimistic about the outlook for the global beauty market, which has shown no sign of slowdown to date. And we are confident in our ability to outperform it because most of our '25 and '26 innovations are off to a good start, and we have more to come. And because we have the teams, the means and of course, the fighting spirit. So we are now ready for your questions.

The first question comes from Celine Pannuti with JPMorgan. The next question is from Guillaume Delmas of UBS.

Are you having some technical glitches because we can't hear any questions.

Sorry. Ms. Celine Pannuti, JPMorgan is now on the podium.

Can you hear me?

Yes.

So clearly, a very strong start to the year. You said that the market has continued to show a good progress at 4%. Can you talk about what you see -- you said you are potentially worry about the impact of the geopolitics, what you could see in terms of potential impact in travel retail as well as maybe you mentioned -- I mean, Middle East seems to have been a small, small weakness. And yes, that would be my first question.

My second question on emerging markets. Clearly, it was a strong beat. SAPMENA accelerated, and we also see that China did very well. If you could give us like a steer on the durability of that growth? And maybe color to my first question that I should have asked is whether what you see in terms of the momentum having started so well. I mean you were talking about acceleration at the end of last year. How would you characterize the rest of the year following?

Okay. Thank you, Celine. First thing because just to make sure my pronunciation was right, I didn't say I was worried. I said I was vary, which means...

Vary. Yes. That's what I said, but maybe my pronunciation...

I'm conscious about the uncertainties that lie around this conflict. It's true that today, as far as the impact it has on our sales, it is -- it was absolutely manageable. It impacted our sellout in March in Travel Retail and indeed in the Emirates. But this region, the Middle East is less than 3% of our sales. And if we look at the situation over there, we see that, I would say, consumption has gone back to normal in Saudi, which is an important growth market for us.

And as far as the Emirates are concerned, we see that e-commerce is back to more or less normal. The -- I would say, the local -- the neighborhood malls are also back to consumption, where you find still a real impact is on the big tourist malls of Dubai and travel retail. So overall, this has had an impact in March. And of course, we will see how things evolve in April, May. But we think it's overall manageable in the region.

What we don't see, of course, what we don't know is whether durable inflation on gas prices will impact consumer behaviors. I must say that so far, and we are monitoring this very closely, we have seen absolutely no reduction of beauty consumption in our markets, whether it's Europe, North America or as you mentioned.

So, so far, so good. But of course, we have to see. And then, of course, should the conflict last longer, this will have an impact on the cost of the price of the brands will have an impact on our sourcing, on our logistics, which is more a P&L impact than the top line growth. So I would say, like you, we're all waiting to see the resolution of this conflict. So that leads us to a certain level of carefulness, which leads me to the momentum.

I'm sorry to -- apparently, no one can hear the webcast. Only the people on the line can hear you, so you know no one can hear the webcast.

That's a big issue. So we will have someone fix this. I do apologize. So if it's -- if you're the only one listening to our responses, that's a problem. So I will pause Celine to make sure we -- I will probably have to start again then if you are the only one to give the answer.

That's -- we seem to have had a few issues, which, frankly, I'm not very happy about with that later. Apparently, there was an issue with intermediary. Let's wait I hope it doesn't take too long to fix -- how do we know whether it works...

I think they're putting a line that people can call on the website. I think we answered the questions. People will have access to the webcast. So I think we...

All right. So we continue with the questions. As far as the momentum, because I'll talk about the emerging at a later stage. But as far as the momentum is concerned, I would say 2 things. The first thing is that Q1 was our most favorable -- our easiest comp from last year. So that has to be taken into account as well as potential even if it's not -- if it's manageable impact of Middle East consumption.

On the good side is that all the news we have today from our sellout are very positive. So we remain confident on the year, which is, as I said in the financial analyst meeting for the yearly results. We expect both the market and more importantly, L'Oréal to grow faster in the full year 2026 than it did in 2025.

And of course, the start of the year is an encouraging news for us. And for emerging, you mentioned China in the emerging. So for me, it has emerged a while ago, but it's true that the market has continued to -- has confirmed this stabilization or slight rebound because it was at plus 1% on the end of last year, and it's now closer to between 1% and 2%, closer to plus 2.

So that remains pretty solid. But the good news within the Chinese market is really the fact that there's been a shift back to selective. So what's been driving the growth of the market is more this -- the selective market with, I would say, a bounce back of the confidence of the Chinese consumers, especially a more affluent one with the fact that the stock market in China is getting better. So of course, as we are overrepresented in overweighting in our business in -- on the selective market where we are gaining share, it is a very positive news.

So we see China as continuing to -- which is now for us, including Hong Kong, is continuing to do well. And we've really very seriously outperformed the market in the first quarter as the market was, as I said, somewhere between plus 1% and 2%, and we were in mid-single digits in China. So really gaining share, particularly on selected divisions.

And as far as SAPMENA is concerned, it's also -- it's been a good start of the year with a market that is -- that remains in the same level of dynamism at the end of last year. And our sell-out is in line with our selling. So there's no inventory building with some markets that are very dynamic like Vietnam and particularly India is doing -- doing good, even though it's still very small for us.

So we are confident on SAPMENA. The only emerging market that has slowdown in terms of market versus last year is Latin America, which was also slower in Q4. And so it's more in mid-single digits now in the beginning of the year, but we continue to outperform it, particularly in Brazil, in CPD, in hair care, where we have strong results. So overall, as you said, a good start, a very good start in sellout and a momentum that has to take into account the fact that Q1 was our easier comp.

The next question is from Warren Ackerman of Barclays Bank.

It's Warren here at Barclays. Can you hear me?

Yes. And we do apologize to all the people connected that couldn't hear the beginning of the call because there was apparently a technical glitch, which I sincerely apologize for.

Okay. So I've got one housekeeping question and then 2 main questions. The housekeeping for Christophe. Can you just clarify the phasing issues? There's been a little bit of confusion just on the 6.7% and the 4.3%. Just what is the actual real underlying, underlying? That would be great.

And then my main question, Nicolas, can you talk about the skin care market? At CAGNY, you said it was one of your biggest priorities to improve performance around brands like Lancome. It seems like there are some green shoots -- what's happening to the skin care market? And how happy are you with your innovations and attraction? And what can we maybe expect for skin care overall this year, given it's your single biggest category?

And then the second one really is, could you maybe just outline the strength in Europe? It was very strong at the end of Q4, and that strength seems to be confirmed in the first quarter. What are you seeing? Is it your market share, your innovation is driving that continued outperformance? And do you feel good that, that can be sustained for the balance of the year?

Yes. Babule here. I will start with, of course, what's happening on the IT transformation. As you know, it's very important to create this common backbone. So we are going forward with this big project.

And -- you will have noted that in the press release, in the Page 2, we have put a new column that gives you the adjusted growth. So the adjusted growth taking into account all the transformation that we had last year and this year. So that's why from the reported like-for-like growth of 7.6%, there is a negative adjustment of 90 basis points, 9-0. And therefore, the underlying or adjusted like-for-like growth is 6.7%.

And this is linked to a minus 340 basis points from the IT transformation in Q1 because we started Australia, U.K. and we are starting for -- with the U.S. And last year, plus 250 basis points from the IT transformation of Q1 of last year. Net is minus 90, and you have it on the Page 2 of the press release.

Is that clear for you, Warren?

Yes, it's clear.

Okay. So as far as categories are concerned, skin care market is doing overall pretty good. It's one of the market that is mid-single digits. I think we have estimated because at this time of the year, it's still an estimation, but we estimated around plus 4%. And we have indeed put in place our, I would say, our quickup or counter attack plan, which has already delivered pretty strongly on LDB.

As you can see, LDB is growing -- our Dermatology Beauty Division is growing double digits. And it's both the continued strength of La Roche-Posay, the return to growth of CeraVe and the very good health of SkinCeuticals, which if you remember, has become our new billionaire brand in Euros last year. So here it's doing very good.

On the other divisions, we are -- when I say we're seeing green shoots is that a number of the launches that we've either put on the market at the end of last year, like Garnier Fructis Curl, which was a real success and now is being rolled out in Latin America and Mexico, but also in Southeast Asia is showing promising start. We have new launches on L'Oréal Paris, Glasskin serum, which are starting well, too.

And of course, if I take luxury, we have 2 positive effects. One is the fact that the Chinese market -- selective Chinese market is more positive. So that's good for us. But the launches we've put on the market, the [ energy ] cream, the new Kiehl medicated and are doing great.

And we just had the first initial sellout of our new longevity MD line, which is the new launch that has been developed with a new integrated supplement that drives -- allow us to act on all signs of longevity. And the first sellout are very good. If you add to that, the fact that MIXA continues to thrive, that Thayers in the U.S., which one of our acquisitions that had been a bit of a slow is also growing.

Medicaid, our acquisition goes well. And of course, and we will be starting the rollout of Dr. G, our Korean brand. So we have -- I think today, it's very, very strong on LDB, and we have promising signs on the other divisions, which have not materialized right now in strong overperformance on the category, but I feel that it should be good for the rest of the year.

And our Winstein is also thanks to China positive. So it's getting better. And I would say the proof of the success of the strategy is really on the -- come back on LTV, which is really powerful. As far as Europe is concerned, we see the -- I think it's both topics, both explanations were right.

One, the market is pretty resilient. It's a market that's growing mid-single digit, around plus 4-ish, so consistent with the global beauty market. And we are outperforming in all 4 divisions, very significantly in luxury, pretty good also on the mass market on professional, thanks to Kérastase and LDB is gaining share in the majority of countries.

CeraVe has become the #3 brand in Europe for the first time. So we have -- Europe is doing good. And I agree with you that some people are surprised that we see -- I think Europe for me is the absolute demonstration of what we call the lipstick effect of the dopamine effect of beauty because we really see in our consumer studies that even though consumers are worried and they have some preoccupation, they may cut on high-value items, but they use beauty as compensation for stressful climate and psychological buffer, and we see it in several categories.

So good performance in Europe is driven as previously by Southern Europe, but also our DACH business, so Germany, Austria and Switzerland is doing good. And the U.K., which has an easier comparative is not to a good start, say, pretty solid in Europe. And so we expect the market to continue to be positive. I don't know, in the 3, 4 brackets. And of course, we are determined to continue to outperform.

The next question is from Jeremy Fialko of HSBC.

Jeremy Fialko from HSBC. So a couple from me. The first one is maybe we could just go into Professionals. So that was just a massive pickup from where you were, I guess, over the last sort of 6 quarters or so. So perhaps you could just talk about what was going particularly well within that division.

And again, any elements that you think might not be sustainable or whether you just think you've got a template that's working really well at the moment and can be sustained. Second thing is on Kering. So you've now got that in the portfolio. Perhaps you could talk a bit about your sort of first steps with that portfolio and whether you think there's any chance of getting your hands on the Gucci license a bit earlier than 2028?

Okay. Well, on Professional, indeed, it's been a very strong performance of the division now for I would say, more than 18 months. And it's really a performance that's driven by really a structural transformation of the division that has happened profoundly over the last couple of years, where this division has really truly become omnichannel with, on the one hand, an always confirmed, reaffirmed dedication to supporting growing the salon market with new technologies, new hair color products.

We just launched a new Redken ALK. We just renovated Majirel. So we remain dedicated to supporting that channel. But the big step change is that after having built highly desirable brands for decades like Kérastase or Redken, the fact that we have become omnichannel and that these premium hair care brands are available in some selective outlets or online drives phenomenal growth and attraction.

And this happens at a time when hair care itself becomes a much more valorized and sophisticated and demanded category. All over the world, the hair is longer. Whatever the age, hair grows longer, women keep their hair longer, people are concerned about hair loss and you have more mixed population with lots of curly textured hair that are much more demanding in terms of hair care.

So you have the combination of brands that have the science and the offer and the desirability that are not available to consumers even though they are premium and a strong consumer desire backbone. So the combination of these 3 factors is the perfect equation for the growth of the Professional division. So -- and I think it is sustainable because the underlying demand is growing and because we have more technology.

And indeed at the end, the weight of premium hair care over the total hair care remains relatively moderate. It's 1 product out of 10 in mature markets. So there is room to grow. So I think it's a good combination, I would say. So I'm pretty confident that.

Which is also we have to say it by a very strong e-commerce growth.

Yes, that's what I mean. When I say omnichannel, it is available in a lot of platforms. And of course, consumers and younger consumers are really craving for it. And we are just also expanding in emerging markets, this division, which is also getting some traction.

So lots of innovation, lots of demand, coveted brand and availability online, while still protecting the professional support and professional equity with specific innovations for this channel, which is also, by the way, served by our teams in a more digital way than before, a more, I would say, efficient way.

So that's more professional. And as far as Kering is concerned, I'm afraid there's not much I can tell you. It's true. It's -- the deal has been closed. So it's ours since the 1st of April. So we are -- of course, we have met the teams. We will be hosting them in our offices.

And of course, we'll be focusing on the brands that are #1 will be Creed, which is already a significant business and looking at the 2 beautiful brands that are Balenciaga and Bottega Veneta. And as far as the Gucci license anticipation is concerned, we are not having the discussions. It's a discussion between Kering and Coty.

I assume they are happening, but I have no news to give you on that front. So it's just the beginning, but we are really excited. And when I look again at the performance I have right now on Yves Saint Laurent, I'm pretty excited at the potential on Kering Beauté, which will have because of the step-up in inventory, which have a dilutive effect of the first half, which will comment probably our first half results. But really excited about this prospect. Nothing really new to tell you on Gucci.

The next question comes from Guillaume Delmas of UBS.

I've got one quick housekeeping question. I mean, for the people that were not on the webcast and also because I missed the number, could you maybe repeat what is your initial assessment of the beauty market growth in the first quarter?

And then my 2 questions. I mean, firstly, on North America, because I think Q1 is your best quarterly performance in nearly 2 years. So could you maybe shed some light on this? I mean, particularly what kind of market growth are you seeing? Any particular discrepancy between sell-in and sell-out in the quarter? And then looking at the 4 divisions, I mean, where are you seeing the most significant outperformance?

And then my second question, probably a question for Christophe. I mean, early days, but to what extent your commodity and logistics cost outlook has already changed? I appreciate you've got high gross margin, productivity savings. So historically, you've been really good at rapidly mitigating these headwinds. But could you also consider some pricing actions in the back half of the year should these higher prices persist?

All right. So Guillaume, beauty market growth, and again, apologies for the glitch in the beginning. We estimate the markets in the first quarter to be shy of 4% growth, so slightly below 3.8% or something like that. But as you know, we don't have all the sellout data, but it's -- so more or less in the same -- on the same pace than the second half of last year. So it remains dynamic.

And as I said earlier, we have been paying a lot of attention on the recent weeks to see whether there was any impact on consumer behaviors of the increase in gas prices or for people that they have to fill their car tanks with. And we have seen absolutely no change in beauty consumption patterns. So that's the first -- the answer to your first question.

As far as the U.S. market of North America is concerned, first of all, what is important, as you know, our growth is once adjusted of the IT transformation is plus 7.6%. So it's indeed one of our best growth in a while and with a little bit of discrepancy between sell-in and sell-out because our sell-out is actually higher than our sell-in.

We clearly outperformed the market big time, I must say, CPD and sellout is really doing great because it's low double digits in sellout, which is great with hair care on fire. And the reason why we're a bit behind in sell-in, which is one of the explanation why our Consumer Products division is a bit below some of the expectations is the fact that we had kind of the perfect store in the U.S. without play on words because we had, on the one hand, sellout that's really going really, really strong, particularly in hair care across all categories.

We are building the inventory to prepare for our IT switch, which is going to be early June in the U.S. And at the same time, we had a snowstorm on our big distribution center in Arkansas. So we lost some sales there. But overall, CTP is doing great.

Professional is a bit like everywhere. I would say the good sign is that SalonCentric, which had been a bit lackluster last year is back to positive growth. So it's helped by the launch of Color Wow. But overall, we see a little -- a little better situation in the sellout world.

Luxury is doing good, thanks to fragrance and the recent launches in fragrances. And La Roche-Posay and LDB in general are also doing pretty well because you have both the recovery of CeraVe in skin care and good performance in hair care and La Roche-Posay continues to thrive.

So overall, I think we are in a good -- very good sellout situation in the U.S., and we are managing this big -- it's our biggest country. So this move to our new SAP in the U.S. is something that we work very hard on and that has had a minor, but real logistic implications in the -- in the first quarter. But overall, it's one of the countries, where our performance is really very good right now.

And Christophe, on the impact of...

On the impact of the -- first, let me give you also a flavor on the structure of the growth because we think it's important. So we have both growth in volume and value. Basically, volume accounts for around 40% of this growth. And therefore, the value is there also to protect, of course, our gross margin.

And as you can imagine, first part of the half, we have a negative impact linked to the tariff. So this will have a negative impact on the gross margin for the first half. But we are trying, of course, to mitigate the impact with different aspects. And on the other side, we have been computing the potential cost linked to the oil. So as you can imagine, we have, on one side, a negative cost -- additional cost on the logistics and also direct additional cost potentially on the sourcing of some materials, mainly on plastics.

And when we add both of them, if the oil stays at around USD 90 to USD 100 a barrel, then the additional impact could be in the range of EUR 90 million to EUR 100 million. Of course, all this is being calculated based on the evolution of the prices. And we will see because the biggest risk at the end will be the inflation that may come from this all increase. And if inflation, of course, goes up on the long term, of course, we may have to take some action on the pricing later this year.

We'll see at last whether we need to do it. But we also will have potentially some good guide on the tariffs in the U.S. in the second half of this year, the change in percentage that we now have.

So we'll see we're monitoring. But as you know, we have this capacity to take prices up. And we have a lot of, I would say, opportunities in what we call revenue growth management where the articulation of formats, product mixes, et cetera, and promotions is also another way to protect our gross margin without necessarily taking prices up too much for consumers. That's how we did it post-COVID, and that's one of the tools we use to keep on recruiting consumers, while protecting our P&L.

The next question comes from Sarah Simon of Morgan Stanley.

I have 2. First one is just can you remind us, like-for-like, is that assuming that what you own now you owned last year? Or is it excluding the contribution of everything that's been acquired until you get to a year afterwards? I'm just thinking because obviously, you've got some bigger M&A coming in. And then the second question.

It includes what we acquired during the year.

So if Medicaid is growing at 100%, you would benefit from that in your like-for-like?

We would have -- if they are growing at 100%, yes, but we still have the sales in the base, we have the sales of that Medicaid in dollars last year. They're doing great, by the way.

Well, I can see it's everywhere in the shops over here now. So second question was on Mixer and the rollout. Can you talk about how -- where that's been rolled out from a geographic perspective and how much further there is to go?

Well Mixer is mostly -- today is mostly a European rollout. It's launched in DACH, and we are, of course, studying a few other European countries. But as always, at L'Oréal, when things start flying, you have a few countries that are beginning to raise their hand and are becoming interested. So right now, it's mostly Europe, but we may have other project candidates later. But this year, it's mostly a European play.

The next question comes from Olivier Nicolai of Goldman Sachs.

Nicolai. I might have missed this at the beginning on your remarks at the beginning, but SAPMENA was up 15.4%. Have you made any comments on the impact from the issue in the Middle East and if like some of your peers in luxury expect any impact in Q2?

And then just one question going back to Derma and the growth of CeraVe, which continues and a nice turnaround there. You mentioned the growth of hair care in North America for CeraVe. Have you reached the full distribution for your hair care range compared to your skin care offer? And how much of CeraVe in the U.S. is hair care today?

I'm not sure I have all the details to the latter. I don't -- it hasn't reached full distribution, but more importantly, it hasn't reached full potential because it's very, very recent. It's growing month after month. And what's interesting in this line, you've got both Anti-Dandruff and I would say, normal shampoo and both are working very well.

So it's totally additional for both for CeraVe and for us. It's still a minor part of the business in the U.S. but growing. And for us, what's really interesting is that CeraVe's turnaround is also and mostly driven by the turnaround of skin care. We've launched an intensive lotion on the back end of last year, which is doing really great.

So it's really -- and it's true everywhere. And we are just launching on CeraVe, which is not a U.S. story today, but we're launching -- we're just launching sun care in Europe, which is a good complement in terms of price positioning and overall strategy to launch Posay. So it is promising, but the brand is back to growth, and that's for us a very good news because it has, at some point, started plateauing. And now it's growing again, and I think there's a lot of potential.

On the Middle East, so first of all, a reminder for everyone. It's less than 3% of our sales. And it had, I would say, a manageable impact on the month of March. It will have an impact on Q3. But I would say it's not as big as some of the other players you're mentioning, first of all, because it's smaller in our business. Second is that what we see today is that Saudi Arabia is back to normal in terms of consumption. But e-commerce, which is, as you know, one of the areas we bet on, is also pretty resilient.

And even the neighborhood malls in the Emirates are doing okay. So it's really more both the tourists visiting the big malls, Dubai Mall and the travel retail. So it's going to impact more our L'Oréal Luxe business than any other division. So I would say it will have an impact, but it will really depend on how long the conflict lasts and whether particularly tourists and travelers are confident to go back to this region. But as far as local consumption, it is, I would say, globally okay.

And by the way, most importantly, all our teams are safe and working. And I think if you look midterm or long term, it remains a very strong area of growth for us because in terms of the size of the population, the economy, the women that are more and more empowered. I would say I was last fall in Saudi, and it was pretty exciting. So today, the impact exists. It will impact more Q2 than Q1, but it is, I think, overall manageable.

The next question comes from Charles-Louis Scotti of Kepler Cheuvreux.

I have 2. The first one on North Asia. The market is finally rebounding in China, and you are outperforming it. I'm just curious to hear your outlook for the year and to what extent you believe this rebound is sustainable? And does the fact that the luxury beauty segment is driving the recovery confirm that Chinese consumers are more inclined to engage in discretionary spending and trade up in your view?

And second question is on the fragrance category. There are some of your competitors in beauty and general and fragrances that are facing difficulties, and it seems to be fueling a new wave of consolidation or is it rumors of potential mergers for some? Are you still on the lookout to acquire some additional fragrance licenses? Or do you consider your portfolio sufficiently broad after the Kering Beauté deal?

So first, on the North Asian market, it's true that it is -- it has recovered. And for North Asia, the biggest part, of course, is China. For us, it's 70% of the total. So it's really what is the absolute for barometer or thermometer of the market.

And indeed, China has gone back to positive territory. It's not a massive rebound. I'd say -- we said it's somewhere between plus 1% and 2% and but it is positive. And indeed, it's more driven by selective premium products. It's true for our luxury brands, but it's also true for Care Xtenso, SkinCeuticals who are both very positive.

And I would attribute it to probably 2 factors. One is that indeed, there is -- thanks to the rebound of the stock market in China, there is a bit more discretionary spending. And there's also, as travel retail remains negative, especially on domestic, there is also probably some transfer of consumption from what used be a Travel Retail to the domestic Chinese market. So overall, we are confident on the fact that China will grow.

We have -- we are conquering new consumers. That's interesting because we were -- we've been for a while stuck to 100 million consumers in China, and we've increased it to 105 million and growing 108 million latest assumption, thanks to the penetration in Tier 3, 4, 5 cities, which are driving the growth, and that's a combination of a couple of door openings, but a penetration allowed by e-commerce and doing in particular.

So overall, we don't want to get carried away, and it is -- it remains a market which has not its old growth rhythm, but it's positive. And our brands are really good, doing good. We are launching -- expanding our culture brands like Prada, and there's good response. Aesop is doing good in China. It's a brand that Chinese consumers love. So I would say that it is positive news for us. It's a very competitive market, of course, and that forces us to be ever more innovative, but confident on that.

On fragrance, first of all, it's true that the market as some of the players said, has slowed down a bit. It remains positive. It's a mid-single digit, but we are really growing much faster than the market. Very happy that Libre has become at the end of last year from Saint Laurent, #1 feminine fragrance in the world. We have had a lot of initiatives earlier in the year, which -- whether it's the extensions of YSL Libre Berry Crush or the new female fragrance from Armani and Armani Power of You.

And female fragrances on Armani were always a bit of a challenge, and this one is off to a great start. So we are really firing on all cylinders on fragrances. And frankly, to your question, we have just got the -- if I may use that term, got the keys of Kering Beauté a couple of weeks ago.

And we have to, of course, integrate the teams, the brands and which have potential. So we are not on the lookout for more brands in the fragrance world. We have a lot to do with, and we are very happy with the way we do...

The next question comes from Jeff Stent of BNP Paribas Exane.

Just one question. We -- in the earlier question referenced that potentially, we're going to see meaningful consolidation in the industry. And my questions are, a, what do you think that says about the industry, if anything? And secondly, would you expect this to be the sort of first move and potentially a chain of consolidation? Or is it your expectation this is a sort of one-off event?

Well, I obviously not comment on or make predictions on the consolidation of the industry. But it's true is that there has been a lot of either movements or announcements of movements recently. What is -- for me, what it says, whether it's the decisions from Unilever or the discussion between Puig and Estée Lauder, it says a few things.

It says that, first of all, a confirmation that beauty is a very attractive category because some groups want to be more involved in that category. It's a category -- once again, it's proving it right now, it's one of the best growing categories around the world. And the second is that scale and a good portfolio of brands is one of the winning factors. So -- but they are not the only ones. You have to have the innovation firepower. You have to have the agility because being big is not always compatible with being agile, and that's what really we are very focused on keeping at L'Oréal.

And then there's a company culture, and that's where whatever happens with the move that our people are talking about, having a company culture where people are aligned behind the mission, the way of doing things is also a essential success factor. So I don't know whether there's going to be more. But it's -- in the end, it's good for the beauty industry to have players that invest in it, and it's always good for us to be stimulated.

The last question is from Robert Ottenstein of Evercore ISI.

Terrific. I'd like to drill into the China market a little bit more and parts of your business there. I think you said that in the quarter, China was up 1% to 2% and continues to show rebound, sequential rebound. Can you maybe just give us a little bit more detail in terms now of how that market splits between online and offline and how each of those channels is doing?

You also then mentioned that Prestige or what you're, I think, now calling Selective was doing much better. Perhaps maybe just tell us how much better or at least how the market is doing in terms of prestige growth versus mass, which we think is down? And then my last question, again, related to China. I'd like to understand better the development of the Helena Rubinstein brand there.

From the data that we've seen, I think there was an initial Helena Rubinstein brand that started off very high price and then came down. But then you've, I think, launched another very high price, very premium Helena Rubinstein brand. I think that's the PX 50. So maybe if you could talk a little bit about the strategy around Helena Rubinstein in China and how that's doing?

Okay. So on the Chinese market, first of all, in China, the majority of the market, a little bit more than half is online. And of course, then the we depends on the categories. There's probably more offline on hair care and more online on a number of prestige products.

And if we look at the market overall, most of the growth, if not all of the growth of the market is driven by online, which doesn't prevent us at L'Oréal from at least in Q1 as it was in the last 2 previous quarters to be growing both online and offline because, of course, we are -- because we are also overweight on luxury, and that's where the importance of offline to have consumers feel the experience of the brand, which, by the way, we'll tied to Helena Rubinstein is very important.

And indeed, you're right to say that the mass market is slightly negative and that the other -- whether it's luxury or dermatology are growing more in mid-single digits. So in both cases, we are winning share and doing better. So it is a market that's indeed right now seeing a stronger growth of more premium products and more premium brands, increased by the very high weight in recent months of Western brands and ours in particular.

And so that's what we see today on the market, and we've had really a strong momentum in luxury. And when I was referring to selective or prestige brands, I was including in some of our other divisions like dermatological beauty or professional. We have brands that are more premium like Kérastase or as SkinCeuticals, and they are doing particularly well in China.

As far as Helena Rubinstein, there's absolutely no change in strategy or there was one a decade ago, when we decided to reposition that brand, which was a brand with multi-category doing makeup and even fragrance into a brand focused on premium skin care and of course, with a particular focus on China. And we've never -- since then, we've never changed strategy.

Our -- the previous Rhinoplasty Night Cream, which had 30% Pro-Xylane was the #1 selling cream in China in value in '24. And what we did, you're right, we launched a more premium one on top, which is called PX 50 that has got 50% Pro-Xylane, which we launched in the fall of last year. And that cream is indeed driving the growth of the brand because this brand, which is really positioned on the most affluent demanding consumers is, of course, very successful when it launches very innovative, unique products that have no equivalent.

And I was talking about offline, Helena Rubinstein has got counters in stores. In all of them, you have [indiscernible] where these VVIPs can get treatments, and that's also contributing to the desirability of the brand, which is paying now that the Chinese market is turning again positive on selective. So no change in strategy, just a confirmation that on brands such as Helena Rubinstein, you have to go with superior quality, superior service and demanding -- Chinese and affluent consumers are trading for it. Vola, I think this ends the Q&A, Eva.

And can I just say that we are, again, apologizing for this technical issue, and the webcast will be available in 15 minutes. So you will all have access to the full call in 15 minutes. Thank you very much.

Thank you.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect. Thank you.

Good morning. It's my pleasure to welcome L'Oreal back to CAGNY. L'Oreal has one of the leading brand portfolios in global beauty, covering all facets of beauty, including color cosmetics, skin, hair and fragrance operating across the luxury, mass, dermatology and professional channels.

L'Oreal operates 40 global brands, which are sold in 150 countries, generating EUR 44 billion in sales. In 2025, the company delivered strong financial performance despite the volatile environment, adding to its long history of consistent organic sales growth, strong returns and resilience across economic cycles.

Today, we're pleased to be joined by CEO, Nicolas Hieronimus; CFO, Christophe Babule; and David Greenberg, Chairman of L'Oreal U.S. Nicolas and David will share L'Oreal's strategy, priorities and the planned path forward with Christophe joining on stage, albeit not presenting.

I'll turn it over to Nicolas. Thank you.

Thank you, Olivia. Good morning, everyone. Nice being back in CAGNY. It's beauty time. So you've been seeing a few images of pets, of snacks. And this morning, I will try to entertain you with a few beautiful images of beauty products and beautiful men and women on the screen. And as always, at L'Oreal, we'd like to start with a video that presents who we are so that we can go faster on the rest of the presentation. So welcome to the beauty world of L'Oreal.

[Presentation]

So you've seen what L'Oreal is. As you know, we are the world leader in beauty and by the way, have once again increased this leadership this year, EUR 44 billion in sales, EUR 6.4 billion in profit. 7 billion units sold around the world in 150 countries, 95,000 employees and around EUR 200 billion market cap.

And today, with David Greenberg, we're going to show you how L'Oreal is not only performing regardless of the turbulences that affect the world, but how 2025 has been truly a defining year in the way we have transformed in major aspects of the company to prepare for future growth and how we want to accelerate.

And clearly, this year has been a year of performance in a very particular context, the geopolitical landscape, the tariffs and everything. That hasn't prevented L'Oreal from outperforming its market. The beauty market has grown around 3.5% with an acceleration on the second part of the year, where the second half of the year was more in the 4% to 4.5% bracket.

And we have accelerated at the same time and did overperform the market with a global growth at plus 4%. But what's really important is this acceleration because if you look at our performance throughout the year, this is our numbers adjusted of our IT invoicing transformation, 2.6%, 3.7%, 4.9% and 5%. And you'll see later that even if you put aside the little Travel Retail one-off in the fourth quarter, it's even better growth.

So it's an acceleration throughout the year. That has been driven by a clear step-up in innovation. We have, of course, played a part in animating the market. The beauty market is an offer market. It's not a need-based market. So you have to tamp consumers with exciting products. And you just see here a small array of what we have put on the market on the second half of this year and most of these products being great hits. So that's been one of the reasons why all our divisions have been growing.

The 2 biggest ones, mass market, so what we call consumer products at plus 3.5%, then luxury on a slightly slower market. Dermatological beauty, which has been for the past couple of years, our fastest-growing division has truly accelerated on the second half. And Professional Products, which is our oldest division, but the fastest-growing one, has been growing at 7.5%. 3 out of 4 of these divisions have been outperforming their respective channels.

We've also been growing in all categories, albeit some more than others. The 2 stellar categories have been hair care and fragrances, both growing at double digit and where we are by far the global leaders and augmenting this leadership. Makeup has been a tale of 2 parts. First part of the year, the market was slow. And the second part of the year, as we're going to see later, we did accelerate the market and our own performance.

Hair color is a bit of a slower category. And clearly, one area of underperformance in 2025 after 8 years of continuous overperformance has been skin care, which has been clearly the focus of the end of the year and the beginning of this one. All categories are growing. All regions are growing.

Europe are -- homeland is growing at plus 4%. North America, you'll hear from David Greenberg, the Chairman of L'Oreal U.S.A. in a minute, has been not only doing a good year, but an accelerating year all over the one quarter after another. North Asia, we'll talk about it in a minute, has been turned back to positive.

And emerging markets are close to plus 10% with our 2 regions, Southeast Asia and Middle East, at plus 11% and Latin America at plus 8% slight slowdown in the first quarter, but overall, emerging markets are a major driver of our growth. They are 17% of our sales. We are probably one of the consumer groups where emerging markets have the slowest we because the distribution and the purchasing power weren't right for our brands. But now it's clearly accelerating and it represents 40% of our growth.

But probably the 2 most important factors in this year's performance was the acceleration of our 2 biggest -- outside of Europe, our 2 biggest regions. One was the U.S.A., a clear acceleration, plus 2% in the first half, plus 4% in the second half and a good start of the year says that the U.S. -- beauty in the U.S. and L'Oreal and Beauty in the U.S. is really in acceleration mode.

And the same thing has happened in China, where we have truly accelerated even though as we'll see in a minute, Travel Retail has kind of offset this performance in the fourth quarter. Because if I take Mainland China, our first half was at plus 1% and the second one at plus 5%. And that's a very important story for us because we see that the market has turned back to positive, even though it's a small positive, it is positive, and we have been accelerating and increasing our market share in China. And again, there, even though we have to wait for the end of Chinese New Year, the start of the year is pretty good.

On the other hand, Travel Retail, which was progressively, as you've seen in our sellouts improving on a market that has been resetting for a couple of years now. There was a fourth quarter disruption with -- in Mainland China, where one of the apps was closed and to a force change owners and they stopped selling. So we decided to reduce the inventory and to stop shipping or reduce shipping very strongly in the Q4 so that we start 2026 on a good basis for Travel Retail.

The overall, the news in North Asia are really good, and our L'Oreal Luxe division has taken the global leadership in North Asia for the first time. It was the only region when they were a leader, and it's very promising for the future. So if we look at this growth, excluding Travel Retail, Asia actually 3%, 4%, 5%, 6%. So that's why I'm pretty bullish about 2026 because here, you see a good trend of acceleration for L'Oreal, which is -- will allow us to invest behind our brands and to continue to recruit new consumers. This is a lot empowered by e-commerce.

E-commerce today for L'Oreal is 30% of our sales. Just a decade ago, it was barely 5%, growing 13%, so continuing to gain share. And of course, it's a massive tool of penetration, particularly in emerging markets where our products are not totally fit for small mom-and-pop stores across the country. So the rise of e-commerce in every emerging region as in China, U.S. and Europe is a massive growth engine for L'Oreal. And as it's accretive, it's a very favorable growth engine for the company.

When we look at that, therefore, we have had a pretty strong P&L despite the 30 basis points of tariff hits, we've improved our gross margin to a record high of 74.3%, maintained our A&Ps at EUR 14 billion, reduced the weight of our sales, general and administrative expenses to 18.8% and therefore, been able to once again deliver a 20 basis points improvement in operating margin despite the 40 basis points tariff hit at the global level.

So a very well-managed P&L, thanks to my great CFO, Christophe Babule and his teams. And that allows us to continue to give stronger and stronger dividends to our shareholders. So we will be proposing at the AGM in April, an increase of the dividend from EUR 7 to EUR 7.20, which is a growth of plus 2.9% and a distribution of around 56% and of course, with a loyalty bonus of 10%.

So we want to remain that company that consistently delivers profit improvement, operating margin improvements and dividend improvements for our shareholders. But in the end, the performance of 2025, as I said, should not -- the financial performance should not dismiss the fact that we continue to want to be a sustainability leader, to want to be an ethical leader, and we have been receiving multiple accolades, including the 10th consecutive year AAA from CDP, and we are the only company in the world, all categories included that have this type of recognition.

And that remains a very important part for L'Oreal because we want to be a financially effective company, but also contribute to the world and to sustainability. But 2025 was truly for us a year of transformation. We've really been investing into making this company both fitter for the future but also ready to accelerate. We have invested record amounts in tech, in AI, in R&D, what we call R&I and of course, in acquisitions, and I'm going to share some of these investments for you in a minute.

The first one is in tech. It's a record year in investment in tech, EUR 1.5 billion invested in technology, and that goes from building the IT backbone, the ERP of our company, which has some impact sometimes on the eligibility of our quarterly sales, but it's very important because it is the first and necessary step for us to be able to truly leverage the scale of L'Oreal whilst keeping agility and speed, and it is the base for our AI development.

Clearly, AI is at the core of what we work on, on L'Oreal, and it touches every part of the organization. We are developing strong use cases with value that we are measuring both for consumer journeys. So AI-powered consumer journeys is about giving consumers possibility to have the best possible choice amongst the millions of products that are available out there. We are powering our functions at a different level with AI.

And of course, we empower our own employees with AI and the use of L'Oreal GPT. So just a few examples. If I take the AI -- the augmented consumer journey, we have this Beauty Genius in the U.S. where you can have tailor-made recommendations powered by AI on L'Oreal Paris, and it's got already 1 million interactions. But also, we've invested in a small start-up, which is a multi-brand AI-powered recommendation engine called Noli, and it's really getting a lot of positive feedback from consumers.

We are using AI to augment the efficacy of our -- fuel of our A&P. That's our famous BETiq proprietary tool that allows us to optimize our spending and to generate 10% to 15% productivity on the first year in any country. And now it's being rolled out to 10 countries and more than half of our A&Ps are going to be covered.

So it's truly something that allows us to maintain, control the percentage of A&P in our P&L and potentially to reduce it because we are truly seeing the benefit in a more fragmented than ever media landscape and promotional landscape for our teams to be able to allocate the monies in the most efficient way.

Of course, AI augments creativity. You see a few images here that come from our CREAITECH studio, where we create around 500,000 pieces of content a month, and our teams do it at a much cheaper, faster, efficient and in the end, more creative way because there are no limits to what can be done. And that's a fantastic way to augment our contacts with consumers whilst creating the aesthetic that beauty requires and, of course, the specificities of each brand.

And then there is AI for our functions. And the example I choose is clearly R&I, R&D. This is -- we have signed this partnership with IBM, where we mix our own data, which is very unique and massive in terms of beauty expertise with their computing power to augment the number of molecules and formulas that we can create, that we can test, that we can assess by very important multiplying factors. So that's really allowing us to be even stronger in terms of innovation, which is the engine, the nerve of this market. And that's why if I look at this year, it has been a record year in terms of innovation.

Our weight of launches has increased by 150 basis points versus last year, and that's a decision that we took very late in 2024. So our capacity to accelerate and to bring to the market more innovations, more initiatives has been powered by AI and has been powered by the reactivity of our research team. And it's just the beginning because we can continue and will continue to do more. As illustrated by the number of patents that have been filed by L'Oreal in 2025, 725 patents for the single year of 2025. It's our record, and it probably makes us one, if not one of the most innovative companies in terms of patents in Europe and the world.

And actually, that's a great source of pride for me and for all the L'Oreal employees. In 2025, L'Oreal has been named Europe's most innovative company by Fortune Magazine across all sectors, whether tech, automobile, weapon reef, airplanes. And that's something we are very, very proud of because in the end, and I say it again, beauty is an awful market. You don't innovate, you don't grow. You don't bring superior products to the consumer that they are willing to pay a bit more for, you don't get the growth, you don't get the gross margin, and that's what we are fighting for, and that's what we've been delivering this year.

And of course, it's been a record year in terms of acquisitions after Dr.G, a Korean brand last year, we've signed the license for Jacquemus, a fashion brand. We have both 2 Indie brands with very interesting technologies, Medik8, a U.K. skin care brand and Color Wow, an American styling brand. We've, of course -- and that's the biggest deal in the L'Oreal -- history of L'Oreal acquisition acquired and we are finalizing the deal as we speak.

We have acquired Kering Beaute. So all the beauty licenses or brands that Kering has. So full acquisition of Creed, which is a high-end fragrance brand and the long-term licenses of Bottega Veneta, Balenciaga and when available of Gucci fashion. So that will clearly augment in a major way our luxury leadership.

And finally, it's not an acquisition, it's a participation. We've raised our stake into Galderma from 10% to 20%. Galderma is a leading company in aesthetics and dermatology. And of course, this is very interesting to us as aesthetics are a growing phenomenon and a clear and complementary adjacency to, I would say, traditional cosmetic beauty. So major, major year in acquisitions.

And today, when I look at the portfolio of the L'Oreal brands, there's a lot. There's 40 brands, international brands. And most people don't even know that they belong to L'Oreal. But what's important is that this brand portfolio, which are classified on the 2 big axis of beauty, health on the one hand, glamor on the other one and then with different price points, we see that we cover pretty much all price points and beauty position is.

Of course, we like to spend a bit higher. So we are more on the upper side on the chart than on the bottom one, but we clearly cover everybody, and that's a great reason to be ambitious in terms of acceleration. Over more as beyond the brands we have in our traditional playground, we have been investing into opening new growth opportunities.

Part of our Kering deal is a partnership on longevity, which remains to be worked on, and you may have some questions about it. We'll be building on the trend for this hospitality of where high net worth individuals go to have some experiences to live longer, better. And of course, there is the Galderma participation which goes along with a scientific partnership that would increase again, the level of innovation and differentiation of our brands. That's why I feel that after 2025, L'Oreal is stronger than ever. We are really ready to accelerate.

And I will show you why we will accelerate our growth because the market will do better and because we have a very powerful strategy to overperform that market. The market will do better because, first of all, there'll be more consumers. There is 2 million consumers that we aim to target over the decade. But the reality is that you have emerging middle classes that are 400 million more people entering middle classes that will be able to afford beauty.

You've got consumers that are younger and younger entering the market, 125 million more people less than 25. I've actually been told that one of our investors had brought his kids to this presentation. I don't know if Talia and Seth are here, but I'm sure they'll be at one day consumers of L'Oreal products, and I hope they will enjoy this presentation.

And finally, we have people living longer. And that's a blessing for the beauty industry. We're not one of these categories that worries about people living older. On the contrary, you have to have people and women and men over 60 that are going to be 170 million more, mostly in the mature markets, and they use a lot of beauty products. So beauty market will increase. There are lots of trends that are making this market grow. E-commerce continue to accelerate and facilitate penetration. The price ladders are stretching.

So if you have the capacity, as you saw in our portfolio to offer products from very cheap to very high, you can cover everybody. Beauty routines are truly sophisticating because you see that on social networks, on TikTok, on Instagram, influencers are sharing all their beauty recipes. And by the way, this health obsession and this longevity obsession leads to augmentation of beauty routines and protocols.

And finally, diversity is creating a lot of new needs. It's true in hair. You have much more curly and cold hair and skin. You've got much more different shape of skin and climate has an impact on it, and that's creating the growth of the beauty market. And L'Oreal is really ready to serve on this trend because what we do is that we use all these brands we have, these divisions, these 4 divisions that might be strange to some of you are actually allowing us to make sure that we don't lose one consumer and not lose one trend. And we've been doing this across all our categories.

