The right of use is amortised over the expected lease term. French lease rights are not amortised.
The discount rate used to value the lease liability corresponds to the annual rate for each contract calculated using zero-coupon rates obtained by currency and by maturity tranche, increased by the Group’s credit spread.
Deferred taxes are recorded during the initial recognition.
Inventories
Inventories are valued at the lower of cost or net realisable value. Cost is calculated using the weighted average cost method.
A provision is made for obsolete and slow-moving inventories on the basis of their probable net realisable value, estimated on the basis of historic and projected data.
Trade accounts receivable
Accounts receivable from customers are recorded at their nominal value, which corresponds to their fair value.
The current trade accounts receivable impairment methodology at L’Oréal reflects the level of expected losses on the customer portfolio, calculated on the basis of past statistics from the outset of the receivable. Moreover, this risk is contained thanks to the credit insurance policy applied by the Group.
Except when local conditions do not allow it, the Group has insurance cover for the subsidiaries.
3.1. Segment information
3.1.1. Information by business segment
The Group’s business activities are organised into four Divisions.In its markets, each Operational Division develops and enhances a range of its own brand of consumer products:
- the Professional Products Division provides expertise to beauty professionals.For over 100 years, this Division has acquired extensive knowledge of, and provided tailored support solutions for, the hairdressing sector. It has built up a unique brand portfolio which currently includes L’Oréal Professionnel ,Kérastase, Redken, Matrix and PureOlogy;
- the Consumer Products Division’s goal is to democratise access to the best that the world of beauty has to offer. The Division is underpinned by four major global brands(L’Oréal Paris, Garnier, Maybelline New York and NYX Professional Makeup), and by the deployment of its specialised and regional brands (Stylenanda, Essie, Mixa, etc.);
- L’Oréal Luxe creates exceptional experiences and products, for the most demanding consumers in selective distribution.
The Division has built a unique portfolio of prestigious brand sincluding iconic mainstream, aspirational, alternative and specialist brands (Lancôme, Kiehl’s, Giorgio Armani Beauty,Yves Saint Laurent Beauté, Biotherm, Helena Rubinstein,Shu Uemura, IT Cosmetics, Urban Decay, Ralph Lauren,Mugler, Viktor&Rolf, Valentino, Azzaro, etc.);
- the Active Cosmetics Division, whose goal is to help everyone in their quest to have healthy and beautiful skin.
Its portfolio of highly complementary brands (La Roche‑Posay,Vichy, CeraVe, SkinCeuticals, etc.) is designed to keep pace with major skincare trends and recommendations of health care professionals.
The “non-allocated” item includes expenses incurred by the Functional Divisions, fundamental research and the cost of free shares not allocated to the Divisions. It also includes non‑core businesses, such as reinsurance.
The performance of each Division is measured on the basis of operating profit.
Weight of net sales by division over the three periods
These diagrams show the weight of net sales by division over the three periods.
2022 Sales: €38,261 M
L’Oréal Luxe : 38.3%
Active Cosmetics: 13.4%
Professional Products: 11.7%
Consumer Products: 36.6%
2021 Sales: €32,288 M
L’Oréal Luxe : 38.2%
Active Cosmetics: 12.2%
Produits Professionnels : 11,7 %
Consumer Products: 37.9%
2020 Sales: €27,992 M
L’Oréal Luxe : 36.4%
Active Cosmetics: 10.8%
Professional Products: 11.1%
Consumer Products: 41.8%