The assets and liabilities of foreign subsidiaries are translated at closing exchange rates. Income statement items are translated at average exchange rates for the year. The resulting translation difference attributable to the Group is entered directly under equity under the item Cumulative translation adjustments, while the translation difference attributable to non-controlling interests is recognised under the Non-controlling interests item.
On 13 December 2023, the Argentine government and the Central Bank of Argentina modified their exchange control system with the aim of stabilizing the economy plagued by inflation. The official devalued rate as of 31 December 2023 is 894.98 ARS for one Euro (compared to 189.34 ARS for one Euro at the end of 2022).
Goodwill generated on foreign companies is considered to form part of the assets and liabilities of the foreign company, and is therefore expressed in the entity’s functional currency and translated using the closing exchange rates in effect at the closing date. Goodwill recorded before 1 January 2004 continues to be recorded in euros.
On 3 April, L’Oréal announced that it had signed an agreement with Natura & Co to acquire Aēsop, the Australian luxury beauty brand, for $2.6 billion (representing €2.4 billion at the rate of the acquisition date). Created in 1987, Aēsop is a global super brand known for its skin, hair and body products, available across luxury retail, beauty and hospitality locations around the world. Aesop operates online and in around 400 exclusive points of sale across the Americas, Europe, Australia and Asia, with a nascent footprint in China where the first store opened in 2022. This acquisition was completed on 30 August 2023 and has been fully consolidate since that date. In 2023, this acquisition represented €557.5 million in full-year net sales and €13.1 million in full-year operating profit. The provisional allocation of the purchase price led to the recognition of goodwill of €1,682.3 million and is as follows:
| € millions | Fair value at the date of acquisition |
|---|---|
| Intangible assets(1) | Intangible assets (1)Fair value at the date of acquisition580.9 |
| Other assets | Other assets Fair value at the date of acquisition428.4 |
| Cash | Cash Fair value at the date of acquisition74.8 |
| Other liabilities | Other liabilities Fair value at the date of acquisition-415.3 |
| Aēsop net assets | Aēsop net assets Fair value at the date of acquisition668.8 |
| Goodwill | Goodwill Fair value at the date of acquisition1,682.3 |
| ACQUISITION PRICE | ACQUISITION PRICEFair value at the date of acquisition2,351.1 |
(1) Including €52.8 million of brand and €54.9 million of technological assets.
On 4 December 2023, L’Oréal completed the acquisition of Lactobio, a leading probiotic and microbiome research company based in Copenhagen (Denmark). The strategic acquisition builds on 20 years of advanced research by L’Oréal into the microbiome scientific territory, deepening its knowledge of the microorganisms that live on the skin’s surface and reinforcing the Groupe’s leadership in this field. The acquisition also opens up new scientific opportunities, including leveraging Lactobio’s microbiome expertise and significant IP portfolio to develop safe and effective new cosmetic solutions using live bacteria.
The cost of these new acquisitions represented €2,401.8 million. The total amount of goodwill and other intangible assets resulting from their acquisitions provisionally amounted to €2,313.9 million.
On 23 September 2022, L’Oréal signed an agreement to acquire Skinbetter Science, a physician dispensed American skincare brand backed by cutting edge, dermatological science, combining patented efficacious ingredients with luxurious sensorial textures.
Skinbetter Science was co-founded in 2016 by pharmaceutical industry professionals, Jonah Shacknai, Justin Smith and Seth Rodner, and has since become one of the fastest growing medical-dispensed skincare brands in the United States. Skinbetter Science is known for formulating innovative products with active ingredients for anti-aging, moisturizing, cleansing, exfoliating, skin peeling and sun protection. The brand is strongly supported by deep knowledge of skin and chemistry with clinical trials led by board-certified dermatologists.
Skinbetter Science’s products are mainly available through a network of leading dermatology, plastic surgery and medical aesthetics practices throughout the United States, powered by a national medical sales team.