If I take hair care, this is the market that has been sophisticating the most and actually taking the prices up. So it makes it now, I would say, a profitable category. And we've really been tackling it through our all multiple divisions outperforming it by 2.5x over the last 6 years. That's been one of our biggest and strongest growth engine. And as you can see, this is an example of how we address the market with multiple brands and divisions.

You've got Kerastase and the Professional division on the high end that are really growing at twice their historic average. And you saw that the Professional division was the fastest-growing one. You've got mass market that has the third consecutive year at double digit. That's addressing whether curls or frizz or anybody at all price points.

And now you've got the dermatological Beauty division because there's lots of scalp tissues, hairful, dandruff that are -- that is contributing a lot to the growth. And here, you can really see how we occupy the market with multiple divisions. Of course, we'll continue to innovate, many launches planned in 2026 for us to continue to lead in hair care.

Then we didn't have a big strength in styling that was probably the only gap in our portfolio, which is why we made this acquisition of Color Wow, great American brands and #1 in this category and just in its infancy as it relates to its globalization. So we are just beginning to make this brand global. And hopefully -- and not hopefully, I know it's going to be a great success because wherever we launch it, consumers are reacting extremely well.

Another category where we've been growing, as you saw, double digit is fragrance, where we've truly been building a real powerhouse. We have benefited from the love of fragrance that has developed amongst young consumers who want to have several fragrances. It's what we call the wardrobe effect. You have people across the globe that weren't using fragrance like in Asia that are falling in love with this category and Middle East continues to develop it.

You have all these expectations, which we have been able to seize and we have become the global leader in luxury fragrance with spectacular performance on women, where we have the top 3 family fragrances in Europe. And I just heard that our Libre fragrance from YSL, which is #1 in Europe, is now also #1 in the world, which ahead of Chanel, which was a great thing for us to achieve.

And we are really making strong strides with men, both with Yves Saint Laurent or recently Prada. So fragrance will continue to be a very strong growth engine. We have great Couture success stories. All our brands have been growing very, very strongly on Couture fragrances, which is why the Kering deal is such a big opportunity.

Of course, we have Jacquemus, Kering, Bottega Veneta, Balenciaga and Gucci are massive growth opportunities for us. When you realize that YSL, Yves Saint Laurent is bigger today in beauty than it is in fashion. And if you know or Google the size of Gucci fashion, you can imagine what we could do with Gucci Beauty. So it's a massive opportunity for us, and we will continue to grow.

And we will cover the market again at all price points with Mist at a very affordable price and oud perfumery fragrances such as Creed or Aesop that we acquired a year ago. In makeup, it's all about speed and creativity. So we've increased our pace of launches. And you can see that even when the market is slow, because it's an offer market, the leader can make the trend.

And CBD brands, our mass market brands have been generating the whole of the acceleration in the U.S. market on the second half and increase their market share with a combination of L'Oreal Paris, NYX and Maybelline at different price points. So we do bring more launches, more innovation, whether on Couture or on mass market. And of course, it's about innovation, but it's -- and there will be a lot in 2026, but it's also about activation.

And the way we work now with our teams in the U.S., and David will tell you, if I leave some time a little bit about it, it's how we partner with the big shows of the moment, the big stars of women and implant our product in shows that the younger generations are seeing and that they find ultimately relevant.

And if any of you, I'm not one, but he's a fan of Emily in Paris. And if you watch the last season, there was one full episode where L'Oreal Paris brand was at the core of the plot where the agency was supposed to create an ad for our new lipstick, which, of course, is creating a strong connection with our consumers. This is also what beauty and creativity are about.

Finally, there's skin care, which, as I said, has been our pain point this year. But it's also where I have the biggest ambition because this is where this quest for health and longevity and our pioneering the science of longevity will make the biggest difference. We've had a very strong track record in skin care growing 8 years, not this year.

And really, we've upped our game in the second part of the year with more innovation, and that has shown in our Dermatological Beauty division performance, which has clearly benefited from new launches on the second part of the year. And it shows, again, if you have the right playbook, if you adapt your engagement strategies and have better new products, you can accelerate again.

We have had lots of victories in CeraVe turnaround. SkinCeuticals, our aesthetics brand has become billionaire in Euros. That's joined our roaster of billionaire brand and Vichy that some of you may know, has rebounded. But more importantly, this portfolio that we have allows us to cover every price point from EUR 3 cream [indiscernible] in Brazil, where I'm going tomorrow to the EUR 450 Helena Rubinstein that's treasured by Chinese consumers, you have to have skin care for everyone, and that's what we have at L'Oreal.

So we recruit new consumers in emerging markets. And of course, we accompany consumers in their aging journeys in the mature world. That's why our acquisitions matter. Dr.G, a Korean beauty brand, K-Beauty is hot. We have bought one. And Medik8, which is science-driven luxury will allow us to accelerate in skin care around the world.

And finally, on skin care, it's truly an opportunity. I'll skip the body attack because we don't have a lot of time, but it's really that this longevity quest is really making people expand their beauty routines and their protocols. They want diagnosis that allow us to know what they truly need. They will use topicals like the one we're launching with Lancome Absolute MD. They will -- they are using devices, LED masks like the one we presented at the CES in Vegas and supplements.

And all these extended protocols offer growth opportunity for L'Oreal because we are playing and we will be playing in each and every one of them. Thanks to our science. We have groundbreaking molecules in the pipeline from our advanced research. We are one of the only 2 beauty companies that has its own advanced research with partners from our ecosystem and tomorrow with the partnership of Galderma.

So as you can see, we are stronger than ever. We feel stronger than ever. We want to accelerate because we think the beauty market is showing more and more dynamism. We want to outperform it. We have a lot of innovation in the pipeline, and we have this multi-division strategy that I have tried to outline for you, which makes us very confident that the future of beauty will be bright because it's expanding to these new adjacent territories I was talking about, technologies, categories or services.

And because we have the teams, we have the means, we have the science, we have the resources to invest behind this science, and that's what makes us very confident that we will continue to win across categories, across channels and across regions. And because we are here in the U.S.A., I accelerated a little bit my presentation to make sure I leave time to David Greenberg, who's the Chairman of L'Oreal in the U.S.A., and we will give you some news of this beautiful market, which happened to be our biggest one.

Thank you.

Thank you, Nicolas, and good morning, everybody. It's great to be here. And of course, you know perfectly well that L'Oreal has been in the U.S. for some time, but we haven't taken this opportunity to really share it with you directly, and I thought this was the perfect moment. Just a couple of years ago, we celebrated 70 years in the U.S., and it's an extraordinary history. Personally, I've been a part of it for over 30 of them.

And I can say the spirit of our company in the U.S. is a spirit of entrepreneurship and a spirit of challenger, which is interesting because we're the global leading company, but we start from very humble beginnings. And while today, we're the #1 subsidiary in the group, we're about 27% of the turnover of the group. We're also very -- we've built an ecosystem over these years that has made us very self-sufficient in many ways.

We produce over 3/4 of everything that we sell in our market locally in our zone, thanks to 6 factories and an enormous footprint of retail stores as well, which is very unique for our business because we have a direct connection with our consumers across brands like Kiehl's, Aesop and even in Professional Beauty, where in the Professional Products division, we connect directly with over 1 million stylists through our salon-centric distributor, which operates both stores, e-commerce, of course, and direct sales. And an amazing team in the U.S. of over 13,000 of us.

You don't see charts like this often, but I love this chart, not because the first bar is more or less the year I started, but because -- with the exception of 2 moments in the last decades, which were the financial crisis of 2008 and '09 and, of course, the pandemic, we've had consistent growth in the U.S. market for all of these years. We surpassed $10 billion in 2023 and close to $12 billion in this most recent year. So we're a very scaled subsidiary in a very dynamic market.

And I hope if you leave here with nothing else today is the fact that we consider this market to be a very high potential growth market for years to come. Why can we continue to succeed in this market? It has a lot to do with the way we built our conquest, our foundation in the U.S. over these years.

With the acquisition of Maybelline some years ago, we put ourselves firmly planted in the mass makeup market with a brand that was very deeply penetrated in the market, which then allowed us to ignite our sales across multiple brands. We added more later.

In Pro Hair, where we started very small, we acquired the #1 and the #4 brand at that time. Now we own #1 and the #2 brands in addition to some of the new brands coming on board, and we've built the salon-centric network over these years through acquisition and through organic growth to give us those direct connection with our customers.

We identified the Indie makeup phenomenon many years ago. And in fact, we acquired the OG of Indie makeup with Urban Decay in 2012 and then more in the digital era in the social media era with NYX Professional Makeup, which so far this year seems to be off to a fantastic start. I think we're the fastest-growing cosmetics brand in the mass market year-to-date 2026.

And finally, accessible dermatology. We've seen this phenomenal surge of consumers interested in self-care and taking care of themselves and their skin is, of course, emblematic of health. And with the acquisition of CeraVe, which by now you know a lot about, but from under $100 million in sales to well over $1.5 billion in a very short period of time. It's been an extraordinary success, not just in the U.S. but globally.

We continue to optimize our Couture business as well. Nicolas shared a lot about that with you. I won't go into it deeply other than to say that thanks to this connection with culture and this connection with celebrity and this connection with sport and this connection with social media, these brands have become loved by Gen Z and even Gen Alpha, which gives us enormous potential to continue to grow these brands in the future.

The aesthetics trend, I think we're all keenly aware of our population of not just the affluence in the age, but the fact that more and more is available to us. Over 20% of people are on GLP-1s, 1/4 of women over the age of 45 have done or are contemplating some kind of aesthetic procedure.

So this segment is a powerful segment of growth, of profitability and of connection because we're, in fact, present in over half of all dermatologist offices in this country and in addition, over 85% of all med spas. So these brands like skin better science and SkinCeuticals are the brands of choice for the professional world.

And finally, where beauty wellness comes together, experience, fragrance, care and this combination of efficacious as well as pleasurable is an enormous explosion in our country and in the world, frankly. And with the acquisition of youth of the people in addition to Aesop, these are brands that are firmly implanted in these places.

So we are the #1 beauty company in the U.S., somewhere around 13% share. So lots of upside, plenty of room to continue to grow, 2x the size of the #2. And I think you got from Nicolas presentation that what this provides us is the resources and the ability to amplify from the position that we're starting in. We're #1 across all of our divisions and pretty well balanced as well. In categories, it's the same.

Our weight of business by category, you can see here, hair is the biggest at 31%, followed by skin, then make up 26% and fragrance at 13%. And we know the fragrance story has been a powerful engine of growth. We're pretty much aligned with the market everywhere. However, in skin care, we have a lot of upside where skin care is 37% of the U.S. market, and we're only at 30%.

And we have the brands, we have the technology and we have the innovation. We also have the top ranking brands. Why is this important? We play the pricing, of course, but we can also play very carefully consumer segmentation. We don't have to be all things to all people with every brand.

In makeup, we occupy the #1 3 and with NYX, we're just outside of the top 5, but one of the fastest growing. Top 3 in hair, in skin care with CeraVe #1. La Roche-Posay is now in #3 and SkinCeuticals #4. So these brands are big and powerful brands in this market. And this year and just recently, this is new data that YSL has taken over the #1 fragrance position in the U.S. market, which is an extraordinary achievement over many years of innovation, excitement and building connections with consumers to see that happen is quite phenomenal.

And then up and comers that are quickly becoming top 5 like Valentino, soon, we're going to see Prada there and many more. The market, as we know, is a big market, somewhere around EUR 74 billion, growing at 4%. So we know this market is critical to the success of the group. And we know, of course, that it has a vitality, thanks to the economic engine of the U.S.

We're often asked whether or not this market has continued growth potential. And you heard it from Nicolas. I mean, this is a market that's an offer-driven market. So the more we put into it, of course, the more we stimulate the growth of the market. Historically, there was a CAGR of around 4%. When you take out the periods of the pandemic and then the pandemic recovery, we also saw most recent years somewhere around 4%. And frankly, I'm a firm believer that this will be the baseline, and it could even be a little bit better than this. Why?

Because these are still preferred categories. So this is data from Circana, but what it says when you compare us to a number of other categories, we are a preferred category. Therefore, we're one of the fastest-growing categories with the exception, it looks like of toys and video games. So what can we say? Pretty much everything else is in low growth. And it's both value and volume, which is important because it's more consumers and more usage opportunities.

And in the U.S., we're gaining momentum. We outperformed the market in every one of our divisions by considerable margin, and you can see that on this chart. And this demonstrates that our innovation is working and our marketing engine is working. And of course, we're not starting from a base of 0 here. So this is a very exciting results to see and to share with you, and we see it continuing into this year. Why is this market so important to us and so important to the group?

Diversity, you're well aware of it. But what matters the most is that each generation has a unique contribution to make to the beauty business and of course, to our business and to our brands. From Gen Z that loves so many of our brands, both fragrance, skin care and makeup, all the way to men who today are comprising only 10% of beauty business and have so much more room to go. And we've seen what has happened in men's fragrance and now even in skin care.

And the boomers, of course, have so much potential, especially as science and technology brings more options for them. Today, it's incredible. 40% of the beauty spend is driven by millennials and younger. And almost half of those consumers are now diverse in some way, skin, melanated skin, hair texture, and they're looking for different kinds of products, and they're embracing the brands that we have in our portfolio that bring that kind of innovation.

Almost 1/3 of the spend comes from the affluent consumer who comprises less than 10% of the U.S. population. And these consumers are not just trying things, but they're very ambitious and aggressive in the kinds of things that they want to do, especially in skin care and in hair care. This 55-plus age consumer, not only are they populous and not only do they have the disposable income to spend, but they're interested to know what they can do to improve the way they look, the way they feel, and it's intrinsically linked to self-confidence and to longevity.

And of course, this is an enormous potential for us over the years to come and a great dynamic. And you can see here, we have some brands that are particularly dialed into each one of these segments, brands like Redken and NYX on Gen Z or Urban Decay and Maybelline on the Millennial or Lancome and L'Oreal Paris for the boomer and for men, of course, brands like Kiehl's and Yves Saint Laurent.

So very much connecting these brands to these consumer targets to allow us to deepen the penetration, continue to recruit and bring new offers to these markets, things that you've seen powerful innovations and successes over these years, like the new YSL Blush, which was the must-have item for millennials or Ralph's Club, which was the launch we did with Usher under the Ralph Lauren brand last year or P-TIOX, which is your companion to Botox or in some cases, your replacement for Botox. So all of these brands very dialed into these consumers.

And of course, at all price points from where we play an under $15 brand on TikTok Shop all the way through to the most expensive products, be it at Sephora or Macy's, Ulta or anywhere else. Building this connection is what makes the difference for us. And we are, of course, at our heart, a marketing company obsessed by the consumer, but this has changed from the analog world to the digital world, from the cookie world to the individual ID world and now in agentic commerce and AI. But it all starts with 3 things.

First is rapidity of movement, understanding culture and being connected. Second is being creative and third is scaling. In order to scale, of course, you need to build enormous reach in a very authentic way. So I'm going to play you some examples of some of the things we've done recently and...

[Presentation]

So I'm going to finish on the topic of our go-to-market. With all of this excitement, of course, we have to be where the consumer is, and we've seen this enormous shift to e-commerce. We're also outpacing the e-commerce market. So overall, we grew at 14% versus the market at 6% in e-commerce.

And of course, you have to play all of your e-commerce partners. We performed pretty well across most of them. We have the #1 position on all of our e-commerce partners from Amazon to Sephora with the exception of Walmart, where I think it will happen pretty soon. How do we do this?

We do this by being very linked to content to how consumers make choices and to provide the kind of data, the kind of content and the kind of information that helps them make the right choice with partnerships with ChatGPT, where we load our own data directly into ChatGPT so that they don't have to scrape and we can make sure that it's the kind of data that the consumer is looking for and partnerships with Target and Amazon on those same kinds of topics.

We never forget about brick-and-mortar. It's still where we showcase our brands in the most powerful way. And importantly, and I think you probably understood that from this week and everything else that's going on, most of our retail partners are investing in beauty.

They've understood that beauty is the future of their business. It's where the consumers are most engaged. It's higher margin, and it also showcases what they do in a more powerful way. So with that, lots more consumers, lots more connection with those consumers, lots more conversion to our L'Oreal brands and products and lots more growth in the U.S.

So with that, I thank you all for listening, for being here. And I think we're probably taking questions, I'm guessing, in the next room.

I thank L'Oreal for the presentation. Appreciate it.

All right. It is 9:00. Good morning, everyone, and welcome to this 2025 annual presentation for the results of L'Oreal. Christophe Babule, our CFO, will kick off with the presentation of our 2025 financial statements. Then each head of division will summarize the 2025 highlights and share with you the outlook for 2026.

So you have Omar Hajeri, who's President of the Professional Products Division; Fabrice Megarbane, who's our newly appointed President of the Consumer Products Division; Myriam Cohen-Welgryn, in charge of Dermatological Beauty Division; and Cyril Chapuy, President of L'Oreal Luxe. Then I will conclude the first part of the meeting by explaining why 2025 was a defining year for L'Oreal and why we are uniquely well placed to seize the ascending currents in emerging beauty trends in order to accelerate our top line growth and deliver superior long-term performance. We will then move to the Q&A session, which we expect to last around 40 minutes.

Finally, I draw your attention on the claim disclaimer that is now on the screen. And I guess we are ready to hear you, Christophe.

Ladies and gentlemen, good morning. Let me share some of the key 2025 highlights with you. Like-for-like growth came in at 4%, marking another year of market outperformance. At 74.3%, our gross margin reached a new all-time high, up 10 basis points from last year despite the adverse impact from tariffs. Our operating profit margin increased 20 basis points, touching 20.2% for the first time. And our operating net cash flow of EUR 7.2 billion, up almost 8% implied cash conversion of over 100%.

Sales increased by 1.3%. Foreign exchange had a negative 3.6% impact as the euro appreciated against all of our key currencies. You can find further detail in the appendix of this presentation. If the exchange rates on the 31st of January 2026 were extrapolated until the end of the year, the impact of currencies on sales will be a negative 2.5%. The change in scope of consolidation contributed a positive 0.9%. It reflects the acquisitions of Dr. G in March, Medik8 and Color Wow in September as well as the impact of hyperinflation accounting in Argentina and Turkey. On a like-for-like basis, growth stood at 4%. Volumes were up as we passed the 7 billion unit mark for the first time. Value was positive, driven mostly by mix.

Let's now take a look at the progression by quarter. As you can see on the left, like-for-like growth, adjusted for the impact of our IT transformation, accelerated quarter after quarter from 2.6% at the beginning to 5% at the end of the year, boosted by the step-up in our innovation pipeline. On the right, you have the reported quarterly like-for-like growth. And as you can see, there is no difference between the adjusted and reported figures on a full year basis.

On the subject of IT transformation, 2026 will be our most important year as we will cover the U.S. as well as the UK-Ireland and Australia-New Zealand clusters and the rollout has already started in the first quarter. By the end of the year, we will have completed around 60% of our total IT transformation, up from close to 30% in 2025. We will, of course, update you every quarter on the impact this has on our divisional and regional growth numbers.

Let's now turn to our regions. All of them show positive momentum, illustrating the power of L'Oreal's geographical footprint, which allow us to grow whatever the context at any time and everywhere. Emerging markets spearheaded our growth at 9.7%. They contributed 17% of group sales and 40% of growth. SAPMENA-SSA grew 10.9% with particularly strong performances in Vietnam and the Gulf countries.

Latin America was up 8.3% with Mexico and Brazil both advancing in high single digits. Growth in Europe remained very robust at 4.4% with particularly strong performances in the Iberia and DACH clusters. In North America, sales increased 3.4%. Adjusted for the impact of our IT transformation, they accelerated between first and second half with a very strong finish at 4.5%. In North Asia, sales advanced 0.5%, a figure that masks several distinct market stories. Let's take a closer look.

Overall, growth accelerated from minus 1% in the first half to plus 2% in the second. This was driven by Mainland China, our single largest market in the region, where growth went from plus 1% to plus 5%, helped by the gradual recovery of the market, especially in Luxe. But I know that you expected more from North Asia given the improving news out of Hainan. The reality is that Hainan is only a small part of the travel retail ecosystem. As you can see in the chart on left, it accounts for around 20% of the total.

What we saw in the other parts of the market was continued softness in Korea and Mainland China travel retail market that was temporarily disrupted by the suspension of Sunrise app and the change in domestic airport operators. To maintain healthy inventory levels, we adjusted our sell-in in Q4. Sell-out progressively accelerated and was close to flat in the fourth quarter, allowing us to improve our share by 260 basis points. Travel Retail Asia now accounts for less than 4% of our sales versus more than 6% only 3 years ago. Therefore, excluding the impact of Travel Retail Asia, our growth at group level accelerated by 1 point each quarter from 3% to 4% to 5% and nearly to 6%.

Let's now look at our divisions. On a like-for-like basis, all grew and accelerated between first and second half. Professional Products was the fastest-growing division, up an incredible 7.5%, supported by the ongoing boom in premium haircare. Consumer Products advanced 3.5%, led by haircare and the sharp recovery in makeup in the second half of the year. Luxe grew 2.8% with momentum accelerating to 3.6% in the second half. And Dermatological Beauty advanced 5.5%, led by both haircare and skincare. All key brands contributed and SkinCeuticals became the division's third billionaire brand.

Let's move on to our categories. Every one of them grew. At 12.9%, haircare was the most dynamic category driven by strong volume growth. All divisions, professional, mass and derma contributed. Fragrances maintained their double-digit pace at 10.4%, growing twice as fast as the market, driven by our Couture brands and boosted by a highly successful launch plan. Makeup increased by 3.5% with a strong acceleration between first and second half, especially in North America. Hair color advanced by 0.6%, led by mass and skincare was up 0.4%, accelerating to close to 2% in the second half, thanks to the innovation-driven recovery of LDB division.

Next, I would like to share with you the development of our e-commerce footprint. In 2025, sales in e-commerce amounted to EUR 13 billion, crossing the 30% threshold for the first time. That's an increase of 200 basis points from 2024. Let me remind you, back only 10 years ago, e-commerce contributed only EUR 1.3 billion or 5% to our sales. So why does it matter? First, it means that we are winning with the winners. Global beauty market growth in e-commerce is 4x that in brick-and-mortar. Second, e-commerce is a real game changer in emerging markets, where its weight rose by 400 basis points in 2025. Third, e-commerce is not only margin accretive but also highly cash generative.

So let's now move to the P&L. Gross profit rose 1.5% to EUR 32.7 billion. The gross margin reached a record high of 74.3%, up 10 basis points year-on-year and 50 basis points in the second half. On a full year basis, tariffs had a negative 20 basis points impact, which was more than offset by a strong contribution from price and mix as well as cost efficiencies. Research and innovation expenses increased 1.9% to EUR 1.4 billion, equivalent to 3.1% of sales. We continue to invest behind our brands.

Advertising and promotion expenses rose 1.2% to EUR 14.2 billion or 32.2% of sales, stable versus last year. As anticipated, they increased by 15 basis points in the second half. Selling and administrative expenses were down 10 basis points at 18.8% of sales, reflecting our continued discipline and recurring cost control. All of these lines of the P&L have clearly started to benefit from AI efficiencies. Last, operating profit amounted to EUR 8.9 billion, up 2.4%. The operating margin increased 20 basis points to a record 20.2% despite an unfavorable FX impact of 40 basis points.

Let's now look at operating margin by divisions. In 2025, each division reported an operating margin in excess of 21% and with the exception of Dermatological Beauty reached a new record. That of Professional Products was up by 70 basis points at 22.9%. That of Consumer Products increased by 30 basis points to 21.4%. That of Luxe rose by 10 basis points to 22.4% and that of Dermatological Beauty was flat at 26.1% with a better balance between the 2 halves. Non-allocated expenses, consisting mainly of corporate and fundamental research costs remained stable at 2.5% of sales.

Let's now return to the P&L. The net financial charge came in at EUR 236 million. Total dividends received amounted to EUR 351 million, down from EUR 445 million last year following the reduction in our stake in Sanofi in February 2025. Income tax, excluding nonrecurring items, stood at EUR 2.2 billion, representing a rate of 24.3%. Now including the exceptional French tax, which amounted to EUR 253 million and nonrecurring items, income tax was close to EUR 2.4 billion, representing a tax rate of 27.8%. Net profit, excluding nonrecurring items, amounted to EUR 6.8 billion. And therefore, diluted earnings per share came in at EUR 12.71, up slightly compared to last year.

To help you estimate your EPS for 2026, I will recommend that you base your calculation on a diluted number of shares of 534.9 million. Nonrecurring items amounted to EUR 679 million. They included other income and expenses of EUR 504 million, of which primarily EUR 209 million of restructuring charges related to various reorganization measures at group divisional and regional level and EUR 179 million related to product liability lawsuits.

Net profit after nonrecurring items came out at EUR 6.1 billion, down 4.4% versus the previous year. Cash flow decreased by 2.2% to EUR 8.3 billion. Our working capital improved significantly, reflecting more efficient management across all key lines. Capital expenditure of EUR 1.5 billion came in at 3.4% of sales, 40 basis points below last year.

Operating net cash flow amounted to EUR 7.2 billion, an increase of 7.8%, implying strong cash conversion. Dividends amounted to EUR 3.9 billion. We spent EUR 2.4 billion on acquisitions, EUR 0.5 billion on share buybacks and EUR 454 million on lease debt repayments. Investment in noncontrolled entities primarily includes the proceeds from the partial sale of our Sanofi stake last February. The residual cash flow came to a strong EUR 2.4 billion. Our balance sheet remained robust with shareholders' equity of EUR 35 billion or 57% of the total balance sheet. As a result, the financial situation remained very healthy in 2025.

At the end of December, net debt amounted to EUR 2.1 billion and to EUR 254 million, excluding the financial lease debt. The gearing ratio stood at 5.9%, the financial leverage at 0.2x based on an EBITDA of EUR 10.5 billion. For your information, we just closed on the Galderma transaction we announced last year. This will lead to a cash outflow of EUR 4 billion. After we will have paid for the Kering beauty acquisition, we estimate our leverage will stand at less than 1x at the end of the year. This will allow us to pursue further opportunities should they arise.

The quality of our performance in 2025, coupled with the strength of our balance sheet and our confidence in the group's outlook led the Board of Directors to propose a 2.9% increase in the dividend to EUR 7.20 per share at the AGM. This results in a payout ratio of 56.6% and illustrates L'Oreal's real consistent and dynamic dividend policy.

Now with regards to our L'Oreal for the future ESG program, 2025 was a key year. At the halfway point of this program, we have reflected on our progress and learnings, refined our road maps and reinforced our commitments. We have introduced new targets addressing key material topics, including virgin plastic reduction, nature regeneration and water resilience.

Let's take circularity. In 2025, we reduced the use of virgin plastic for product packaging by 37% in absolute compared to 2019, and our objective is to reach 50% by 2030. In 2025, L'Oreal was once again rewarded for its social and environmental performance and recognized among the best companies in the world by nonprofit organizations, rating agencies and international bodies. We were particularly proud that L'Oreal was awarded a AAA rating by CDP for a 10th consecutive year, the only company in the world with that distinction.

Thank you very much for your attention.

Thank you, Christophe, for this very clear presentation. And now we will start with the presentation of the divisions with the Professional Products division, our fastest-growing division this year with Omar Hajeri.

Good morning, everyone. I'm very pleased to present the outstanding performance of the L'Oreal Professional Products division. 2025 was a year of outperformance, a year of profitable expansion, a year where the composition of our growth is a testament to our successful transformation and winning omnichannel strategy.

In the professional market, growing at plus 3%, we delivered plus 7.5% growth, combining volume and value. We crossed EUR 5 billion for the first time. We further reinforced our global leadership with a record market share of 27%, which is more than our 3 largest competitors combined. This performance reflects our successful premiumization strategy, resulting in structurally healthier margins. We reached a record profit at 22.9% I would like to thank all my teams for the remarkable results. They know how to blend expertise, passion and a bold spirit of conquest.

So how did we build our success? Our performance relies on 4 key drivers, which will continue to power our future growth. The first driver is our strategic focus on premium haircare. The premium haircare market is dynamic at plus 6% and keeps valorizing. Inspired by influencers and boosted by social media, consumers are sophisticating their haircare routines with new gestures such as serums, oils, mist. This dynamic is not a temporary bubble. It is a fundamental structural shift driven by lasting underlying trends, longer styles, scalp health concerns, an increasing proportion of population with demanding texturized hair.

And it's only the beginning as even in our most advanced premium markets such as the U.S., out of 10 haircare products sold, only 1 is professional. In 2025, our division strongly outperformed in premium haircare and grew by plus 15%, boosted by Kerastase. Our portfolio is the most powerful in the industry with iconic brands, which are culturally relevant and have the highest endorsement in hair salons. Growth was driven by the success of our superior treatments and latest launches, benefiting from the most advanced discoveries by L'Oreal Research and Innovation.

The second driver is our omnichannel excellence. On the one hand, we have strengthened our footprint in more than 400,000 salons. We have introduced strong innovations such as the relaunch of L'Oreal Professionnel Majirel and new beauty tech tools such as AirLight Pro. This is infusing fresh energy into a challenging salon market. On the other hand, we grew double digits in e-commerce and in selective retail, driven by strong traction among younger consumers and powered by our digital excellence. Together, retail and e-commerce represent 39% of our sales, making our model more efficient and scalable.

The third driver is our geographic expansion. Despite varied market conditions, the division grew and outperformed in every region. Europe was a standout, delivering high single-digit growth. In North America, we strengthened our leadership, whilst in North Asia, we gained significant market share. And once again, emerging markets remain our strongest engine with double-digit growth, notably in Gulf countries, India, Brazil and Mexico. In these countries, we are driving salon modernization and thanks to our full omnichannel model, benefiting from rising consumption of digitally engaged consumers. Overall, this broad-based momentum enhances our diversification.

Our fourth driver is our unique connection with hairstylists. We are interacting with more than 3 million hairstylists. Our unique digital ecosystem, combined with our unrivaled on-the-ground reach is truly our striking power to reach professionals at scale in every market. We foster loyalty with Pros because our relationship is like no other. We don't just sell products. We co-build the industry and the market with them. In a salon market that is facing challenges, we are more than ever committed to supporting stylists in regaining momentum and long-term attractiveness. For instance, by crafting new concepts and experiences such as hair spas.

These 4 drivers combined, position the division on a sustained trajectory of growth. We have a deeper professional and consumer engagement. Our operating model is more future fit than ever. Last but not least, our diversification and the quality of our earnings give us the firepower to keep investing and further strengthen our competitive edge. Looking ahead to 2026 and beyond, I'm confident in our ability to maintain our growth momentum with 2 priorities. First, recruit new consumers. We are entering this year with a strong innovation pipeline. In haircare, we'll further reinforce our reach among younger consumers with the extension of Kerastase Gloss Absolu for thick hair and Matrix Mega Sleek for texturized hair.

In addition, the relaunch of Kerastase's chronologist with Demi Moore will allow us to engage boomers with a compelling proposition grounded in longevity science. In hair color, we are also focused on regaining momentum with our breakthrough innovation, Redken Shades ALK designed to boost color services. In styling, the recent acquisition of a fast-growing iconic brand Color Wow, perfectly complements our portfolio. It propels us as the global leader in the dynamic premium styling segment, and it opens up substantial opportunities for international expansion.

Our second priority for 2026, increasingly leverage AI and tech as powerful accelerators for value creation. In our professional ecosystem, which is data-rich, AI is augmenting our team's capabilities and will considerably transform the way we serve our salon partner. Beauty Tech is also proving to be a true game changer to reengine the in-salon experience with high-tech devices such as K-Scan for hyper-personalized hair diagnostics deployed in 10,000 salons worldwide. We are the technological leader in the professional beauty industry, and this will powerfully accelerate our growth.

To conclude, we are entering 2026 with strong ambitions and with clear levers for value creation. We are ready to continue shaping the future of professional beauty. Thank you.

Thank you, Omar. Thank you so much. And Fabrice, let's talk about the Consumer Products division.

Good morning, everyone. The Consumer Products division delivered solid growth at plus 3.5%. 2025 was a year of sequential acceleration. We had a strong finish with a Q4 at plus 4.8%, thanks to a powerful innovation plan, especially in haircare and makeup. In fact, the global appetite for mass beauty remains high, driven by digital discovery as savvy consumers seek innovation and best value for money.

Per region, North America's spectacular turnaround at plus 6% demonstrates our ability to drive growth within mature markets. In Europe, growth remains solid and resilient at plus 3%. Emerging markets fueled over 40% of our total growth, powered by Mexico at plus 9%, South Africa at plus 11%, the GCC at plus 13%, and Vietnam at plus 31%. Despite the soft mass market in China, L'Oreal kept its #1 position.

Our unique and complementary portfolio is the foundation of our performance with our 4 global brands growing in 2025. Our mega brand, L'Oreal Paris achieved another strong year with mid-single-digit growth boosted by haircare and makeup. The #1 beauty brand in the world extended its industry leadership. Garnier, our natural high-tech and feel good brand grew at low single digits, but delivered solid performances in haircare and hair color. Despite a challenging market context, Maybelline consolidated its position as the #1 makeup brand in the world. And NYX, the brand of entertainment, delivered another year of an amazing growth at almost double digits and remains the definitive brand for Gen Z.

Among our rising star brands, Mixa, our mass medical champion, grew at plus 27%, thanks to its successful European rollout. 3CE, our K-Beauty makeup brand, grew by plus 10% as we scaled it across Southeast Asia. Our strong finish in the first quarter allowed us to clearly outperform the market in sellout at plus 5.7% with some spectacular highlights. haircare saw by plus 13% with both Elvive and Fructis delivering double-digit growth. U.S. makeup, thanks to our stimulus plan, we bounced back at plus 7%, and our performance turned the market positive.

We also achieved key milestones across emerging markets. In haircare, L'Oreal Paris became the market leader in Lat Am and accelerated Elvive across SAPMENA, especially in India. In skincare, we had a huge success with Toque Seco, which doubled the size of Garnier skin in Brazil in 2025.

Now moving into 2026. Our division has identified 3 strategic levers to further accelerate our growth. The first lever is to strengthen our exceptional brand portfolio by investing in the equity of our brand and stimulating the market with more relevant innovations to win across all categories. Our brands are more than beauty brands. They are part of the cultural landscape with lasting legacies. This is why we partner with culturally relevant ambassadors, champion social causes and put on larger than life events. The infinite power of our brands build trust and engagement with our consumers.

In the most desirable categories, we have blockbuster innovations to come. In haircare, our division is on fire. We'll continue to break records with launches like L'Oreal Paris, Elvive, Collagen Lifter and Garnier Ultra Doux Great Moisture. Next, makeup. As a category leader, we'll keep on stimulating and boldly disrupting the market. And we are doing this with big bets across 4 brands: Maybelline Lash Sensational, Body Mascara; and Maybelline Serum Lipstick. L'Oreal Paris Extensionist Mascara; and NYX Jelly Job Gloss. And finally, 3CE Multi Eye Color Palette.

On skincare, our attack plan features impactful innovations backed by science that delivers superior quality and efficacy. L'Oreal Paris, the #1 anti-aging brand in the world, continues to pioneer science with breakthroughs like Revitalift Triple Laser Creamy Serum. Garnier is capturing Gen Z with unisex offering through the rollout globally of the Dry Touch Cream. And we have exciting innovations from our 2 mass medical champions. In Europe, Mixa is launching its anti-reaction range, and we're accelerating the rollout of Dr. G in Asia and beyond, riding the strong tide of the desire for K-Beauty.

Our second lever is to drive penetration by growing units and recruiting new consumers. In the developed world, we have a tale of 2 cities. In Europe and the U.S., we have a significant penetration of over 50%. We will maximize our momentum with target additions like boomers, men and Latino shoppers, especially in the U.S. Meanwhile, in China, we have plenty of room to grow. We're ramping up innovation across skincare and haircare, and we'll continue to accelerate our growth across online and social platforms. Now speaking about recruitment opportunities, we will, of course, continue to double down in the emerging markets, where our penetration is around 25%. This region remains our largest recruitment reservoir with an estimated nearly 500 million new consumers expected in the next 5 years. These consumers are younger, digitally native and demand great innovations for good value.

To keep capturing the immense potential of the emerging markets, we're scaling our 4 global brands through relevant innovations. We're also expanding the distribution of our K-beauty stars, 3CE, the #1 Korean makeup brand in the world; and Dr. G, the #1 mass medical skincare brand in Korea. This allows us to meet consumers wherever they are as we capitalize on the rise of modern trade and especially e-commerce. Finally, we'll continue adapting to the consumer journey to ensure local relevance, particularly for Gen Z by leveraging advocacy, influence and our local content factories.

The third and final lever is to deploy a smarter, more virtuous business operating model powered by AI. Our sustainable growth is driven by our scale, our relevance and our precise execution. Our obsession is to grow in units while valorizing our brands and innovations to democratize and premiumize the mass beauty market. Thanks to AI, we can further fine-tune our pricing and the revenue growth management. We're also obsessed with being part of our consumers' conversations, and we have 2 key challenges to turn into opportunities. The first is content creation. We are scaling content at the speed of culture, leveraging advocacy and influence. We will reach consumers through trusted peer-to-peer connections using precise massive seeding. We call this mass advocacy powered by AI.

The second major opportunity is, of course, generative AI. In the current self-service world of mass, AI allows us to connect with consumers at scale by giving them access to expertise and advice at an unprecedented speed. These 3 levers empower our passionate teams across the world to seize every opportunity everywhere, every day from spotting emerging trends to capturing new consumer segments, expanding into untapped territories and optimizing our operational model with AI and tech. We are committed to delivering the best innovation and value for consumers without ever compromising our values because all of our consumers are worth it. Thank you very much.

Thank you. Myriam, let's talk Dermatology.

Good morning, everyone. The last years have seen LDB reach a new dimension. After years of hyper growth, the division has become the undisputed leader of dermo cosmetics. In 2025, again, LDB grew faster than the market, reaching a record market share at 25.8%. The market decelerated versus 2024, deflated by the U.S. and the spread of copy cats beyond dermo market, yet it remained robust at plus 5%, significantly above beauty. Sell-in reached EUR 7.2 billion, up 5.5%, a solid 4% in unit growth and a sustained 26.1% operating margin. After a slow start, growth accelerated each quarter, hitting double digit in Q4, driven by the gradual alignment of sell-in, sell-out and notably, CeraVe's progressive turnaround.

Four key success factors explain this overperformance. First, our portfolio of complementary brands covering all consumer needs. In 2025, as expected, our beauty stimulus plan boosted our innovation weight of business by 150 basis points. La Roche-Posay and CeraVe consolidated their position in the worldwide skincare top 5. La Roche-Posay grew by almost 6% in sell-in, significantly outpacing the market. It was propelled by CICAPLAST and the Melasyl anti-pigmentation technology.

Now CeraVe. Its turnaround is at a real highlight. It helped the brand land at nearly 5%, boosted by the successful launch of intensive moisturizer, which helped recruit both boomers and males. Even in the U.S., the brand outpaced the market in H2, reaccelerating in skincare and successfully entering haircare. In emerging and China, the brand achieved high double-digit growth and continued to play a key role in recruiting new consumers. New news, you've heard it, SkinCeuticals became our third billionaire brand with another double-digit year of pioneering integrated skincare.

After the tremendous expansion of P-TIOX, which complements toxin, the brand launched A.G.E. Interrupter Serum. It is the first-ever serum clinically proven to address what is called the Ozempic face the sagging effect following rapid weight loss. Vichy beat the market, leading longevity science in pharmacies with Dercos Aminexil R.E.G.E.N., a unique patented formula that extends her lifespan.

Second growth factor, our MEDgital expertise, meaning our ability to power medical with digital to reach more doctors with more efficacy. In 2025, we reached 320,000 doctors, notably thanks to the rollout of our HCP 360 omnichannel platform. All brands consolidated their leadership position worldwide in dermatological prescription and dispensing clinics. LDB also reinforced its #1 position in scientific publications.

The third factor is our online leadership, which amplifies our consumer reach. E-comm is up by 18%, significantly beating the market. In the U.S., SkinCeuticals D2C with its customized consumer experience now represents 35% of the brand's business. We have also consolidated our #1 position in medical advocacy.

And finally, the fourth success factor, our international expansion. There are many noteworthy LDB performances. Emerging market, plus 13%; Mainland China, just outstanding at plus 19% and big achievement, SkinCeuticals has become the #1 Dermo brand. Europe and North America beat the market. In sell-in, after softest one due to last year's basis, both zones accelerated to reach plus 7% in Q4, thanks to service turnaround, SkinCeuticals boom and La Roche-Posay's sustained performance.

So what is the outlook for 2026? I am confident that LDB will continue to post strong growth. We expect the market to remain dynamic, roughly 1.5 points above beauty, propelled by 3 long-term trends. Firstly, the quest for health and longevity. This trend, as you know, is driven by the unfortunate rise of skin sufferers, 2.2 billion people. It's reinforced by the boom of aesthetic. Today, 850 million people intend to have aesthetic procedures. That is 30% more than 2 years ago.

Secondly, the growth of dermo haircare. Hair is now the fastest-growing segment and the second reason for consulting there. Yet dermo haircare is still underdeveloped. It's only 1/3 of haircare in total beauty. This trend -- third trend, the growth reservoir of emerging and China, which will provide new consumer pools. In this market, the weight of dermo in total beauty is 3x lower than in the most developed countries. In this context, we are uniquely positioned to overperform. Why? Our unmatched partnership with aesthetic clinics give SkinCeuticals and Skinbetter Science a clear competitive edge to seize the boom of procedures doors. In parallel, we will continue to consolidate our prescription leadership, reaching even more doctors.

With our complementary portfolio of iconic brands, we cover all consumer needs and drive value through premium and affordable brand mix on all categories. In Q1, for instance, we will fill the affordability gap on sun. And finally, we have an unprecedented pipe of med-augmented innovation. This will bring around 70 extra basis points in innovation weight of business.

In Q1 alone, we will introduce 3 new technologies: La Roche-Posay Effaclar super molecular delivery system, Lipikar Baume's anti-itching molecule and Dercos collagen filler longevity technology, without forgetting Vichy's new collagen supplement. As the leader of Dermatological Beauty, we will also continue to support our skin health ecosystem with our L'Oreal Act for Dermatology program. In '26, our certified image data bank of skin pathologies will transform derm education and increase access to skin health everywhere in the world. So to conclude, I believe that this division with its 5 iconic brands powered by a unique medical engine will continue to shape the future of beauty. Thank you.

Thank you, Myriam. Cyril?

Good morning. In 2025, L'Oreal Luxe delivered a robust performance with a plus 2.8% like-for-like growth and EUR 15.6 billion in net sales. We saw a clear acceleration over the year with growth climbing to plus 3.6% in H2. We very substantially outperformed the selective market, which after starting in negative territories, closed the full year at plus 1%. Worth noting that excluding Travel Retail Asia, still in reset mode, the market remained dynamic at plus 3%, driven by Couture and premium segments.

2025 marked L'Oreal Luxe's 15th consecutive years of market share gains. In fact, with a 30 basis point increase, it was the strongest progress in market share since 2020, further cementing our global leadership of luxury beauty. And I should mention that Q4 shows an even stronger acceleration of market share gain. This leadership is anchored by a balanced regional footprint. We now hold the #1 position across all 4 of our publication regions.

