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L’Oréal acquires a minority stake in the French biotech Microphyt – 2022-11-29 at 18:15


(AOF) – L’Oréal and the French biotech Microphyt announce a strategic partnership according to which the private equity fund of L’Oréal BOLD (Business Opportunities for L’Oréal Development) acquires a minority stake in Microphyt. This operation is fully in line with L’Oréal’s Research & Innovation strategy in the field of Green Sciences, through numerous strategic partnerships with innovative start-ups in the biotechnology sector, in France and abroad. .

This proactive policy is at the heart of the objectives that L’Oréal has set itself for 2030 as part of its sustainable development program, with in particular the objective that 95% of its ingredients will be bio-sourced, from abundant minerals or circular processes.

Microphyt, created in 2007 and located in Baillargues (Hérault), has developed a revolutionary low carbon impact process for the production of microalgae – microscopic plant organisms used, among other things, in cosmetics for their active properties and functional qualities.

L’Oréal and Microphyt will build a technological platform and pool material and human resources to design raw materials from the biomass of microalgae. The two companies aim to establish a long-term partnership for the development of new cosmetic solutions.

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Key points

– World leader in cosmetics, created in 1909;

– Group organized into 5 divisions generating €32.3 billion in sales: luxury for 40%, consumer products for 42%, active cosmetics for 12% and professional products;

– Powerful international position, with 35 global brands and balanced revenues between Europe (32%), North Asia (31%), North America (25%) and the rest of the world;

– Business model based on 5 pillars: high R&D around 800 Ms€, innovation contributing to 15% of annual sales, release of new products between 15 and 20% per year, positioning in “premium” products, brands global and focus on e-commerce;

– Capital characterized by the strong positions of the Bettancourt and Meyers families -34.7%- and of Nestlé -20%-, Jean-Paul Agon chairs the board of directors of 16 members, Nicolas Hieronimus being managing director;

– Exceptionally healthy balance sheet, with €3.6 billion in debt compared to €23.6 billion in equity.

Challenges

– Average annual growth above 5% of the world beauty market, driven by the enrichment of the populations of emerging countries and their aging in the OECD;

– Innovation strategy aimed at making the group the leader in “Beauty Tech”; 3.3% of revenues invested in research & innovation, approximately 500 patents filed per year by 21 research centers / focus on digital, reinforced by acquisitions (ModiFace, leader in augmented reality and artificial intelligence), by equity investments in start-ups with the BOLD fund and partnerships with GAFAM, Alibaba and Tencent, Verily (skin ageing) / integration of sustainability criteria into products;

– “L’Oréal for the future” environmental strategy: transformation of the business model within planetary limits: carbon neutrality of sites by 2025 and, by 2030, all plastic packaging of recycled or biosourced origin and 50% reduction in CO2 emissions compared to 2018 for each finished product / contribution of €150 million to solidarity actions for vulnerable women and environmental protection (regeneration and biodiversity) / display of the social impact and product environment;

– Ability to generate high operational self-financing -€5.6 billion;

– Integration of the Californian Youth to the people;

– History of sales growth above the market for 13 years and reinforced by digital, at 29% of turnover.

Challenges

– Long-term evolution of the 8% stake in Sanofi;

– Impact of the Russia-Ukraine war: closure of e-commerce sites and stores and maintenance of the production plant in Moscow, 2% of sales coming from Russia;

– 2022 objective of market outperformance and growth in sales and profit;

– 2021 dividend of €4.8 and towards a cancellation of the 4% of shares repurchased from Nestlé.

Learn more about the luxury sector

Market boom for several more years

According to Bain & Company, the global luxury market (fashion, cars, hotels, wines and spirits, cruises, etc.) will have recorded a 21% jump in sales in 2022, to 1,384 billion euros. The luxury personal products segment (jewellery, clothing, watches, leather goods, etc.) should grow by 22% and again grow by 3% to 8% in 2023 despite the expected economic slowdown. Growth should continue in the following years, with an increase that should reach 60% by 2030! According to Bain, spending by Americans in Europe has more than doubled between 2019 and 2022. This development is largely explained by a strong dollar. The Chinese market, on the other hand, is at half mast due to the “zero Covid” policy and strict confinements.



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