In China, the market pivoted back to growth. Following a negative 2024, it accelerated strongly during the year to close full year '25 at plus 3% and we reinforced our very strong dominance there in China with an impressive market share of around 30%. Thanks to China and a healthy management of Travel Retail, we achieved a key milestone in North Asia. We became the region's #1 luxury player for the very first time in our history. Within a still declining market, our performance remained stable, and we captured significant share.

In Europe, our momentum remained very robust with a growth of plus 6%, double the pace of the market. In North America, we were on par with the market, but our sellout accelerated very strongly in the second half, especially in Q4, where we were twice the market. Finally, in emerging markets, we sustained our high-growth trajectory at plus 12% on the market itself at plus 7%.

This leadership is anchored by a strengthened category balance. Our fragrances remained a powerful growth engine, surging by 10%, more than doubling the market growth rate. This success was driven by Couture hypergrowth. Libre by Saint Laurent is now the world's #1 feminine fragrance. In the U.S., Valentino Born In Roma franchise secured the top spots for both feminine and masculine. Our strategic launches, Prada Paradigme, Miu Miu's Miutine had exceptional consumer appeal. And we must also mention the impressive 20% growth of our fragrance collections led by Aesop and Margiela.

In skincare, our performance was on par with a still difficult market, even if momentum improved quarter after quarter. Key driving factor, high science innovation like Lancome Renergie Triple Serum and Helena Rubinstein Replasty PX50. Simultaneously, in skincare, our recent acquisition proved to be unstoppable growth engines. Takami has forged ahead with its successful global expansion. Medik8 delivered an explosive plus 40% growth and started its rollout in the West, positioning us at the heart of the key medical luxury trend. And Aesop continued its strong upward trajectory at plus 9%. Last but not least, Yue Sai, our C-beauty brand has been totally revitalized in China and grew by 25%.

In makeup, we performed in line with a broadly stable market. Our Couture houses, notably Prada and Saint Laurent demonstrated remarkable momentum, and Lancome successfully reengaged younger demographics with the Idole line.

In 2025, L'Oreal Luxe overperformed in both brick and click channels. In off-line, accounting for 2/3 of our sales, we strive to elevate experience and services and fees across all our distribution formats from stunning freestanding stores all around the world to stunning corners in department stores to gondolas in specialty or very, very eventful pop-ups in high-traffic areas. In online, 1/3 of our sales, we remain pioneers. Lancome inaugurated its new D2C with a state-of-the-art experience. Our strategic partnership with Amazon expanded way beyond the U.S. and our endeavors with TikTok Shop and social commerce yielded impressive results.

And last but not least, we also drastically accelerated on supercharge content creation and versioning with AI. All in all, L'Oreal Luxe is a stronger than ever market leader. And despite the tariffs and FX context, in 2025, we succeeded in improving our operating margin once again, reaching 22.4%, way above all our key competitors.

Looking ahead to 2026 now. Well, we anticipate a favorable market reacceleration, building on the dynamism of the second half of this year, especially in U.S. and China. And L'Oreal Luxe is uniquely positioned to significantly outperform this luxury market. Why? Well, let me give you 3 reasons. Reason one, our unparalleled portfolio spanning price points from EUR 20 to EUR 500, we cover every luxury segment, allowing us to expand our customer base across all geographies year after year. In 2026, our 5 mega brands have extremely powerful plans.

And this year, we will also welcome the beautiful brands that Kering decided to entrust us with. Creed will allow us to drastically accelerate in the high-growth collection fragrance segment, and we will be scaling Balenciaga and Bottega Veneta at the same time as Miu Miu. And for this, we will follow the proven hypergrowth blueprints of Valentino and Prada, which both scaled from EUR 100 million to over EUR 700 million in just 5 years. Last but not least, in 2026, Aesop will continue its distinctive expansion with 20 new signature stores, mainly in Asia.

Reason 2, our unique innovation power. Next year, we're expecting new to account for an even greater proportion of L'Oreal Luxe revenue. This is what's going to deliver us a return to strong growth in skincare. Reigniting our skin engine on our biggest brand is a nonnegotiable, and we have what it takes and this as early as H1. Lancome Longevity [ MD ], the biggest Lancome innovation since Genifique. Kiehl's Ultra Facial Medicated, the ultimate repair cream for skin emergencies and Biotherm Electrolytes, a totally new territory supplemented hydration.

Innovation will also allow us to maintain high dynamism in fragrances and this also as early as H1 with launches that are original market and that got off to very strong starts already, Emperio Armani Power of You or YSL Libre Berry Crush and also in fragrance with additional accessible offers to recruit younger generations. Finally, we will, of course, keep reigniting the makeup category with innovation with powerful, colorful initiatives and couture desirability.

Third reason, our balanced regional footprint. As you know, we are #1 in all 4 regions. And in 2026, we will accelerate everywhere. We will double down on our leadership in the U.S., which is still a massive conquest region for us. We will reinforce our top-tier positions in every market in Europe. We will continue our conquest in emerging markets with a special focus on GCC and Brazil. And last but not least, we will leverage the new wave of consumer enthusiasm in the Chinese ecosystem.

At L'Oreal Luxe, our ambition is crystal clear. Furthermore, accelerate in 2026. Beyond the brands, we have world-class talents, truly fantastic teams. And I'd like once again to thank them very sincerely. Beyond the brands, we have also very powerful means, optimized A&Ps and an obsession with ROI. As the world's #1 luxury beauty player, we are more than ever determined to lead the industry into a new era of profitable high growth. Thank you.

Thank you, Cyril. So good morning again. Very happy to be with you today, and I will now explain how L'Oreal has been performing again regardless of the context and how it deeply transformed to prepare for future growth and why it is ready for acceleration, which I guess is a word you've heard in every division. So let me first comment on our full year results.

In 2025, L'Oreal delivered strong results, reinforcing our leadership, increasing our sales and profit, once again demonstrating the resilience and agility of the company. Our like-for-like growth of plus 4% puts us ahead of the global beauty market, which grew around plus 3.5% and well ahead the majority of our large, listed peers, which is particularly impressive when you consider our size. As we had promised, growth accelerated significantly between the first and the second half. This was driven by the step-up in our innovation activity. The contribution from new launches more than doubled between first and second half. And this was supported by the gradual improvement in global beauty market growth. 3 divisions out of 4 beat their respective markets and CPD had a strong and very promising finish, particularly in the U.S.A.

One of the major highlights in L'Oreal's second half is the recovery in its 2 largest markets. In the U.S., growth doubled from 2% to 4%, driven by a strong recovery in LDB and CPD. In China, growth accelerated from low to mid-single digits, boosted by the recovery in the selective markets and strong outperformance by the Luxe teams. And I can tell you that in both markets, the year is off to a strong start.

Another highlight was the continued dynamism in emerging markets, one of our key areas of consumer conquest, as you know. In aggregate, they accounted for 70% -- 17% of sales and as much as 40% of sales growth. Particularly impressive was the GCC cluster, our fifth larger growth contributor, followed closely by Mexico and Brazil. India, though, is not meeting expectations, and we have a new setup there starting this year.

One of the strong drivers of our growth has been e-commerce, where we continue to grow in double digit and gain share, illustrating L'Oreal's continued digital leadership. Its weight surpassed the 30% mark for the first time, up 2 points from last year. This increase was broad-based across all our regions, but especially strong in SAPMENA, where it's a real game changer. We are growing in e-retail, in D2C and even more with pure players, where our teams are making strong progress at mastering the algorithms and the influencer game.

Our global multi-brand community L'Orealistar allows us to leverage the L'Oreal cloud with 300,000 influencers across the world. And in 2025, we reinvented L'Oreal's creative marketing playbook, evolving at the speed of culture with the fast adoption of AI to create more cheaper and better content in our CreAItech Studio. But also with the increase of what we call beautytainment, where we reach our audience in highly culturally relevant context. A good example is the last season of Emily in Paris, where the L'Oreal Paris is at the core of the plot of 1 episode. In a world marked by growing economic and geopolitical uncertainty, the importance of a virtuous P&L cannot be overstated. And our finance teams once again did an outstanding job, allowing us to propose a further 2.9% increase in the dividend to EUR 7.20.

Lastly, I'm proud to say that L'Oreal reaffirmed its commitment to being a sustainability and responsibility leader with its new L'Oreal for the future program. And as you saw in Christophe's presentation, we received multiple accolades for it. But for me, the most important achievement of 2025 is how whilst delivering on business, we have been deeply transforming to prepare L'Oreal for future growth. We have been investing record amounts in transforming the company in building new growth engines for the future. With a total of EUR 1.5 billion, 2025 was a record year of investment in tech to leverage L'Oreal's scale with even greater agility and speed. AI is at the core of L'Oreal's new playbook and the deployment of ONE L'Oreal's IT backbone is just the first and necessary step.

Our newly created AI transformation team is implementing multiple AI use cases at scale to deliver strong value. Value for the consumer first with AI-powered diagnosis and personalized recommendations to facilitate their choices. L'Oreal Paris Beauty Genius is a successful first step, Noli, a great learning experience, and L'Oreal is set to be the reference source of beauty knowledge for LLMs through partnerships with the major players with the objective to make our brand the destination of choice of consumers.

Value for our main functions to increase L'Oreal's competitive moat. Two examples. In marketing, BETiq maximizes our ROI through predictive modeling. In 2026, it should cover 10 countries and over 50% of our optimizable A&P, whilst CreAItech powered by NVIDIA enables content mass production at lower cost. In research, we leverage AI-based models, including those codeveloped with IBM to speed up the discovery of new molecules. Over the last 12 months, we have tested more molecules than in the previous 5 years together and have managed to save up to 40% of the time to market.

Value for our employees, of course, whose productivity and creativity are augmented by the daily use of L'Oreal GPT and more than 9,000 AI companion. And of course, value for the company as these use cases and those to come represent significant productivity on multiple lines of the P&L.

2025 was a record year of innovation. With our beauty stimulus plan, the weight of business from new rose by 150 basis points, and that's bound to continue. At 725, L'Oreal files the highest number of patents in its history, and this is the promise of more disruptive innovation and superior launches. And I'm proud to say that these efforts earned L'Oreal the title of the most innovative company in Europe from Fortune Magazine.

Finally, 2025 was a record year of acquisitions. We clearly strengthened our competitive position. After Aesop in '23 and Dr. G early '25, we filled gaps in our portfolio with the bolt-on acquisitions of Medik8 and Color Wow, fast-growing brands with technology that we will roll out globally. L'Oreal further cemented its luxury leadership with Jacquemus and most importantly, Kering Beauty. Kering Beauty represents a major opportunity. It completes our presence in the Haute Parfumerie fragrances. And when you see that YSL now is bigger in beauty than in fashion, I will let you imagine what we could do with Gucci Beauty.

When I look at the map of L'Oreal's brand portfolio, which we regularly assess and prune, I feel that we are in the best position to seize the rising current in each category and serve all levels of purchasing power. And we are opening new growth opportunities with 2 strategic investments in fast-growing beauty adjacencies with our upcoming longevity JV with Kering and with the increase in our participation in Galderma, a global leader in the highly attractive aesthetics market. When I look at how we transform in 2025, I feel that L'Oreal is stronger than ever and ready to accelerate its growth and expand beyond its boundaries.

The beauty market will be boosted by several major and lasting underlying trends, which will benefit L'Oreal. The number of beauty consumer is steadily increasing. Middle classes are growing in emerging markets. Teenager are entering the market ever younger and with the extended life spans, consumers in developed countries are using products ever longer. We are confident that L'Oreal will reach 2 billion consumers in the next decade. Penetration of e-commerce continues to accelerate and reduce consumer friction. This is obviously a major growth engine for L'Oreal as we consistently outperform this channel.

Price ladders are stretching from the very affordable to the most expensive, allowing anyone to enter beauty and then trade up. There is no doubt that we have the very best portfolio in the industry to cater to this trend. Routines and beauty protocols are sophisticating. This is the result of the explosion of beauty conversations on social platform as well as the global trend obsession with health and longevity, which expands our category from just cosmetic products to services, supplements and procedures. As proven many times, gloom leads to a stronger appetite for indulgence and beauty dopamine and consumers crave newness, which we know how to deliver.

Finally, the increase of diversity creates new needs for skin and particularly for hair. Consider that the population with textured hair is projected to grow by 400 million in the next 15 years, creating a boom in needs for hair treatments. L'Oreal is the only beauty company always ready to serve on this strength, thanks to the powerful combination of its best-in-class R&I, its multi-division category strategy, leveraging the power of its unique brand portfolio and, of course, consistent execution excellence.

Let's talk about categories. In haircare, we have truly taken advantage of the category sophistication and will continue our multi-division conquest. In recent years, we launched multiple breakthrough innovations outperforming the market 2.5x and winning across our 3 divisions to satisfy the growing need for hair treatments and scalp care. Growth in Professional Products now stands at twice its historic average with Kerastase as its crown jewel. Consumer products have seen a strong acceleration of Elseve and Fructis with a third consecutive year of double-digit growth. And in Dermatological Beauty, as you've heard, Dercos' phenomenal growth single-handedly boosted the Vichy brand and CeraVe's entry into U.S. medical haircare is off to a promising start.

And we continue to increase our rate of innovation with a full launch plan for '26. Haircare is both a source of recruitment and increasing profitability. One of our white spaces was the styling category that has been exploding over the last year with #hairstyle attracting more than 10 billion views per month. The acquisition of Color Wow catapults us into the global leadership position, giving us the right to win in styling as we start globalizing the brand.

Let's now move to fragrances. As the usage of multiple scents nurture the fragrance boom, L'Oreal is building a unique powerhouse. Fragrances are boosted by the entry of young consumers, particularly young men who are truly crazy about the category with the wardrobe effect leading to multiple fragrance usage and by the quest of uniqueness and personalization leading to the rise of Haute Parfumerie collection fragrances. This global trend is particularly noticeable in Asia, where it is new and of course, the Middle East where it's not new.

In luxury fragrances, L'Oreal is the global market leader, a position we continue to steadily reinforce. The incredible success stories of YSL, Armani and now Prada and Valentino demonstrate our unique capacity to combine the inspiration of great Couture brands with our own fragrance creation and marketing know-how. In feminine fragrances, L'Oreal has the #1, #2 and #3 brands in Europe, and we conquered the love of young men with our most successful record-breaking launches, MYSLF from YSL in '23 and Paradigme by Prada this year. So I'm truly excited at the prospect of replicating this winning recipe on such magic brands such as Jacquemus, Bottega Veneta, Balenciaga, Gucci, each with a very different personality.

And to fully cover the market in terms of price point and trends, we're doubling down Haute Parfumerie collections with Maison Margiela, Aesop and soon Creed, whilst addressing the consumer in search for more affordable sense with the rollout of mists in several of our brands. There again, L'Oreal is in the winning seat and in the best position to accelerate.

In makeup, it's all about creativity and speed. being influenced by fashion trends and over-indexing with younger consumers, it's the least predictable of our categories. But it's also the one where leaders can actually make the trend and make the market as we demonstrated with the second half acceleration in the U.S., entirely powered by L'Oreal. Makeup is all about innovation and activation. We have turbocharged our launch intensity in makeup to twice that of any other category. In Consumer Products, all of our brands stepped up their innovation game. In the U.S., the division widened the gap to the market. And in Luxe, the Couture brand enjoyed growth in the mid-teens, thanks to the strong launch plans of YSL and Prada. And we are doubling down on innovation again in 2026 with a very strong launch plan.

Innovation is key, but activation at the speed of culture is what connects to the youth. Just think of If You NYX You Know, a great campaign, Maybelline Miley Cyrus reinvention of the historical single or the nostalgic return of Lancome Juicy tubes repositioned for the TikTok era. Here again, the breadth of our portfolio in terms of price points and beauty archetypes from Couture trendsetters to Gen Zs to working women allows us to satisfy and recruit all consumers.

Finally, we will be winning again in skincare by bridging health and beauty and pioneering the science of longevity. Skincare is clearly the category where we have the biggest acceleration opportunity because after 8 years of strong outperformance, 2025 has not met L'Oreal standards. The skincare playbook is the one that has changed the most with the proliferation of fun indies with quite fantasy claims. So we have changed our own playbook, we've increased innovation in the second half and revised our media and engagement strategies.

And even though skincare is less reactive than makeup, it does work. The proof is in the pudding. We stepped up innovation in Dermatological Beauty, our most skincare-focused division, and sales growth accelerated quarter after quarter. CeraVe started to turn the corner in its all-important U.S. home market. SkinCeuticals became the division's third billionaire brand, thanks to the success of its new launches and the dynamic trend in aesthetics and Vichy accelerated strongly in the second half of 2025.

For 2026, we have a full pipeline across all divisions. Our unique brand portfolio enables us to play at multiple price points from EUR 3 for our recently launched Garnier Dry Touch Cream in Brazil to EUR 450 for Helena Rubinstein PX50. This allows us to recruit new consumers in emerging markets whilst accompanying our existing consumers during their aging journey. And we will start the global rollout of Dr. G tapping into the continued K-Beauty hype and of course, Medik8, our first luxury beauty brand. L'Oreal will continue its successful multi-division attack on body care, which is new and is following the same premiumization path as haircare with Mixa, CeraVe, NYX or Aesop.

But the real opportunity in skin lies in the increase of life spans, the focus on preventive health and new perceptions of aging. Longevity is fundamentally reshaping the consumer skincare journey from reactive anti-aging to proactive skin health span. With over 1.5 decades dedicated to longevity research, we are uniquely positioned to offer advanced beauty protocols, and they include diagnostic tools like Cell BioPrint, topicals, like this new Lancome Longevity with Urolithin A, which is just hitting the market, devices like the LED face masks that we introduced at this year's CES in Las Vegas and supplements, which will extend across additional brands this year. We have multiple groundbreaking molecules in the pipe discovered by our advanced research or sourced from our extended partners ecosystem and tomorrow from the scientific partnership with Galderma.

So let me conclude. L'Oreal is entering 2026 stronger than ever. In a dynamic beauty market, we have what it takes to increase our momentum, once again outperform the market and accelerate our growth, boosted by an even stronger innovation pipeline within a systematic multi-division strategy. And the future looks bright. We operate in a highly attractive market, not just because of its historic organic growth, but because it is expanding to new services, new categories, new technologies where L'Oreal will play its role.

Consumers are entering beauty ever earlier and are staying ever longer, engaging in more complete beauty strategies as life expectancy rises around the world. And as I just illustrated, L'Oreal has what it takes to keep winning across our categories, channels and regions. In an increasingly complex environment, our unique combination of scale and agility is a very powerful competitive advantage. Above all, our success is rooted in our unique L'Oreal culture. The passion, expertise and fighting spirit of our teams are the real secret behind our success today and the #1 reason why we will continue to lead the beauty industry tomorrow. Thank you.

Okay. We are ready for your questions, which I guess you've been expecting to ask, but it was important for us to share with you the ambitious visions and plans of our 4 divisions and how we see L'Oreal moving ahead. So we are ready for you.

Celine, we'll start with you, and then we'll go to you -- to Olivier after that.

My first question is, well, on the market growth for 2026, unsurprisingly, so '25 was [ 2.5% ], I think you said on the slide. And I think it was a mirror image of '24, which was strong H1, weak H2 and then '25 was weak H1, strong H2. So as we look into '26, I know the exit rate is quite better. You mentioned that in the fourth quarter. But how do we think for the full year? I think some of your peers are mentioning weakening Europe. And then if you could as well talk about the China run rate. That's my first question.

My second question for Christophe. You mentioned that there was volume growth in '25. Can you give us the split between volume and price mix? And then as I think into '26, there are a few moving parts like tariffs, like M&A inclusion and the U.S. dollar. How should we think of all of that in terms of the margin outlook?

So as far as 2026 growth, I think experience, you get more experience as every year as a CEO, shows that making too accurate predictions can create some lots of talks around the year. So I'll be very careful today. What I can say is that the run rate on the second half was in the 4% to 4.5% bracket that we had discussed last year and that the year is starting pretty well in all markets. We don't see a slowdown in Europe. So we don't -- we see pretty good sellout in the U.S. and in China. Emerging remain dynamic. There was a bit of a slowdown at the end of the year in Latin America.

But overall, I see the market as being faster in 2026 than it was in 2025. And I'd like you make your calculations on the actual second half run rate. But we are -- as you could hear, we are pretty ambitious for 2026. The word I think we've most used in our presentation is acceleration. That's what we felt with the exception of this travel retail disruption that was unexpected. But overall, we are quite positive. The year starts well. People want beauty. And probably that's the other learning from last year, we created this -- we decided to what we call beauty stimulus plan to accelerate our rate of innovation.

I think when the world is a bit more shaken, when consumers are a bit less enthusiastic, we have to tune them more. And it took us 6 months because you can't make the launches appear like this to get them going. And 2026 is going to be even higher in terms of innovation in all categories, in all divisions. And we saw in Q4 that it did work in Q3 to in sellout. So in the end, the market will be what it will be, but we definitely intend to do better.

Okay. Maybe I follow with your second part of the question. So 2025, again, was a year where we had growth both in volume and in value, probably more towards the value because it accounted for nearly 80% of the growth. And within this value, it's not only pricing that has been acting in the right in the right way, but also mix. But overall, that's like last year, a good balance between volume and value.

For 2026, of course, we will still have to manage headwinds, the same way, by the way, we did in '25. So we will have probably a slightly higher impact on tariffs. Of course, this is something that is pretty unpredictable. As I said, in '25, the impact was 20 basis points. So you can expect this impact to be a bit higher in '26 because it will be on full year. But we've been pretty good, and we will keep doing that in '26 in pricing because this brought more than 25 basis points in 2025. And you know that at L'Oreal, it's very important to keep the gross margin.

So we'll keep working on that. We had also a positive impact on mix. And I do believe that with the growth of for example, Luxe division that is accelerating, there will be still a positive impact in 2026. So we'll find a way, like usual, to navigate into this, but it's -- for us, it's still critical to keep our gross margin at a very high rate.

Olivier? I think you need the mic.

Olivia Nicolai, Goldman Sachs. Two questions. So could you go back first to the Travel Retail in North Asia just to clarify because it was a bit of a surprise today. Could you quantify the impact it had on the group in Q4, the difference between sell-in and sell-out? And should we expect, therefore, some restocking in Q1? And then secondly, more broadly, you mentioned AI efficiencies. We've also seen some SAP implementation in '25. How should we think about the SG&A and potential savings you could see there in the midterm?

So on Travel Retail, it's true that the last quarter was not what we expected. We actually piped a number of our launches, Helena Rubinstein, to name one in Q3, which was positive for us in invoicing. And if I look at Q4, as you've heard, the Sunrise app, which is the main app that's duty paid within Mainland China was closed for various reasons. And then there were also changes in operators in Beijing and Shanghai that reduced the sell-out and led to destocking.

So if I look at our performance in Q4, we had a mid-teens negative in sell-in, and we had quasi flat, I think it was minus 1%, in sell-out for the Q4. So we really avoided to have an inventory pile up. So we end the year with a healthy inventory. Therefore, a prediction on the market, we hope that the market is going to be flattish. We contemplated to be flattish in Travel Retail Asia for the year. And of course, we've been gaining share, 260 basis points, and we intend to continue to do so. So it was more an invoicing sell-in issue than a sell-out issue for us. But it did clearly impact the North Asia Q4, which all noted. But I think that's a temporary disruption.

Yes, one word on AI because, of course, we are already committed to grasp this technology and take the benefit of it in all the key lines of the P&L. There are several big initiatives at the group level, and I will probably focus on just three of them. The first one is what we call the revenue growth management. So what we are using is the big data that we have to improve the way we price our products, at least in big geographies, because this requires a lot of data. And we have now all the platforms to manage that and, most important, even the teams to run this technology.

The second one is to optimize our advertising expenses and, overall, our promotional and advertising by the way. So we have a tool, and I think you know called BETiq. In 2025, it was already rolled out in 9 countries, I think....

2025, 2026. And by the way, we're not going to roll it out in all countries because we have another tool that's a scaler that allows countries that are smaller, where we will not invest to create the tool to benefit from the learnings of all the similar situation. So in the end, I think we should be pretty effective everywhere by the end of '26.

And as you know, this is bringing a better ROI at least on year 1. And this is what we've been observing in all the countries we've been rolling out this year. And the last one, because for us, it's very important is on the SG&A. Because it's obvious data on certain functions at the group level. And with the scale of the group, there are already some impacts. I'm thinking about first in my area in finance, where we see already those tools bringing a lot of productivity in the way we compute our accounting, our treasury and also our financial control.

So this will come still year after year. It will not a big bang next year, but we are, of course, advancing into those new technologies to further decrease our SG&A.

Please.

Jeremy Fialko, HSBC. So two from me. First one is when you look at your performance versus the market, you had the Beauty Stimulus, a lot of very successful innovations. And you were about 50 basis points ahead of the market. When you look back at 2025, what do you think are the things that you perhaps could have done to have created a bit more clear water between yourselves and the market? Is it innovation? Or are there some other aspects that you would sort of like to highlight?

And then the second question is on the Chinese kind of ecosystem as a whole. I guess it's been very complicated where you've had the Mainland is doing better. You've had a lot of disruption in Travel Retail. Maybe some sales get shifted from one venue to another. So maybe would you try and kind of think about it as sort of one complete whole? Or kind of where do you see it at the moment? And what are your kind of expectations for it in 2026?

Okay. So on the performance, for me, it's very clear. There's one thing I'm not happy about, skincare. Skincare market, I mean, we've been really outpacing this market for 8 years. That hasn't been the case in 2025. And the reason is double. One is that we've -- before skincare was about establishing long pillars that you were growing year after year. And the pace has accelerated with the development of indie brands that come and go, but come up with oftentimes claims that aren't really supported. And we had, I would say, a low level of innovation in skincare, particularly in the first half of the year.

So as always, we've analyzed, we've diagnosed, we've reacted. We've seen what we had to change. Sometimes it's about improving some formulas. But most of the time, it's the pace of the innovations, the claims we make. And it's the engagement strategies that have to be a bit more diverse, leveraging our portfolio because what I showed, and I think that's probably what I tried to communicate during my presentation, is that we really approach categories with the breadth of our divisions. And when we launched the Garnier Dry Touch in Mexico, that has been an absolutely fabulous success and which we're rolling out. It's not a very expensive cream. We're not going to promise on this one, that it reduces wrinkles or makes you look younger. But it's a fabulous formula and it's very affordable and it's great for emerging markets, hot climates and young people.

And on the other hand, you've got the Helena Rubinstein product with 50% Pro-Xylane, which is truly super efficacious, not to mention the new Longevity MD range from Lancome. So frankly, the playbook of skincare has changed, and we've had to react. So if we had done a normal year on skincare, let's say, plus 5, our growth would have been 1.5 points higher. So that's really been a focus. Of course, we have to continue to do well in the other categories, but I think we have what it takes. So that's the one thing.

And by the way, it's a good segue to your second question because skincare is the biggest category in Asia. If I look at the Chinese ecosystem, which indeed we follow with the combination of Travel Retail and domestic market because there are fluctuating spending in consumers. Overall, it's been improving month after month. We had this Travel Retail disruption in December. But we feel that, first of all, and that's the most important thing for us, China is back to positive territory and also back to a positive luxury consumption because there was a moment when consumers were buying more mass products.

We see that with probably the stock market in China being at a better level. We see that consumers are back into buying high-quality products from the luxury brands and also Dermatological Beauty. We see Kerastase is flying in China. So I feel that there is a bit more of confidence to buy more premium products in China. That's what we see at the beginning of the year. By the way, there's no change. We'll see, of course, because Chinese New Year always creates different comparisons. But it smells good, as we say.

And Travel Retail, I believe we've hit the bottom. Now a lot of the downtown stores have closed, which was a big drag on 2025. Airports have been progressing. Traffic has been progressing and is back to levels that are at the level in North Asia of 2019. And therefore, we'll go back to what Travel Retail used to be, which is people buying gifts in airports at a good price. So all this put together, we've set ourselves a growth ambition in this part of the world, and it will be driven by all divisions but more premium products. A brand like SkinCeuticals is flying in China, too. So it's all this that makes me -- without being crazy but still being ambitious for a positive year in North Asia.

Ladies first, always. We'll go to...

Two questions from me, please, one on Dermatological Beauty and one on innovation. So Dermatological Beauty, can we expect the cadence we observed in Q4 to continue into 2026? And in addition to strong brand execution, any other factors around market we should think about, for example, drug store channel in the U.S., what's the latest on that? And on innovation, another year of ambitious innovation plan. What gives you confidence that the R&D and the function, the marketing can keep up with the speed and the magnitude of the planned launch that you have?

So as I said, the dermatological market -- the dermo-cosmetics market is pulled by very long-term trend. That, we believe, will continue to play a big role in the coming years. So as I said, we expect the market to remain robust, and we expect that we will continue to overperform versus this market, leveraging the strength of our very powerful portfolio. SkinCeuticals, seizing the boom of aesthetics. La Roche-Posay significantly overperforming the market and leveraging the dermatology pathology. And finally, on the U.S., and obviously, the turnaround of CeraVe, that is a key highlight of the year. On the exposure to drugs as I answered last year, our exposure is limited. And we have demonstrated that we're able to win with the winner and have a channel strategy that allows us to overperform the market.

So on how can we cope with increasing innovation. It's a very good question because it's -- you have to create a lot of products to put them on the market. And I think there are -- probably the main reason or the main capacity -- additional capacity that we have is AI. Because whether it's to create content or to screen molecules or to come up with new types of formulation, it requires more speed. Then maybe we'd take a little bit less of time to make sure that the product is absolutely 110% perfect because that's not the world we live in. But overall, it's technology that allows us to do that both on the R&I side and from the marketing side. And you saw that, our CREAITECH studio, I mean, we create, I think, 50,000 pieces of content per month for all our brands. And the cost of one content is down 40%. So it's really -- we have to learn to master the tools, but it's really a new era. And I think for our labs, it's also working the same.

And then we have, again, this fantastic asset of L'Oreal, which is what we call cascading, which is when a great technology is invented, we then roll it out in several brands, take Melasyl, which you see it in several brands, but it's always the same. So that also helps. We have probably more brands jumping on one innovation that we used to, where it will trickle down more progressively. So again, it's about acceleration.

[Foreign Language] Charles-Louis. After we'll take a phone question, please.

Charles-Louis Scotti, Kepler Cheuvreux. Two questions for me, please. The first one on the Kering Beauty and the second one on governance. On Kering Beaute, it seems that the new CEO of Coty is more open to discussing an early termination of the Gucci license, which matures in June '28, if I'm not mistaken. Would you be interested in taking the license earlier? And if so, does it require an additional payment to Kering? And if you can also update us on the launch time line of Kering licenses and also the medium-term potential for these brands and especially Gucci?

And the second question on governance. There would be a couple of Board member appointment at the next AGM. There has been some market speculation regarding the Nestle stake. And should we interpret the proposed appointment of 2 Nestle representatives for the next 4 years as a signal that there is no short-term exit from Nestle?

So on Kering Beaute, first of all, again, it was a very important deal for L'Oreal. That really puts us apart from the rest in luxury beauty, and I'm very proud that we could sign it, that we could agree with Luca de Meo and the Kering management to make this deal. As you mentioned, it will be staged because who will inherit -- and I will ask Cyril who hasn't spoken to tell us a bit more and when he intends to take over Creed and the others.

As far as Gucci, it's really something that's being discussed between Kering and Coty. So I cannot comment on it. The only thing I can say is that would we be happy to have it sooner? Clearly. Anyway, it will take time to work on new projects to refine the brand. So we will need some time, but we'll be happy to, yes, get the brand sooner. And there's no extra in the deal for that. And as far as timing...

So regarding the three other brands of the portfolio, which are Creed Bottega and Balenciaga, as soon as noncompete studies are completed, we'll take over these brands. So it will be sometimes during Q2. The potential of this brand is massive. Creed is today the #3 player in collection fragrances which, as you know, is the part of the fragrance market which grows the fastest. It's 23% of the fragrance market. It is growing at 3x the rhythm of regular fragrances. So Creed has a lot of potential in this segment. The brand today, it's public information, but the brand is around EUR 350 million. And we think it can become quickly a billionaire brand. So that's for Creed.

And regarding Bottega and Balenciaga, these brands are pretty tiny, pretty recent in the beauty market. And they launched their beauty at the end of '24 for Bottega and beginning of '25 for Balenciaga. And we think they have great potential. These are very solid fashion brands with very distinctive territories, Bottega, exceptional craftsmanship and sophistication; and Balenciaga, pretty disruptive, high fashion statements. So we think these two brands will have great, great, great DNA for beauty. And as I mentioned in my presentation, we have ambition for these brands. We have ambition to take them to a high level, just like we did with previous fashion licenses we took over.

We are not going to give you a number on that one, but...

But ambition.

Obviously, we want to make it big. And as I said, today, YSL Beauty is bigger in size than we YSL fashion. And when you know the numbers for Gucci. So who knows if we can do the same, it would be fantastic.

As far as the Board question and the proposed appointments for Nestle Board members, first of all, it corresponds to changes in the -- internal changes within Nestle. So there's -- Paul Bulcke will not be no longer the President of Nestle. So they are proposing new Board members. As far as their intention, they are the only ones that can answer that question. The only thing we can say is that they've been very loyal shareholders for 40 years, and we're very happy to have them as shareholders. They are contributing to the Board and to the discussion. So I hope and believe it will continue.

So let's take the phone question.

So the first question is from Warren Ackerman of Barclays.

Warren Ackerman at Barclays. I've got a couple for you as well. First one is on India. I think you said, Nicolas, that India was disappointing. Can you explain why and how you're changing India on the go forward? Second one is on the Beauty Stimulus Plan. I think you said '26 will be bigger than H2 '25. I think you said previously you wanted to add 300 bps to the innovation rate in the second half, and Q3 was at 170 bps. So did you get to the 300 bps for the second half? And how much bigger will the stimulus plan be in '26 versus second half of '25. Just trying to understand the kind of scale of the step up. And do you see this as kind of a structural step-up and that the '27 then has to be bigger than '26? So how do you think about that?

I'll start first with the Beauty Stimulus Plan. First of all, I said that '26 would be bigger than '25. I didn't make any comments on halves or quarters and I don't intend to do so because that would be a bit too accurate. What is clear is that we see that, again, we need to stimulate the market. Then when you put products on the market, some deliver less than expected, some much more. So we'll see what the future holds. But very clearly, all divisions, all categories are on to hyperdrive on innovations. And as far as '27, '28, we are, of course, already preparing the launch plan. So we intend to keep a good pace. But I will not be more precise on that not to give away too much information.

As far as India is concerned, when I say that I'm not satisfied, we had high single-digit growth. We did not gain a lot of market share, if any. And in the end, I think it's just because we are setting up a new team, a new organization, I took the Board of Directors to India at the end of October. We revised the strategic plan. We see that we have major growth opportunities. LDB, for example, is fantastic. We just launched there La Roche-Posay. It's starting very well, but it's still very small. We have great positions in some categories like haircare, where Garnier is #1 or hair color, where we have great products. But overall, we have to be more ambitious. We have a new CEO for L'Oreal India that was previously in charge of CPD Mexico, and he delivered a very strong performance there. We have new capacities. We've invested in our factories. We have announced the creation of a new tech center in Hyderabad.

Let's say that today, India is roughly 1% of our turnover, which is very small. So it can only go up. And we have really put a lot of efforts, both financially and humanly in terms of talent to change gears in India. And when we see what we do in the Gulf countries, in Saudi Arabia, where we've got great teams, and it's doing phenomenal, and what we've done in Brazil and Mexico, I am optimistic, ambitious. But we need to do better, it's very clear, and that's what we will start doing hopefully in 2026.

The next question is from Jeff Stent of BNP Paribas Exane.

Just two questions, if I may. The first one is you commented in the release increasing the stake in Galderma will allow you to take part in the fast-growing market of aesthetics. If you could maybe just shed some color on what that 10% increment will really enable you to leverage in L'Oreal itself.

And then the second one, just really a housekeeping question, perhaps for Christophe. But obviously, there's more IT implementations coming. Are you able to give us any color on what the likely impact will be as we sort of progress through '26?

So the increase of the stake in Galderma will give us two very concrete things. First, we will be proposing to the AGM of Galderma 2 Board directors for L'Oreal, representing L'Oreal. And that will allow us to be truly part of the strategy, of the discussion and both contribute but also continue to -- a learning process of this world of aesthetics and of the combination between topicals and injectables, et cetera. Of course, on a more financial basis, it will allow us to consolidate the profits of Galderma, how do you say, by equivalence? How do you say that in English, by equivalence.

And then as it brings us closer to Galderma, we will also want to expand our scientific partnership. We have one going on right now where it's a lot about measurement of the performance of products through imaging, but I think we can do more. I will not go more into details, not to make any revelations. But these are the three main, I would say, benefits from increasing our stake to 20%. Before, we had every now and then discussions or meetings with the management, but it was very loose and we were not really in the game. Now we will be.

So now regarding the -- you mentioned the thing about AI, I just want to precise two things to that. Of course, this will have an impact both on the top line because I think we've been mentioning before the different tools that are now in place. You mentioned, Nicolas, about CREAITECH generating 0.5 million assets every year now. You mentioned also the impact that this has on R&I., so speeding up the creation of new formulas. But it will have also an impact on the bottom line. Because definitely, what I can tell you is that on a different part of the company, meaning mainly big functions we are already seeing this impact. And I can tell you, for example, that despite the solid growth of this year, the total headcount working on the SG&A have been decreasing in 2025 compared to last year. And despite the integration of new teams from the acquisition, we managed to decrease by 400 people. And this is...

Christophe, I think Jeff's question was about the impact in basis points of our IT transformation and the inventory movements, which we are not going to give today because we don't know it. But that was the question.

So if this is a question for 2025, I think you have now this information because our dear Eva, if you don't have the precise figures, will communicate to you. For 2026, difficult to assess right now. As I said before, you will know exactly what will be the impact quarter-by-quarter and division by division. We are still waiting for the confirmation of the go-live of the first countries. As I mentioned before, there is Australia and the U.K. that are on the pipe. This will be known, I think, in probably 1 month. And at that time, we'll be able to give you those precise figures, don't worry, so that you can reevaluate the performance on a quarterly basis.

Next question sir is from Guillaume Delmas of UBS.

Then we'll go back to the room. We have one question in the room.

Two questions and one quick point of clarification. So first question is on Europe. The region had a strong finish to the year. Wondering what drove this performance. And particularly, was it down to one particular division or was it quite broad-based with all 4 divisions contributing? And I guess, in Europe, do you also see Europe as a region that could accelerate in '26 versus 2025?

And then my second question is on the contrasted performance between haircare and hair color because one is growing double digits, the other one is pretty much flat. What do you attribute this gap in performance to? And as a clear leader, a market leader in hair color, do you see scope to stimulate category growth in '26?

And then the very last one, if I can squeeze it in. A point of clarification on Q1. Nicolas, am I right to understand from your comments that your like-for-like sales growth should show some signs of sequential acceleration in Q1 versus Q4 given Asia Travel Retail should be less dilutive and probably a better alignment between sell-in and sell-out in the quarter? Or once again, I might be guilty of over-interpreting your comments.

It's time we end this question. It's getting very, very specific. No, but good questions. On Europe, the acceleration was broad-based. It was across all divisions. It was true for LDB in particular because LDB was the division where, as you heard during the year, there was the biggest discrepancy between sell-in and sell-out and eventually everywhere but particularly in Europe. And it was also out of the sun care season, we had a good acceleration of LDB in Europe. But it was true for PPD in haircare. It was true for CPD overall with makeup, and it was true for luxury with great fragrance seasons. As you've heard, we've got feminine fragrance #1, #2, #3 in Europe, which is frankly something the teams are very proud of. So it was broad-based.

As far as acceleration is concerned, Europe being our biggest region, the one with the highest market share, it's not where I expect the biggest share of the acceleration. But of course, as there's a new President of the European zone and he wants to make an impression, he's there in the first row of the room, so I will also put some pressure on him. But more seriously, I expect the acceleration to be broad-based. But probably Europe will not be the #1 contributor.

On hair color, because it's a tale of two cities between professional and mass, I will ask the two gentlemen on my left to give their perspective and, more importantly, what they intend to do to drive the growth forward. So let's start with -- maybe we'll start with our oldest division in hair color with Professional with Omar. And then we'll ask Fabrice to comment.

When it comes to the professional hair color market worldwide, actually, it's moving at two speeds. We see in one hand the major market being soft, but on the other hand, a very good momentum in emerging markets. So if I mention the emerging markets, India, Brazil, Middle East professional is still a powerful symbol of aspiration. And we are successfully capturing there a massive new wave of first-time professional color hair user in these high-potential territories.

On the other hand, in major markets, the pace is softer, where we see possibly more trade down to mass. And so what we are trying to do in professional color in mature markets is to bring a lot of innovation. You saw in that presentation, [ SHADES ALK ] which is here to recruit younger consumers. We are leveraging the innovation power on the most valorized formula like INOA. We are bringing also valorized service for education. So we are really trying to bring fresh energy and a lot of innovation to stimulate these more mature markets.

I just want to give you a last comment. You saw in my presentation that we are rebalancing our footprint. So overall, I'm very confident in the mid- to long-term professional color acceleration because with the acceleration of emerging and the more weight that we will have in our portfolio, it will create higher dynamism to the professional category in the mid- to long run.

Fabrice?

Yes. And from the CPD perspective, hair color is an important category with CPD. We are a leader in this category. We play with our two big brands, with L'Oreal Paris and Garnier. And our strategy has always been to really cover the entire market needs from price points and from type of hair color. So you know that Garnier has a very accessible sachet offer in India that is growing. And at the same time, we're doing also stimulating the market with Nutrisse, like the latest example that we had in the U.S. where we did a very successful color animation with Caramelo. But it's also a way to speak about her color in a different way. So it was a lot about advocacy, a lot about peer-to-peer connection, which really allowed this market to get stimulated in the U.S. And we go strongly on this market.

And the second part also of stimulating the market is bringing new innovation and new gesture to the market. So a few years ago, L'Oreal Paris launched Magic Retouch. It was initially a service between two hair colors. And today, Magic Retouch, after a few years, become 1 of the iconic product of hair color, a very complementary service for consumers and adding a lot of new gesture and premiumization to this hair color market. So for CPD, it is an important market. We're stimulating it, first of all, with innovation, but most importantly, with more engagement with consumers at their lifestyle.

And on your final question, Guillaume. As you know, we don't give guidance. But the only thing I would say is that if we want to accelerate, you have to start early. So we will do our best.

So we will take one last question from the room before going to have little cocktail. So please.

It's Orla O'Connor from GuardCap Asset Management. A general question. Could you please just talk a bit about the changing dynamics in the skincare market, particularly as it relates to the derma-cosmetics business? And just to help us here understand the market segmentation and the potential for cannibalization between those two businesses.

I may hand over to Myriam. What I can say is that all in all, there are many different dynamics in the skincare market. On the one hand, you've got people who want more science, more efficacy. Other people want more safety and ideally both. And that's, by the way, where Dermatological Beauty plays a very important role. But you also have a part of the market that wants products that look good, smell good, feel good even if they don't deliver major skin transformation. And that's probably the part where we're a bit absent of, and that's why this Garnier launch, which is again a huge hit and we're rolling out is a good illustration of what we can do. And then there's the capacity to occupy different price points. And that's probably the big category. And as I've shown it where we have the wider breadth of price points and our capacity to position each of our brands, the Biotherm, the Kiehl's, the Lancome, the Helena Rubinsteins on all these price brackets is probably one also of the keys to doing better in skincare.

But maybe I think because it's true that this longevity trend is changing the perception of skincare and how they can consume, maybe you want to say a word, Myriam, on that.

On longevity?

Yes. How is the -- say a few words about SkinCeuticals.

On skincare, what I want to say is consumers are looking for performance and trust, be it them looking for anti-aging performance or answers on the specific skin problem they can have. And dermatology is well to deliver those benefits. What we see is that effectively, the prescription and the role of dermatologists and our pharmacists to drive the trust is absolutely critical. And this is being reinforced with the recent boom of aesthetic. I'd like to quote one example to explain the role of skincare in the most advanced aesthetic performance is that it works in complementary -- it works in complement with aesthetics. And if you take the latest disruption that is happening with, for instance, the GLP-1, that drives fabulous sagging on the skin that requires -- fabulous is not maybe the right word, but a very important impact on the skin, dramatic. That's what I wanted to say.

Well, the most advanced skincare kind of impact, it has been proven this year, and that was a massive achievement, that through cosmetics, you can impact -- you can correct part of the impact of those medicines. So the medical part is, on one side, adjunctive therapy complementing drug or on helping to sort the pathology is critical and driving trust, which explains why skincare is very big in the market. It's about 80% of the total dermal market.

And I will -- and just to conclude, to talk a little bit about the future in AI. We see the rise of LLMs and how people now are asking questions to these models. And here, the quality of our content, the science we have, the publications that our brands are putting out there are making our brands pop up because these LLMs need deep, enriched content. And that's, in the end, going to be very positive. And I'm sure if you type as I did, what are the safest skin care brands on Perplexity? The odds that you're going to find La Roche-Posay and CeraVe popping up because there are all the publications plus the support of dermatologists that are making a difference. So that's going to be, I think, an important game changer in skin care.

This being said, thank you for staying so long with us. And we'll be joining you for a little cocktail, and you know where. So thank you so much. Have a great day.

Timing is perfect as we've just spent the most important day yesterday in the field, really connecting with where our business happens. And I know it wasn't the perfect day because we had some really nice weather, but I could tell from the excitement of walking through the aisles of Walmart and Target and SalonCentric that you were really feeling and experiencing the U.S. market, which is so critical because this is really where we connect with our consumers.

Just to share a little bit about myself. So this is my 32nd year with the L'Oréal Group. I started some time ago. In fact, this subsidiary at the time was called Cosmair. It wasn't even yet called L'Oréal, and I'll share a little bit of the history of sales in a moment. But I started in the Consumer division. -- in marketing and spent after that 4 years in Mexico City in charge of the Consumer division in Mexico. I came back to a global role in the Professional Products division, just a couple of years after the acquisition of the Matrix brand.

From there, I took a 90-degree turn and took over as Chief Human Resources Officer for L'Oréal USA for a couple of years, moved out of that role just ahead of the economic crisis of 2008 and 2009. So timing was not so good to get back to the business, but that's what happened in those years, and you'll see a little bit of the sales history there. And then I had the great fortune to come back to the Consumer Products division as President of the Maybelline and Garnier SE brands for many years and then took over the Professional Products division for U.S. and North America.

And then just about 4 years ago, took the role as CEO of L'Oréal USA and President of L'Oréal North America. So I have quite a bit of history with the group and quite a bit of history here in this country. And I hope over the course of the next hour or so, I'll be able to share a lot of that with you so that you really get to know us.

The extraordinary thing about our subsidiary is that we have been in this country for over 70 years. And I'm not sure you all noticed when we're in Clark, New Jersey, at the R&I facility, but that Street is called L'Oréal Way, and that street has been named after our company because we've been in Clark New Jersey for so long. And folklore has it that one of the early pioneers of L'Oréal met somebody on the ship coming over from Europe who indicated that there was land available to buy in Clark, New Jersey and this individual who was French probably had never been to New Jersey, let alone Clark and somehow managed to go there and buy a plot of land and build our first factory.

And that history, which may or may not be true, but I think it is, is how things began there and you sensed, I think, because at this point, we've taken over the whole street, you saw our R&I facility. The factory has long since moved out because it's no longer an industrial area. It's much more of a residential and business area. But that history is important to us because our roots go really deep in this country. And that's given us the sense of stability and confidence to build our business from the ground up.

And I'll show you and share with you the construction of the subsidiary in America, which I think is one of the more solid foundations for future growth. Of course, we've been building our business consistently over many, many years, and I'll share that with you. And as we celebrated just a couple of years ago, our 70th anniversary, we have grown so much that, in fact, years ago, when I started, we could fit the whole company in sort of one conference center or one ballroom. We needed actually to rent the Javits Center across the way to be able to house all of our people. And we had an extraordinary celebration and recognize the contribution of so many people to the construction of this subsidiary over all this period of time. And we don't have a small number of people who've been with the group much longer than I have here in the U.S.

We celebrated some people who have been 40 years, even 50 years working for L'Oréal USA. So this is our subsidiary at a glance. We are the #1 subsidiary in the group, which I don't think surprises anyone considering the size of the market and the importance of the U.S. We represent around our zone, which is U.S. and Canada, represents around 20% of our global turnover. And importantly, and this is why I tell a little bit the story of Clark and why we started in the U.S. with a factory from the very beginning, the strategy was always to be able to source our own growth locally to rely on our own ability to support our business and our growth. And today, we produce more or less 75% of the units we sell here within our zone. And we have a fantastic footprint of our operations, facilities, our factories and distribution centers across the U.S.

We manufacture in 3 states, Kentucky, Arkansas and New Jersey across 6 factories. And we have somewhere around a dozen or so distribution centers and fulfillment centers spread across the country. Importantly, we also have a very large number of retail stores. between SalonCentric, which you experienced yesterday, Keels, ESOP. And these stores, of course, are a place where we control fully the environment, the way we connect with our customers and consumers and the brand expression. And this is the place, of course, where we can always bring to life our products and our brands in the most spectacular way.

We have over 13,000 employees across all of our facilities. You'll hear today from our Chief Human Resources Officer, about that pool of talent and how extraordinary that is and what a strength that is for the future growth of our business.

I mentioned the history of sales. So in this chart, which more or less starts just after I joined the company. So I started here in 1993, and this data goes back to 1995. I joined L'Oréal, in this country, when we were just crossing the threshold of USD 1 billion at that time. And the construction and I'd say, more than the construction, but the conquest of this market has been built in a few different ways. One is through acquisition and the second is through organic growth. And both have been critically important, and you can see above the bars, the years of the acquisition of each of these brands.

And I'm going to speak to you in a moment about the strategy behind that and the role that each of these played in the construction of the business in the U.S. But there were some pretty extraordinary thresholds. We passed the $10 billion mark 2 years ago, which was a big moment for us. And I think, signifies just the size, scale and stature of our business here in this country. We've grown every year with the exception of the 2 crises, the 2008, 2009 crisis and, of course, the global pandemic. Every other year, this subsidiary has grown and consistently, I'd say, over the long haul.

The brands that you see on the top are the brands that have been acquired in this country. Of course, we've acquired brands outside of the U.S. But the U.S. brands that have been acquired over these years is about 18 brands. And today, more or less that represents half of our sales. And that's important because to construct a business over all these years in the U.S. We knew we needed to have brands that were local, that were relevant known by U.S. consumers. We also knew that we needed to build scale. And in order to build scale, of course, we acquired some sizable businesses. We also acquired some very small businesses. And each one played an important role in how we built our growth. And this is what it looked like.

When we think back first about the makeup business. So the makeup business is an important category in the U.S. especially in the mass market. It's one of the most dynamic and fastest-growing categories, and it's driven by product innovation and creativity. At the time before the acquisition of Maybelline, we had a very small footprint, predominantly in the drug channel with the L'Oréal brand. But we knew we needed to step it up and build real scale and make up and also penetrate more deeply into the market. And this is the mass market we're talking about.

So the acquisition of Maybelline did that for us. You were in a Walmart store yesterday, at the time in the mid-'90s, we were not really present in Walmart, which was the fastest-growing retailer in America. Maybelline was a very strong brand in Walmart and much deeper roots across the Midwest and south and western part of the country much more so than we were at the time with L'Oréal Paris.

So we built our cosmetics business this way, including the acquisition of a factory that came with the Maybelline acquisition which is in North Little Rock, Arkansas, which is now one of the most, the largest, most efficient and productive and modern makeup factories that we have in the world. And this factory, of course, is helping us to continue to drive our growth. So we're able to step change our presence and make up. We added more brands after that and the mass market makeup like NYX Professional Makeup, which I'll talk about in a minute. But today, that's given us over a 33% share of the mass makeup market in the U.S. which is an extraordinary market, very dynamic market and one that really represents your ability to innovate. And of course, as you saw in our R&I facility, the ability to innovate is the core of who we are and what we do.

The second part of the conquest of the market was through the pro channel. So prior to the acquisition of Redken, around, it's debated, whether it's 1993 or 1994, but around that time. Prior to that, we had essentially 0 business in the professional channel. And as you know, our group was founded in the professional channel in France, over 100 and some-odd years ago. So it was really a point of importance for the group to be able to enter this market, but this market was very local, very fragmented. And it was difficult to gain distribution in this market because at the time, distributors were regional, small family-run companies and it was not easy to penetrate that market.

The acquisition of Redken became the moment to do that. It gave us not just a footprint in salons but it also gave us an understanding and know-how in the métier of the professional business in the U.S., which is an indirect business at the time versus the direct business, which was the European model. That was followed by Matrix in 2000. And with those 2 brands, which were at the time, the #1 and, let's say, the #3 or #4 brand in the market, we suddenly found ourselves with a very important market share in the professional business.

And as we grew those businesses over the years, it became very clear that the distribution model in the U.S., which was built on small regional distributors was not a sustainable model once you have an important market share because you rely on others to grow your business. And we knew we needed to change that and have direct connection with our customers. And you saw that in SalonCentric yesterday where we meet and greet our customers every day. And through the course of the years that followed through over a dozen acquisitions, the SalonCentric distribution network was born. And today, of course, SalonCentric, and you'll hear a lot more about it later on, is the #1 professional distribution network in the U.S. And of course, we are by far the #1 player in this channel.

The next conquest was professional skin care. At this time, we were in the skin care business, predominantly in luxury and a little bit in mass, but we didn't have a footprint in the professional arena. It became very clear that the most important connection between advanced scientific skin care and the consumer was through the doctor or through the esthetician. And there was an emerging channel called med spas at that time. which we didn't know too much about, but they were growing very fast. And we were introduced to this brand called SkinCeuticals, which was founded in Dallas, Texas. And we were inspired by the fact that they had really understood how to connect with the professional, the dermatologist, the esthetician and they knew this market of adjunctive therapy, meaning if you had a procedure in a esthetician's office or in the derm than what would be the product that go along with that. And how does the influence of the doctor influence the sales.

So SkinCeuticals was an important acquisition because it also step changed the size of our L'Oréal Dermatological Beauty division, which prior to that was really quite, quite, quite small. And that became the beginning of our adventure in professional skin care. And as you know, of course, we've acquired skin better science since then, and we've continued to grow that business, and I'll show you in a minute where that has all ended up.

The next strategic shift and move was what we call Indie makeup. So there was a moment in time in this country when makeup was big players, big brands, but all of a sudden, through the ingenuity of pioneers and entrepreneurs and some real visionaries, makeup brands began to emerge, and there was the notion of specialist companies in makeup. A few of them popped up in that era, predominantly coming from California. And we saw one of them, which was Urban Decay, and we felt that this was the perfect Indie makeup brand to add to our portfolio. That was around 2012 in the Prestige part of the market.

And then just a couple of years later, as we began to see more and more of this notion of influencers, driving the awareness and the growth of beauty and in particular, makeup we saw that the models were shifting from the mass advertising and media model to a much more advocacy-based model, and this allowed us the idea to bring NYX into the mass market portfolio and in 2015. And we learned very quickly that in fact, it was a very different business model than Maybelline or L'Oréal Paris. And today, of course, combined with our other 2 brands, we're by far the mass market and make up, thanks, also to NYX, which is today the fastest-growing makeup brand in the market.

And finally, as we understood as well, the strength and the importance of dermatological driven skin care and the importance of that connection with the physician, with the doctor and with the derm, we knew also that skin care was ready for an explosion in a much more accessible way, but also driven by the medical part of the category, and we identified the brand of CeraVe and made that acquisition as well in 2017.

And I think you know the story of CeraVe, it's one of the, I think, the more spectacular stories of how the L'Oréal Group has been able to acquire and scale a small brand into something that's now a global powerhouse and in fact, has become #1. So these 5 pillars of conquest helped us build the foundation of what is today our leadership across L'Oréal USA, but they weren't the only.

Beyond that, it was very clear as well that on the high end of the market, a lot of things were happening. Couture fashion was becoming more mainstream and more understood by more consumers. It started with ready-to-wear. But after that, of course, we all know that between celebrity and culture couture fashion became enormously desired and of course, couture beauty along with it. And through these licenses and these acquisitions from YSL, Valentino, Prada and now Miu Miu, we've been able to build a very successful and very important couture business, which has been important, especially as the economy has developed and we see the affluent consumer being really the powerhouse of growth not just in beauty, but in many cases across the U.S. economy.

And more recently, this groundswell and focus on health, well-being and this connection between beauty and holistic wellness self-care. And this, of course, was exponentially increased during the pandemic. We all know that. We watched people, think changing their beauty regimens, focusing on skin, focusing on holistic health and we identified Youth to the People, which at the time was a small brand, again, California launched brand, but the vegan brand, very much around ingredients and this notion of caring for yourself, the experience, the fragrance and how this has been put together in a health-driven positioning.

Skinbetter Science, which was also a brand that at that time in 2022 is very much connected to overall health and well-being through the physician and through the dermatologist and most recently, ESOP. And if you know the ESOP brand, it's all about experience, it's all about the holistic sense of beauty and how it makes you feel about yourself when you have these products, the fragrance experience, the packaging experience and of course, the shopping experience.

So these 7 areas built the foundation of our subsidiary and our success today. And of course, I think you know that this puts us in the #1 position in this market with 16% of the market, 2x bigger than the second. The real point is not so much being #1, which makes us feel good, but the fact that our size and scale give us permission to do a lot of things in this market. It affords us enormous resources to invest back in our business. You've seen, for example, the RNI facility yesterday, it allows us to be able to build our own future by designing our own product pipeline, it allows us enormous efficiency in supply chain. It gives us pricing power. It gives us leverage with customers, retail partners. And also, of course, it allows us much more opportunity because there's still 84% of the market that we do not have.

So we feel we're just at the beginning, even if, in fact, we are #1. But we're not just #1 in one particular sector. We're #1 across all of our divisions. Luxury, Consumer Products, Dermatological Beauty and Professional Products. Each of those, we hold the lead position although our market shares aren't necessarily the highest in the world in the luxury area where somewhere around 13%, consumer 17% or so.

L'Oréal Dermatological Beauty in what we described in the perimeter of brands that fit in that area, somewhere around 26% or so and Professional Products closer to 26%, 27%. So we have important market shares. We have lead market shares, but by no means do we feel we're at the end of the runway. In fact, more so we feel we're at the beginning. It's also a story of balance because each of our categories, in fact, which is comprised of all of our brands across all of our divisions help us have a balanced business as we see in beauty. There are times when skin care is experiencing explosive growth or maybe makeup or maybe fragrance. And in each case, we're allowed to benefit from that opportunity in many cases, even drive that opportunity.

So for us, the hair business is about 31% of our business and somewhere around 28% way to business in the market. So we're ever so slightly above the weight of the business in the market in hair. In skin care, it's 30% of our business and in the market, it's 37%. We've been very clear about our desire and our objective to grow our share of skin care, and we feel we're very well positioned to do that. And make up it's 26% of our business and 23% of the market. So pretty well aligned. But with our portfolio, it's normal that we have more we think, of course, we can go much, much, much further.

And fragrance, we're quite aligned with the market at 13%. And again, we know this is 1 of those fast-growing categories where more and more consumers are coming to the fragrance category. And of course, this is a great opportunity for us. So not only are we having a leadership position overall and a very well-balanced portfolio. But we also, thanks to our 37 brands, we also have a very important position by category, by brand.

So just to give you a sense of things, because we do like to be able to play the strength of the portfolio. It's a big part of the L'Oréal strategy. And in this country, it's critically important. So we have the #1 brand in Maybelline in makeup, the #3 brand in L'Oréal Paris, quite sure we'll probably have 1 and 2 at some point in the not-too-distant future. We also have a third brand in the top 10 with NYX Professional Makeup. So we're a leader with 34% of the market, but we also have 3 brands in the top 10 and lots and lots of headroom and opportunity to continue to grow.

In hair care, in fact, we have 3 of the top 5 between Redken, L'Oréal Paris and Garnier. If you just, for example, took e-commerce because we have a lot of strength in e-commerce, we'd have 4 of the top 5 and I think we have 6 of the top 10. So we see the strength of hair care, both premium hair care and mass hair care, and this has been an area of explosive growth for us this year as well.

In fragrance, we have 2 of the top 5, but what's astounding is YSL taking the #2 position, which happened, I think, last year. And you know the fragrance world is a competitive world with a lot of very well-known brands and to step in front of the #2 brand and become #2 ourselves with YSL was extraordinary. Valentino #5. And we have other brands following very quickly within the top 10, so in fragrance, also, we hold a lot of top market positions.

And in facial skin care, with CeraVe being #1, we also have La Roche-Posay and SkinCeuticals in the Top 5. And also in the Top 10, we have some other brands following. So even in the skin care category in facial skin care, we're very much present in the top of the market. And again, this allows us each brand to have scale. And the notion at L'Oréal that each brand builds its own destiny is very much true. And when you reach critical mass as a brand, of course, it allows you to reinvest in yourself to continue to gain market share and grow on the market.

So I'm going to shift gears for a moment and just speak overall about the U.S. beauty market and share a little bit about the market, not just in size, but sort of the factors that's driving its growth and how we see it. So we are fortunate to be in the biggest market in the world. This is BMS data, so this is sell-in data. So it's around just under $80 million or so, about 27% of the of the global beauty market growing around 5% or so. This is 2024 data.

And the second market, of course, as everyone knows, is China and so on and so forth. So we do have the privileged position of being in a very large and very robust and very dynamic market. And I think it's not shocking in a way that the U.S. is this way. I mean not only is it purchasing power because so much of the world's purchasing power lives here, but it's also a very consumer-driven market. And I think everybody knows that $7 out of every $10 within GDP of the U.S. is driven by consumer spending. And we know consumers in America like to spend, and we know as well they like to spend on beauty.

We're often asked about the growth of the market and whether this is a dynamic market and is this still a dynamic market. And the answer is very much so. It has always been a dynamic market and it still is a very dynamic market. If you look back in history, the CAGR between 2015 and 2019 was around 4%. Of course, the pandemic impacted that with a lot of store closures and everything else and it became slightly negative. Then it roared back after the pandemic for a couple of years, at around a 10% CAGR and then have since normalized around 4%, which is pretty much where it was before the pandemic.

And if you look back in history, it's really been the case for many, many years. Some years a little above, some years a little below. But by and large, it's been a market that grows consistently around this rate. And of course, as the leader in the market, we always refer to this as an offer-driven market, meaning the more you put into it, the more you'll get out. And we believe the larger we get, of course, we have the opportunity to stimulate this market as well. And there's a lot of factors that are helping this market become even more dynamic.

And of course, one of those is the explosion of social media and advocacy, which gives so many people of voice in a market that has a lot of passion and a lot of belief that this is a place that you want to be and you want to be a part of. It's also interesting to see how it compares to other categories outside of beauty completely. So this is data that comes from Circana, it's not a L'Oréal report. It's something that was published recently, and I think this is data through the third week in September or so. And it just shows a number of categories and the growth rates, both in value and in units and where beauty sits.

So within the box is mass beauty and prestige beauty, both growing at 4% in value and 2% and 3% in units. So these are only amongst 3 of all of these markets that have positive unit growth, which shows more consumers coming to the market, more consumers using these categories. And we sit in positions 3 and 4 relative to all these categories measured by Circana, which also tells us that within the overall retail business and the overall economy, beauty is a very, very important part of the growth and sits only behind, I think, video games and toys, which I guess one can understand maybe why and lots and lots and lots of other categories that are much slower growth.

This also tells us that for our retailers, whether you're an e-commerce platform or an omni-channel retailer that being successful in beauty and making an investment in beauty matters for your own growth, which gives us additional leverage as well as we speak with our retail partners. It's also, in fact, a moment of positivity. So depending on where you live in the world and which newspaper headlines you look at, sometimes you get an impression that the U.S. might be experiencing some kind of some clouds on the horizon. But in fact, it hasn't been the case at all.

Even underperforming retailers have recently reported pretty good news, whether it's Kohl's. Of course, Walmart, we know has been going from strength to strength over the last couple of quarters. Ulta in a turnaround moment, and I think they released their next quarter tomorrow. We see Sephora as well announced improvements in their trends. And Walgreens has gone private. So one of the biggest pharmacy chains in America is now controlled by private equity. And as a result of that, they're finally able to reinvest in inventory, reinvest in their stores and start to plan and build out their future, which is huge for us because, of course, we have a lot of brands in our consumer division in Walgreens, and it's much better to be in a situation where they're investing than disinvesting.

And CVS, which just reported a 12% growth in their health and wellness area. So by and large, even our retail partners are reporting pretty positive news. And we know the story of the market. I think we've shared that with you, but there was a very unusual Q1, driven very much by a lot of uncertainty, consumer uncertainty after our new administration took office, what would be immigration policy, what would be tariff policy. There was a lot of uncertainty and consumers sort of held back, but as soon as things became clear, of course, the market began to grow and around a 2% growth in Q2 and a 4% growth in Q3.

So again, we're back to this dynamism that we have always been at and this is the rate of growth at which we're running at. And our own growth has accelerated along with that, in fact, even more. So above the market in the first quarter, although not as dynamic as we're used to, coming back strongly in the second quarter and in the third quarter at plus 5% versus plus 4.

So dynamic growth on top of the market and an acceleration of the market. And I think this is really, really important because we have 17% of the market. So a fast-growing market and a fast-growing leader makes for a very good combination. And we feel excited and confident going into the fourth quarter, and we're all picking up here and there, the tidbits of news of how holiday starts and there's been a lot of reports on e-commerce, somewhere between 6% and 7% over the holiday, 5-day holiday periods, depending on how you measure it, they had record numbers of people in the stores, I think 10 million more shoppers over the 5-day period.

I read this morning and even us, we were able to grow our 5-day sales period between Thanksgiving and Cyber Monday, which was your first day here in New York in double digits. So we feel very strong that the positivity of holiday will halo as well on the rest of the year. And I think the holiday season in the U.S. will be somewhere around $1 trillion in sales. So the power of the American consumer to continue to drive the business is really extraordinary.

There's a few parts of our business that are really contributing to our momentum. The first is momentum in hair. So all things hair. And we've known that the consumer is more and more interested in the health of their hair, holistically taking care of themselves, treating their hair, treating their scalp, thinking about the benefits of hair care as a part of their total beauty regimen in new ways and ready to spend more money.

We have 6 of the top 10 brands. We have an explosion in prestige, we have absolutely a massive acceleration of our mass market brands led by L'Oréal Paris and extraordinary innovations like Glycolic Gloss. And we've entered new markets where we have 0 market share like medicalized hair care with CeraVe, which we've just started this adventure, and it starts super well. So we're both accelerating in prestige, way above the market, but a fast-growing market or accelerating in mass and we're entering new territories with huge growth trajectory with the CeraVe brand in medical skin care.

There's also the blooming of the fragrance market. We've watched this since the pandemic. It's been a high-growth market. And we have 2 levers of growth, which is helping us not just grow ahead of the market, but also gain market share, which is, of course, our icons, the brands -- the solid pillar brands that we've had in our portfolio where we've owned these licenses and we continue to grow them like Valentino, of course, which has the #1 fragrance #2 and #5 leading in men's, but also strong presence in women's and then rising stars. -- like Miu Miu and Miutine as well as product paradigm for men. So both icons, brands that are powerhouses in the fragrance world as well as rising stars, new innovations, new products. And the fragrance is very much about that.

Of course, this is the time of year of gifting, but we've been seeing this all year long, and we have a strength in men's and we also have an important strength in women's. And you'll hear a lot more about this later. The year was tricky in mass market makeup in the beginning of the year. I think we all felt this, there was some trepidation. But we saw -- we very quickly got past this with our innovation pipeline. I know you've heard an awful lot about the Beauty Stimulus plan, so I'm not going to repeat things you already know, other than to say that this is what happens when a company that's driven off of innovation brings the innovation that the consumer wants, supports it in powerful ways and you can see the acceleration in our mass market makeup. And again, this is off of a 34% market share. So we aren't talking about growth off of a small base.

We're talking about growth off of a large base. So it's very, very dynamic and exciting growth. And just to give you a sense of some of the things driving it. So we have the core, we all looked at the L'Oréal Paris setting spread in the store yesterday, and I think with a lot of excitement because this has become not just the #1 SKU within the Consumer division makeup portfolio, but the #1 setting spread on the markets. lots of great reasons why, and we'll talk a little bit about that. Fantastic innovation, products, must-have products that are talked about online, like some of the NYX products, the brow glue, liquid IV, these kinds of super viral products that consumers just can't get enough of.

And new products have been the lifeblood of NYX and it's why they're the fastest-growing brand in the mass market makeup. And then, of course, this connection to the consumer, which we call brand love. And we've spoken a bit about that over the last couple of days and our capability to connect our brands with our consumers and we'll show you a little bit of what we're doing with Maybelline and Miley Cyrus, which is interesting because you have the coming together of 2 generations. You have the people who are attached to Maybelline for a very long time. They might be millennials, they might be GenX. And then you have a superstar who's bringing in a bit of Gen Z and younger millennials to bring this Maven brand into the next generation.

So the story of growth is not over for us. I think it's -- we're just at the beginning. And our growth strategy is built off of a couple of strong pillars. First, it's our portfolio. We have the most powerful portfolio in beauty. It's undeniable that we have the best and most desired brands across all categories. We have dynamic and shifting channels and they're shifting in a way that positively influences our ability to reach more consumers, introduce more consumers to our brands and products and broaden our penetration across all consumer targets and that constant ability to connect with consumers.

How do we do that? How do we keep our brands relevant authentic and generating that kind of brand love that drives market share and drives growth. And all of this has to be done to keep us fit for the future. And the reason I say that is because this isn't just about 2026 or 2027, this is about building out our capabilities as a company so that we do this year in, year out. And we'll share that over the course of today so that you have a strong sense and confidence of our ability to keep doing this year in and year out.

So let's start with the portfolio. You know our brands, and we have 37 global brands. We have more brands on top of that are local. You can map them in many ways, but we've looked at this from sort of the more health-driven brands to more glamorous brands, from the most premium price to more accessible price points. And as you can see in this map, we cover all quadrants. You can debate whether it should be a few degrees to the left, right, up or down. But by and large, we have couture brands at the highest price points of the market, very glamorous, very desirable, attracting an affluent market, attracting a dynamic trend-driven consumer. We have very health-driven brands like La Roche-Posay even in hair care, Biolage of course, CeraVe, brands like Kiehl's, which are positioned very much on this idea of taking care of yourself, holistic health Youth to the People, which we spoke about.

We have price points that are more accessible for many consumers, Garnier, for example, which is in hair care and skin care and hair color, NYX Professional Makeup, who has price points -- entry price points between, let's say, $8 and $12 at L'Oréal Paris, which lives on the more premium side, the more glamorous side in the mass market. And then you have Thayers, which is much more in the healthy taking care of yourself side based on skin care, toners, cleansers, acne products and these kinds of things.

So all of this mapping demonstrates that we're in a great place to target the vast diversity of American consumers, across price, across positioning and the strength of this portfolio, I think, will help us continue to drive our business forward. You have to match that with the consumer of the U.S. today. which is the most diverse market in the world. I think we all know that.

We're fortunate to have a couple of younger generations that are obsessed by beauty. This was I don't want to say unexpected, but to watch Gen Alpha, lining up to go into a Sephora, doing Saturday birthday parties with their moms at Ulta. This kind of a thing bodes well for our future. I think we can feel excited unless you have a daughter who's 12 and you're worried about their allowance not being enough. I can tell you it won't be. These consumers are coming our way.

The spending power of the alphas is going to be over $5 trillion by 2030. Think about what that means for our business. Gen Z is the fastest-growing segment within beauty. The millennial are now entering that age when they need a lot of different kinds of products, more and more skin care, more and more hair care and the boomers that are sitting on top of an enormous amount of wealth and affluence and the ability to spend and there's going to be 10 million more boomers, women over the age of 55 in the years to come.

And the Hispanic market, which we all know it's not just the fastest growing, but bringing new needs, we saw the demonstration of what it means to create hair products for curly hair for naturally curly and coily hair. We see more mixed race, more brown skin, more darker hair bases. And then men coming to fragrance like we've never seen before coming to skin care, they're only 10% of beauty and of course, closer to half of the population. So an enormous opportunity for men as well.

So we see this American market, this enormous, exciting mosaic of people needs and of course, we have brands for each and every one of them, and we have a strategy and a way of targeting them and bringing them into our business. So just to share some examples, you have a brilliant Redken brand, which is the leading brand in the professional market. recently working with Sabrina Carpenter, who is beloved by Gen Z and some millennials as well.

It's an extraordinary effort to demonstrate how we can connect celebrity, brand and consumer to bring our brands to these younger consumers. We have brands like Maybelline with Miley Cyrus, who's sort of the icon and queen in the millennial generation on the younger side but also reintroducing the famous Maybelline Jingle, which we all know that's been iconic for decades and decades. We have the Hispanic consumer. So they kind of spokes people at brands like Miu Miu are using that are introducing our brands to this remarkable robust targets. Of course, boomers, Christiano is the most recent celebrity to work with the Lancôme brand, but there's many others, Kristin Davis with in cosmetics.

And why do I share these celebrities? Just to give you a sense of how iconic they are and how much they represent a generation and the importance of connecting those consumers with spokespeople that they both admire, value and understand and bring some identification to themselves. They see themselves in these people and of course, men. So YSL with a little bit more of the street culture, and this is Shai Alexander, who is, of course, an NBA star. And there's many others across the board. I think you've seen Ralph Lauren and Usher, who performed at Super Bowl not too long ago, Tom Holland with YSL. So all of this is to identify these consumer cohorts to connect them with our brands.

And the innovation has to do the same. So they're not separate things. The innovation that each brand brings has to also connect with these targets. And I think we're being more discrete than ever, more intentional than ever about designing our brands, our innovation pipeline and our marketing to be very targeted to be able to have the most complementary array of consumers that you can have to make sure that we're building growth in separate and distinct boulevards by brand and by target. So things like the brow glue for Gen Z, I mean this is extraordinary, how this has exploded and how Gen-Z is connected with their brand.

You see it across the board, YSL with the millennials with Make Me Blush, which is the most extraordinary compact and you have this in your hand and it's something that you just cherish and want to share with your friends, and you do that quite a bit on social media. You have the Hispanic consumer and brands like Garnier with hair color for dark basis, which allows women who start with dark brown or even black to become lighter and either light brown or even all the way to blond as possible. You have P-TIOX, which is like a BOTOX in a bottle for women who aren't quite ready for the needle, but want the same benefit as they could get and are coming to SkinCeuticals for products like P-TIOX. And of course, Ralph Lauren, in this case, Men's Club, which is attracting men across, frankly, more age groups than we ever imagined between millennials and of course, all the way through boomers.

So the innovation pipe matches the target connected to the brand and the portfolio, which allows us to build overall the most complementary business, and of course, in aggregate, the largest and fastest growing. I mentioned the channels, and we know that there's been a fundamental shift in the landscape, the retail landscape of America, as is the case probably around the world. E-commerce way back in 2019 was quite small.

Today, it's somewhere around 35% of the market. And who are the big players that are making this happen and how do we leverage them and work with them. Of course, we all know about Amazon, which is the giant in e-commerce and the most important one overall. You have TikTok shop, the fastest emerging reinventing social selling in the American way. You have Sephora, which is probably the most omni-channel retailer, which does such an amazing job balancing their online presence with their in-store presence with a very, very powerful loyalty club. And you have Walmart and walmart.com. And you saw in the store how they do fulfillment from the store and Walmart tells us.

And I think quite true. As you can imagine, they have 5,000 stores or said another way, 5,000 distribution centers will be able to deliver 90% of Americans same day. So the power of that to put products in the hands of consumers quickly, and also to have more immersive experiences online is very much what's a part of this. Of course, these are all important partners for us.

We're the #1 beauty player in most instances, and I'll share that with you in a moment. And beyond that, the innovation that's coming through these platforms is extraordinary. And I think we saw on the -- just Cyber Monday alone, and this isn't a beauty statistic, but it's a broad statistic. $9 billion of sales were done on Cyber Monday with agentic AI.

Six months ago or 9 months ago, there was no such thing. And already, the consumer is adopting these new tools to help them shop and to help them find the products they want, which plays enormously in our favor because our category is, of course, high interest to consumers. So our business, of course, reflects that same shift. We're now weighted about 26% of our business in e-commerce, growing at a CAGR of around 25%.

We still have 74% of our business in brick-and-mortar. A much lower CAGR in the mid-single digits, but super, super important. And I think you saw that when you were in the market. And we're accelerating in e-commerce. We're gaining market share in the first half and the third quarter were over twice the rate of growth of the market in e-commerce. So we're playing the e-commerce card in a very powerful way. And of course, it comes back to where we started, which is this notion of scale. -- and how do we leverage the resources of L'Oréal and our capabilities to drive this because this is very much a resource business is how do you prepare yourselves and arm yourselves with the capabilities to win on e-commerce, and it's a technology game. And so you have also to be strong in technology.

Across the various platforms, we hold very important positions in most cases, #1. So these are the major players, Amazon, Ulta, Target, Walmart and Sephora. By category, you can see in total, we're #1 everywhere, but we're #3 at Walmart, which is not surprising given the vast array of products they have.

In skin care, we're #1 everywhere, but Sephora make up everywhere, but Sephora, hair, we're #1 with the exempt to being #2 at Walmart, #3 at Target. And of course, fragrance, we're #1. So on each of these platforms, we're #1, in some cases, #2 or #3. Why is that? Because the ecosystem relies on a few different things. First, driving traffic, maximizing the ecosystem and the algorithm to bring consumers to your product detail pages and convert to sale, leveraging the relationships with these retailers, having the right immersive experience and the right content, so the ability to create dynamic content.

And just to contrast it with what life was like when I started in marketing where you created 2 or 3 pieces of communication just to launch a brand on Amazon takes 5,000 pieces of content, and that's just on day 1, which you have to refresh constantly, which we believe gives us an enormous advantage versus smaller players.

On the flip side, there's brick-and-mortar. And brick-and-mortar is a place which is still over 2/3 of our business very, very important. It's still where consumers come, connect with brands, discover. We do panel discussions with consumers all the time. And I was very surprised. We did a panel discussion with Gen Z guys. And their first favorite place to shop for beauty was in stores, which was exactly the opposite of what I might have expected to hear. Why? Because they like the experience of discovery because for them, there are novices on a lot of topics and this is a place that they can really learn and have that experience.

And we see in beauty, dedicated beauty retailers like Sephora and Ulta, which are helping to create this dynamic of the beauty market. stand-alone stores like Kiehl's or ESOP, and of course, big retailers like Walmart, Target, Walgreens, all of them creating beauty experiences. In every case, every retailer has identified beauty as a growth opportunity and a place to invest. And we see projects across all of our retailers to enhance, upgrade and bring new features to their beauty markets. And all of these retailers for the most part, are online and off-line. So they're creating synergies between the 2, which allows us as a major advertiser as well to leverage retail media to create the demand across brick-and-mortar and online. And we're very comfortable whether a consumer decides to buy 1 place or another.

For us, you can advertise on Amazon and sell a product in Walmart, that's okay. So we know the consumer's omni-channel and how you play omni-channel is very, very important. And there's a lot of different opportunities to do that. We create immersive exciting experiences online. We have a great way to connect with consumers on these platforms, Sephora being 1 of the most exciting. I mean, images like this content like this just extraordinary. And then you walk into the store and there you see it table top, front of store or on the gondola and this connection between online and offline creates dynamism excitement and allows us to really bring our products and our brands to life. And then connecting with consumers. So all of this is great, but you have, of course, to create relevancy, connection and brand love with your consumers.

The world, again, has changed awfully fast. And if there's one theme I'd like you to leave with is that L'Oréal has created, we think, the most advanced capabilities to be able to adapt to this new world. So not that long ago, it was the beginning of cookie-based advertising. Life was a little bit simple, a lot of Facebook and things evolve very quickly, precision media, retail media, we create our own capabilities to do our own biddable media in-house, both to be more efficient and also to be more reactive and more agile.

Then the emergence of TikTok very quickly hitting $100 million and now much, much more than that. content, the power of content and the need to create content constantly and then the need to reach the creators of this world. whether you're a YouTube creator, a tick-tock creator, Instagram, that these creators are advocates for our brands, and we need the ability to reach these people at scale, put products in their hands and help them want to support our products and do so in a very interesting and exciting way. So this is called the influence model, and this is today, the predominant way that we connect with our consumers. It starts with extraordinary creativity.

I think we spoke a lot about it, but we -- the reason why we talk about the Super Bowl campaign of 2 years ago with Michael Sarah and the CeraVe brand isn't necessarily because it was the Super Bowl. It's because the level of creativity to create a campaign that started well before the Super Bowl. By the way, the most important part came probably before the Super Bowl was the reveal. But the fun, the comedy, the connection to the brands and the creativity of that just demonstrates the kind of work that we do at L'Oréal across all of our brands. Working at the speed of culture.

We know culture comes from a couple of different places. I mean, we're lucky in the U.S. because culture moves fast, and you have to be connected to a few very clear places. You have to be with athletes and sports. You have to be in Hollywood. Those are the 2 places you need to be. We have a very coveted position of being very close proximity to both. We have a team in Los Angeles that works with Hollywood. We see things and properties coming from the studios before anybody else. So if we want to jump on something or be part of something, integrate it into something we can do that, you've seen us do some fun things with the Oscars and the Kiehl's brand as well as L'Oréal Paris and the setting spray. And then working with creators. It's remarkable the power that these creators have, the reach they have and the kind of numbers that they have following them and to be able to do this in an earned-first way.

And why earned first because it has to be authentic. So just to pay your way into it isn't any more the way to do it. You have to earn their love and gain their support. And when you do that, of course, remarkable things could happen. So with all of this, it leaves us, of course, looking toward the future in a very positive and optimistic way. We think we've built the capabilities to continue to grow, to continue to win, and we have enormous ambition. And of course, all of you know, L'Oréal pretty well. And if you know one thing about us, it's that we're ambitious. We are the current world leader in beauty, but we are building an ecosystem that makes us fit for the future.

There's a lot of technology within that and just to share a little bit about this notion of one L'Oréal, which you hear about, which is how do we harness the power of L'Oréal and our ability to leverage what's happening in technology transversely across the group. And in countries like the U.S., where, of course, it's the advent of AI and where things are moving and happening the fastest, how do we leverage that? And what does it really mean at the end of the day? What does it mean specifically for our business. So there's 3 areas where it's impacting us, and you had a great demonstration of that yesterday in AI-powered métiers in R&I, but it's also in the consumer journey itself.

I mean the reason why I wasn't at all surprised by the amount of sales done on Cyber Monday with the genetic AI is because how helpful and useful it is to personalize recommendations and how amazingly powerful it is when the shopping experience can be done with someone that knows you and knows what your needs are, what your history is, what your skin type is, what your hair texture is. So Beauty Genius from L'Oréal Paris is a great example of that. But it's also all of the AI tools that are sitting even on our retailer platforms.

Amazon, Walmart, they're using agentic AI to help you find the products that you want. And of course, if you are L'Oréal, you have the ability to make sure that you're usually in the recommended stream of products and brands that are served to you. AI-powered métiers is really how AI can help us within each vertical of our company, work better, work more creatively, work faster, work smarter. And you saw how quickly our R&I function has taken AI to help them both sort through fundamental research, reviewing raw materials, reviewing ingredients, understanding how they work together to create formula in a much faster way. iterating. So it was mentioned that it used to take several weeks to formulate a shade of lipstick. Now it takes several hours.

I'm quite sure in the not-too-distant future, it will be several minutes. And of course, we have better outcomes, faster outcomes by using AI in R&I. And maybe even most importantly, is how we, ourselves, as employees are augmented by AI, the way we work the speed at which we work, the efficiency at which we work and how AI is built into our everyday life. And we've spent an enormous amount of time at L'Oréal, upskilling our employees, making sure that AI is on our desktops that we -- it's part of the way we work. Building our own protected tools within the L'Oréal ecosystem and training and developing our people constantly.

And this augmented employee is very much a part of what we see is our role, especially as the leader in beauty and the fact that we want to do things in a way that allows us not just to compete with the biggest companies, which I think we're doing pretty well, but also compete with the smallest companies.

And finally, what I think is our sustainable competitive advantage. Without question, first and foremost, it's our people. We're a 115, 117-year old company. We've been learning about beauty for over a century. It's hard to imagine that there's anyone out there that knows more about beauty than we do. The team you're going to meet today, combined has easily 100 years of beauty experience, if not more. And the nuances of what it takes to win in beauty as a beauty pure player cannot be underestimated.

And I believe our people possess that, that ability, and we drive that sense of entrepreneurship, ownership and accountability all the time. It's a big part of what we do at L'Oréal and especially L'Oréal USA because we're a big subsidiary, so we hold many events. We have many ways to convey and transmit this culture, these values of L'Oréal that are about entrepreneurship, about creativity, about accountability, entrepreneurship and frankly, about winning which is that winning spirit of L'Oréal.

We have an incredible strength in our operational footprints, not just sourcing our own products here in the U.S. in our own ecosystem. Leverage of negotiation, the power of reactivity because let's face it, in beauty, you have sales spikes all the time. Things go viral, you have to be able to react that agility in our supply chain is there. We're a preferred partner to most of our suppliers, and we have capacity to continue to grow. And this is the most important thing.

And all of our footprints today, we have also, let's call it, a secondary footprint even outside of our zone where we can rely on any of the group factories, any of the group resources to support us as well. That strength in operations is also allowing us to continue to evolve our IT. And you know that in the middle of next year, L'Oréal U.S.A. will launch and go on the next SAP platform, which will be another immense move towards simplification and modernization of our IT infrastructure. And that leads us to this digital innovation and technology.

We see the things we're doing in Beauty Tech. We know that as a company and as an industry, technology is enabling ourselves, not just the way we work, but also our consumers. It's creating new opportunities and new capabilities all the time. And in the digital space, in particular, to be able to create 5,000 assets to launch a brand on Amazon isn't going to happen in an art studio with an agency doing them by hand. It's happening with AI, and it could be done very quickly.

So the cost per piece of content is dropping dramatically, which is allowing us to be more effective, more efficient and frankly, more impactful. Tools like Bed IQ, which you've heard about, which is now -- we're running almost 80% of our A&P through this tool to help us be more efficient, gain better ROI and take those kinds of savings and reinvest it in growth, which is fundamentally our model.

So these areas, these pillars are giving us a sustainable competitive advantage. It's the best thing to sort of build a moat around what we do. But more important than that, it's keeping us fit to compete for, I think, is the next 10 years. And I do believe that from our relatively modest share of the beauty market in the U.S. today, we have enormous potential to grow.

I'm not going to say what that number will be in the second bar, but it's definitely going to be a nice big number. And I'm quite sure over the coming years, we're going to surpass 20% share of market in one day 25% and why not 30% at some point. So we see enormous potential in this country, in this very dynamic, very diverse market, where we're very unable to win, and we're very optimistic about what the world is going to look like for us in beauty in the years to come.

So I want to thank you for listening to this presentation, and I think we're going to be able to do a Q&A session at this point.

I hope that you can see us and hear us well, and we'll project even if we're wearing these great microphones to make sure that nothing is missed. So let's get started.

Okay. From my side, I'm pretty happy to be here in the U.S. I'm very happy to welcome all of you here in this market, which is, as you know, the biggest market worldwide and of course, the biggest also subsidiary of L'Oréal USA. It is quite unusual because usually, I'm the one asking questions to David. And today is the contrary. So I will do my best to answer your questions regarding, I think, most of the questions that you have in your mind.

Great. I like the role reversal. So the first question, and I think this is 1 on everybody's mind because we hear this a lot is, "considering the current state of consumer health and spending, do you expect overall beauty market to deviate from the previously projected plus 4% in 2026 and the medium term? If so, what factors might influence this change, e.g. categories, markets, et cetera?"

Okay. First, when I look at how the market has been in 2025, what we have been seeing is, of course, a gradual acceleration. And that's important because we started with a very soft Q1 and then the next quarters have been more dynamic, and we hope that the first quarter should be even more dynamic with the high season starting very soon.

Of course, we are finishing right now the Black Friday and the Cyber Monday is just today, but we are still in front of us the big Christmas period, which is always quite important for our business.

Now regarding 2026, of course, it's by far too early to say anything about what could be the market next year, but at least this gradual increase of the market, may lead probably at an exit rate in Q4 at around 4%, maybe a little bit more, which is quite interesting because is the kind of growth that we have seen in the long-term beauty market at least the worldwide growth.

And right now, we have some positive signs coming from all the regions. First, because U.S. and China have been accelerating recently. And since the very start of the year, it has been quite steadily improving quarter-after-quarter and the latest news we have both from the U.S., but also for China, post [ 11/11 ] are quite encouraging. Europe is still robust with the growth that is above the pre-COVID level. So that's always a very positive sign when we think in terms of health of the market. And last, of course, emerging that are still driving the growth. [indiscernible] MENA is still at a quite high level of growth. Latin America, as you know, has been a bit decelerating, but it's still far above the growth that we see in Western markets.

Then when I look a bit further, so when I think in terms of what are the long-term drivers, I think that, first of all, the emerging markets will be a key driver for growth, this is for sure because we still have in front of us, middle classes that will increase quite significantly in big economies like, of course, India, but that's not the only one. We've seen, for example, recently that the perspective of Gulf countries are very interesting as well and with very high growth.

And all this is driven with the addition of new young consumers that are extremely digital, and they still demonstrate a very high appetite on beauty. And whenever we look at key indicators like the size of beauty comments in YouTube is still proving that the appetite is there. And even in the U.S., this country, we consider U.S. as a growing country because we still see new consumers joining -- population is increasing, but also the new generation, Gen Z and now Gen Alpha, they are even more appetite for our beauty products.

And as for the category, it's very difficult to do predictions. And I think that you will be showing to all of you a very interesting chart showing the how the different categories have been evolving year after year, and it's very unpredictable. But the good news is that in a group like L'Oreal, a very multipolar model. We are in all categories, in all regions. So we are capable to grasp those opportunities. If tomorrow it's makeup, we are fully loaded in the U.S. If it's fragrance, we have all the weapons to grasp the growth. And in any case, for the long term, what is sure is that skin care because, as you know, is the bigger category worldwide and also at L'Oreal, nearly 40% will still be a key driver for sustainable growth is for sure.

And I know the comment on categories within the question is an important one. And I don't know, Christophe, if you think about the world today, there are markets that have a booming, let's say, age 50-plus consumer end markets that are predictably youthful. Do you have any thoughts on how the world evolves in terms of differences in those markets and how that plays into the dynamism of the PB business?

Well, what we've seen at least is that, of course, each region has its own strength. We know that fragrances are biggest share in Europe. We know that in the U.S., it has been mainly a makeup driving in terms of size in the market. And of course, in Asia is absolutely skin care. But what is interesting is that we have some long-term trends. We would probably speak later about fragrances. And we see that the appetite for fragrance is not only something that is specific to 1 or 2 regions, it is visible also in Asia, and that's pretty new.

The same for the premium hair care. It's something that we've tested with our Consumer Product division in geographies like Brazil and the learning from this market is that the appetite from consumers into more premium hair care with addition in terms of innovation, is something that, in all geographies, we can grasp more value. And we've been very successful in rolling those innovation into all the geographies.

Something I read actually I think it was just this morning, you mentioned fragrance, but Couture, and you mentioned the U.S. being a growth country. But in the world of Couture to actually qualify the United States as a developing country, because they consider that -- and I'm speaking about the fashion, but they consider the U.S. consumer to be emerging in this world of embracing fashion in the way that maybe Europe had done some time ago.

And you give me the opportunity to remind something very important when it comes to luxury. You know that the biggest part of the African consumers are here in this market. And when you look at the growth of the Luxe business in the long period, so over the last 10 years, 60% of the growth has been generating in euro terms in this country. So that's also very important to keep in mind, those -- where the business is, and we speak about consumers, that's important. But what is important, equally is the value, where is the value? And that's why we will keep, of course, investing into this very strategic market because this is a market of affluent consumers in hard currency.

I feel some added pressure.

No pressure.

So I'm going to move to the next one. Christophe, what do you consider to be the biggest transformation in the beauty industry over the past 5 years? And looking ahead, what do you predict will be the most significant change in the next 5 years. That's not an easy one.

Okay. Definitely, I strongly believe that the biggest transformation that we've seen in the past 5 years is, of course, the importance and the increasing importance of digital as a whole, and more specifically, the e-commerce when it comes to the sales. And this is a long-term trend. It's not new because it started already many years ago in -- mainly in China. But since e-commerce has been grasping share in the Beauty business every single year. And it's something that we see in all countries across all the regions and still today. Now when we look at some specific countries and we see the size of e-commerce within the total beauty, we can easily predict that this long-term trend will still be visible and including in very mature markets like, I don't know, the U.S. and then Western brands -- Western countries is still the same. So it's not only about e-commerce, it's about the digital because everything starts with the way you activate consumers.

And there, this is a dramatic change. And that's probably where L'Oreal has been at the edge of those technologies. And still today, I can tell you that the biggest [ chunk ] of our of growth is generated, thanks to the e-commerce, proving that we are still at the edge when it comes to how to activate consumers. The game now is much more sophisticated because you have a very different nature of e-commerce platform come from e-commerce, social platform, quick commerce.

So there's a long string of innovations by the way, that are still coming into the market. And every time our teams have been extremely sharp in identifying those new -- those new techniques and investing into them to make sure that we can lead and keep the edge that we have. Latest 1 being, for example, the social network with platforms like TikTok and it's always a new game with new algorithm and therefore, mastering those new platform is critical for us to keep ahead of the pack.

When I look ahead, let's say, for the next 5 years, for me, the most significant change will probably be the deeper integration between science and the technology. And this forward for a more personalized beauty solutions. We are entering an era of drastic changes. I mean, I think we all can acknowledge that technologies is moving and innovation is moving extremely fast, probably every day a bit faster.

And this gives, of course, on one side, a lot of challenges, but many opportunities for the future. And that's what our teams are trying now to catch because I do believe that in that new game, the strength of L'Oréal is even bigger because it's all -- it will be a lot about AI. And if you want to be strong with AI, you need data.

And if there is 1 beauty group that has a considerable amount of data, still bringing every day a little bit more, it's L'Oreal Group. And that's why we have been able and probably will come back to this point later. But internally, we are developing tools that are for me, state-of-the-art today that are -- that will influence a lot the way we operate inside but also the way we activate consumers because that's extremely important. And besides AI and data, it's, of course, the new frontier of the longevity. You know that the number of people over 60 will dramatically increase in the coming years.

I think we're speaking about an addition of 250 million people that will fall into this range. And it is clear today that life expectancy will increase. People want to be in a good shape for the long term, and this comes with, of course, new products to cope with those requests. So we'll keep invest, you know, in making all that stronger, therefore, powering of AI with this data and keep investing in research to catch those innovation coming in this field of longevity.

Okay. Well, I think you answered the question inside the question, which was L'Oréal's readiness take on the world that is going to form over the coming 5 years. And I would only add one point, which is the data piece is -- the data governance is so important in the whole scheme of how you prepare to leverage AI. And I think the group embarked on the data revolution pretty early on. So all these years later, we're either very smart or very lucky or both, but we're in the right place.

No, that's important. I want to stress it because, of course, those are things that are not visible from the outside. But there is a true governance of data inside the group. It is extremely well structured. It's a team of more than 800 people in the group. So it's a big amount of people. And of course, within this data team, you will find all the different [indiscernible]. So it starts with those in charge of structuring the data, those in charge of working analytics and I think that here, one of the key countries mastering the game is the U.S., by the way. And I'm sure that part of the presentation in the coming days will be to show the output of this know-how.

So shifting gears a little bit. Many of our major competitors are facing challenges to consistently deliver strong growth. What are the strategies and safeguards that allow L'Oreal to maintain its growth trajectory? And could you shed some light on which competitors have managed to gain share from L'Oreal. And what factors do you believe contributed to that shift?

Well, first, what I can tell is that L'Oreal growth strategies and sales growth have been built already a long time ago. So this is a group that was born more than 1 century ago, and it's for many years, we've been showing and proving that we have what is needed to keep gaining market share and grow. So first and probably foremost in the demonstration is, of course, the growth mindset. We speak a lot about product, we speak about technology. But at the end, behind everything we do, it's about people and developing a strong culture. And I think that if there is something that needs to be more [indiscernible] is this mindset, this competition mindset, this growth mindset of the people at L'Oreal. It's really embedded into the way to operate. You will have the opportunity to discuss with some of our managers. And you will see that when you look at their eyes, when they look at the spirit, they operate, it's a lot about I want to win the battle.

I'm in charge of the brand. I want to win the battle in my own territory. I -- in this category, I want to win the battle. And many of us, at least those that have been for a while in at L'Oreal, and you know pretty well. We've been educated in that spirit. We love competition. And this is extremely important to understand the strength of our results.

At the center of this ambition of growth, of course, we have the model of L'Oreal, which is a multipolar model, and that makes also the group extremely resilient. I won't come back too much on this point because I think you all know that L'Oreal is present in all categories, in all channels, in all regions. And that's very important because whatever happens in 1 of those regions, categories, et cetera, we are capable to offset. So the road is bumpy. And every time there is a bump, we are capable to compensate to mitigate weakness in a region with strength in another one, a weakness in a category with the strength in other one.

And therefore, capable to produce what is our objective is a sustainable and profitable growth for the long term. And I think that it's difficult to see L'Oreal failing, achieving the growth, both on the top line and the bottom line, and that's our commitment for ourselves first, but of course, for the investors. To ensure this model, what is very important also is to understand that you need on 1 side to leverage the strength of a big group that is developing more than USD 50 billion in sales. But at the same time, to keep this agility, this entrepreneurial spirit. And this is also quite visible within the group because at the end, when you look at the portfolio of our brands, you will see many small brands with a very strong entrepreneurial spirit because they need to survive and they need to gain market share also.

And then we have, on top of that, of course, then this you know pretty well, this incredible portfolio of more than 30 international brands, 37 as of today. We have, as you know, the power of our research and innovation that is in size in volume of spend 3x bigger than the next 3 competitors so that's why we are capable also to invest in understanding what will be the beauty, not tomorrow, but in 5, 10, 20 years from now. That's very useful as well.

And something that you know pretty well also is that to achieve all that, we have the strength of our financials with a strong balance sheet, with a model in terms of a P&L that is extremely future proof for investors.

And there was a part about market share, Christophe, which we obsess about here and there, as you know, and today, I think when you think about, by and large, the large groups out there or not, the smaller companies and the upstarts as well, do you have a sense where we're winning, where we're losing, and if there's a particular place of strength or of opportunity.

But first, I'm -- let's be fact-based when I look at the growth of L'Oreal. So at the end of September, the growth in adjusted was at 3.7% in a market that is lower than that. And when I look because now it's public information. When I look the result of the top 30 competitors at these those that are listed I see a growth of plus 0.6%, excluding L'Oreal. So meaning that at least on average, compared to all the big competitors, we are doing much better. So the fact is that, of course, there are some other players and probably much smaller, the [ indie ] brands, for example, their territory is mainly on the e-commerce.

Of course, they are surfing on a market that is growing. And this is extremely important because those brands are also bringing all the innovation that we see or at least part of it in all key markets. So what we need is, of course, to be ahead of the pack for the big players, but being agile as well to compete with those indie brands.

So that's the difficulty of today was probably is to manage this complexity of being strong among the strong but being strong also among the very agile and very small players.

All right. So turning to some geographies. This particular question seems to be about the U.S. So in the U.S., what drove the discrepancy between adjusted sell-in and sell-out in the third quarter. Are you confident that the steady recovery we have seen since the start of this year will continue.

Okay. So I just want to remind, first, one thing is that when it comes to the reading of our results, it's very important not to focus too much on 1 single quarter. It's very important to look at the growth on a cumulative basis, even more in this period where L'Oreal is facing a big IT transformation. So it's a bit difficult because sometimes the reading of the figures is a bit more complicated than before. That's why probably we need to keep bringing more explanation because we've been a lot speaking about the transformation of our key IT platform.

So moving into the SAP4/HANA SAP from 20 platform in only one. So it's a major change management within the group. That's the key battle today in terms of IT transformation. But the truth is not the only one. Just we'll share with you 1 concrete example is that a prerequisite for implementation of this new SAP is the change of the warehouse management system in all our [indiscernible] around the world. So that makes it's another layer of complexities.

You will be launching -- I mean the go-live of SAP in the U.S., for example, is next year in first half. But the truth is that you have been already facing here in the U.S., right, the implementation of this new warehouse system in your different leases. So it has been impacting your business on a monthly basis this year and next year, again, with this big project called [ NEO ].

Now coming back to the figures. First, what I see over the different period is a market that is growing. The market, I think, is a bit more than plus 2%. And it has been steadily accelerating over the quarters. If I'm not wrong, the first quarter was flat, then the second quarter should show a plus 2%. The third is that plus 4%. And I think we still see a further acceleration in the last quarter and proving that the market is catching up. So that's very healthy. And when it comes to L'Oreal, on 1 side, we have a sell-in at the end of this period, 9 months that is growing at plus 3%, which is 1.5x the growth of the market.

And we've seen all divisions outperforming their own market. So congratulations, David, and even more visible in the Consumer Product division, which I do believe that, frankly speaking, the overperformance has been really incredible. So congrats to those teams.

And when I look at the same time, the sellout, so really the real consumption, if I'm not wrong, the sellout is at plus 3%, so perfectly aligned with the sell-in. And if there are some questions, I want to say that today, there is no inventory issue in the U.S., okay? This is something that we monitor every single month by division, by key player. So no issue for that. And then as for the rest of the year, well, we will see. The market expects to remain quite robust.

Also, as I said before, there are still some big events that are quite important, the holiday season. But usually, it's mainly towards some specific categories like fragrances where, as you know, we are strongly overperforming. So I'm quite reassured for the last months of the year. And what I expect, of course, on L'Oreal USA is to overperform the market, but no pressure, David.

Thank you, Christophe. I mean, there's the terminology we often hear is this question of recovery, but I would just maybe remind that the first quarter in the U.S. was the new administration when they took office at that time. And there was a lot of, I'd say, confusion in the market and particularly amongst consumers, especially around immigration policy around tariffs, around inflation and -- so it was not a typical quarter. That's for sure. And the acceleration from that quarter has been, I think, rather extraordinary. And I think I'll share more specific numbers tomorrow, so I don't want to spoil things, but it gets even better as the quarters go on, which I think is a good sign. I also saw the figures. These are broad holiday figures, but Black Friday e-commerce was plus 9%, 10% in the U.S. Cyber Monday around [ 6% ] so far, and it's only 06:00. So I know my wife is going to be shopping for another 6 hours. So a lot more business to be done.

And I think despite the fact that we read a lot of headlines about the consumer one or another, she continues to be interested in buying products and in particular, made products. So if we could flip to the other side of the world, China which I know a lot less about. So this 1 is going to be on You.

And we have the exact same question, is the gradual acceleration since the start of the year sustainable and a sign of a broader recovery, has 11/11 been in line with this trend of recovery. What will it take for CPD to start outperforming the market in China?

Okay. So as I said before, what we've seen in China is quite positive because after a difficult second half last year, we've seen steadily the market increasing, gaining strength quarter-after-quarter. And especially on the third quarter, we estimate the market growing at around 3%. So for me, it's a very positive sign because it proves that this market is back on track. We are still very prudent because things can turn very quickly. But at least, it's a very positive sign. We are, of course, cautious but very optimistic for the end of the year also because as you rightly remind us, 11/11 now is finished. So we know how things have been moving. And the reaction to this very important promotional activity was pretty good. The total gross -- the GMV, as we said, has been up slightly, so confirming that the conditions are easing in China. And what is, of course, extremely important for us is that L'Oreal once again, have been overperforming the market. So big kudos to our teams there because our brands have been doing extremely well with L'Oreal Paris, of course, leading the market, but then we have 3 brands in the top 5 because Lancome and Skinceuticals are, respectively [ 3rd and 5 ], so they've been gaining on rank as well. So good performance for 11/11.

Now [indiscernible] that CPD has been slightly underperforming in this market. The competition is very fierce. But at the end, I always remind that, in our view, competition is even more complicated in markets like the U.S. or Japan. But it's true that local brands have been gaining, I will say, in different aspects of the business. They are more innovative than before. So it proves that we are still to keep agile to bring more innovation and to be very relevant in the Chinese market. Also because -- the market has been moving slightly with new players doing still gaining traction in China and particularly trying to activate consumers that are in the Tier 3, 4 and 5 cities.

But the truth, when I look at the result of 11/11, something has changed because I've seen the selective brands, the luxury market growing much faster than the mass market. Mass market, we estimate that the 11/11 operation was flat. And what we have seen is, for example, some Chinese competitor that we're gaining market share have been losing traction during 11/11. So proving that the game is not over. So what needs now to be done for CPD is first alignment of the distribution, so expand on doing because that's today a channel where you need to be and you need to win if you want to be at the top of the game.

Second is bring more innovation and faster. There's an issue of speed that we are coping now with a recent decision that we decided to put a new innovation center in China. So it will be a Chinese innovation center for China first, but probably also for the rest of the world. Something like we did probably a little bit less than 10 years ago with Korea. So the second biggest Chinese innovation center will be now based in Shanghai. And of course, bring a solid pipe of innovation, but I know that the teams in CPD, they have a new set of weapons in terms of innovation.

I will not release the future product, but the division is well equipped to keep winning the battles in China, this is for sure.

Okay. All right. So we're going to stay in that part of the world because I'm sure there's more curiosity. So thinking about the longer term in China, what do you see as the sustainable market growth over the next 5 to 10 years? And what will be driving that? And at the same time, where do you see the main white spaces for the group, especially when it comes to the city tiers that you just mentioned. And can we support that with our operations and supply chain as those second, third, fourth, fifth tier cities come on board?

Okay. Well, of course, nobody has a crystal ball and it's very difficult to assess what will be the growth at least short term in China. Still, we've been saying and claiming that for a while, and we still believe that the next China is still China because of the size of the market basically. And because we know that today, we are -- there are key drivers for the long-term growth. So I don't know if it will be visible as soon as in 1 year or 2 or 5 from now, but we know that the middle class is still emerging.

So there are probably around 160 million people that will join the pool of people that can buy our brands. And this by 2030. So 2030 is in 5 years from now, 160 million that should be able to buy 1 of our products. And the second important point is that probably China is one of the most knowledgeable market. So the consumer really love beauty. And they are more and more educated and this plays to our strength because when you have a stronger research, strong innovation and those capabilities, it means that they are very receptive when you bring the right innovation with the relevant brands.

We still believe that, of course, there are some white spaces because today, we reach probably -- not probably, though we have quite precise estimate, but a little bit less than 100 million in this pool of 400 million. So today, we are reaching just 25% of the addressable market. And within that EUR 100 million, we are reaching only 20 million when it comes to our Luxe division.

So there's a lot to do because we are just rolling out some of the recent acquisitions. As you know, there are new acquisitions also to come. So definitely, we have a lot of consumers now to attract on the -- in the coming 5 years in China. When it comes to the readiness of our supply chain. Here, definitely, we are the, by far, the strongest player in China. We have strong capabilities on the industrial side and the network of distribution centers and warehouses with lately the state-of-the-art when it comes to distribution.

We have invested into a new facility, a new fulfillment center in Suzhou. We opened it in those fully automated logistics centers that can cope with a huge increase of volumes. Lately, we just finished 11/11, I think we have now more shipped more than 20 million parcels in a couple of weeks. And if you don't have those logistics capabilities, it's very difficult to win. So on the supply chain, we are fully ready, is for sure.

And on top of that, we are investing for the future because through bold, we have been investing through 2 funds. We have one that is called [indiscernible] and another one that is our [ Bold ] venture capital arm. We are also investing, so with minority shares in different parts of this very dynamic ecosystem of beauty in China. So it's not only brand like fragrance brands, but also, we have investing in some ingredients company.

So there is a start-up ecosystem today in China that is extremely active. And this is part of the strength also for the long-term development in China.

Okay. All right. So we're going to shift gears to the divisions and start with the professional division. The question is professional hair care has been an exceptionally strong category for L'Oreal. Very significantly boosting overall performances. How much of this growth comes from L'Oreal specific initiatives versus broader market trends? And how sustainable is that?

Well, first, regarding the growth drivers, I think it's both. So of course, it's L'Oréal initiatives on one side, but also new broader market trends that have been, of course, important for this strong growth in this division.

So let's start with the market trends. First, we see that there has been an increased scrutiny and interest from a consumer, and this is quite broad-based on hair. So to make it simple, our Professional Products division is acting on hair on one side and the color on the other side. And if there is a market that has been really extremely dynamic, it's a worldwide trend, it is hair care. It has been driven by premiumization of the market. And this premiumization has been to be very honest, mainly driven by our brands. This is really something that you see in PPD through the marketing and the strength of the brand name Kerastase. It's true everywhere, and the growth has been quite extraordinary also in the U.S., by the way.

And as I was saying before, it's not specific to PPD. It has been also driven by our Consumer division with brands like L'Oreal. Second is is more focused from those consumers whatever the regions on the hair and the scalp. And the hair style also has been changing. What we observe is a longer hair styles, so of course, longer hair means more shampoo every time you take a shower. And also a market that is complexifying because if I take just this market, you know that the ethnic groups in many countries are evolving very quickly.

So if I take the U.S., for example, the share of Latinos is increasing, and those consumers are more into makeup, but also hair and fragrances. And the type of hair has been also -- so meaning that we have plenty of new segments that we are today addressing and probably with less focus in the past.

And coming to our own initiatives, it's true that PPD, I won't list all of them, but you know perfectly well that we have a strong portfolio. We are even complementing this portfolio with the recent acquisition of [indiscernible] that will respond to this premiumization trend and very strong innovations. Kerastase, for example, the success of our Kerastase [indiscernible] absolutely has been incredible here in the U.S., but also in China, so in all big geographies. And something that has been at the heart of the strategy of the division is this omnichannel strategy. So the success of PPD has been also the capability to shift part of the focus, not only in hair salons, but also into the e-commerce world. And today, just for information, 38% of the sales of PPD is done in e-com, huge. So that's all. I think those are the key drivers of the success of the division.

Yes. Maybe I'll augment one point you made, which is the last part of the question was how sustainable is it? And I think you commented earlier on the generations on the interest of the consumer and all things, hair and all things scalp. I'd just add one further point and maybe in particular for the U.S., but the sustainability also comes from the powerful network of hair dressers, hair salons and the ability to activate our brands and products through those very influential people, which is in and of itself an engine of perpetual growth when it comes to the introduction of innovation and products [indiscernible] and helping consumers engaged.

I don't want to spoil the presentation that you will see tomorrow, but if there is a market that has been really truly visionary in mastering the art of catching the big shift of distribution, the way the market operates in the U.S. is the Professional Product Division with [indiscernible] on one side, but also with the e-commerce on the other side. I don't say it much more because you will have the head of the division showing what they've been able to do in this market.

So another question on also linked a bit to categories and divisions as fragrances. So the observation of the question is fragrances appeared to be slowing, although L'Oreal continues to see strong growth, where do you see fragrance growth in the midterm?

Well, I know that many of you have been raising the question many times in the past. So I don't want to be too detailed, but this is a success story that is incredible because it has been growing double digit for many -- for years, many years now. Probably today is a bit decelerating, but it's still one of the fastest-growing category that we have in beauty. So I think that in that field, L'Oreal performance has been quite incredible because we are growing at twice the speed of the market. And this is supported, as you know, but one-of-a-kind portfolio of brands.

That, as you know, we are continuing to develop and to build. What we observe is within the different brands, the Coutu brand have been extremely agile to catch this growth. And the stellar growth of brands like Prada, Valentino or even [indiscernible] Laurent are there to prove this trend. And as Cyril has been demonstrated, Cyril is the head of our Luxury division. I don't know some of you probably attended the Toll Beauty that he did last week, but definitely, all the launches that the division has been putting on the market recently has been an extraordinary hit. So here, I'm sure you see already the shops, the new fragrance of [indiscernible] or the new fragrance from [indiscernible], and they are all doing very good start.

And I'm sure that this will be very visible during the holiday season. And for the [indiscernible] potential, it's still huge because this is a category that is still largely underpenetrated compared to other categories. We have new consumer courts joining the pool of consumers, mainly from the very young generation. The Gen alpha are very avid of fragrances. And something that is also now pretty visible is the rise of this category in not only in emerging markets but mainly in Asia, mainly in North Asia, that's quite new because to see Chinese going in a dedicated boutique to buy fragrances.

This is quite new, and we believe it will be a sustainable growth driver on the long term.

It's obvious, I think, for those of us here that most of these fragrance products are coming from Europe. Any thoughts or observations on how we continue to manage that from a standpoint of tariffs, pricing, anything else that might impact the fragrance business.

Well, this is a headwind, of course. But for the time being, we are able to mitigate the risk. So it comes with, of course, the pricing power and therefore, putting a small price increase whenever is necessary to cope with that. For the time being, it's a headwind, but it's still manageable, okay? And despite those tariffs, for example, that impact our business here in the U.S., and in terms of cost. For the time being, still, we have decided to keep the production in France because the productivity gain that we can keep having in our factories can cope with this headwind.

So shifting to the stimulus plan -- the beauty stimulus plan. The question is, can you give us an update on the Beauty stimulus plan? And what did we learn from it in 2025? And will the 2026 vintage of the Beauty stimulus plan be similar in terms of growth contribution.

So stimulus plans means what? It means that -- and it's a very important decision that we took at the end of 2024. When we understood that the market will become more there was a need to activate the market. It was obvious that we needed to bring more innovation, more launches, more new into the market. So all brands, all divisions have been working to accelerate the risk of launches. And so this was -- the objective was really to wake up the market. I have to say, thanks God, we did it because we have been measuring the impact in the growth of each of our quarter. So steadily improving the growth and the last one, Q4, I think, will be even stronger. And that's, thanks to the launches that we did this year. So I think this is not a one-off.

So definitely, we will do the same in 2026. And I think the objective is even to do better in terms of launches. As you know, it's not equally distributed by category because some categories, they need even more launches. I'm thinking about makeup or even fragrances, probably not as much in skin care, but still, that's probably a new -- yes, new metrics that we are following in a much more detailed way by country, by division, by brand. So I think it's crucial in today the landscape of beauty.

So I take away that 2026 vintage will be as good as 2025 if not better. That's my reading.

At least the pipeline, we have Alexis, the Head of Consumer Division with us here, and he will confirm to you that in this division, there is a very solid plan for 2026, stronger than the one in 2025. And believe me, it's the case in all divisions. It's good news.

Let's speak a little bit about channels and channel strategy. We know channels have been evolving and changing pretty dynamically in the last years, and you already asked the question about that. But how is the significant channel shift impacting the business, i.e., Amazon, [indiscernible]? Often some of these are considered lower-margin channels, but faster growing. Is there a gross margin impact and are we actively gaining market share online?

It's a good question because when you look at the evolution of beauty, actually, the evolution of beauty is the evolution of our channels. When you look back 30 years ago, look how much the business has been disrupted by those new channels emerging moving from department stores, for example, here in the U.S., into specialty stores and now into the online. And this has happened just in the last 20 years. So the change has been really dramatic. And I come back to what I was commenting before is that, for example, a group like L'Oreal, today, we're approaching our e-com business is approaching 30% of our global sales -- 30%, it's a use. It's massive.

And the model of L'Oreal has been always very simple: We want to be where the consumers want to buy. So if the consumer is willing to buy more on e-commerce, we'll follow the consumer. We are quite agnostic. We are a strong belief is that the model is -- the winning model is the [indiscernible] model. So we need to have a strong off-line together with a strong online and having a well-aligned strategy between those 2 big channels. And that's why -- over the past few years, we have been investing in both of them, but of course, following the trend of this increasing weight of e-commerce. It allows us to reach more consumers. in a faster way. And this is even more important when you want to be a winner in emerging markets.

In all emerging markets, we see the weight of e-commerce increasing much faster than in mature markets because I don't know if I think about India, but also Brazil or even China in the past. It's impossible to build very quickly distribution, brick-and-mortar distribution in those countries. So if you want to reach the masses quickly, e-com. You had a question of gross margin impact well, this shift is not that because of course, e-commerce, as everybody knows, is accretive to our margins. So it's welcome. And the challenge, of course, because all the sub channels in e-com are not the same, it will be to balance those that are gaining growth and those that are more profitable, but we are quite good at managing this balance.

So you mentioned gross margin. So we'll stick with the P&L and move a few lines down. This is an interesting one. We have 2 opposing questions on A&P. One assumes that L'Oreal share of voice exceeds share of market. The ratio would be 22% to 14% and that the group is overspending on A&P. The other wonders whether our 20 to 40 basis point margin objective will be harder to achieve, given the rising cost of growth and the tariff headwinds.

Okay. Boy, if we speak about the P&L, this is my favorite topic, of course. I want just to frame what is the ambition, and I repeat is clear and loud. Our ambition is very simple is to deliver plus 20 or 30 basis points of margin improvement every single year. And I think that we have a long track record in that sense. And believe me, all the team management of L'Oreal is really committed to this, and we will continue producing that kind of results. There are plenty of levers to improve the margin. As you know, we really stick to our discipline when it comes to the gross margin, making sure that we can mitigate all the headwinds, including tariffs, whenever it's possible. And we have still space for further improvement. And -- but I go directly into the A&P discussion because I think this is a very interesting one.

On one side, it's true that this is the single largest cost that we have in the P&L at nearly 32%. And we still consider that this is crucial to fuel the growth of beauty and of our brands. And therefore, we will keep investing, of course, heavily into that area. Maybe in the future, at least in the near-term future, it's quite unlikely that we will go much further in this percentage in the P&L because we start to see now the benefit of some of the tools that we've been implementing.

There is one that is widely known, I guess, from all of you, it's the [ BetiQ ]. So the property tool that we have been developing. There will be a very beautiful demonstration from the -- from your teams in the next day. So I won't go into the detail. But definitely, this is bringing an opportunity to improve the return of investment by 10% to 15%. It's proven we have those results here in the L'Oreal U.S.A. So it gives us the possibility for the same amount of money to reach more consumers. So that's why I think no need to invest more than the current amount.

Last, are we spending too much on A&P? No. No, because as you know, we see so many areas and opportunity for growth that we will still invest. The important is to make this beauty market even bigger. So we are here not only to gain market share, but also to increase the pie. So we'll keep investing in growth. And for that, we'll keep putting a big amount of money in the market to sustain the growth.

So I'm going to -- in the interest of time, because I think you answered a little bit of the question around L'Oreal systems, IT infrastructure, data management. I think I'm going to just jump so we don't run out of time to the M&A question, which is L'Oreal appears to be increasing its M&A activity. It's now more challenging is it -- apologies. Is it now more challenging or expensive to achieve success with acquisitions, especially with younger consumers being less brand loyal? In which part of your portfolio do you currently see gaps, including in China, where you recently took stakes in Chando and [indiscernible]?

Yes. Well, priority when we speak about growth is, of course, organic growth, and so keep fueling the growth of our current brands. But you know the history of L'Oreal, it's about acquisition among our 37 international brands, only 3 have been created by L'Oreal. So M&A is still, of course, a key element of the growth strategy of the group. And we are quite strict when it comes to designing the criteria to bring a new brand into the portfolio. It has to fit the strategy of the division. And we need to see brands that are potentially, of course, accretive and not only on the top line but on the bottom line on the long term. And I think part of the question was about, is it more challenging or expensive? No. Maybe it requires a bigger amount of capital, but look at the success of brands that we recently bring into our portfolio, Valentino from EUR 50 million when we bring the brand inside the group. Now we have sales that are over EUR 600 million.

If I look at Prada from a little bit less than EUR 100 million in a few years, we bring this brand at more than EUR 0.5 billion in 3 years. So because of the size of the beauty market that now is increasing, it brings -- for those brands that have the right equities that are relevant with the consumers of today the possibility to grow even faster. And we have plenty of examples that can prove that. So maybe it cost a little bit more at the acquisition, but the potential of the business plan that we draw behind is much bigger also. So don't worry, it's still a pretty good deal. Of course, the difficulty is to spot the right brand and assessing if the brand has a true capability to become international.

Maybe I stick with the theme then and talk about capital allocation.

Yes.

So you just spoke about M&A and the interest of the group to continue and the belief that there's opportunity. Can you confirm also that L'Oreal remains committed and eager to deploy capital strategically across other areas of the business like R&I, operations, marketing, digital.

Absolutely. Absolutely because those are the drivers of success of tomorrow. And it's true in R&I where we're still investing a lot in this area. It's critical for the long term. By the way, it's the only line of the P&L that has never decreased over the past now 10 or 20 years. So it's a privilege to work in research because they know that they will have a constant flow of increase of money and I think you will see with your own eyes the facilities that you have, by the way, my dear David here in the U.S. that are state-of-the-art in terms of R&I and strong capabilities there. We are still investing, as you know, in industrial capabilities. We are still investing in the latest technologies when it comes to logistics as well.

Example, the one I was mentioning before in China. So I think it's balancing rightly the investment. And I could spend hours speaking about, of course, data and AI because those are capabilities that are extremely important for the growth of tomorrow.

So there's at least 1 or 2 questions that we will not be discussing this week, so I'm going to pick them out of the back, which is how far would you be comfortable taking financial leverage in the event of exceptional M&A or buyback opportunities.

That's a very hard question. Before speaking about leverage, I just want to reassess what is the situation today at L'Oreal. We have a strong balance sheet. This is extremely robust, gearing ratio that stands at 13%. So the financial leverage that is quite well below 0.5%. And when you add on top of that, our financial investment, like the one that we have in Sanofi, it's EUR 8 billion stake. So we have really the power today to be extremely proactive when it comes to investment or development. I remember people questioning me about about the opportunities in M&A in 2025. I think that we've been demonstrating that whenever there's opportunity, we're not shy. We've been bringing Dr. [indiscernible] Plus Medicaid plus Coloro plus the deal with Kering. So -- and this in 1 single year just because there were a lot of opportunities, and we have the balance sheet to afford all of those acquisitions.

Okay. So we'll stay with that topic then, if we can steal another minute, Eva. Is that okay?

You can steal as many minutes.

Okay. Our global CEO, Nicolas recently said the deal with caring doesn't prevent us from considering any options with our money. Do you intend to remain a minority shareholder in the event of an agreement with Georgia Armani's Arris.

Maybe one word about Kering because I think it's important probably that we are all aware about this important deal. Sometimes people refer about grid, which is 1 of the brands. I think what is very important for you to assess is that's -- really that's a strategic move because basically, it's 2 big groups, one that is bringing fashion, the other 1 that is bringing his expertise in beauty and putting together the best they do for strong value creation in the future.

It is obvious that when you consider, you know the brands that will be joining the portfolio of Luxe division tomorrow, those are strong additions for the long-term development of the division because Creed is one of the top premium brands worldwide. Both the Gaveneta, Balenciaga and Tomorrow Gucci, we are speaking about top brands that have already a solid equity solid awareness sometimes in all the regions.

So of course, bringing them into the portfolio of L'Oreal, that's at the core of what we do at best. So I don't say it's plug and play because at the end, when you go into the detail, there's a lot of work for integration. But this is the kind of deal with no uncertainties low or even 0 risk for a group like us, and therefore, a very promising future when it comes to the development of those brands. This, of course, will not prevent L'Oreal to go even further if we have good opportunities. So you mentioned about our money. Of course, we are still very sad of -- by the passing of Mr. Armani, considering the strong collaboration that we have had with him and his teams for something like 4 decades now. But first, we are quite comfortable because as you know, we renew the license. So the term is 2050. So we are quite at ease.

But definitely, First, we are very honored by the consideration of the heirs of the family towards their willingness to see L'Oreal investing into their company. So definitely, this is something that we will look at. We'll start working on that very, very soon. I cannot disclose more today, but this is the kind of things that you have to look when you are a leader like L'Oreal in luxury beauty.

So maybe we stay on the theme of difficult questions about how we might spend our future money. Hypothetically, what advantages would L'Oreal gain from taking a bigger stake in Galderma compared to our current 10%. What would have been the main surprises in key learnings from our partnership so far? And what strengths of both L'Oreal and Galderma have been particularly emphasized through this partnership.

Okay. First, let's remind us something what is very important is at the heart of the strategy. We want to be in beauty, only beauty, but in older beauty. Now this being said, it's obvious that when you look at the evolution of the beauty, it's true that the boundaries are expanding. It's true that when just a few years ago, everything was about topical products things have been moving extremely fast. When you look today at how fast the evolution of aesthetics is visible. It's visible in key markets here in the U.S., but in China as well.

It is becoming more and more affordable, it is becoming less and less [indiscernible] taboo. I think here in the U.S., we have already 20% of the population that has gone in a clinic. And there are 40% that intend to do in the next future. So proving that this is a trend that will still increase. And therefore, taking a 10% share in Galderma is, of course, a clear message that we want to enter into this market.

But with a lot of humility, we are humble. We know that going into this market, the rules are not the same as the 1 that we know pretty well. So we don't want to rush into something that is working with different rules. It's a lot about understanding all the process of why a consumer is going into a clinic. How does it work? What is the role of a doctor, how the regulation is moving, what are the new additions in terms of product coming to the market today and tomorrow? Our advanced research is working a lot on understanding what is the innovation that will come in the next 10 to 15 years. So there is a huge amount of information to digest. A lot has been done already. is not over. And that's why, as you know, we've been investing with minority share and minority stakes, but in a chain here in the U.S. called Skin Spirit.

So when you have the ability to be in those clinics to understand how the market has been evolving in the past few months because it's still evolving. It's critical to understand exactly what will be -- the important move that we will need to understand and tomorrow to digest to be in this market.

So maybe we finish then conversely with another situation, which is the relationship with Nestle. First, the question is, have you had the opportunity to meet with Nestle's new Chairman and CEO. Second, do you believe the likelihood of Nestle divesting its stake in L'Oréal higher now. And could L'Oreal repurchase the entire stake if Nestle decided to sell it? Or would this in fact, be more challenging given the recent Galderma and carrying investments?

Well, first, there is a new management. It's true in Nestle. And at the end, this is a typical question that you should ask to Nestle because on our side, I still repeat that we are very happy with this long-term partnership that we had with Nestle. It's a very strong consumer goods with a deep knowledge of the way the market operates worldwide. They have been accompanying all the critical phases of our development. So it's a solid partner. And we are very happy with the stake they have and the role they've been playing in the board L'Oreal. So the decision is on their hands.

As usual, if they want to move if they want to sell, of course, we will be looking at what is the opportunity to L'Oreal to buy all or part of the share that they will be willing to put on the market. That's the only thing I can say. And again, I'm quite confident because of the strength of our balance sheet, of course, we can do certain operation with them. So -- and on the other side, as I said before, we still have a stake above 7% in Sanofi, so we can leverage also this financial assets to cope with that kind of moves in the future.

Okay. Well, Christophe, thank you. We took a bit more time than planned, but I think it was interesting, I hope, for everyone. And I know Eva has some logistics to share before we leave the room because it's important that everybody knows where to go, when to go and not to miss the bus tomorrow.

Okay. Thank you very much, thank you.

Good afternoon from Paris, and welcome to the third edition of our Let's Talk Beauty. I'm delighted to be here today with Cyril Chapuy, President of L'Oréal Luxe Division. Over the next 30 minutes, Cyril will explain what makes L'Oréal Luxe truly unique in the world of luxury beauty. We will then have time for questions. [Operator Instructions]

And with that, over to you, Cyril.

Thank you so much, Eva. Welcome to everyone behind the screen. We are live from Levallois, the HQ worldwide of L'Oréal Luxe.

So in my presentation this afternoon, I'm going to have 3 parts. First, I'm going to take you through the context in which we evolve our markets, our customers. Then I'll give you some key numbers regarding our results. And then I'll try to decode a bit for you our secret sauce. And then, of course, we'll have time for Q&A.

So let's start by the luxury markets and the luxury clients, the luxury [indiscernible]. We are acting on the market of luxury personal goods, which is a market which has been dynamic over the last 10 years, plus 4.8. And we are actually the #1 category of luxury personnel goods. As you can see, we used to be the second category after fashion and apparel and now Beauty is the #1 category of luxury personal goods with a nice CAGR growth over the last 10 years of 6.3%. So it's a nice market to be in. It's a nice category to be in, Luxury Beauty.

Who are the customers? As you can see, the customers are pretty well split across different ages. You hear the weight of business of these different customers. And what matters to me is that over the last 10 years, the number of customers increased by 3%. So as I mentioned in the previous slide, the market grew itself by 6.3% CAGR. It means half of the growth came from penetration from new customers, and this across the different age groups. Luxury obviously is driven by young generation in terms of trends, but luxury is very much driven also by GenX and Boomers in terms of purchasing power.

The regions of luxury. The regions of luxury are very well split around the globe. As you can see in the 2024 numbers, the #1 region remains North Asia. Even though this region has slowed down in growth since 2019, since COVID, the second region is North America, which tends to accelerate. It was at plus 5 during the first part of the decade and now it's at plus 7. And the third region is Europe, which is pretty stable in growth, plus 3 during the first part of the decade and plus 4 in the second half.

Then huge reservoir growth, obviously, for Luxury Beauty is emerging countries, which are accelerating. They just represent today a rather small portion of the market, but they are accelerating very fast, and they are the fastest-growing part of the Luxury Beauty market.

The categories of Luxury, interesting changes here, too, that I'd like to spend a little time on. So as you can see, over the decade, the 2 most dynamic categories were skincare and fragrance, but over the last 5 years, fragrance took over in terms of dynamism versus skincare and is today the second category. Obviously, this is linked also to the geographical footprint, and you've understood it. When Asia slows down a bit, skincare was down a bit. But fragrance to cover and is now an extremely dynamic category, as you can see, plus 10 over the last decade. The weight of business are 40% for skin care, 34% for fragrance and 26% for make-up.

In these markets, what are the results of L'Oréal Luxe? Well, the results -- our results were quite proud of because it has been a steady and progressive conquest. The division over the last 10 years went from EUR 7.2 billion to EUR 15.6 billion, i.e., a CAGR over these last 10 years of 9.3% versus a market that's at 6.3%. So over 10 years, the division has had an index of around 15% versus the market and has more than double size, as you can see on this chart. The market share of the division went from around 14% in 2015 to above 19% in 2024. We are close to weighing 1/5 of this market of Luxury Beauty worldwide.

We have been outperforming the market for 14 years in a row. This is very important. This is the signature of L'Oréal Luxe teams. This is the commitment outperforming the market. And we have been outperforming the market for 14 years in a row. And we became the worldwide leader of this category of Luxury Beauty in 2023 as you probably know. You see the difference with our competitor #1 in 2013. We were EUR 2 billion smaller than them. And today, we are almost EUR 2 billion bigger than them, probably at the end of this year. That will be EUR 2 billion bigger than them.

And I can tell you even though the [indiscernible] publication is not at out, but I can tell you that in 2025, we're going to have yet another year of [ sheer ] performance versus market. We're going to beat the market. And other time, I have the results until end of October. And I'm confident we're going to beat the market for the 15th year in a row in 2025.

The point I want to stress because it also underlines the quality of our performance is our profitability. L'Oréal Luxe has a profitability of 22.3% before non-allocated items. And it compares to the #2, #3, #4 and #5 of the market, which are here portrayed on this side by descending order of net sales. As you can see, we were more profitable than all our key competitors. And this is a real pride also for the team to be #1, to gain share every year whilst developing a level of profitability, which is, I think, of a decent level.

So what's our secret sauce. We call it like that internally, what's our secret or secret sauce? And I'm going to try to give you a few insights on that. I won't reveal everything obviously, but I'm going to try to depict a bit how we work.

First thing I want to insist on is L'Oréal Luxe is a mix of L'Oreal and Luxe. Seems obvious, but it's very important. So L'Oréal Luxe the unique combination of the L'Oréal Group Powerhouse and the exceptional luxury know-how of this division. And I'm going to try to depict that. Obviously, the L'Oréal Group Powerhouse is first and foremost, R&I. And L'Oréal Luxe benefits from all R&I discoveries first. It's the famous strategy of cascading of our company. And we always have the best R&I discoveries first, be it in skincare. I'm going to mention a few of these last years like Pro-Xylane, that we now have at 50% a formula like the new Replasty by Helena Rubinstein, be it [indiscernible], be it incredible new textures, like [indiscernible] textures. R&I discoveries in skincare are benefiting to L'Oréal Luxe brands first.

In makeup also for instance, the very spectacular [ FMK ] technology for [ long wear ]; the famous UTF, ultra thin film, that allows to have lipstick extremely beautiful color payoff with a very thin film. These are technologies, which always benefit first to L'Oréal Luxe. And I would mention also fragrances because fragrances is not just a dream far from that. Fragrances is also R&I, is also technology. And all fragrances are superior to any other in intensity in lastingness in bloom, thanks to the work done by our R&I team from L'Oréal Group. So this is the first secret of L'Oréal Luxe.

The second is that we are obviously at the forefront also of L'Oréal Beauty Tech. Why? Well, because we have lots of corner stores around the world where OBAs can harness the power of Beauty Tech to give our consumers the best service. The best service in terms of diagnosis, the best service in terms of performance. You have here on screen 2 examples of Beauty Tech we are using on Lancome. The first one is the skin scanner, which is the Nexa technology, which is a technology which comes from the actually hospital world for the medical world, but allows to get incredible skin scan and a perfect diagnosis of your skin condition even under the regular appearance.

And the other one is the famous Cell BioPrint, which was introduced in Las Vegas at the beginning of the year, which allows to read your biomarkers, i.e., to really define the biological age of your skin. And these are 2 very strong Beauty Tech innovations from L'Oréal Group that L'Oréal Luxe is benefiting from. But it's also in the world of devices, -- here also 2 examples from Lancome, but I could have shown some of Saint Laurent like [ Rouge Sur Mesure ], which allows to customize your lipstick. But here, I have [ porphyry 2 ] of Lancome, the micro needling pen of Lancome, which has hundreds of micro needles that allow you to get your skin cream to penetrate much deeper into the skin. It's the equivalent of what you do in microneedling in medical cabinets.

And on the other side, HAPTA, which is this device that allows people with handicaps to apply lipstick because it corrects the movement of your hand. So if your hand is shaking because you have a handicap, this device allows to correct totally your movements and allow you to apply lipstick, mascara, et cetera. These are amazing products of L'Oreal Group Beauty tech that are first applied by L'Oréal Luxe.

The L'Oréal Powerhouse is also extremely instrumental to our success in the world of operations. We have 6 L'Oréal Luxe factories around the globe. We produce almost everything in-house at L'Oréal Luxe. We control most of our production around the globe. It allows us to have a great flexibility, a great also cost effectiveness and also, which is critical in a [indiscernible] sense of quality and safety, which is exceptional. I think our quality and our safety is probably unbeatable. And frankly, I don't think any indie or dupe around the world can ever reach this level of quality and safety. And this is due to our strategy of in-house L'Oréal Group operations approach.

Now the last but not least, point of synergy between L'Oreal Powerhouse and L'Oreal Luxe is obviously the talents. We have an incredible talent pool of people we can develop. We have 90,000 employees worldwide at L'Oreal Group, 33,000 out of them are at L'Oreal Luxe. There are of [ 40 ] nationalities and from extremely diverse expertise, and they are obviously the ones who are behind the success. And our HR strategy of L'Oreal Group is one that is absolutely essential to the success of L'Oréal Luxe.

Now what is specific to L'Oréal Luxe. We use, obviously, every day, we harness the power of L'Oréal Group Powerhouse, but we also have specificities and it's our luxury knowhow or [Foreign Language] as French like to depict it. So first, it's the obsession to build exceptional products, products that justify the price premium you have to pay when you buy a luxury beauty product. Yes, luxury beauty products are more expensive, more valorized than other products from the mass world or the derma world. So they have to justify this price. So they have to be exceptional.

So our products are of the greatest guarantee you can imagine. They have a sense of detail, which is something we work on every day. I'm, as the President of this division, extremely obsessed by the detail, be it, for instance, on this slide, on the design of the caps of our fragrances. For customer fragrance, the cap says it all in terms of the quality of the fragrance, the way it closes, the weight of it, the quality of the texture. We spend hours defining, getting the best quality, working with the best vendors around the world, working with the best designers around the world to get this level.

It's the same for makeup. The way a lipstick closes, the way a [indiscernible] of a cushion or a powder closes, the way it feels in the hand, the way it never gets any issues when it's in the bag. It doesn't -- the quality of the bag, it doesn't get affected when it's in a bag. All of this is details of utmost quality that define luxury. And in skincare, same story, the finishes and the air, waterproofness of our packaging, the air tightness, the water tightness of our packaging have to resist all this to preserve the formulas. This is what I call ultimate quality, and this is part of the know-how of L'Oréal Luxe.

Second element of this know-how is innovation. We are obsessed by innovation at L'Oréal Luxe. Every year, my teams around the world are delivering a double-digit level of innovation on the net sales, and we need more than 10% of our net sales in innovation on each of our 3 categories. And you have here on the slide some of the latest innovations, for instance, in skincare, in makeup or in fragrances. And these innovations are absolutely essential also to justifying the luxury positioning. If you are luxury, if you are more expensive, you need to be more innovative. You need to surprise, you need to disrupt, you need to [indiscernible] create. And this obsession of innovation, this obsession of the new, better, different is essential in our culture.

Now beyond products, in the L'Oréal Luxe luxury know-how, there is the portfolio management. We have an exceptional portfolio of brands. I would even say we have the best portfolio of brands on the market. It's crafted with a very strategic point of view, which is complementarity. Our portfolio has been built to cover all price levels of the luxury market around the world. Here, you have, I would say, simplified vision of the strategy with this pyramid that summarizes the way we see luxury.

There is access luxury below EUR 50. It's where some of our brands are positioned. It's the world of indies. You have prestige luxury, it's the world of historical legacy luxury brand, and then you have super premium luxury, which has developed very fast with recent years. The whole strategy of L'Oréal Luxe is to be strong on these 3 levels of the pyramid and this across the 3 categories. In skincare, we want to be on the 3 levels; in makeup and in Fragrance, we want to be under 3 levels of the category, which obviously ties to the way we choose the brands that are in our portfolio to cover all these price levels, but also to balance our business.

Very important, I don't want to be a fragrance player only. I want to be very balanced across the 3 metrics. Today, we're #2 worldwide in skincare, #3 in makeup, #1 in fragrance, and the objective is to balance very well these 3 categories across the different geographies where we operate. Our market share, I told you earlier, is slightly above 19% total luxury. It's 22% in fragrance, it's 20% in skincare, and it's around 15% in makeup. And so we are pretty balanced across the 3 categories, and it's very important in the way we see this business of luxury.

Tied to the portfolio is another very important part of L'Oréal Luxe now of my team. It's our exceptional M&A power, some will way M&A skills. We have 27 brands at L'Oréal Luxe and they all were acquired in the history of L'Oréal. So we have been built 100% through acquisition across the years. And I want to show you some of our more recent ones. 2021, we acquired Takami, probably the most sophisticated medical luxury brand from Japan, amazing clinic, luxury clinic in Omotesando, Tokyo, the best knowledge in the science of PL, very important in our skincare conquest for the world.

In 2022, we acquired Youth to the People, organic luxury directly from Los Angeles, the art of cleansing, the art of squeaky clean skin, which is so dear to Americans, and this brand is also a great tool for us in our skin category. Then 2023, Aesop. And it's 400 unique retail addresses around the globe -- retail stores around the globe that are the epitome of design and wellness that get together. Incredible brand, Aesop, and we are very proud that it joined the division.

Then in 2024, we acquired the license of Miu Miu, the hottest fashion brand out there right now. You probably all have a look at the list index that allows you to see the hotness of the fashion brands or you probably attended the meetings -- investors meetings or analyst meeting of the Prada Group. As you know, the Miu Miu brand is exploding right now. We acquired the license in 2024, and we just launched Miutine, the first fragrance by Miu Miu.

2025, Medicaid, medical luxury as well like Takami, but from U.K. this time with a very specific knowledge in formulation of vitamin C and vitamin A, i.e., retinol and is the fastest-growing luxury skincare brand in the U.K. and probably amongst the fastest growing in the whole Western Europe, a great new acquisition for the brand -- for the division also.

2025, JACQUEMUS, very hot French fashion brand, rooted in Provence, extremely aspirational, very successful in the U.S., very successful in Europe. And more recently, of course, the Kering Beauté acquisition with Creed, #3 fragrance brand in the top of the pyramid of France, i.e., the super premium fragrances, the exceptional fragrances, the -- i.e., perfumery -- good perfumery. A very beautiful brand, seventh generation of perfumers, a brand which has an incredible DNA, incredible story, and we think has an incredible potential.

Bottega Veneta, exceptional artisanal know-how, extremely high level of sophistication that will translate very well into fragrances. And Balenciaga, this audacious, subversive fashion brand, but as a territory also that will work very, very well in fragrances. And obviously, when it becomes available, when the license expires, Gucci, which is part of the top 4 most famous fashion brands in the world and which has a great potential untapped yet in beauty.

So we are aggressive in acquisitions, yes. And we also have a unique track record of success in acquisitions. Look at Saint Laurent. We acquired Saint Laurent in 2008. The brand was around EUR 300 million. It had been pretty stable. And under our management, Saint Laurent went from EUR 300 million to more than EUR 3 billion. It passed the EUR 3 billion last year. And obviously, this year, it's going to keep going up. I can't give you a number, but it's a very good number for Saint Laurent this year. So unique track record, proven by Saint Laurent, proven by Valentino.

Valentino under the previous owner was a EUR 50 million brand. It's a EUR 600 million brand, probably a digit higher in 2025, I mean, the first digit. So a big, big success of Valentino also in this story. And Prada, which under the previous owner of the license was EUR 100 million, and which is now EUR 500 million. So yes, we are aggressive in acquisition, but the whole strategy is to really potentialize this acquisition, globalize them. We have a unique footprint. We are really global, and this allows us to scale these brands and also define very clear DNA for each of them and then potentialize this DNA.

Great link with my next point with our know-how, which is our commercial cloud. We have a great global commercial cloud. We are #1. We were #1 in 3 of the 4 publication regions. As you know, we've been a historical #1 in Europe. As you know, we became #1 in North America last year. We had become #1 in emerging countries in 2022. And we were until this year, #2 in North Asia, but I can already announced you that this year, L'Oréal Luxe will be #1 also in North Asia. So this is a unique commercial cloud. We are #1 of luxury beauty across the 4 regions of publications. And this is a know-how. This is a talent that the teams of L'Oréal Luxe around the world have.

This applies to channels. We are #1 in offline. We are #1 in online. Online is growing fast in luxury. Online is around 30% of the luxury market. It's growing fast. You cannot discount online at all. You have to [Technical Difficulty] online and our teams are doing it. And we are #2 in travel retail. So across the 3 big channels of luxury around the world, we are well positioned and well balanced.

All of this, obviously, are, I would say, objective know-hows or factual know-hows. Now there is one know-how, which is extremely unique and which is very L'Oréalian, which is our culture. The culture of seizing what's starting, [Foreign Language], and being on the quest of the extraordinary. And this is very deeply rooted in our DNA. This is very deeply rooted in the way all our teams around the world think. They always craft extraordinary customer experiences, be it offline, which is the natural territory of luxury.

Offline needs to be an incredible experience. It needs to be enchanting, it needs to be disruptive. It needs to be surprising. It needs to be entertaining. And you hear about the examples of Miu Miu, which was just launched around the globe or the example of Prada [ Padding ] or an Aesop store, always an incredible moment of architecture of design and then when in the store, a unique moment of experience. Or Valentino at this store is probably, I think, is a Dubai store of Valentino, which is very spectacular.

But in this offline experience, it's not only design, it's not only architecture, it's not only a statement, it's also a service, which is incredible. And we have more than 20,000 BAs around the globe that are at the service of our customers worldwide and help them have a great diagnosis, a great moment and get out of the store with a great product, tailored to their needs and with a smile and hopefully, with emotions, which is what we are trying to create always.

And then we permanently try to replicate this online. Yes, online is 30% of luxury, but online cannot be a disappointing experience for luxury customers. So we are permanently upgrading the level of the online experience. You have here the beautiful D2C site of Aesop on screen, which is very spectacular. You have here the new Lancome U.S. site, which I just saw the results of today, and they are spectacular because the level of experience is pretty incredible, but also the experience on Amazon.

We, for years, did not accept to go on Amazon because we thought the experience was not elevated enough, magic enough for luxury. And Amazon accepted to work with us. And we were first movers with Amazon in luxury because we think now the experience is pretty outstanding and is at level versus what a luxury brand should be. So exceptional extraordinary experiences offline and online, whenever the channels. And as mentioned it, the obsession to seize what is starting, to seize what is beginning, which, as most of you know, is a very L'Oréalian value, but it's more important than ever in a business like luxury because obviously, it also justifies your price to be ahead of the game, to be up and above.

And for that, we strategized a very specific culture, which is like Culture de l’Écart, which means the twist culture, which means the culture of always being one step ahead or one step aside. And I propose to show you the trailer of documentary on Culture de l’Écart, which is available online that you can very well if you desire, look in its entirety. It's around 45 minutes, but you're going to see a trailer of 1 minute, which has been crafted with some of our outside partners, the great creators, great crafters we work with on luxury.

[Presentation]

We are back. Q&A time.

Indeed. So I think we start with a roam-up question, which is if the global beauty market grows at 4% to 4.5%, where do you see the long-term growth for the Luxury Beauty segment?

Well, actually, I'm confident for the growth of the Luxury Beauty segment, very confident even. As I mentioned to you, over the last 10 years, it grew by 6%. And actually, this growth gain, half of it came from new consumers. I have the precise number, but I'm going to give you.

In 2015, there were 410 million affluents buying luxury beauty. In 2024, 540 million. And if we follow the evolution, the macroeconomic evolutions of the planet, there will be 700 million people who can buy luxury beauty on the surface of this planet by 2030, which means clearly that there is a big reservoir of growth. Big reservoir of growth in the emerging, for instance, it's only 10% of our business when it's around 17% of the total beauty market, not on a luxury only total beauty market. So huge space in the emerging, huge space still in China, where at the end of the day, there is only 20 million people buying luxury beauty today.

Huge potential of penetration across the categories. Yes, fragrance is booming all over the planet. We all know this, but the penetration of fragrance is not even higher than 55% on a global scale. So a lot of potential for luxury beauty. So I'm really confident on the growth of this market. And obviously, when consumers are confident, the market grows even faster. When the consumers are a bit less confident, it grows a bit slower. But overall, structurally, it grows, it develops.

And don't forget also that luxury beauty is very accessible luxury. At the end of the day, lipstick is EUR 50 to EUR 60, fragrance is EUR 90 to EUR 200. So it's very accessible luxury. So even in moments of doubt, it's a treat that consumers are very happy to indulge into.

Great. Thank you. We have a very interesting question, which is about how you decide where innovation goes first in terms of brands?

Well, it's very much based on our cascading approach. Obviously, I tend to give the best innovations to my most valorized brands, obviously, to amortize the cost of R&I first on the brands that have the most premium price. That's the first criteria. The second criteria is obviously depending on the brand territory, the brand DNA. Each brand has a very different territory. And so the innovation can correspond to this territory or not.

For instance, when it comes to Pro-Xylane, well, it's the territory of Helena Rubinstein. So when there is a new amazing technology with [indiscernible] and Pro-Xylane, it goes to Rubinstein more than Lancome and other brand. So mix of cascading based on, obviously, the level where the brand is in the pyramid and relevance versus the brand territory.

Great. Quite a few questions, as you can imagine, about fragrances. So there is a question about growth in fragrances. We've seen the market slow. Where do you see the category land? And how can you ensure that we continue to outperform that market?

This category is still very dynamic. It's going to end the year probably in the area of 6% to 7% growth. So it's still a very dynamic category. Okay, last year, it was 9%. So it's a bit less dynamic than last year, but it's still super dynamic. How many markets are as dynamic as that worldwide? Very few.

And we overperformed systematically. This year, I think we're going to end way, way above the market. We are growing double digit year-to-date. And as you know, November, December is the peak season of fragrances and with the quality of the launches my team has crafted, with the quality of our portfolio, we'll land way, way above the market. So we're going to still overperform and grow double digit in fragrances.

And I'm very confident in this market for, I would say, 3 reasons. New targets, men, who used to be, I would say, very classical consumers of fragrances. The new generations of men, they layer. They love having a fragrance wardrobe, i.e., several fragrances depending on the occasion, depending on the moments. They are no longer attached to just one fragrance, but they rebuy just every 2 months, 3 months. They have overall fragrance wardrobe they play with. And this young generation of men consumers has explained a big part of the growth.

Then emerging, all the emerging world is adopting fragrances at high speed. The level of growth I have this year in fragrances in North Asia, in South Asia, in Latin America is extremely impressive. So these are the 2 main reasons. And the third reason why I think this market is going to keep growing is because it's a very creative market. A lot of surprises, a lot of newer fashions, a lot of new trend and a lot of new gestures. There was a great, for instance, move last year towards mists, which is another way of fragrancing during summer, for instance, that was successful.

So overall, this category is innovative. This category is interesting new targets, new geographies. So it's going to keep growing very nicely.

We're going to go a little bit niche on fragrances now. We asked about China. So in the U.S. and in Asia, especially China, penetration rates are still quite low. Do you see these penetration rates catching up? And in China, where we've seen a lot of focus on ultra-high-end consumption, is that becoming a mainstream market for fragrances? Or do you see that more as a niche market going forward?

No, it's -- I have to say it's one of the most exciting fragrance market in the world because the consumer is very demanding. The consumer likes original high-quality fragrances, high-quality bottles and the consumer is very playful in its consumption. Historically, Chinese consumers were offering fragrances. It was a gift, but people were not really wearing it. The new generation loves wearing and loves changing.

What I was mentioning regarding the fragrance wardrobe is very much happening in China. They don't wear the same juice, the same choice depending on the season. They don't wear the same juice, the same choice depending on the day of the week -- workday, weekend day, depending on the social occasions, be it an office situation, a dating situation. They love changing because -- they consider fragrance as part of their signature -- as part of their personality signature. So this is very interesting.

And second, they also consider fragrance as a sort of a wellness gesture also when it comes to certain fragrances with essential oils like the one we have of Aesop, which are working extremely well. So it's a new interesting kind of consumption, very experts, very demanding. So only the best brands and the best quality/technology will win in China, but I have a lot of faith in this market in China. I think today, it's smaller than skincare, obviously, but it can become a very big part of the market.

Great. Very glad to hear it. Still on fragrances, obviously, a lot of our portfolio in fragrances comes from licenses. However, you've just showed us that in the last few years, we've acquired brands like Aesop and now Creed, which are fully owned. How do you see the trend develop from here? Why one or the other?

Well, I think licensed fragrance will always be a huge part of the market. Why? Because those fashion brands are extremely inspiring, extremely creative, and they allow us to create fragrance territories, fragrance stories, fragrance archetypes, which are very interesting, very exciting. And frankly, we have a unique way of working with our licensees, which is an extremely collaborative way. We see each other a lot. We take immense inspiration from them, and we bring them immense knowledge of the category. And this is a real win-win between our fragrance partner -- our fashion partners and on fragrances.

So I think this will remain a huge part of the fragrance market. Then at the top of the pyramid, in what I call oud perfumery, high perfumery, I think brands like [indiscernible], like Margiela, like Aesop will remain dominant because here, consumers don't buy a fashion projection. They don't buy the creativity, the imagery of a fashion brand translated into [indiscernible] French. They buy artisanal compositions. They buy raw materials. They buy ingredients. They buy somehow the mastery of fragrance, the mastery of composing of fragrance.

And they even don't like when there is a storytelling that I would say, cannibalizes the pure story of the ingredients and of the composition. And so it's a very interesting part of the market. It's already 20% of the market on the top of the pyramid. And it's a part of the market on which L'Oréal Luxe was weak. I have to acknowledge and confess, and that's why Creed is a perfect fit because it's the #3 brand and reached of the top of the pyramid. And as I told you before, seventh generation of perfumers, a brand which has been in the market ever since the 16th century, 220 incredible formulas in the archives with incredible composition, secret of composition, which are super precious. Very few brands have such archives.

It's a bit like an incredible fashion brand, which has archives of the design of accredited, the archives of Chanel, et cetera. Well, in this world of high performance, it's the statement. They have 220 incredible formulas that we can today relaunch, repurpose for consumers of today.

So moving away from fragrances towards makeup. So one of the questions is, are designer brands still gaining market share in makeup? If they are, where do we see potential to add a second access to our Couture brands?

Well, makeup is the obvious second step for Couture House after fragrance because makeup is very close also to fashion, to style, to self-expression. So obviously, the territory, the DNA of Fragrance House can translate very well into makeup. The very young, [ edgy, rock ] side of Saint Laurent translates very well into Saint Laurent Makeup, which has become, by the way, #1 in China and which is #3 worldwide. All more minimalistic expression of the Prada feminity, works extremely well also in makeup for face makeup, for instance, or eye makeup or lip balm instead of lipstick.

So every fashion house has a vision of feminity, a vision of self-expression that we adapt into the world of makeup. Mr. Armani was the maestro of glow. This is what he was really obsessed with, women who glow. And that's why the whole Armani makeup line is all about the glow and it's working very well. Luminous Silk by Armani is at the very top of the Sephora rankings in the U.S., especially around this idea of glow. So easy to translate a fashion house imagery into makeup. And then you need amazing technologies, beautiful packaging, incredible storytelling to make it a success.

So I think before we move on, there's one question on the third category, which is skincare. Nicolas Hieronimus has often said that skin care is an area where the group can do better. What role do you think luxury will play in that journey?

Skincare is, as I showed you in my presentation, is in critical category of luxury. It's 40% of the luxury market. It's still the biggest category of luxury. Skincare is especially critical in the eastern part of the world, i.e., the Asian part of the world where their skin condition is a very strong element of sophistication for luxury customers.

So obviously, we have a key role to play. And as you all know, Helena Rubinstein, which is a very strong brand in Asia went from less than EUR 50 million 10 years ago to more than EUR 1 billion today. So we -- all skincare brands can be very big. That's why we acquired Takami. It's going to be a very big skincare brand. That's why we acquired Medicaid as long as we keep justifying the prices of luxury skincare.

So what does it mean? It means superior performance. We need to do formulas with incredible level of actives, patented actives, exceptional active, unique actives, incredible experience. We need to do textures, which make the skincare moment a moment of pure bliss, including, by the way, fragrances in the skincare that make office moments a real moment of a relaxing moment, wellness moment.

So exceptional performance, exceptional experiences and a really exceptional service. Skincare is a lot about service, luxury skincare. A woman that comes into a corner in China, that comes to a store in Japan, that comes to a back wall in Korea, has to have an incredible moment of experience. She needs to be diagnosed what product is right for her. She needs to be explained how to use it, what kind of routine, when, how, et cetera. So this mix of performance, experience, service is what makes luxury skincare unique and what we focus on to improve our skincare numbers, which are much better this year, by the way, versus where they were last year.

Great. Now I think let's start a little journey of the globe, and let's start in China. Everyone was obviously very pleased to see that the market has been improving since the start of the year. Is your view that that's the beginning of a gradual recovery in the near term? And how do you think about the potential in China in the longer term?

The market is improving. It's a fact. It's not a radical improvement, but it's improving as -- to remind everybody of the facts, it was -- the market was negative in H1 in China. And on H2, it's positive in a nice way since, for instance, October, November, I just got the results of the market. The market is going to be around plus 5%.

So it's a very decent level of growth. It's not the level of growth that we had before COVID, where China was double digit, but it's a very decent level of growth at plus 5%. So I'm very happy to see these numbers, especially because they are, I think, structural. Chinese consumers are back into confidence, although it can change. But for now, we are back into confidence. I think the improvement of the stock exchange has helped this new level of confidence.

And also because I think -- because we challenge ourselves to bring new surprises, new experiences that they are interested with. And so it's too early to say, "Oh my God, China is totally back." But what I'm sure about is that this market is, for sure, going to remain one of the biggest markets of luxury. And as I told you, we have only 20 million people who buy Luxury Beauty in China. Imagine. So the potential -- imagine the potential in Tier 2, Tier 3, Tier 4 cities. Imagine the potential in fragrance, it's still tiny. So China is going to be one of the key drivers of growth for the future, no doubt of that.

And we have a very similar question about the U.S. We've seen momentum improve after what was a fairly slow start to the year. Can you maybe talk a little bit about what you're seeing? And again, how you think about the potential in the long term?

Yes. But the U.S. is improving every quarter on a low base because we started the year on a low base too. The more recent market numbers are more in the area of plus 3% in the U.S. So it means the market is progressively getting back on track.

Here also, I think it's very linked to consumer confidence. If the consumers are confident, they love treating themselves to beauty and especially to luxury beauty. So I'm very encouraged by these last numbers, especially since, for instance, fragrance is already back big time in the recent weeks, for instance, got the first numbers of Black Friday or Turkey 10 as it's not cold because it has 10 days. So it's called Turkey 10 around Thanksgiving. And it's -- the numbers are very encouraging. So as you can decode between the lines of our discussion, I'm reasonably optimistic. I don't think our market is yet back into its pre-COVID times, but it's structurally improving without any doubt.

Great. We've had a few questions asking about the competitive environment, especially the smaller brands. What do they bring to driving the market? What can you learn from them? And how disruptive are they in the Luxury segment?

Well, first, I have to say very loudly that I love competition. When you're a big company, L'Oréal Luxe is #1 luxury beauty company in the world, you need the competition to stay alert, to never step on your laurels. It's very good competition. It allows to permanently challenge us, to permanently avoid that we stay in a status quo mode. So it's great.

And amongst competition, these small indie brands are very interesting because they are local. So they are very relevant towards generally local needs, and they are fast. So it's very interesting to decode how relevant they can be, why they can be so relevant and why they can be so fast. And then obviously, they will never have what we have, which is scale. We are worldwide. They are most the time local, which is capacity of innovating.

We have an incredible R&I that can help you -- help us innovate. And obviously, we have brands also which have awareness that is probably difficult to meet. But it's very interesting to take inspiration from them on their creativity, speed and capacity of being relevant.

You've obviously shown us quite a few slides with recent acquisitions and presumably, the teams are busy starting to integrate some of those acquisitions. But when you think forward, where do you see the white space opportunities in the market still?

Well, we did quite a few acquisitions in the last 5 years. So I think first thing is going to be to digest them, potentialize all of them at the level which I promised to my shareholders. So this is the first step. Then are there going to be new exciting opportunities? Yes, there always are. So the question would be, are they complementary enough to what we have? Can they replace some of our existing brands because also there is no taboo on saying that we may divest some of our brands.

When you have a portfolio of 27 brands, if some of them are not at level, if some of them do not perform several years in a row, well, I think it's very healthy to divest. So I do not close the door at all to new potential acquisitions in complementary spaces to where we operate today. It needs to be complementary, and this is the name of the game. Very important when you have a portfolio of 27 brands to make sure the contour, the DNA, the territory of each brand is very different from another, and it's my job to make sure of this.

But if we can find opportunities which are complementary, well, we'll always be curious. We'll always investigate and we'll always make the best decision in the interest of our company.

And I have before we conclude one last question, which is very closely related to this. Everyone loves the Aesop brand. So we had a question on where are we with the integration? What have we achieved so far? And what's coming next?

We acquired definitively Aesop on September 1, 2025 and 2024 -- no, 2023, apologies. 2023, I'm losing my dates. So September 1, 2023. So we are 2 years after. And 90% of Aesop is integrated today. So it means the Aesop teams, great teams, who have an incredible knowledge in retail, in design, in capacity to develop spectacular customer experiences. The Aesop teams have joined us in 90% of the geographies. There is still 10% to integrate.

The brand is doing great. It's growing double digits this year again. It grew double digit last year, and it's going to grow double digit this year again. So we're on track and we're on track with Aesop. We have great successes at the moment in fragrances. They are very original, Aesop fragrances, both the composition, extremely aromatic, based with a very specific charter formulation. So I think consumers find them very new, very interesting. So I'm very happy we have Aesop.

And as I mentioned when we acquired it, I think Aesop is going to be part of the next billionaire brands of L'Oréal Luxe. We have 5 billionaire brands today at L'Oréal Luxe: Lancome, Yves Saint Laurent, Armani, Kiehl's and Helena Rubinstein. And I think Aesop will soon join this club together with Prada and Valentino, which also will join this club soon. So probably not this year, but soon, we will have 8 billionaire brands, and Aesop will be part of it.

Great. Thank you very much, Cyril, for this fascinating tour of the luxury world, and thanks, everyone, for joining us for this session.

Thank you, everybody. Thank you.

Good evening, and thank you for joining us for L'Oréal's 9 months 2025 Sales Call. With me are, as always Nicolas Hieronimus.

Hello.

Christophe Babule.

Hello, good evening.

And Laurent Schmitt.

Hello, good evening.

Nicolas will briefly comment on the numbers and the acquisition of Kering Beauty we announced yesterday. We will then open up for Q&A and aim to finish at 7:30. Over to you, Nicolas.

So good afternoon, everyone. This is -- I'd like to tell you about this 9 months. First of all, about the market at slightly over plus 3% in the first 9 months. The global market remains dynamic. And in that context, our like-for-like growth sequentially accelerated, reaching plus 4.9% in the third quarter. That is, of course, adjusted for our IT transformation in the U.S. last year.

As promised, the contribution from our Beauty Stimulus plan accelerated. We rolled out our first half innovations and launched new products, including our 2 latest fragrances, Prada's Paradigme and Miu Miu’'s Miutine, both are off to a good start.

If I had to name some of my key highlights for the first 9 months, I would say the following: First, the gradual recovery in our 2 largest markets, Mainland China where we clearly outpaced the market and the U.S. where CPD gained market share in each of its categories for the first time since 2021 proved that innovation really is a game changer in beauty. Second, the ongoing strength in Hair Care & Fragrances now 30% of our sales, but also the bounce back in makeup, where we grew almost 3x above the market. And third, the continued dynamism in e-commerce that plays to our strength, enabling us to outperform us in the fastest-growing channel.

On Sunday night, we announced the acquisition of Kering Beauty, including the Creed niche fragrance brand as well as the Beauty & Fragrances licenses of Balenciaga, Bottega Veneta and when available, Gucci. I'm extremely excited about this transaction. Not only does it cement our existing leadership in luxury beauty, I also see enormous potential for each 1 of these 4 brands. And we have proved our ability to turn licenses into billionaires. Today, YSL is as big in beauty as it is in fashion. Prada crossed the EUR 500 million mark just 4 years after joining the L'Oréal Luxe family. The future is now good, and I look forward to writing this new chapter. And I'm truly delighted to do it with caring, a trusted partner for more than a decade and a half.

And with that, we are all ready to take your questions.

[Operator Instructions] The first question is from Guillaume Delmas of UBS.

Nicolas, Christophe, Laurent, Eva, two questions for me. The first one on North America because you had a slow start to the year. If I remember well, market growth accelerated from the middle of Q2. And I think since then, we've seen like some pretty impressive scanner data for L'Oréal, particularly during the months of summer. So a bit surprised that your adjusted like-for-like in North America was 3% in Q3. That seems to be a little bit of a deceleration compared to your adjusted like-for-like of, I think, around 5% in Q2. So could you maybe help us unpack what looks like an apparent slowdown. And is it maybe because of a material discrepancy between sell-out, sell-in the region? I mean any color on this performance would be helpful.

And then my second question on North Asia. I mean it's always a bit of a mixed bag with the contrast developments between Travel Retail, Mainland China and Japan. Wondering if you could touch a little bit on all the different moving parts for Q3 and what did drive this material step-up in like-for-like? And maybe more of a crystal ball exercise at this stage, but any indications on the upcoming 11/11 and whether the nice developments in Mainland China in Q3 could be maintained or even accelerated in the fourth quarter?

Okay. So we'll share the first question with Christophe and I'll tell you about the news from the market itself and our performance. And then we'll try to explain the differences between sell-in and sell-out. But I think the first and most important thing to say is that we've indeed seen the real acceleration of the North American and particularly the U.S. market over the year and as you said, over the summer, and our outperformance has increased, particularly in CPD where we were below market for the beginning of the year, and we have accelerated. So if I look at the total beauty market, excluding hygiene, where we don't compete in the U.S., the Q1 was flat. Q2 was at plus 2% and Q3, which was around 3.9% or close to 4%. So it's a real acceleration of the market. And we've been indeed outperforming the market in North America, thanks to an acceleration in mass, a continued stellar performance in PPD in the Professional Division, which is even before the addition of Color Wow, which joined us in September was really great.

And Life has been pretty consistent overall overperforming the market. LDB is recovering fantastic performance of SkinCeuticals, good performance of La Roche-Posay and CeraVe has finally gone back into a slightly positive territory, not just because of hair care, which is doing good, but also because thanks to moisturizers. So Christophe on the discrepancies between selling and sell-out. And but overall, as you can hear, I'm pretty bullish for the U.S., and I'm very happy with the performance of our CPD teams, which is, of course, helped by a fantastic comeback of L'Oréal in makeup, continuous performance in hair care. And we see -- we hope that the market will remain a dynamic in the later part of the year as it was in Q3.

Christophe, maybe on selling...

Yes, of course, I want to reinforce the message that the fact the market has been accelerating in the Q3. So that's a very positive figure. And it is reflected also in our selling adjusted of the IT transformation impact. North America has been growing at an adjusted rate of 3.8%. And lifting, therefore, the total growth at the end of September at 3.1%. And I think when we look at the sell-out, L'Oréal is overperforming the market. So -- the only discrepancy is on LDB, where we still have the problem of inventories compared to last year. But besides on all other divisions, we see the sales improving.

Now if we go to North Asia, you're right to say that it's a mix of different situations. Let's start with the -- what's, I would say, going in the right direction, which is Mainland China. The market is now year-to-date at plus 1%. So it has continue to slightly improve. It was flattish in the first half. The Q3, our estimation of the Q3 was around plus 3%. I'm always very careful about China because one quarter doesn't make a trend. But overall, the market has gone into positive territory. It's been boosted by -- of all our channels, the one that has improved the most in Q3 is luxury, which has allowed us and which we have outperformed, which has allowed us to improve our performance versus the market, the Chinese -- the Mainland China market. So overall, China has stabilized.

We see slight uptick in consumer confidence. We see a stock market that has come back to the 2019 level, which is good for luxury consumers morale. But I wouldn't get over excited because there are other macro employment statistics that are not as positive. But let's say, it's in positive territory. And that's true also for other markets, such as Japan, which is benefiting from Chinese tourists, from Korea. So overall, that's going in the right direction. What's still not improving is Travel Retail. It's improving a bit, but it remains in negative territories. Travel Retail Asia is negative in single digits. But with -- as we commented in our last call, a significant difference between the downtown stores, which are double-digit negative and the airports which are doing better. So Travel Retail is not positive.

Hong Kong is in the same bag. But overall, all in all, you saw the results. So as we're entering the end of the year, of course, the big question will be because we are talking about should we see a repetition of this improvement in Q4. As you know, this is the big moment for 11/11, which is the big promotional event in China. We have -- it's too soon to say anything. So it will, of course, performance of Q4 in China would be, of course, very much dependent upon the dynamism of 11/11. So too soon to tell, I will tell you as much as soon as we know. But overall, we are gaining share in China on 3 divisions out of 4, big time in professional dermatology, and we continue to gain despite our high share in luxury, and we are below market on CPD where the competition is fierce. But the good news is that the proportion of luxury is increasing, so that's good for us.

Next question is from Charles Scotti of Kepler Cheuvreux.

I have three. The first one, I don't really expect you to answer this question, but I will ask anyway. Could you give us an idea of how the 4 billion tag is split between the acquisition of Creed and the beauty licenses. And my second question, still about the strategic deal with Kering. You mentioned that you are treating a 50-50 joint venture. Could you give us more details about the services and product that might result from this? And could you also tell us what know-how and expertise Kering will bring that you do not already have internally? And my last question is about the Armani succession. You mentioned being interested only in the beauty business. Could you eventually consider an operations similar to the deal of Estée Lauder with Tom Ford, i.e., acquiring the brand and then granting a long-term license for the management of the fashion business?

Okay.

May be I can take the first one.

Okay, if you want...

So just want to remind one point, which is very important is that the price of the deal encompasses the totality of the scope and includes 100% of the acquisition of the House of Creed, together with the long-term license for the right for 3 emblematic houses. And the price, of course, is for the total deal. So -- and for the time being, there is no way to disclose what is our own valuation on those different assets.

On the joint venture on well-being, longevity, I mean, it's very early days to give you details. It will take the form of a joint venture between Kering and L'Oréal with a clear goal, which is responding to the strong demand for services and experiences link -- linked to well-being, health and longevity. And of course, it's an ambitious product. We put joint resources in it. We will bring our expertise of skin care, of longevity -- the longevity research that we have.

We will also bring what we've learned from our services we offer in the Carita store that we have in Paris. But Kering will bring with their expertise in experience luxury, their client telling. They are used to focus on high net worth individuals, which -- who are the primary target of this type of business. And I think it will be a great collaboration. A bit too soon to tell, to be honest. But we are both very excited about it because it's one of the megatrends of the moment. I think you will not have missed it. So more in the weeks and months to come. But that's how we see it. And we're really excited about it.

And as far as the Armani brand or company, Armani's pipe is concerned, I will repeat what we have said is that, first of all, I never want to miss saying it is that we are all very sad of the passing of Mr. Armani with whom we've collaborated for 40 years. We are very honored that in his succession and in the instruction that he left with his heirs, L'Oréal is considered as a potential acquirer at least of the first part of the first 15%. We said we would consider all the options. It's a bit too soon. The family is mourning and focusing also on driving this business. And I mean, the only important thing I can confirm today is that the deal we just did with Kering does not prevent us from considering any of the options that are on the table with Armani. So we'll rediscuss it in the future.

The next question is from Olivier Nicolai of Goldman Sachs.

Nicolas, Christophe, Laurent, Eva, I got two questions, please. So going back to the deal with Kering. I think you mentioned in the press that you were expecting Creed sales to potentially triple over time. Could you give us perhaps your initial impression on the brand? And where do you see the main source of upside? And then just regarding Gucci, I think you mentioned that could -- I mean, essentially, you said that by 2028, I believe. But could you see a scenario where you could get a license before that date? And -- in the meantime, if you can't, what is the risk that Gucci license to some extent, could deteriorate between now and 2028?

Okay. So as far as Creed is concerned, House of Creed is -- it's a beautiful brand. It's in the #3 brand in the top 3 of the niche fragrances market, which happens to be the fastest-growing part of the fragrance market itself, the niche, which are products that are more valorized around EUR 200 and more. And it's been outpacing the overall fragrance market, and it happens to be a segment where we are just represented by the collection inside our Couture brand. So we are underrepresented and under shared.

So for us, it's -- it's already a step, a strong step in this market, and we think we plan to accelerate both because we think this part of the market is going to continue to grow fast. I just come back. I was the -- for the last couple of weeks, I was in a trip in Saudi, which is a fast rising market, which like the rest of the Gulf has an absolute love for fragrances and not just for blockbusters, but really for expensive niche fragrances that they layer. We see the same in other emerging markets. And of course, we see this in the rest of the western world. So we think that there is going to be organic growth from the segment but also that we will bring our expertise. We have, I think, proven that we had the capacity with our olfactive department to create one after the other great juices, great fragrances.

And by the way, even though it's not the question you asked me, I'm happy to report that both Paradigme from Prada and Miutine from Miu Miu are off to a very good start, both entering the top 10 in the market where they have been launched. So we think we can bring our knowledge in fragrances. And also our cloud because with the number of brands that we have in Beauty and in luxury Beauty, in particular, when we are negotiating with the retailers space, et cetera, we can probably have some leverage as it relates to Creed. So very excited about it and looking forward to working with the teams that have already built such a great success story.

So as far as the Gucci license, it belongs to Karen to comment on that. I've never mentioned the time line, but it seems that the market has a pretty clear view on it. So we're not privy of their discussions and it won't be appropriate for me to discuss, neither with Gucci nor about the details of this part. So we'll see for us, we are patient, and we'll wait. And as far as your question on deterioration. We've had experiences in the past of taking over licenses from other big groups. In the end, it has always gone well and these brands are brands that are -- that have passed the test of time. So I don't think a couple of years can make a huge difference.

The next question is from Ashley Wallace of Bank of America Merrill Lynch.

I have three, please. The first one is on 2026.

I'm sorry, we can't hear you very well.

Is it better now?

A bit better, yes.

Okay. So my first question is on 2026 last year at the Q3 results, you very helpfully gave us some market growth expectations for 2025. I was wondering if you'd be willing to share your market view on 2026 already? And do you think next year, L'Oréal can see stronger organic revenue growth than in 2025. And if so, what are the drivers of that acceleration maybe from a regional perspective?

And then my second question was a follow-up actually on the U.S. I think Christophe mentioned that excluding IT phasing, your sell-in was up 3.8%. And if I'm not mistaken, you said you estimated the U.S. market growth was at 3.9% for the quarter. So maybe if you can help give us a sense of your sell-out trends in Q3 because it sounds like selling was below sellout. And therefore, maybe we can also expect some type of restocking in Q4? What do you think about this?

And then my last question is on fragrances. I think there's some debate now in the market that the fragrance cycle is slowing. Do you see any signs of this? It sounds like it's not impacted the launches for Prada, Miu Miu. But what about the other parts of your Fragrance business? And then can you just remind us if the sell-in for Prada and Miu Miu was in Q2 or Q3 or maybe from third quarter?

It was in Q3. The sell-in for Prada and Miu Miu within Q3. And by the way, our growth on fragrances at year-to-date is just shy of plus 10%, and we are gaining share. And overall, our fragrances, there are always some brands that depending on their comparatives that have highs and lows, but our fragrances are doing great. We have multiple brands in the top 10 in both male and female. And Libre is #2 female fragrance in the world. We've launched, as you said, Prada Paradigme.

We've just launched also a new Ralph Lauren fragrance. Ralph, with Usher as a spokesperson. So overall, our fragrance business is doing good. And the niche fragrance business is also continuing on the market to grow. So -- yes, the market has slowed a bit, but it remains -- the fragrance market remains the fastest-growing category of Beauty. It's -- I think today, we are probably slightly above mid-single digits for the market, which is twice the speed of the beauty market overall.

So we remain very confident in fragrance. And we see it continuing to grow with several factors as we commented, of course, growth rate is slowing down a bit, but there are still more people using fragrances, more young people having this, what I will call the wardrobe strategy in fragrances, i.e., having several fragrances depending on occasions. By the way, what's interesting is that men fragrances are right now growing faster than female, which reflects the entry in the market of multiple younger men and boys that are very excited about including Paradigme from Prada. So overall, I remain confident in fragrance. And I would say something on that.

One of the consumer trends that we see everywhere next to the medical or safety trend is this indulgence feel good. I mean we all see the world we live in and people want things that make them on the bliss of something that's not good. So overall, I remain confident on fragrances.

I think your first question was on the U.S. Our sell-out in Q3 was shy of plus 6%. So above the market. Then we have, of course, you heard the comparison of the IT system last year. Most of our divisions have in terms of inventory is absolutely 0 issue. We have, as always, a little bit of pipe of the holiday set from L'Oréal Luxe, but like last year. So we -- of course, everything will depend on the success of the holiday season. But as fragrances are overpresented in this holiday season, we are -- I think we are confident for the rest of the year. And I missed one question.

Yes, 2026. I don't know. I don't know yet. I'm surprised that actually you said -- you said I gave a number in Q3 2025 for -- 2024 or '25 because it seems surprising to me. So...

I think you said that it would be -- that 2025 would be a year where you would have normal growth in line with pre-COVID level of growth or that you kind of talk about conceptually.

Yes, yes. No, frankly, I don't know. What I know when I compare it to other industries, I've looked at the list of consumer goods and other industries. And I don't see many industries that grow above plus 3, which tends to confirm that the beauty exception continues, whether -- I don't know if we should call it the lipstick effect or the smell-good fragrance effect. But I think that the market has accelerated slightly in Q3. And hopefully, it will continue to go in the same direction for next year. But frankly, with the world, we're in right now, I'll refrain from prognostics, if you allow me.

The next question is from Celine Pannuti of JPMorgan.

So sorry, I was late joining. So just following back on the discussion just now about market growth. Did you mention what market growth was in Q3? And are you still expecting -- I think you were expecting about mid-single digits in the second half. Do you think that's happening? And can you talk about if it seems that China is slightly improving. But can you talk about what's going on in Latin America, Europe from a market standpoint? And whether you think that mid-single digit is where the market can be at some point?

Second question is on Europe. We have seen an acceleration. We are hearing nonetheless that some -- the consumers are a bit more under pressure in that region. So can you talk about what drove that performance and what to expect from this market going forward? And maybe one last question on quite a big change in your Executive Board was announced a few weeks ago. If you can give us a bit of the rationale behind those changes?

Okay. So I'll start with market growth. We consider that every time we talk about the market, we don't have the full data. So we'll go back to the first part of the year, tell you what's our assessment of Q3 and how we see the year. But overall, we see that in Q1 -- the market was slightly above plus 2%. It was just likely below plus 3% in the first half, which means meant Q2 around 3 and 4, somewhere like this. And our best estimate at this stage for Q3 is that the market growth was pretty similar to that of Q2. So maybe a touch better than Q2 because as you said, the Chinese market was a bit better. The U.S. was a bit better.

Latin America was a bit softer, but still in the plus 8%. So it's not -- it's a good market growth, but it was softer than the first part of the year. And Europe was pretty stable with a robust around plus 4%. So it means that our assessment is that the market at the end of 9 months is slightly above plus 3%, and that for the full year 2025, our estimation that it will be close enough to the plus 4 I was mentioning. But of course, we know it's -- as I said, it's many times at the end of the year between Chinese 11/11 and the holiday season in America and Europe. So fingers crossed, and we have lots of ammunition to drive that market because it's an offer market. So that's my first take on the market.

Can I just get in there. Did you say LatAm was plus 8%. And then can you just then explain why you had a much weaker performance in the quarter then?

I just said the plus 8% on Latin America. The market was around plus 8%. And we've had a pretty good performance overall in Latin America. The market was at plus 9% in the first half, plus 8% in the second. And in sell-outs, year-to-date, we are above the market, plus 10% on the market at plus 8%, so we are not underperforming that -- we never look at the quarter-over-quarter because there are some fluctuations of invoicing. But 3 divisions are outperforming. PPD Luxe and CPD big time with hair care, and we have -- we're slightly below on LDB. And sell-in should be reviewed on a 9 months rather than a quarterly basis because there are again several IT-related factors that are distorting the quarterly read. So no, we're very happy with overall our Latin American situation. And the market is a tiny bit slower. But as I said, plus 8% is a pretty decent growth number. So -- and lots of positive things overall in Latin America.

On -- so now on Europe, I think a good performance came from market share gains. We've been gaining market share in -- if I look at 9 months, we are gaining share in 3 divisions out of 4, as in the total group gaining strongly on PPD on luxury and at market level on dermatology and slightly below on mass. But again, increasing and improving as we do in America with a strong comeback in makeup with any initiatives doing a bit better. So that's the situation in Europe. I think, overall, what you have to understand because it's a bit the same situation in most regions.

We really see the acceleration of our new product. We talked about the Beauty stimulus plan. It gave us an extra 150 basis points of growth approximately. And we have -- most initiatives are doing great. It's very true in makeup on all divisions. It's very true in hair care. We have many initiatives coming in skin care, and that's going to be helping in China with Helena Rubinstein and Lancome. And as I said, fragrances are doing good. So the launches are working. And as it's an offer market, we are -- that's what makes us confident. And your third question, Celine, was?

Your Executive Board.

The changes in the Executive Committee. Well, it's -- as always, we -- at L'Oréal, we try to give our talents and our leaders opportunities to continue to prove themselves and to bring a fresh view on different -- on the different regions. So we also had the desire considering the importance of the North American market and they need to have a very strong relationship with the authorities, with the regulators that are current CEO, the great David Greenberg, who's one of our strong American talents to become Chairman because I want him and I'm going to be, by the way, with him in Washington to have real -- to having to focus and dedicate his time to this part of the both L'Oreal reputation, but also all the work we do on regulation, and that has given me the opportunity to appoint Alexis Perakis, who's done a phenomenal job on CPD and with a strong comeback, particularly in the North American business on the third quarter to take America and then it's a chain reaction.

Fabrice Megarbane, who was in charge of both transformation and our Chief Growth Officer is going to take the mass division is going to be replaced by Vianney Derville within charge in Europe and again, a fantastic track record, a great contributor of the last couple of years and pointing to replace Fabrice, to replace -- sorry, Vianney in Europe. Emmanuel Goulin was in charge of Travel Retail and prior to that, he was CEO of L'Oreal Italy. And that gave me the opportunity to bring in the [ connects ] our first Chinese women, Eva Yu, who is going to be taking over Travel Retail, where she was for -- she had been for a while, the Head of Travel Retail Asia. So it's the typical L'Oreal talent development, bringing fresh blood, fresh ID and fresh vision on every part of the business and continuing to grow people. So this is all going to be implemented on 1st of January. They're all in hand over right now, and I'm pretty sure -- this is going to be another source of acceleration in the months and years to come.

Congrats for the deal yesterday.

The next question is from Fon Udomsilpa from RBC.

Two for me, please. The first one, could you talk about the level of impact of Beauty Stimulus plan in Q3 compared to your previous guidance that the impact will be about 300 basis points versus last year in the second half. Is it there yet? And to follow up on that, I appreciate it's too early to talk about market growth next year, but I'll try another way. Any color you can give us on intensity of launch of Beauty Stimulus plan heading into next year and any category that you will be focusing?

As I said, on next year, I'm not going to give you a guidance. We've seen the progressive acceleration of the market between the first and second half. And we see how things evolve next year. What I can see, let's go back to the fact because the facts are the following: U.S. market is getting better. SAPMENA emerging in general remain dynamic with a slight slowdown, but to a good level of Latin America, consistent growth in single -- in double digits of SAPMENA. Europe is quite stable. And we see China has improved a bit in Q3, as I said, but I'm cautious about China because it's hard to know what the next event will truly represent. So overall, you have better America, at least at the same level, if not a better China, stable Europe and somehow a little bit of reduction of Latin America. So it means that the market next year should be a bit better than this year, but I'm being very cautious.

As far as the Beauty Stimulus plan, it added 170 basis points in Q3, and we'll see what happens in Q4 because this is where the way the fragrances will increase. We have still a few ammunitions, if I may use that term, that were not launched in Q3 that were in the end, when I look at Q3, you had the things that we launched in the first part of the year, the new fragrances, but we still have a few launches in skin care by L'Oreal Paris, a few makeup initiatives. So hopefully, it will increase even more in Q4. It's not an exact science, but what I know is that it's above last year by, yes, 170 basis points.

The next question is from Sarah Simon of Morgan Stanley.

Just one question. Obviously, this year was all about more innovation to kind of stimulate the market. How do -- should we think about that in the context of next year? So I'm not talking about the market. I'm thinking about whether you see the potential to maintain that level of innovation next year? Or can you even do better?

So, I think the answer is very clear. Yes, we won't need and will maintain this level of innovation. It's clear that when the context is a bit less rosy as is the world today, Beauty has to play its role of bringing a smile on people's face and we have to do our job in tempting consumers with exciting stuff. And -- we hadn't been doing it enough in the prior year because probably there was tailwinds that we're carrying the market. Now we have to carry the market, and we do it. We do it both through the launches that are being launched now and that will -- most of them being successful carryover for next year. And we, of course, that's what I've spent my days right now in the meeting is reviewing the plans. We have strong plans for 2026. So we want to keep that pace very clearly. And there is something that we haven't discussed so much in the questions we've had and which plays also a role in our capacity to overperform the market is the role of digital and e-commerce.

When we say the market is growing a bit above plus 3%, probably the growth rate of e-commerce is more than twice that. And we grow -- our e-commerce growth is at plus 12% right now and that we are really doubling down on that because it allows you to reach -- it allows us to reach new consumers, whether in India, in Saudi, in the U.S. or in China where it's the largest part of our business. And e-commerce also allows us to penetrate much faster with new products or continuing to animate the existing brand. So that -- I think in the current context, where in the beauty world, offline or brick-and-mortar is a bit more stable and where e-commerce is more booming. That helps us overperform and that's what we intend to continue to do.

The next question is from Jeff Stent of BNP Paribas Exane.

Just a point of clarification. I think you said on North America, the sell-out was 6%, adjusted sell-in was 3.8%. I think you also sort of suggested there weren't really any inventory issues. So I was just sort of trying to square that circle, if you like, if you could elaborate, that would be great.

Frankly, I don't have more details than that. We have -- maybe, Christophe, you want to jump in.

No, I just want...

The acceleration of makeup that plays a role in our own acceleration. So there's category mixes that play, but maybe, Christophe, you want to...

Yes. I just want, again, to restate exactly the growth. So North America in Q3 adjusted is 3.8%, and therefore, cumulated adjusted is 3.1%. So again, we had a very strong Q3 in North America, and this has to be compared, of course, with the situation of the market remaining 2 key important factors. First is the fact that we have a business in North America that is heavy weighted on makeup. And as you know, makeup is not the most dynamic category right now, even if it's recovering. And also, there is a part of the market where we are not there. And here, I refer to the mass fragrances and hygiene, where also it accounts only 2% of our sales in the U.S. while the market is 14%. So what is important is to see really how our divisions are competing in their own territory, and that's an area where we are very proud because in fact, we are still gaining market share and recovering. And that's why all overall, the situation of our business in the U.S. is nearly on par with the market despite those unfavorable factors, footprint.

The next question is from David Hayes of Jefferies.

Just sort of three clarification questions, I guess, on my part. Just to come back to LatAm, just so you're talking about the sellout at 10%. I think in LatAm, 4.4% organic sales growth with no adjustments involved there. So just try to understand, is that a disconnect in terms of shipments that we might catch up in the fourth quarter? I'm just trying to understand the fourth quarter dynamics. And then going back again to the U.S. or just on the U.S. dynamics, you're doing 3.8%, as you say underlying, I think you said the market at 3.9%. Normally, you're well ahead of the market. I guess what you just said is that you're in line with the market despite the weightings of your business. But just again to understand, was there some deficit in terms of your shipments versus the sellout in the U.S.? Or is that aligned?

And the last question was just the 1.5 percentage points you mentioned of innovation impact in the quarter. Is that at the group level? Is that the right interpretation? And is that something that goes out next quarter? Or is that the biggest benefit in the third quarter? Or is that something that could contribute even more as you roll those new renovations into next quarter?

We'll see. In theory, it should go up a bit in the next quarter. It should go up in the next quarter because you have a bigger weight of the categories that are -- where we have had our biggest innovation, and particularly fragrances that are -- well, we are very strong. And as far as the U.S. are -- we were below market on CPD, which with a lot, and we have accelerated on CPD very significantly over the summer, particularly July, August and September.

Thanks to great performance, as I said, on hair care. And a great comeback on makeup with both L'Oreal Paris and Knix, in particular, significantly outperforming the market. And I have to say that you're trying to get the number of recalculations, which I have a hard time now following. I think the message that you have to remember that the U.S. market is improving, and we are improving faster than the U.S. market. That's, I think, the best -- my best shot at your question.

And you want to say a word on Latin America, Christophe, or you want me to take it. On Latin America, we look at the performance on the 9 months basis. And where indeed roughly at plus 10% in sellout of the market at plus 8%.

The next question is from David Da Maia of CIC Market Solutions.

My question have already been answered, but I also have some follow-up questions for Nicolas after this very interesting interview you gave with Luca de Meo in Le Figaro. So the first one on Saint Laurent [ Beauty ]. Can you confirm the brand is generating today more than EUR 2 billion in consolidated sales, not at retail value? And the second one on Gucci. In the interview, you gave quite bullish comments on the long-term potential of the license. So do you think Gucci Beauty could become in the long term, your biggest Couture brand, I mean, bigger than Saint Laurent?

Well, first of all, I can confirm that if Saint Laurent is bigger in net sales than EUR 2 billion. It's actually not far from 3. So it's one of the successes we are the most proud of, and it's entered the top 5 worldwide of luxury beauty and not -- and both with great successes in fragrances, but also particularly in makeup. And as far as Gucci, I don't have the exact numbers and data of their sales, but we know it's significantly smaller. And as a fashion brand, Gucci is bigger than East Saint Laurent. So in the long term, over the 50 years we are talking about, which is the term of the licenses that we will get well available. I think we -- there is indeed the potential for Gucci to become -- I don't know how long it would take, but it can catch up with Saint Laurent.

Considering the Gucci is probably 3x the size of Saint Laurent, of course, gives a potential a lot of...

The next question is from Patrick Folan of Barclays.

Just within derm, outside of the Sun Care impact, what was the growth of underlying skin? It would be helpful to maybe know how the market is performing today versus how L'Oréal is performing? And maybe if you could split that out how CeraVe and La Roche-Posay are holding up? And maybe secondly, just a quick one in light of the carrying deal. Does this change your thought process regarding the Galderma mistake at all?

Okay. So on LDB, so indeed LDB, the first thing to say is that it is the one division where there is still a significant discrepancy between our sell-in, our invoicing, which is a bit less than 4% and our sell-out, which is around 7%. The big difference comes from Europe, where indeed, we still offsetting the -- some inventory of the sun care season last year. So it's more important to look at sellout to give you a good perspective. And then I'll tell you about the brands, as you mentioned. But the market in Dermo has been slowing. It's globally at plus 5% at the end of after 9 months. And it's mostly the North American market that has slowed down with weakness in drug stores and probably a bit cautious consumption on this category of product. .

L'Oréal is well above that market and we grow at 1.5x the market, especially in North Asia. In North America, we are growing 3x the market. So we continue to be healthy in sell-out on a market that's a bit -- that's a bit slower. We have -- in terms of brands, the strongest momentum right now is in brands that are related to aesthetics and I'm thinking about SkinCeuticals which have double-digit growth, and it's true. It's very strong in the U.S. as it is in China.

Hair care is very strong also, both with Dercos and CeraVe, and La Roche-Posay is very health. CeraVe, which has gone back into positive territory in the U.S., which was a very important to me and particularly in moisturizers. So I think we are now on the upward trend on CeraVe. We have a number of initiatives coming. On La Roche-Posay, we're launching a new -- a relaunch of Hyalu B5 which is one of our best sellers in anti-aging both with a serum and a cream. We have new intense moisturizers coming on CeraVe. We have acne patches coming on CeraVe. So we continue to believe very strongly in the power of dermatological beauty and have brands that are correlated to the world of aesthetics such as SkinCeuticals, which leads me to -- it's a perfect segue to the question you asked me on Galderma. Right now, nothing has changed. The fact that we did this great partnership with and deal with Kering doesn't change the situation on Galderma. There's nothing new. We are still in our observation process and nothing more to say on that topic.

The next question is our last question, and it comes from Robert Ottenstein of Evercore.

I want to build on one of your prior comments about the importance of e-commerce to your business and the Beauty business. So perhaps just narrowing things down on the U.S. Amazon has become an important channel now. And you've done a terrific job with Lancome there, I think, as the pioneer on prestige beauty. So I was wondering if you can talk about the impact you see of Amazon's success on the growth of the beauty market in general, channel dynamics and your strategy?

Well, we are -- I must say that, indeed, first of all, we are very happy with our performance in e-commerce in general. As I said, we're growing double digit. It's around -- getting closer to 30% of our sales, I think it's 28% as we speak today. And our e-commerce strategy relies on multiple partners from pure players such as Amazon or Tmall in China or JD, social commerce and of course, the e-commerce platforms of our brick-and-mortar partners, be it Sephora or Walmart in the U.S.A. But I must say that overall, we are very happy of our -- of the situation with Amazon because it allows our brands to reach a larger number of consumers. And it's -- we were talking about the U.S., but I was 10 days ago, I was in India where it's clearly a game changer for us because whether it's quick commerce or the traditional platform allows us to reach consumers all over the country, which we couldn't do before.

But going back to Amazon, it's very strong partnership. It's recruiting new consumers to the brand. It's also loyalizing some consumers that have discovered some of our brands in other channels. So we are -- it's a very, very dynamic momentum. And I think it is indeed contributing to the growth of the market. We saw at the beginning of the year in the U.S.A. where there was a little bit of -- lots of traffic in the brick-and-mortar world in North America and e-commerce in general and Amazon in particular, were remaining pretty dynamic.

So beauty is a category where you need the brick-and-mortar experience. To smell, to touch the textures, to discover the brand and have the full experience, but it's also a category where when you fall in love with a given product, whether it's a new mascara, which is whether it's a fragrance you love, the capacity to replenish and sometimes to discover for categories that are a bit less sensorial, there's a perfect complementarity. So I really believe in the -- what we call O+O, online plus offline strategy. And that's how we grow our brands, making sure, of course, that their equity is absolutely well served and protected in every channel we operate in. I hope that answers your question.

Okay. Well, I think it was the last question. So a big thank you to all for your attention, and talk to you in February.

Thank you very much. Good evening.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.

Thanks for joining us today. I'm pleased that we have L'Oréal's CFO, Christophe Babule here with us.

Hello. Good morning.

Before we go into some Q&A, I'm just going to give the stage to Christophe, who will do a short presentation for the next 10 minutes, and then we'll get into some Q&A. So over to you, Christophe.

So good morning to everybody. We will start with a small movie to let you know what is L'Oréal.

[Presentation]

So yes, welcome to this incredible category called beauty, and I hope this puts you in a good mood. So let's go now to speak more about who is L'Oréal. So you've seen the key figures. And I have to say that, yes, L'Oréal is a truly unique company. Why? Well, let me give you 4 reasons of why I consider that L'Oreal is a truly unique company.

Number one, we are, by far, the largest beauty company. We are 1.5x bigger than the #2 and 3x bigger than the #3 players, as you can see on this chart. And size matters in our industry. It allows us to scale our acquisitions and licenses. For example, Prada and Valentino, both have sales of more than EUR 0.5 billion by now. It allow us to scale our brands. We have 12 out of our 37 international brands that are billionaire brands. And I have to say that quite a few more are waiting to join the club. It allows us to scale our innovation.

You know that we invest a lot in R&I because new molecules can be cascaded over several brands. And of course, it allow us to scale our technology and we invest a lot in beauty tech. But scale is nothing without agility, which is why we consistently optimize and improve our operational and organization footprint.

Reason number 2 is that for more than one century we have been doing only beauty. But we do all beauty making us the only company that is truly a multipolar company. We are in all categories, as you can see on the left side of the slide, and skincare is our largest category, followed by hair and makeup with an increasing weight of fragrances because this category gained 5 points in the last 4 years. We are in all segments or channels with primarily mass and luxe being the biggest ones. We are in all regions. The exposure to our developed market is well balanced. Emerging market contributing 17% of our sales in 2024. And of course, the contribution to the growth is much higher. This breadth of our footprint makes us the turbulence-proof company.

Let's take 2024. The ongoing strength in Europe, North America and emerging markets more than offset the softness in China. At the same time, the continued dynamism of the fragrance and haircare markets more than offset the more sluggish momentum that we see in makeup and skincare.

Third key point is that over the years, we have built and carefully curated an unrivaled brand portfolio. Our 37 international brands are highly complementary and ensure that we cater to all beauty consumers' wants and needs. And you can see that perfectly on this slide, our brands straddle all price points and cover all consumer aspirations from health to more glamor needs.

And we continue to add to our portfolio when we find a brand that will enhance our long-term growth profile, and that is highly complementary. In that spirit, we recently announced 2 very exciting acquisitions. The Luxe division took a majority stake in Medik8, the premium brand with focus on the selective distribution at the health end of the spectrum. And then the Professional Division acquired Color Wow, a U.S.-based prestige haircare brand. That is one of the fastest-growing and most innovative of its industry. And of course, it will fuel the ongoing haircare boom.

Fourth reason, our financial situation is rock solid, which enable us to consistently focus on growing the business. As you know, we grew 7.6% compound annually between 2019 and 2024. Last year, our gross margin stood at over 74%, up 120 basis points in 4 years despite the significant inflationary pressure. This allow us to continue to increase our brand investment by 140 basis points to slightly over 32% of our sales. And last, thanks to our laser sharp focus on SG&A, our operating margin increased to a record 20%.

And let me remind you that our balance sheet remains healthy with gearing of less than 13% allowing us to pursue growth opportunities, as I just described. So let me now say a few words about our recent first half.

First, we delivered organic top line growth of 3%. Now, adjusted for the impact of our IT transformation, mainly in North America and China, the growth stood at 3.2%, implying an acceleration from 2.6% in the first to 3.7% in the second quarter.

Now while I'm on the subject of adjustments, I thought it might be helpful to give you an update of where we are in our IT transformation. To that, we have finalized around 1/3 of the process which has included a number of smaller countries but also some of larger countries like China. We promised you earlier this year to be transparent on the impact of this bigger project which takes us to the chart on the right part.

You will recognize on Q1, the 90 basis points impact we disclosed in the first quarter and the 130 basis point effect we quantified in the second. And probably what is important for you is that on the Q3, we expect that in the third quarter, there will be a positive phasing impact of 70 basis points.

Regarding now our operating margin. Operating profit advanced by 30 basis points, reaching a new first half record of 21.1%. Each of our divisions reporting operating margins in excess of 22%. And 3 of them, Professional, Consumer and Luxe reached a record first half margin.

In Dermatological Beauty, the operating margin declined 70 basis points versus last year as we are working to gradually reduce the existing imbalance between the 2 halfs.

Regarding the market, that's important because we continue to expect that global beauty market growth will be around 4%, plus 4%, with significant discrepancies between the various regions. And of course, we have every ambition to outperform the market with our strong stimulus plan.

So what is the stimulus plan? Critically, our beauty stimulus plan will accelerate further in the second half, up 300 basis points compared to last year, 300 basis points is an addition of launches in the sales that we plan for the second half. We will continue to roll out our most recent blockbusters, and we have an even fuller basket of launches in the second half. This is especially true in Luxe with a new men's fragrance from Prada. You see here the picture [indiscernible], inaugural fragrance from Miu Miu and the latest skincare innovation from Helena Rubinstein.

When it comes to e-commerce in the last 12 to 18 months, the contribution from online to total beauty market sales has been accelerating. In the first half, online grew more than twice as fast as the market. We are uniquely well placed to benefit from this shift given our long-standing investment and presence in the channel.

Last but not least, let me put the spotlight on what's new in the areas that I know you are most interested in. First, the United States. The momentum continued to accelerate for the market and for us. This was especially true in consumer products, where market growth remained solid and where we outperformed the market 2 to 3x in spite of our adverse footprint, illustrating the success of our launches especially in makeup, where we grew 8 points ahead of the market.

We also outperformed the market in our other 3 divisions, especially in Professional Products. The Chinese ecosystem remains a tale of 2 cities. In Mainland China, the market continued to stabilize, and we continue to outperform it in 3 of our divisions. I'm quite optimistic about our Consumer Product division where the gap to the market has been narrowing and with a strong launch pipeline also in the second half.

But in Travel Retail, on the other hand, the situation continues to be challenging across all downtown operations, whether in Hainan, where the footfall and conversion rates remain under pressure. South Korea and most recently, also in Thailand.

On the tariffs, well, we have now better visibility. Recently, we had some small good news, mainly from Canada. They listed tariffs regarding importation of product from the U.S. And therefore, we believe that the impact in our P&L this year is reducing. I shared a few months ago that could be impacting 40 basis points. Now we are down to 30 basis points.

Last point is our acquisition where we've done recently some acquisition in June, as you know, Medik8 and Color Wow. And the good news is that we're expecting to consolidate both brands starting from this month in September.

Thank you very much. And with that, I will hand over to Patrick for our fireside chat.

Super. Thanks, Christophe. And thanks also for confirming again the 4% number, I guess, you knew that was going to come up as a question.

I guess following up from that, how are you guys performing versus the wider market right now? The gap of outperformance has narrowed recently over the last 12 to 18 months. Are you starting to see maybe some green shoots as we kind of go into the second half now and maybe that outperformance is going to go back to a bit of more of a historical level?

Well, the good news is that at least the market is increasing compared to the first quarter that has been quite impacted in some markets. I'm referring to the U.S., for example. Now the market is probably a little bit above 3%. And what we have seen at least July, August, is positive news.

Positive news in the U.S., as I just said, because the market is much more dynamic. And also, for the time being, at least in Mainland China, which is the second biggest market, the market is also stabilizing, with up and downs because depending on the promotion, but that's pretty good news.

And when you dive into how the market is doing, it's quite interesting because when you look at the top 30, actually, we have now the figures of the big players. They have all been publishing their results. And we did the plus 3, but the top 30 have been growing by only 0.7%.

So the growth is mainly coming from the small brands, mainly from the long tail, those indie brands that are gaining strength in countries like in emerging countries a lot, of course, in the U.S. But that's quite interesting because it means that among the big players, we are strongly outperforming but at the same time, we're agile enough also to compete with the small indie brand in some of the geographies. So that's what we are monitoring very carefully.

Okay. That's clear. You touched on a few things there, and I want to dive into one of the key topics China, and you talked about how you have innovation coming in the second half there. But I want to go back to the Q2 conference call when you talked about competition is fierce. How has the Chinese market been doing since the 618 shopping festival? And how do you expect the innovations to go down in the second half?

Well, first, some insights about the market in China. Competition, of course, is still increasing. But what we see is competition coming from Chinese brands is only in consumer market. So for the time being, in our other divisions, we don't see that fierce competition as the one we can see on consumer.

And it's all about bringing our innovation at the right time. So we know that at least in consumer our biggest launches are coming in the next 4 months. So that's why we expect the gap to narrow. And then we'll see, but at least when I look at the results of the 618, we've been growing at 10%, while the overall results are at plus 7%. So we've been doing pretty well.

L'Oréal Paris is still the #1 brand. We put 4 of our brands in the top 10, 8 in the top 20. So I can tell you that we're still there and overall growing, which is also a good news because the market was quite negative still in the Q1 and now it's stabilizing. So it's not a big wow. But at least with the innovation, with investment a little by little, we are coming back from a market that was very negative in the second half of last year, minus 6%. So to see the market stabilizing for us, at least, it's a good news.

Okay. Related to China on Luxe, you talked about the consumer side of things. But can you maybe touch on why the Luxe market has been, in general, a bit weaker in China? There's that concern, but also in the U.S., you've seen a bit of weakness. Is it suffering from years of inflation? Is it more competition within the luxury space? Or consumers trading down the pricing that? Can you pinpoint what you think is the cost concern?

Well, there are many factors, and I think that the reason is quite -- could be quite different from one big regions to other ones. First, I want to remind that, for example, in emerging markets, the luxury business is doing pretty well. So growing very fast. Even in Europe, our old continent, Luxury has been developing pretty well, nearly at least above 4%. And now you have 2 big regions for which I believe the reasons are quite different. You have China on one side, where this is due to the economic situation. You know what happened in the past 3 years.

But one of the probably things that could change a bit the fate of luxury brands is that you have noticed that recently, the stock market in China has been catching up a lot. And I'm sure that this will help the sentiment of the Chinese consumers probably to look back a little bit more to our luxury brands. And even within the luxury, you have for example, our couture brands in China are performing extremely well. I mean we are speaking about double-digit growth. So probably -- when it comes to skincare brands, it's where here, there is more competition coming from dermatological brands. So our brands, by the way, but also from the market.

And from the U.S., I think there was a specific situation that is linked to the Q1 for political and economical reasons. But what we've seen since the end of Q2 and confirmed in July and August, is a stronger dynamism in the U.S. market. And then it comes with innovation. So that's where big companies and we are doing our job is to bring innovation. You know that fragrances are doing extremely well. The market is still -- it's not any more double-digit growth worldwide, but it's still growing by more than 7%. In that context, we are well above 10% growth. And we need to fuel the pipe with strong innovation and that's why we have new launches coming in the second half. So we'll see what happens.

Okay. So going from -- to quite a good success story with Kérastase, can you maybe talk about your success there? What's driving that success maybe? And where are there still white spaces with the brand across different markets?

Yes. This is an incredible result, and we see Kérastase growing extremely well in all regions of the world. In the U.S., it's a huge growth. And I think it's first the fact that the consumers, and we have seen that not only in our Professional Product division, but also in consumer. Consumer has been looking for more value in haircare. So every time we put some innovation, and that's true with L'Oréal Paris, it's true also with Garnier or with other brands. When we put more innovation in the products, implying higher prices, the consumers have been responding extremely well. And by the way, the first success we've noticed it's something that was designed by the Brazilian teams. So a market where prices are not that big.

And actually, when we roll out this innovation into other geographies in the U.S., in Europe, it has been the same everywhere. So that's why we have been I think, doing a lot in valorizing this category and therefore, enhancing the growth. So Kérastase is benefiting from that. Consumers are looking for a more value in terms of innovation. So they dare to put the price. And of course, it comes also with very strong innovation. And in that respect, the latest launch of Kérastase is doing extremely well.

And the third main reason is e-commerce. This is a brand that is also boosted by our strength in e-com. And I think if you sum up the -- those 3 regions, this is -- those are the main reasons of the strong success of Kérastase.

Okay. And maybe going to another brand that has had a great success over the last 7 years CeraVe. And it's quite interesting because we've seen a bit of a moderation of growth there recently, which I know you guys have touched on a few times. But what is the opportunity you guys are selling at within the CeraVe skin kind of space?

And then lastly, on CeraVe, you just did the anti-dandruff line. Curious to hear the strategy behind that rollout, guessing that's after different geographic and target audience compared to the Kérastase brand.

Well, maybe for the audience, I want to remind what is the history of CeraVe because it's a brand that when we acquired was doing EUR 150 million and is now bigger than EUR 2 billion. So of course, there's been a huge probably one of the most incredible success stories among our brands. So this is a brand that has been a bit a victim of its own success. So that's the main reason of the plateauing of the brand in the past few quarters but the teams have been now preparing the next steps for the development.

So first, it comes with new products. So as you know, we launched for recently the haircare range of products. And it's visible here in the U.S. [indiscernible] is doing pretty well because in the therapeutic haircare category, we have already 8.5% of market share. So of course, we have now to scale this product in other geographies. And we are also bringing innovation, new products in new categories like Hand & Care. So new launches, it's the #1 thing that we are doing. Second is geographies because even if we started to develop in other regions, the growth of the U.S. has been so big that still today, the U.S. is still half of the market.

So we don't have to forget about the huge potential that we still have in other regions, and that's why we put recently the brand in India doing extremely well also in China. We are focusing now in the lower tier cities. So there's a lot to do in many emerging markets.

And third point is this brand is addressing probably one of the biggest needs that the consumers have. It's about skin -- resolving skin problems. And we know that mainly in emerging markets with urbanization and pollution, the needs are incredibly big and untapped yet. So that's why we are investing also in helping dermatologists to be more visible in some of the countries.

Okay. So sticking with skin care. We've seen some softness recently in the market, particularly in Derma and Luxe, obviously, has been a bit weaker. Why do you think that's the case recently? And I guess from your growth perspective is are we seeing the competitive dynamics heat up quite a lot?

Well, I don't worry that much because honestly, I've been looking at what was the growth of skincare over the years. And probably among the categories is the category where we see more stability. The fact is that sometimes you have a year where the category is growing by 5%, 6% and the year after is growing by 3%, 4%. But on average, it's always growing by 4% to 4.5%. It's not linked to fashion, it's not linked. It's really need. So last year, the market was quite dynamic. This year is a bit less. But I'm convinced that probably next year, it will come back.

So behind it's a lot about innovation, to be honest. So -- and here, we know that we should do better first, because we have the strongest research teams in this market. So we have all the capabilities to put innovation in the market. That's why there has been this stimulus plan put for this year, but not only this year, we are already preparing for 2026. But the long -- the key drivers behind the long-term growth of this category are still there. So that's why it's up to us to churn out the right products and take our fair share in this market.

And this is very important because, as you know, this is the biggest category in beauty. So we cannot also ignore the fact that skincare being mainly Chinese or North Asia category when China is at 0 growth. Definitely, it has an impact on this category, but you exclude China and this is a category that is still growing by 4% to 5% this year.

Okay. You mentioned a few times around about indie brands in the market. And one of your competitors this week have talked about barriers to entry have come down, but barriers scale are still there. How do you see the kind of the fight with indie brands? Do you see it as good for the category? In aggregate, when you add up all the indie brands, it does seem like the environment is much more competitive in the last 2 years than it has been historically. Is that what L'Oreal thinks as well? Or do you guys think differently about that?

First, we welcome competition. Then I would like to make a small distinction between competition and number of competitors. So obviously, barriers to entry have been much more lower than probably 10 years ago. So that's why we see plenty of our brands. Just want to tell you that, for example, in the last count that we did in countries like China, but also Indonesia, we count more than 20,000 brands. So it's a very dynamic market. And I think indie brands are very important in the economy of beauty because a lot of innovation is coming from them. So it's very important to have a dynamic in the ecosystem.

That's why this market in the U.S. is extremely interesting because indie brands are quite strong. And the point is that, of course, many of them are disappearing but it's a way for us also L'Oreal to understand what are the latest needs or latest hot cakes in market. Sometimes we take some good ideas from this ecosystem. And sometimes, as I mentioned before, for those that are the most promising, we try to acquire them. So what is interesting is that overall, worldwide, the weight of those indie brand is increasing. I estimate that it's probably today, 9% of the beauty business worldwide. It was much less 10 years ago.

And also the strongest indie brand ecosystem was mainly here in the U.S. But today, you see this happening in other markets in China, in Southeast Asian markets and now in India. So yes, interesting. We need indie brands, and that's bringing a little bit of a spike in the competition.

You talked about M&A there, and it's -- you've been busy the last 12 months as well on the M&A front. You mentioned a few of the brands in the presentation. Considering now that the quantity of brands now under the L'Oreal umbrella, how should we think about M&A moving forward? Are you guys comfortable with continuing doing disciplined bolt-on M&A? Should we have any concern of portfolio sprawl?

What is important is to keep enriching our portfolio making sure that we have, at any time, the best portfolio we can to address all categories of beauty in all geographies. So that's why from time to time, it's important to bring into the portfolio, those brands that are in 2 ways, interesting for us. First, because they bring growth on the long term. And hence, the interest of having a bolt-on strategy because it gives you the capacity to bring growth for years.

And the second is, of course, this is a brand that has to be complementary to our current portfolio. And then at the other -- what is important as well is, of course, to be -- not be complacent with our current portfolio. So at one stage, it's a brand we are not capable to meet what are our targets or the brand is fitting anymore really some of the consumer needs. Well, it's our responsibility also to clean sometimes the portfolio of our brand, and that's what we do. So usually, we don't speak a lot about them because they're very small, but the latest divestment was Carol's Daughter here in the U.S. In the past, we've done with other brands in France. So what is important is no complacency in our portfolio. That's important as well.

Yes. And that's for sure. When we go back a year, it's been a year since the Galderma stake and partnership. How do you guys view that stake over the long run? Or it's been very topical, I think, over the last 12 months? And maybe secondly, can you talk to what you've learned over the last 12 months since the stake?

Well, first, we are quite happy with this investment because the value has just doubled since we did this acquisition. We are still, of course, working with them on this R&I partnership. And by the way, we were just yesterday in discussion with them to review where we are today with this partnership. Very interesting results. So basically, we are bringing to them some of our technologies. And they have been testing it and with very good results. So this will reinforce the capability at least on the marketing side to explore new territories as well.

So we decided just yesterday to go into the second phase with them. And what is important is that we take the time also to understand the whole ecosystem. So of course, we can understand from ourselves because we have some brands. I mentioned SkinCeuticals or Skinbetter Science that are really in the ecosystem of those injectable business. We've been also doing investments in -- small investment but acquiring a chain of clinics in China. We took also participation in clinic chain here in the U.S. to understand also better from the inside, what is the perception of the consumer, how they behave with those injectables how much enhancing the consumption of topical products.

So we are consolidating all those data to even further understand not only the direct benefits of injectables, but also the halo effect on the whole beauty ecosystem. So here, I want to state again, this is a market that we want to be in. It's just that we have to consolidate the learnings on this because it's an important strategic movement.

Okay. We have just about a minute left and I -- there's 2 questions I want to get into, but the first one is just on channel exposure. You talked about the beauty ecosystem. We know the channel shift over the last decade has been pretty large. How should we think about your channel focus now between department stores, specialty, travel retail and ultimately online? Is there one where you think the battleground is more intense, I'm guessing it's online. But how should we think about your exposure?

We are quite agnostic to one channel or the other one. What is important is to be aware the consumers are willing to shop. And we believe that what makes the strength today is the O+O strategy, so being visible not only in online but also offline.

And then it's up to each of those channels to adapt themselves and make sure that they keep their attractivity with the consumers. And that's why we see some channels that are still overperforming, namely e-commerce. And as I was saying at the very beginning, we are really overperforming in the e-commerce, which is quite important because in emerging markets, e-commerce is taking now a first share of the business. But it's extremely important as well to be visible in the offline in the brick-and-mortar.

So we see -- and here is not only the U.S. perspective, but we see some department stores that are renovating a lot their merchandising and they're doing extremely well. Some others are not investing and therefore, losing shares. More complicated recent investors, but we see Ulta is doing well, Sephora is doing well. So we just follow the trend. And again, I think it's more in the hand of the retailer to keep investing and make sure that the way they expose the brands are -- is attractive for the consumers.

And secondly to that last question. Do you think the physical store experience like department stores, is that the one where consumers are still looking to engage with beauty products? Is that still as important as it was?

It is very important. That's why we are investing a lot ourselves. It's not only training or beauty advisers, but we have more and more devices in department stores, for example, in Lancôme, that are bringing science and the consumer can have a deep understanding of what's the situation of the skin, what is the true product that will solve the problem she has or he has. And this is something that is very difficult to afford on the e-commerce platform. So for those consumers that are really willing to understand what is the true product that will be useful for them, nothing better than to go to a Lancôme counter in the U.S. or whatever in the world, wherever in the world.

Okay. Well, that's all the time we have for today. Thank you, Christophe, and thank you for...

Thank you very much.

Welcome to the conference call regarding L'Oréal's [ 2025 ] results. The conference is about to begin.

I now hand over to Eva Quiroga. Mrs. Quiroga, please go ahead.

Good morning to all, and thank you for joining us for the presentation of our first half 2025 results. I'm here with our CEO, Nicolas Hieronimus.

Good morning.

Our CFO, Christophe Babule.

Hello. Good morning.

And the Global Head of Corporate Finance and Financial Communications, Laurent Schmitt.

Good morning.

As always, Christophe will comment the first half results. Nicolas will then share his takeaways from the first 6 months and tell you why we remain confident in the outlook for the rest of this year and beyond. After that, we will open for Q&A.

You can find the slides of both presentations on our website already. You will be able to access the replay of this call later today, and the half year report will be available at the beginning of next week.

And with that, over to you, Christophe.

Thank you, Eva. Ladies and gentlemen, good morning. L'Oréal delivered a solid performance in the first half. My four key highlights are the robust like-for-like growth of 3% in a dynamic market; the sequential acceleration in like-for-like growth, adjusted for the phasing related to our IT transformation; the record operating margin of 21.1%, up 30 basis points from last year; and the operating net cash flow of EUR 2.7 billion, up 38% versus last year.

Sales increased by 1.6%. Foreign exchange had a negative 1.9% impact as the euro appreciated against most of our key currencies. You can find further detail in the appendix of this presentation. If the exchange rates on the 30th of June were extrapolated until the 31st of December, the full year impact of currency fluctuations on sales will be a negative 3.7%. The change in scope of consolidation contributed a positive 0.5%. It reflects the acquisition of Dr. G on 31st of March and the impact of hyperinflation accounting in Argentina and Turkey.

On a like-for-like basis, growth came to 3%. This was driven by a positive contribution from volume, up 1.2%, and value, up 1.7%, the majority of which from mix. As you can see on the chart in the center, like-for-like growth adjusted for the impact of our IT transformation in North America and China accelerated from 2.6% in the first to 3.7% in the second quarter. The first half stood at 3.2%.

While I'm on the subject of adjustments, I thought it might be helpful to give you an update on where we are in our transformation. To date, we have finalized around 1/3 of the process, which has included a number of our smaller countries as well as some of our larger countries. We promised you earlier this year to be transparent on the impact of these bigger projects once they have been implemented, which take us to the chart on the right. You will recognize the 90 basis point impact we disclosed in the first quarter, 130 basis points effect we quantified in the second. The difference between the two comes from the fact that it took a little over a quarter to reverse the impact of our North American phasing in Q1 last year.

In the third quarter, there will be a positive phasing impact of around 70 basis points, the net effect of two factors: first, a negative 40 basis points stemming from the gap I just explained; and second, a positive 110 basis points related to the IT transformation of our Luxe business in North America in the third quarter of last year, which we commented but did not quantify at the time.

With that, let's move on to look at our divisions. They all grew on a like-for-like basis. Driven by the ongoing boom in premium hair care, Professional Products advanced 6.5%. Consumer Products progressed 2.8%, perfectly balanced between volume and value. Luxe grew 2% with fragrances maintaining their double-digit win, and Dermatological Beauty advanced 3.1%, reflecting a particularly challenging basis of comparison. All four key brands contributed.

Let's now turn to our regions. Emerging markets continued to grow in double digit at 10.4%. SAPMENA-–SSA and Latin America, both contributed from it. In North Asia, sales declined 1.1% held back by Travel Retail, excluding which, growth turned positive in the first half driven by Mainland China. Momentum in Europe remained robust at 3.4% with particularly strong performances in the DACH and Iberia clusters as well as in Central Europe. In North America, progress was solid at plus 2%, implying a gradual acceleration in the second quarter.

And finally, let's look at our categories. At 12.1%, hair care was the most dynamic with professional, mass and derma contributing. Perfumes maintained their impressive double-digit pace at 11%. At 2.4%, makeup continued its gradual rebound, boosted by new launches. Hair color advanced by 0.5%, led by mass, and skin care declined slightly, impacted by the situation in North Asia.

Let's now move to the profit and loss account. In the context of ongoing economic and geopolitical tensions, we continue to deliver strong progress. Gross profit amounted to more than EUR 16 billion, resulting in a very healthy margin of 74.7%. The slight 10 basis points decline versus last year reflected a number of factors, including adverse currency movements and tariffs. Research and innovation expenses came in at EUR 672 million, stable at 3% of sales, in line with the long-term average.

Advertising and promotional expenses stood at EUR 7 billion or 31.9% of sales, a slight 20 basis point decrease versus last year as we continue to see the benefits of the gradual rollout of our BETiq optimization tool. SG&A expenses of EUR 4.2 billion decreased by 20 basis points in relative terms, reflecting our continued focus on cost control and operational efficiencies.

Operating profit increased by 3.1% to more than EUR 4.7 billion. The operating profit margin advanced by 30 basis points, reaching a new first half record of 21.1%.

As I do in my first half presentation every year, let me remind you that L'Oréal is managed on an annual basis. Therefore, the profitability of group and divisions in the first half cannot be extrapolated to that in the full year. All of our divisions reported operating margins in excess of 22%. Three of them reached record first half margins. The profitability of Professional Products came in at 22.4%, up 30 basis points. Consumer Products improved their profitability by 50 basis points to 22.5%. L'Oréal Luxe increased its margin by 40 basis points to 22.3%. The margin of Dermatological Beauty stood at 28.2%, 70 basis points below last year as we are progressively reducing the existing imbalance between the two halves.

Non-allocated expenses, consisting mainly of corporate and fundamental research costs, were down by 10 basis points at 2.3% of sales. Net financial expenses amounted to EUR 102 million for the full year. You should expect to see an increase owing to the acquisitions of Medik8 and Color Wow. Sanofi's dividend came in at EUR 348 million, a 22% decline compared to 24%, reflecting the sale of a 2.1% stake earlier this year. The adjusted income tax stood at close to EUR 1.2 billion, representing a rate of 23.7%, broadly in line with that in the first half of 2024 at 24%. Net profit excluding nonrecurring items amounted to EUR 3.8 billion.

We will now complete the review of the P&L account. Nonrecurring items amounted to a negative EUR 415 million compared to a negative EUR 89 million in the first half of last year. Other income and expenses stood at EUR 269 million and included, first, restructuring costs at EUR 93 million related to projects in the Luxe division as well as Europe, north America and Travel Retail; second, costs related to product liability lawsuits amounting to EUR 85 million; and then last, the impact of the disposal of Carol's Daughter amounting to EUR 41 million.

Nonrecurring tax items came in at EUR 146 million. This reflected the impact of the exceptional temporary surcharge approved by French parliament earlier this year. It stood at EUR 198 million in the first half and is expected to amount to around EUR 250 million in the full year. Considering all nonrecurring items, net profit after noncontrolling interest came out at EUR 3.4 billion, a decline of 8%.

Gross cash flow of EUR 4.4 billion was down 3%. Our working capital amounted to EUR 861 million, down from EUR 1.7 billion last year. This can be attributed to several factors, including fluctuations in the fair value of foreign exchange derivatives as well as the increase in tax debt. Capital expenditures stood at EUR 766 million or 3.4% of sales, broadly in line with last year. Operating net cash flow of EUR [ 2.7 ] billion increased by 38% that of last year and residual cash flow was a positive EUR 310 million, driven by the sale of the stake in Sanofi, which more than offset the impact of acquisitions and share buybacks.

The balance sheet remained robust with shareholders' equity of EUR 31.2 billion or more than half of the total balance sheet. At the end of June, net debt amounted to EUR 4 billion and to EUR 2.1 billion excluding financial lease debt. The gearing ratio stood at 12.8% and the financial leverage at 0.38x. The financial situation remains very healthy.

I thank you for your attention.

Good. Up to me now. Good morning, everybody. Since Christophe has already commented the numbers in details, let me jump right in and address some of the questions I know many of you are keen to ask. The first one is about the market. So let's start with the market.

At the beginning of the year, we told you that market growth would gradually accelerate over the course of the year, and that is exactly what happened. In the first half, the market advanced slightly more than 3%, implying a clear acceleration from the first quarter at slightly over 2%. This acceleration was broad-based across all regions. Most remarkable was North America as the U.S. improved significantly after a challenging start of the year. In Mainland China, market growth was broadly flat, a significant improvement from the 4% decline last year. But what is even more important is that luxury started to outperform mass, which is obviously helpful given our footprint. Emerging markets remain dynamic with both regions growing in double digits. In Europe, market growth remained solid but below last year's level, which was boosted by pricing.

Second, let's look at our performance. Considering the impact of the phasing relating to our IT transformation, my comments will refer to numbers net of this phasing unless I tell you differently. As anticipated, our like-for-like growth accelerated from 2.6% in the first quarter to 3.7% in the second. This takes us to 3.2% in the first half. Yes, this was broadly in line with the market, but the devil is in the detail, and we outperformed the market in 3 out of 4 divisions.

Luxe outpaced the market in all regions and across all categories, especially fragrances, where it grew thrice as fast as the selective markets. The strong innovation pipeline added 300 basis points to the contribution from new products. Professional Products continue to grow multiple times faster than the market driven by the unstoppable boom in premium hair care. Our Kérastase billionaire brand grew in high teens, boosted by the launch of Gloss Absolu.

As you know, LDB was up against a particularly challenging comparison base in sell-in. Sell-out was significantly better and well above the dermocosmetics market at a multiplier of 1.3x. Emerging markets in North Asia grew in double digits, reflecting the division's focus on geographical expansion. In the U.S., CeraVe started to regain traction with successful entry into haircare health, but we also saw an improvement in the core skin care business.

Consumer Products slightly underperformed the market. This was partly due to its unfavorable footprint as the division overindexes in U.S. makeup, which remains soft, and has no exposure to fragrances the fastest-growing mass category. The division significantly outperformed the market in hair care and makeup. It showed encouraging trends in skin care in markets with a strong innovation lineup like Latin America. And we are reassured by the recent green shoots in the U.S., including in makeup, where our innovation has started to kick in, as you will have seen in the most recent Nielsen data.

By region, our emerging markets are starting to pull their weight. They're accountable for 17% of our sales and continue to grow in double digits. The large markets all grew the vast majority above 10%. Four of the emerging markets were among the top 10 contributors to growth at group level: Mexico, Brazil, India and Thailand, well balanced between our two emerging regions. Growth was driven by a healthy combination of volume as we recruit new consumers and mix as we premiumize our offer. In North Asia, adjusted growth improved sequentially. The key driver was Mainland China, which turned positive for the first time in 5 quarters as we continue to outperform a stabilizing market. Sales increased in each of our four divisions. We were encouraged by 6.18. The market advanced around 7%, our brands were up double digits, and we had 4 of our brands in the top 10 and 8 in the top 20 in this year's ranking.

In North America, adjusted growth accelerated in the second quarter, including first green shoots in Consumer Products as well as Dermatological Beauty, as I just explained. In Europe, growth was ahead of the market in sell-out, with particularly strong performances in Luxe and Professional Products. Sell-in was impacted by a high comparison base particularly for LDB given last year's strong sun care presale.

Third, let's look at how we think -- we should think about the rest of the year. What we have seen so far this year makes us confident that global beauty market growth will come in around 4% as we had predicted at the start of the year despite the many economic and geopolitical uncertainties. We expect the market acceleration to continue, helped by an easier comparison base as market growth slowed from 4.5% in the first half to 3.5% in the second half of last year.

The appetite for beauty has never been more dynamic. Today, over 2/3 of people around the world consider it important to look fit and attractive. That's 6 points higher than just 3 years ago. This is a global trend whether you look at the U.S., Brazil or India, just to name a few. Social media conversations over all things beauty remain incredibly dynamic with 6.5 billion beauty searches on TikTok in the first half alone, up over 50% from last year. Last but not least, beauty market growth could be boosted by price increases related to the announced and pending tariff hikes. And we have every ambition to outperform the market.

Critically, our Beauty Stimulus Plan will accelerate further in the second half. Our ambition is to increase the weight of new launches by more than 300 basis points versus last year. We'll of course continue to roll out our more recent blockbusters such as Kérastase Gloss Absolu, L'Oréal Paris Infallible, SkinCeuticals P-Tiox, and we have an even fuller basket of launches in the second half. In the Luxe division, for example, we have a new men's fragrance from Prada, the inaugural fragrance of Miu Miu and the latest skincare innovation from Helena Rubinstein.

In the last 12 to 18 months, the contribution from online to total beauty market sales has been accelerating. In the first half, online grew twice as fast as the market, and we are uniquely well placed to benefit from this shift given our long-standing investment in this channel. In the first half, eCommerce accounted for almost 29% of our sales, more than 2 points above last year and grew in the low teens.

Over the weekend, Europe and the U.S. reached tariff agreements, imposing American tariffs of 15% on beauty imports from the EU. I can't give you a definite number for the impact tariffs will have on our margins since we are still missing certain elements. What I can tell you, however, is that it will be manageable. Our 36 factories and more than 150 distribution centers around the world give us significant flexibility as most of the units we sell are manufactured where we sell them. The one exception are luxury fragrances, which are made in Europe. We have ensured that we have built sufficient inventory and we consider raising prices to offset at least part of the tariff impact.

Looking ahead, I'm super excited about our prospects as we continue to future proof our business by adding highly complementary fast-growing brands to our existing portfolio and by continuing to widen our innovation moat across all parts of the business. Over the years, we've built and carefully curated a portfolio of 37 international brands which ensures that we cater to all beauty consumers wants and needs, and we continue to add to our portfolio when we find a brand that will enhance our long-term growth profile and that is highly complementary.

In that spirit, we recently announced two very exciting acquisitions. The Luxe division took a majority stake in Medik8, a premium scientific skin care brand based in the U.K., best known for its CSA, vitamin C, sun care and Vitamin A routine. The Professional division acquired Color Wow, a U.S.-based prestige hair care brand that is one of the fastest-growing and most innovative in the industry. Since the start of the year, both brands have been growing well into double digits, building on several years of very strong momentum. And they fit right in by filling two clear gaps in our portfolio. At a time when consumers continue to obsess our skin health, Medik8 as a premium brand will focus on selective distribution at the health end of the spectrum. In the midst of the hair care boom, Color Wow adds to the glamor and prestige scale of our professional brands.

Now let's talk about innovation. From its very inception, L'Oréal has been driven by a deep rooted culture of innovation. One of the innovation highlights this year has been around our first Longevity Summit in Paris, where we showcase how the beauty industry will need to shift from symptom correction to root cause intervention to extend the skin cellular health span. We introduced the L'Oréal Wheel of Longevity, which decode the skin biological aging. It uses our proprietary Longevity AI cloud based on 280 biomarkers.

We launched technological innovation, like Cell BioPrint, which enables consumers to understand the aging trajectory of their skin and find solutions that can reverse it. And we introduced product innovations like Absolue Longevity Cream from Lancôme with its first-ever DNA extraction from a rose.

Another important scientific development was the implementation of our research cooperation with Galderma. We recently signed an agreement for a joint project to use our complementary technologies to develop a new easy-to-use imaging method. This method will show how the skin's internal structure changes in a noninvasive way. But for us, innovation goes far beyond the lab to include our creative processes and our beauty tech leadership. And we constantly widen our digital moat with our investment in AI, which strengthens everything we do.

In R&I, AI helps us to accelerate molecule screening, raise testing standards and develop sustainable formulations in collaboration with external partners like IBM. Take hair care. Using GenAI, we developed digital twins of all hair types, enabling us to accelerate the discovery of new molecules with over 150 new polymers being explored in just 6 months. We use AI to optimize trend prediction, streamline international internal operations and enhance our supply chain, making production facilities more agile and responsive.

AI drives personalized experiences. Take agentic AI, the famous AI-powered Beauty Genius. Since its U.S. launch last October, it has driven over 500,000 conversations and is now integrated with all major retailers, already the first of its kind AI-powered multi-brand marketplace that decodes each user's beauty profile and provides the right product recommendation. AI enables us to sharpen our creation in marketing. We recently announced a partnership with NVIDIA that uses their Omniverse platform to create incredibly detailed 3D models of our products that can be placed in various contexts and settings, significantly reducing time and cost. And of course, we continue to roll out BETiq, our A&P optimization tool, adding France and Mexico to our existing roster of 6 countries.

As a result, we were incredibly proud when Fortune Magazine named us as Europe's Most Innovative Company first ever ranking last month, not just because among 300 companies, we made it into the top spot from the get-go, but because the ranking assesses innovation based on three pillars: product innovation, process innovation and innovation culture, validating our conviction that innovation fueled by science, technology and creativity is the very best way to succeed.

With that, let me conclude. We have delivered a solid first half with the anticipated acceleration in top line growth and yet another increase in operating margin, showcasing the quality of our P&L management. We are confident in the second half as market growth is set to continue to improve, and we have what it takes to outperform the market, boosted by the second act of our Beauty Stimulus Plan. And we are excited about the future. More than ever, we are a beauty tech company, and that will allow us to continue to augment everything we do, further widening our competitive moat.

I thank you for your attention.

And with that, we are ready to go to the Q&A. Operator, please. .

[Operator Instructions] The first question is from Guillaume Delmas, UBS.

Two questions for me, please. First one, on Europe. It did slow a little bit in the second quarter. I think it was your lowest quarterly like-for-like sales growth performance since the COVID years. So question here is, any particular temporary factors or any country that you would highlight that may have had an adverse impact on the region's growth in the quarter? I mean it seems to have been also a bit of a discrepancy between sell-in and sell-out. So whether that should continue going forward.

And I guess also looking ahead, Nicolas, are you still confident that the beauty market in Europe today is structurally different than what it was a decade ago when L'Oréal's like-for-like sales growth was more muted, like low single-digit like-for-like? So still optimistic about Europe despite this small deceleration in Q2? That's my first question.

And then the second one is on your Beauty Stimulus Plan and how we should think about it. I mean do you see it as a one-off, as in you're doing it in 2025 because the environment is particularly volatile and challenging. But after that, you're done? Or do you see scope for another beauty stimulus next year, basically doubling down, raising the bar further for 2026? And I guess related to that, in terms of funding this Beauty Stimulus Plan, would it be fair to say that initiatives like BETiq or expanding your shared services are key enablers for this beauty stimulus?

Okay. So let's take it one by one. Well, on Europe, I'll start with the end, I remain optimistic because I see, first of all, the market overall remaining quite robust. The market in sell-out was around 4% growth in first half. So it's still significantly above the growth that we were experiencing pre-COVID. And one of the explanations of what appears to be a slowdown is what also is impacting our [ LDB ] division at global level is the impact of the last year's unfortunate strong presale and slow sell-out of the sun care season, which is particularly important for Europe.

Overall, the market is at plus 4%. And if I look at countries because you were asking about countries, some are doing really great, Germany, Spain, Eastern European countries in general, Greece. The one country that is a bit disappointing on the first half is France. Unfortunately, this is where the market is still growing but slower than the rest of the other markets. So it's our role to stimulate it and then also probably, I would say, a [ mood context ] in France, that's not as good as everywhere else. And we have -- we are broadly in line with the European market, above in three divisions and slightly below in CPD and with pretty strong plan in the second half.

I was just in the U.K. a couple of weeks ago, and the teams there are quite positive and ambitious. Overall, I remain optimistic in Europe. And probably the why is that -- is this appetite for beauty that I see. I was talking about TikTok. But in Europe, the social media engagement on beauty is really high. And you have this double phenomenon of of consumers, young consumers entering and being passionate about beauty, and of course, they shift from one category to another. Fragrance is super hot, and haircare, super hot right now and makeup, a little bit more in no-makeup, makeup or lower color makeup trend. But overall, there's a great appetite for beauty. And we have this aging population that is very involved into skin care.

So overall, I remain optimistic for Europe to remain above the pre-COVID level over there. So factors, sun care, sell-in and, in terms of countries, most doing great, France a bit subdued.

As far as the Beauty Stimulus Plan, no it's not a one-off. Clearly, there's more competition out there. Everything goes faster. So we have -- we will be on, I would say, an increased innovation reason. And what we've designed for 2025 which in the end is impacting mostly our second half, even though a few of the launches started pretty well in the first half, this is going to be -- to have to be a new habit. So of course, as always, in launches, some are overperforming, some underperforming expectations. But clearly, the -- we want more launches.

And you're right to say that overall, we need and want to develop our shared services, to develop the productivity of our investment to be able to support everything and to target really properly every cluster of consumers because, of course, when you're selling to boomers like myself or to Gen Zs or very young consumers, you need to use different channels and that needs constant optimization. So no worries about Europe and clearly an intention to continue to boost and stimulate the market with more innovation.

The next question is from Patrick Folan of Barclays.

Looking at North America specifically, it was a very strong Q2 like-for-like. Is this largely due to the hair performance and CeraVe regaining traction? Or was there any other market dynamics playing out where maybe competitors were raising prices to offset any tariff risk? Is that kind of a benefit for you guys from a competitive standpoint? And was there any pretariff buying in the U.S. in the quarter?

And then maybe secondly, just on North Asia, looking at Consumer which underperformed a bit. Can you talk about maybe where the underperformance was specifically? And do you see that improving sequentially as we go into Q3 and Q4? And I know you talked about the shopping festival 6.18 looked quite strong. How has that been since, I guess, the festival? Conscious it's only a few weeks, but are we planning to see sequential acceleration in China in Q3 and Q4?

All right. So North America, I would say that the overall acceleration first comes from the market. Of course, we've done a bit better in CPD at the end of the quarter, which is good. But really, the market growth has been accelerated, which was flattish in the first quarter, closer to plus 2% or 3% in the second. And I think what was probably unusual and under expectation was the first quarter of the market. And I guess there was a little bit of consumers waiting, expectations about the new policy and there was a little bit of pause in consumption.

And we see as consumers, I would say, are overall a bit reassured, we see consumption going back. It's a lot accelerated by online which is, by the way, a global trend. We see online overperforming brick-and-mortar in most parts of the world, true for us, true for the market. And so in the U.S., we've seen the market accelerating. Some categories indeed are strong. we have hair care that remains strong. Fragrance remains strong. Makeup which was dragging us down is improving, still slightly negative in the U.S., but we see clearly an upward trend. They'll be stimulated by innovation but also probably by the same slight improvement in the mood. So I mean, we are confident that the U.S. market will continue to grow.

As far as we are concerned, we gained share in three divisions, a lot on PPD and LDB, thanks to La Roche-Posay doing great, SkinCeuticals growing double digits. And CeraVe, to be honest, is a bit better but it's still -- it's not as great as we would like it. But it's moving back into better territories in skin and hair care. Nothing that competition gave us. There was no pre-tariff increases that other competitors have done and we didn't. So there's no benefit there. On Luxe, we are on par with market and, of course, driving the growth with fantastic performance in fragrances. The Valentino Born in Roma became recently #1 female fragrance in the U.S. like superb performance.

And on CPD we're slightly below market because overweighted on makeup which, as I said, is still in the recovery process, and not present in mass fragrances and hygiene, which are the categories that are driving the market up. But we're really winning on hair care in CPD. so overall, we are quite confident. I must say that the early weeks of July where there was -- which are again a bit biased because there was the Prime Day festival for Amazon but overall it was pretty positive. So without going crazy, we see the U.S. market gaining traction on the second part of the year.

On China, it's true that we are very happy with the 6.18 festival because in net GMV -- because we often -- the platforms publish their GMV. We look at net of returns because that's the real performance. We saw that the market was at plus 7% during this period. We were -- so that was quite positive with a good performance of luxury brands, L’Oréal Paris, #1, and Lancôme, #3. Yes, of course, this festival -- and we know in China, this festival are hyped. So I don't see a major change in the Chinese market. The only thing is that the second part of the year will be much more favorable in terms of comparable because the last year second half for the market was much more difficult. Last year, the first half of the market was at minus 2%. It was minus 4% on the full year. So it means that the second half was much lower.

So in China, we see the market getting a bit better, mostly thanks to easier comps. And as far as the CPD performance in China, it's true that there's a fierce competition of Chinese brands, some of which, by the way, that were very negative in the 6.18 festival, so which confirms the kind of perception that there's always a high churn in the brands that -- in the indie brands phenomenon. But L’Oréal Paris is doing okay. We're struggling in makeup. And L'Oréal Paris has a pretty nice second half plan with hyaluronic acid filler and Age Perfect relaunch that should help a little bit. And we have also a very strong plan for Luxe as we talk about Beauty Stimulus Plan.

We have talked a lot about fragrance, but we're launching -- we've just placed on the market a new cream from Helena Rubinstein on Replasty, Replasty Age Recovery is today the existing product, is the #1 beauty item sold in China. And we are adding 1 SKU to that range with 60% proxylane, which is the highest concentration of this great ingredient to the product. So we have high expectations on this product, which is, by the way, a product that will be sold close to EUR 500. So with sales, it's money in the bank. So China, the market for me remains flattish, which is better than last year and will have an easier comparative. And the U.S., we are optimistic for the second part of the year.

The next question is from Callum Elliott, Bernstein.

I wanted to start asking you about skin care. I'm struck by the negative organic growth in the first half of the year that I'm sure you guys are not happy with. You're obviously still allocating capital to skin. You just bought Medik8. So you clearly don't see it as a structural problem with the category. So just hoping to get you to talk about what's going on with skin care today, how much of this is the weak market versus issues in your own business? And in particular, what are you doing to stimulate the market in skin care? Specifically, we've heard a lot about fragrance but interested in stimulus for the skin.

And then my second question is on gross margins. 10 basis points of compression, gross margin compression in the first half of the year. Obviously, Christophe, as you said, you manage the P&L on an annual basis. But I was struck by that, which obviously means that the majority of the margin expansion that you're seeing is coming from the cuts to ad spend, which I guess is probably not what you would consider to be the optimal kind of shape of the P&L to be driving margin expansion from ad spend cuts. So just hoping to get you to talk a little bit about the drivers of the gross margin compression in H1 and whether we should expect those to persist.

Okay. So I will take the skin care. Right to say we're not -- I'm not happy about skincare, but I would just take it with a pinch of salt. The first one is that as you know, and we had to live with this until the first half of this year, skincare is the category impacted by the -- the biggest by the discrepancy between sell-in and sell-out, and the same as sun care stocking of last year. If you take LDB, just to go back to that division, which is our skincare champion which is doing great, as you saw in invoicing, the division is at a plus 3% growth where in sell-out year-to-date, the division is at 6.7%. So you have twice -- you have more than 3.6 points of difference. So that impacts -- that would make skincare net positive instead of being slightly negative. This being said, we are not very happy.

The second is clearly as long as North Asia, which is the biggest worldwide market in skincare [indiscernible] and particularly China doesn't recover, it's hard to get strong traction in skincare. That's what we are trying to stimulate with launches L'Oréal Paris in China, on Helena Rubinstein, the new Absolue Longevity Cream, and there's more to come, there's a lotion on Génifique. So we're trying to animate that Chinese and North Asian market, which is right now taking the category down.

And then overall, if we're totally honest, there's also more competition. Everybody's got excited about indeed skincare and particularly medical positioned skin care. So we're happy that we grow faster than the market with LDB. But there's lots of competition out there. So that's why we acquired Medik8 because it's a fantastic brand that has great formulas. And it's interesting because it's both a firm positioning that is very hot but also a premium and luxury positioning. So it's a channel where you don't see many of these brands. So that, I think, is going to get us a lot of traction. It's a brand that's mostly U.K. today, and half of their business -- a bit more than half of their business, they are in the U.S. So a big opportunity on Medik8.

We have also -- I mentioned the launches of Lancôme. And I think on CPD, that's where we have to do an even better job. So we have a few good things happening. We are rolling out Mixa again, which is a dermatological mass brand, so very affordable. It's at plus [ 35 ] or something and it's flying across Europe. So was a French-only brand. And now every country in Europe wants it and we'll see about the other countries in the world. We have acquired Dr. G to boost the CPB skincare presence in North Asia. And we have one small but growing skincare specialist brand in America with Dr. Thayer. So more brands, more specialist brands in skin care, more innovations trying to occupy all the price points of the spectrum. So it's the fight ahead of us. And we have both -- because we are not happy, we are eager to fight back.

Okay. Regarding the gross margin, maybe I will add a little bit of color on where do we stand. So basically, what you see in the P&L end of June is a negative impact of 10 basis points, which is actually the structural effect linked to the integration of Dr. G and hyperinflation. And then we have opposite impacts. On one side, we have a positive 30 basis points due to conversion, this will last; and a negative impact of 30 basis points on comparable. And this we have inside, of course, positive effects from mix, from pricing, and this may further improve in the second half.

And we have a one-off that will disappear. It's a technical aspect because of the change of methodology. So we have a negative 25 basis points on supply chains. That will disappear. So objective is, of course, as you know, keep our high level of gross margin and absorb the impact of tariffs that is stronger in the second half than the first half. And well, we've been already preparing the mitigation plans, mainly in the U.S. So we are quite confident on our capacity to keep our gross margin high.

The next question is from Fon Udomsilpa, RBC.

So two questions for me, please. One -- another one from Beauty Stimulus Plan. So with more active launches, could you provide any color on how much these new products and new launches contribute to growth in the first half? And the second one is on A&P spending heading into the second half. Is it fair to assume that the benefit from BETiq will increase with more rollout, but at the same time, with more launches coming when marketing campaigns also step up as well? Any color on that would be great.

Excuse me. The sound quality was not great. Would you mind repeating the second part of your question? Because I got the question about the contribution launches on the first half, but not the end of the question. Apologies.

Of course. So the second one is on A&P spending into the second half. Is it fair to assume that benefit from BETiq will increase with more rollout, but at the same time, with more launches coming, more marketing campaigns also step up. So how should we think about momentum of A&P spending for the rest of the year? .

Okay. So contribution of launches, in the first half, it was around 100 basis points. And the objective, of course, with all the uncertainties related to new products, it's 300 in the second half. So we expect more launches second half. In the first half, we had some ones that blew my mind because it's really well above expectation, it's Gloss Absolu from Kérastase, which makes the brand the high teens, and that's just starting to be rolled out. We have a few others coming. We've just launched a new mascara on Maybelline called Colossal Bubble, which is also bring over expectations. And as always, we have a few others that are a bit below expectations. So more launches in the second half. Of course, fragrance, the [ known ] fragrance, quite a bit of skin care and makeup, too.

And as far as A&P are concerned, I wouldn't make a specific extrapolations. Yes, BETiq will improve more, will give us more flexibility and more productivity. We will have to support these launches and the catalog. But also, we have to be very agile because as I said, now the name of the game in this world of influencers and a very fast rocket takeoffs and some others that do not react as well, we have to be super agile to allocate permanently and reallocate our resources to whatever is flying. I think that's a bit the new name of the game.

This idea that you would consistently support a pillar brand forever is a bit past. You have, of course, to keep you supporting your catalog. But when you have fast-flying engine, rocket or whatever, you have to instantly put more fuel in to potentialize it in the maximum way. So it will be, as always, at L'Oréal all about real-time management, flexibility and when we can add, we will add. And sometimes, if we have to reduce some others, we'll do it, too.

The next question is from Olivier Nicolai, Goldman Sachs. .

Two questions, please. First of all, going back to the tariffs in the U.S., I understand it's a sensitive topic. But I would expect -- would you expect an impact from Q4 this year or perhaps even next year considering your level of inventories already in the U.S.? And what can you do to mitigate the impact on the 30% products which are imported from Europe and sold in the U.S?

And then secondly, I've noticed that [ Aesop ] has been growing double digits in H1. I think last year, you indicated it was more like in the high single digits. So it's been certainly accelerating. Could you give us more details on the performance? Is it driven by fragrances there? Or is it the store rollout? And how much run rate do you see for this brand which you bought, I believe, 18 months ago?

So I'll start with Aesop, and you want to jump in on tariffs?

Okay.

So Aesop is doing great. It's, of course, as always, it's a blend of like-for-like growth and store opening. The brand is doing pretty well in China. By the way, the stores, there's lots of people there. We're overall very happy with the brand. I think it probably meets the needs of many people to find some relaxation, peace of mind and bliss in this crazy world to live in. So overall very happy. We are indeed enhancing the visibility. And we've just launched two new fragrances, but so we are we're working on making the fragrances which were a bit of a hidden gem within Aesop a bit more visible in the store. But I wouldn't say that's the reason why for the acceleration

I think the brand has got good traction. It's been perfectly integrated right now in the team. They have a good combination of [ L'Oréal ] and at the helm, and 1 of the 2 founders are still working with us and very happy to see the brand developing. So yes, so I would not make predictions about the run rate, but let's say, we're on track. Clearly, we lost a year at some point at the beginning with the second COVID closure of China, but we're happy right now. And clearly, we keep the strength of the brand on whatever -- cleansing, body products, and we are bringing skincare innovations with [ lab ] formulas that will kick in probably a bit more next year. And we are indeed enhancing the fragrance visibility. So overall, happy and confident.

So coming back now to the tariff. Well, first, we have now much more visibility on what will be the second half. Maybe to give a little bit more color on what could be the impact, as of today, because of course there are some maybe tariffs that will still move in Canada or in Mexico, but when Nicolas says the situation is manageable, it means that the impact could be less than 40 basis points as of today. Second, as you know, we've been building a little bit of stock there to mitigate the impact on the second half. So this, of course, is helping. And obviously, there are some divisions that have been already planning for a tariff increase in the second half, and this also will help on the P&L of this year.

What is important is already to foresee what will be the impact on 2026. And here, I have to say that we have different initiatives, mainly in operations to see on some categories. We're thinking in the perfume, for example, what can be done to mitigate those tariffs on the long term.

So short term, it's manageable in the P&L this year. If we look midterm, I think we are really waiting for, if I can use that expression, for the dust to settle because there are other bilateral discussions that are happening between the U.S. and Mexico, the U.S. and Canada, the U.S. and Brazil. So we are waiting for -- to have the clear picture to see whether we need to make any production moves from here to there and a few other mitigations, like you can do [ first sales ] in products that are exported to France, which reduces the best of the base for tariff applications.

So there are several mitigations being studied, and we'll see when they are done. And by the way, I'm not giving up on trying to convince the European authorities to negotiate some exemptions for cosmetics. Who knows? You have to try.

The next question is from Sarah Simon, Morgan Stanley.

I've got two questions. First one was on sun sell-in. I think the really big -- the really tough one was in Q1 and that it sort of eased in Q2 and they got a bit easier in Q3. Can you just remind us of the phasing there, please?

And then the second one was on -- in China, I think Helena Rubinstein has had a pretty strong performance, particularly during 6.18. And it's obviously quite a mature brand. I'm just wondering what's behind that. Is it just a resurgence after a period of being a bit quieter? Or were there particular kind of strategies behind that?

I'll say Helena Rubinstein, well, we try to find the data somewhere on the question on sun care. You're right overall on the phasing you're describing, but I will let Christophe see where you can find that.

No, Helena Rubinstein is a fantastic success story in North Asia. And it's linked to, I would say, three main phenomenons. One is the fact that the upper classes of China are really aspiring to high-quality luxury and high-end luxury. And if you look at the overall performance of the Chinese market, the top, top end, be in fragrance or in skin care, remains stronger and more dynamic than the what I would call the mid-premium brand like Biotherm, which is more affordable, is less protected. So there is this appetite for quality.

Then the second reason is that we have -- frankly, I think we have the best skincare formulas. I think they are the best in skincare in the L'Oréal Group. And therefore, they have the best skincare formulas, I think, in the market. And this age recovery, Replasty jar, which the Chinese called the black bandage because it acts on skin like a bandage, is the #1 selling beauty product in China and maybe in North Asia in value because it's just a fantastic formula.

But it goes beyond that. There's also the question of service. Because it's premium, you go to any counter or mini boutique that we have in China, you have [ cabins ] where services skincare facials are provided. So here, we are talking about a brand that has a limited number of consumers but that are super loyal and very high spenders with a very strong CRM and great services. So that makes it a beautiful jewel, and that's why the launch of this Replasty P50, so with 50% proxylane that has just been shipped at the end of June and is now going to be supported for the second and third quarter raises a lot of expectations for us.

And if you have the chance to use that cream, I'm sure Eva can send you one, it's just phenomenal. So very very excited about that brand, which is a niche brand but a very successful one. Sun care, you want to -- you found?

Yes. Maybe I will give you some more information on sun care, of course, speaking on the Dermatological Beauty division. So as you know, sun care is important for this division, it's probably less than 15% of the sales. And coming back of the pattern of our sales last year, it's true that we had a very strong sell-in in Q1. Actually, we are still fighting with a plus 40% that we did in Q1 last year.and then gradually sequentially has been decreasing very fast. Q2 was already a plus 1% and then negative in Q3. So of course, there is a big gap between what you see in the sell-in linked to data and what is happening on the sell-out, what I think Nicolas explained very well. That's why we are actually happy about the results of our sell-out in sun care, but still impacting the visibility of our growth.

This being said that unfortunately, this is -- sun care is the most unpredictable business we have because if I look at this year, the start of the summer was phenomenal in Europe. It was -- the Sunday was shining and everything. It's been a week, at least in France, where it's raining every day. And in the U.S. was the opposite. They have a very pretty bad July, early July, end of June. Now it's sunny. So it's only at the end of the season that you really know whether it's going to be great or not. But the good thing is that we will have finished offsetting our inventory overload at the end of the first half.

The next question is from Celine Pannuti at JPMorgan.

My first question is on market growth. If I look at Slide 3 where you look at the acceleration in the second quarter, North America, it seems was mid-single digit in Q2 in terms of growth. So I would like to understand if you could explain which category grew mid-single digit in North America.

And then as well, emerging market accelerated in Q2, which is a bit contrary to some of your peers across different categories, talking about the deceleration, for instance, in Latin America and maybe a bit cautious comment on Asia. So if you could comment on this.

And then my second question is on North Asia. We've seen the better performance in Mainland China. At the same time, it seems that Travel Retail was down. Can you say how much down was Travel Retail? And what does that mean for the second half of the year? I understand you said that there is an easy comparative in Mainland China, but I think the Travel Retail was better in the second half of the year last year. So net-net, where do we stand on North Asia from for the second half of the year?

Okay. So I think on North America, we gave some of the questions -- we answered that question, but happy to talk about it. So indeed, the market accelerated between the first quarter and the second one. And I think the first quarter was artificially low. All categories have been growing except makeup. And makeup is improving, it's still slightly negative but has been improving. And the categories that have most driven the growth in the U.S. market are hair care and fragrance. And if we exclude our own footprint, hygiene has also been pretty dynamic in the U.S., but we are not really playing in that domain. So the categories that are the drivers of growth are fragrance and hair care.

Can you comment by channel? Is the Luxe market and the mass market back to mid-single digits in the U.S.?

The mass market is the one that is the most dynamic today. Like by the way, if you take up a group level, it's quite true. But -- and luxury remains [ easy ]. You see that overall, the luxury market at global level is flattish. So in the U.S., it remains slightly positive and it's mostly a fragrance play. Dermo is positive but it's the one channel that had slowed down the most from last year, but it's slightly positive, low single digits. And Professional is a mix of two stories between salon market, which remains sluggish, and the professional hair care markets, be it in selective or online, which is extremely dynamic. And overall, the online market in the U.S. is more dynamic than the brick and mortar. So that's the -- what's going to -- I can tell you about the U.S. the U.S. market.

Your second question, Celine, was on?

Sorry, It was the same question, the acceleration in emerging markets, which -- well, great for you, but it seems a bit differentiated commentary that we get from a consumer in emerging markets feeling the pinch, especially in Latin America.

Well, for us, Latin America remains pretty dynamic. It has slowed down a bit, particularly in Mexico, which has a little bit of uncertainty regarding their situation in the U.S. So the underlying market growth has slowed down from low teens in 2024 to high single digit in the first half. So it's lower than last year. But you have some markets that are very dynamic. Brazil is very dynamic. Mexico is quite resilient. We have less bad news or, I should say, more good news from Argentina, though it's quite small. We see that there is, in some categories, we are gaining share from the door-to-door players. It's particularly true in makeup. So we are growing ahead of the market, gaining strong shares in Brazil with CPD.

By the way, there was an earlier question on skincare. That's one of my highlights because we launched this on Garnier, this little jar called, it's called Toque Seco, which are incredible new formulas that are flying. And that were initially a Brazil play and that we've decided to extend to the whole emerging hot climate countries because it's a texture that's perfect for them. And so we outperformed in three divisions in Latin America, PPD, Luxe and CPD, And LDB we have a challenge in Brazil but winning anywhere. So overall, I wouldn't say -- I can have a crystal ball and say that Latin America is going to be flying.

But I was in Mexico 2 weeks ago. And of course, there's a lot of expectations what's going to be the outcome of the discussions on tariff with the American administration. But we see -- we continue to see a dynamic market. So we remain ambitious for Latin America, as we are for SAPMENA, where we are basically gaining share everywhere but Indonesia, but still have potential to accelerate. So what we see is a market that is a bit slower than last year, but overall pretty dynamic. I don't know what competitors say. That's...

There was also a question on North Asia. Maybe I can give you a few information. First on Mainland China because I think it's very important to remind what has been the dynamic in the Luxe quarters in China. As you know, when we look at the market, the situation where we see the market really negative was Q3 last year and then progressively catching up, still negative on Q4. This year, we've seen a market at around 0% both in Q1 and Q2. So at least we are out from this negative territory. And in this context, of course, we have our sell-in that is turned to positive territories. So that's why we feel another second half will be helped by [ prices ].

And when it comes to the Travel Retail, here the situation is still complex. The market in Asia is still negative.

Yes, in high teens negative. What's happening in the Travel Retail market overall, so the market is high teens negative and we are low teens negative, so gaining share. And it's really a tale of two cities because you see, on the one hand, because the traffic is increasing, the airports are really growing. The markets in airports is overall very positive, like plus 8 or something like that. And it's very negative in what used to be called the downtown stores, which had been opened by many players back in the days probably to -- when there was less traveling and also were fueled with the daigou business.

And you've seen Korea, many of these downtown stores in Seoul that are closing. You see the example of France, France Samaritaine has been transferred under the leadership of Bon Marche because as a tourist destination as the Chinese tourists do not travel so much in groups, it was less relevant. And we see that [ Hainan ] despite being pretty heavy in traffic, it remains very negative in the minus 25-ish in terms of sell-out. So we have a reconfiguration of Travel Retail back to what it was and should have remained, which is travelers, individual drivers, business opportunity and a brand exposure opportunity. And clearly that's, as we said, hadn't been for Travel Retail, our North Asia business would have been positive for this first half.

The next question is from Ashley Wallace Bank of America Merrill Lynch.

And firstly was on the Q2 revenue acceleration, strong margin progression in the half. Can I help with a follow-up question on derma, please? Sell-out trends were obviously much better than sell-in for half 1, but I was wondering when you expect sell-in and sell-out to align. And will this already be true for Q3 in your view?

My second question is just on the contribution from new channels. You mentioned a few times in the presentation TikTok Shop. But obviously, we also have Amazon Premium Beauty. I was wondering if there will be any more brand launches on these platforms in the second half. So just, I guess, helping us to understand how much more white space opportunity or distribution push that exists on some of these newer channels for you.

And then finally, just on EBIT margin. I know Christophe mentioned not to extrapolate half on performance. But any reason why the full year EBIT margin can't be up 30 basis points even with the impact of tariffs building in the second half?

You mentioned the reason.

Tariffs. Okay, fine.

And support of our launches. In the end, we have to -- as Christophe -- I'm stealing his answer, but he's always reminding us that our focus is top line, brand fuels, stimulation of demand. So we know that we could deliver a higher margin, but we don't want to do it at the expense of the top line goals. And on top of that, this year, we have to offset these tariffs that we cannot fully mitigate. We mentioned around 30 -- 40 basis point impact. So -- and it's all on the second half, so mostly on the second half. So Christophe, I'm sure you want to add something, too.

Don't worry, Ashley. We are, as usual, targeting both supporting the growth at first. And when there is growth, of course, there is also an improvement in our profitability.

So on derma, I expect, at least from my team, they should realign sell-out and sell-in on the second half. So that's their objective. It will, of course, depend on again success of launches, competition. But that's -- there was really a very specific effect impact on the first half of this year. The only negative thing that they will have against them is that they pipe their hair care launch in the U.S. second half of last year. I don't remember exactly, weighted. So -- but overall, they should realign that's the objective they have. And your second question was?